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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 SEPTEMBER 30, 2007

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

(Registrant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 or 15(d) 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 October 31, 2007



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PART I  FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

FIRST COMMUNITY FINANCIAL
CORPORATION

CONSOLIDATED BALANCE SHEETS (Unaudited)

(Dollars In Thousands, Except Share Data)



|                                                                                                    |  |                    |         |                   |   |         |  
|--------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- | - | ------- | -
|                                                                                                    |  | September 30, 2007 |         | December 31, 2006 |  
|ASSETS                                                                                              |  |                    |         |                   |   |         |  
|Cash & Due from Banks                                                                               |  | $                  | 6,746   |                   | $ | 8,021   |  
|Interest Bearing Deposits with Banks                                                                |  |                    | 964     |                   |   | 721     |  
|Federal Funds Sold                                                                                  |  |                    | 1,862   |                   |   | 3,690   |  
|                                                                                                    |  |                    |         |                   |   |         |  
|Cash & Cash Equivalents                                                                             |  |                    | 9,572   |                   |   | 12,432  |  
|Time Certificates of Deposit                                                                        |  |                    | 891     |                   |   | 1,485   |  
|Securities Available for Sale                                                                       |  |                    | 59,377  |                   |   | 48,955  |  
|Securities Held to Maturity, fair value 2007 $ 21,109; 2006 $ 21,174                                |  |                    | 21,144  |                   |   | 21,073  |  
|LoansNet of allowance for loan losses 2007 $ 1,250; 2006 $ 1,230                                   |  |                    | 189,500 |                   |   | 177,930 |  
|Premises & Equipment, Net                                                                           |  |                    | 6,883   |                   |   | 7,213   |  
|Restricted Investment in Bank Stocks                                                                |  |                    | 1,918   |                   |   | 2,069   |  
|Investment in Life Insurance                                                                        |  |                    | 4,720   |                   |   | 4,665   |  
|Other Assets                                                                                        |  |                    | 3,227   |                   |   | 2,698   |  
|                                                                                                    |  |                    |         |                   |   |         |  
|TOTAL ASSETS                                                                                        |  | $                  | 297,232 |                   | $ | 278,520 |  
|                                                                                                    |  |                    |         |                   |   |         |  
|                                                                                                    |  |                   
|LIABILITIES                                                                                         |  |                    |         |                   |   |         |  
|Deposits:                                                                                           |  |                    |         |                   |   |         |  
|Non-Interest Bearing                                                                                |  | $                  | 25,318  |                   | $ | 23,329  |  
|Interest Bearing                                                                                    |  |                    | 216,354 |                   |   | 199,045 |  
|                                                                                                    |  |                    |         |                   |   |         |  
|Total Deposits                                                                                      |  |                    | 241,672 |                   |   | 222,374 |  
|Short-Term Borrowings                                                                               |  |                    | 9,154   |                   |   | 7,417   |  
|Long-Term Borrowings                                                                                |  |                    | 18,000  |                   |   | 22,000  |  
|Junior Subordinated Debt                                                                            |  |                    | 5,155   |                   |   | 5,155   |  
|Other Liabilities                                                                                   |  |                    | 2,354   |                   |   | 1,900   |  
|                                                                                                    |  |                    |         |                   |   |         |  
|                                                                                                    |  |                   
|TOTAL LIABILITIES                                                                                   |  |                    | 276,335 |                   |   | 258,846 |  
|                                                                                                    |  |                    |         |                   |   |         |  
|                                                                                                    |  |                   
|SHAREHOLDERS EQUITY                                                                                |  |                    |         |                   |   |         |  
|Preferred Stock, without par value; 10,000,000 shares authorized and unissued                       |  |                    |        |                   |   |        |  
|Common Stock, $ 5.00 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                                                                                   |  |                    | 13,650  |                   |   | 12,634  |  
|Accumulated Other Comprehensive Income (Loss)                                                       |  |                    | 2       |                   |   | (205    | )
|                                                                                                    |  |                    |         |                   |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                          |  |                    | 20,897  |                   |   | 19,674  |  
|                                                                                                    |  |                    |         |                   |   |         |  
|                                                                                                    |  |                   
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY                                                            |  | $                  | 297,232 |                   | $ | 278,520 |  
|                                                                                                    |  |                    |         |                   |   |         |  

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 EndedSeptember 30, |       | Nine Months EndedSeptember 30,
|                                                    |  | 2007                            |       | 2006                           |   | 2007  |  | 2006
|INTEREST INCOME                                     |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Interest & Fees on Loans                            |  | $                               | 3,273 |                                | $ | 2,987 |  | $    | 9,457  |  | $ | 8,607 
|Interest on Taxable Securities                      |  |                                 | 721   |                                |   | 536   |  |      | 1,970  |  |   | 1,605 
|Interest on Tax-Exempt Securities                   |  |                                 | 192   |                                |   | 215   |  |      | 578    |  |   | 644   
|Other Interest & Dividends                          |  |                                 | 80    |                                |   | 68    |  |      | 303    |  |   | 215   
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|TOTAL INTEREST INCOME                               |  |                                 | 4,266 |                                |   | 3,806 |  |      | 12,308 |  |   | 11,071
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|                                                    |  |                                 |       |                               
|INTEREST EXPENSE                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Interest on Deposits                                |  |                                 | 1,943 |                                |   | 1,600 |  |      | 5,635  |  |   | 4,503 
|Interest on Short Term Borrowings                   |  |                                 | 93    |                                |   | 94    |  |      | 267    |  |   | 228   
|Interest on Long Term Borrowings                    |  |                                 | 341   |                                |   | 354   |  |      | 989    |  |   | 1,036 
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|TOTAL INTEREST EXPENSE                              |  |                                 | 2,377 |                                |   | 2,048 |  |      | 6,891  |  |   | 5,767 
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|                                                    |  |                                 |       |                               
|NET INTEREST INCOME                                 |  |                                 | 1,889 |                                |   | 1,758 |  |      | 5,417  |  |   | 5,304 
|Provision for Loan Losses                           |  |                                 | 30    |                                |   |      |  |      | 30     |  |   |      
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                 | 1,859 |                                |   | 1,758 |  |      | 5,387  |  |   | 5,304 
|                                                    |  |                                 |       |                               
|NON-INTEREST INCOME                                 |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Service Charges on Deposits                         |  |                                 | 182   |                                |   | 186   |  |      | 547    |  |   | 512   
|Fiduciary Activities                                |  |                                 | 110   |                                |   | 90    |  |      | 285    |  |   | 240   
|Earnings on Investment in Life Insurance            |  |                                 | 51    |                                |   | 50    |  |      | 154    |  |   | 145   
|ATM Card Fees                                       |  |                                 | 131   |                                |   | 123   |  |      | 368    |  |   | 337   
|Realized Gains on Sales of Securities               |  |                                 |      |                                |   | 24    |  |      |       |  |   | 22    
|Realized Gain on Sale of Foreclosed Real Estate     |  |                                 |      |                                |   |      |  |      | 21     |  |   |      
|Other Income                                        |  |                                 | 66    |                                |   | 61    |  |      | 173    |  |   | 156   
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|TOTAL OTHER INCOME                                  |  |                                 | 540   |                                |   | 534   |  |      | 1,548  |  |   | 1,412 
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|                                                    |  |                                 |       |                               
|NON-INTEREST EXPENSES                               |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Employee Compensation & Benefits                    |  |                                 | 840   |                                |   | 821   |  |      | 2,539  |  |   | 2,531 
|Net Occupancy & Equipment                           |  |                                 | 293   |                                |   | 296   |  |      | 869    |  |   | 837   
|ATM Expense                                         |  |                                 | 11    |                                |   | 82    |  |      | 182    |  |   | 231   
|Professional & Regulatory Fees                      |  |                                 | 80    |                                |   | 63    |  |      | 266    |  |   | 157   
|Director & Advisory Boards Compensation             |  |                                 | 72    |                                |   | 68    |  |      | 220    |  |   | 211   
|Supplies & Postage                                  |  |                                 | 79    |                                |   | 60    |  |      | 202    |  |   | 204   
|Other Non-Interest Expenses                         |  |                                 | 251   |                                |   | 267   |  |      | 765    |  |   | 794   
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|TOTAL NON-INTEREST EXPENSES                         |  |                                 | 1,626 |                                |   | 1,657 |  |      | 5,043  |  |   | 4,965 
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|                                                    |  |                                 |       |                               
|Income Before Income Taxes                          |  |                                 | 773   |                                |   | 635   |  |      | 1,892  |  |   | 1,751 
|Applicable Income Taxes                             |  |                                 | 170   |                                |   | 127   |  |      | 386    |  |   | 331   
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|NET INCOME                                          |  | $                               | 603   |                                | $ | 508   |  | $    | 1,506  |  | $ | 1,420 
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|                                                    |  |                                 |       |                               
|Basic Earnings Per Share                            |  | $                               | 0.43  |                                | $ | 0.36  |  | $    | 1.08   |  | $ | 1.01  
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       
|Dividends Per Share                                 |  | $                               | 0.12  |                                | $ | 0.11  |  | $    | 0.35   |  | $ | 0.32  
|                                                    |  |                                 |       |                                |   |       |  |      |        |  |   |       

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 Nine Months Ended September 30, 2007

(Unaudited)

(Dollars In Thousands,
Except Per Share Data)



|                                                                               |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|------------------------------------------------------------------------------ |  | ----------- | ----- | --------------------------- | - | ---------------- |  | - | ------------------------------------------ | - |  | ----- | ---- | - |  | - | ------ | -
|                                                                               |  | CommonStock |       | CapitalIn ExcessofPar Value |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |     
|Balance December 31, 2006                                                      |  | $           | 7,000 |                             | $ | 245              |  | $ | 12,634                                     |   |  | $     | (205 | ) |  | $ | 19,674 |  
|Comprehensive income:                                                          |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Net income                                                                     |  |             |       |                             |   |                  |  |   | 1,506                                      |   |  |       |      |   |  |   | 1,506  |  
|Net change in unrealized losses on securities available for sale, net of taxes |  |             |       |                             |   |                  |  |   |                                            |   |  |       | 207  |   |  |   | 207    |  
|                                                                               |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Total comprehensive income                                                     |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   | 1,713  |  
|                                                                               |  |             |       |                             |  
|Cash dividends, $0.35 per share                                                |  |             |       |                             |   |                  |  |   | (490                                       | ) |  |       |      |   |  |   | (490   | )
|                                                                               |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|                                                                               |  |             |       |                             |  
|Balance September 30, 2007                                                     |  | $           | 7,000 |                             | $ | 245              |  | $ | 13,650                                     |   |  | $     | 2    |   |  | $ | 20,897 |  
|                                                                               |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  

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)



|                                                                                  |  |                                |         |   |      |   |         |  
|--------------------------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- | - | ------- | -
|                                                                                  |  | Nine Months EndedSeptember 30, |        
|                                                                                  |  | 2007                           |         |   | 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Net income                                                                        |  | $                              | 1,506   |   |      | $ | 1,420   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Provision for loan losses                                                         |  |                                | 30      |   |      |   |        |  
|Depreciation and amortization                                                     |  |                                | 424     |   |      |   | 441     |  
|Net amortization (accretion) of securities premium                                |  |                                | (45     | ) |      |   | 166     |  
|Net realized gains on sales of securities                                         |  |                                |        |   |      |   | (22     | )
|Net realized gain on sale of foreclosed real estate                               |  |                                | (21     | ) |      |   |        |  
|Earnings on investment in life insurance                                          |  |                                | (154    | ) |      |   | (145    | )
|Increase in other assets                                                          |  |                                | (865    | ) |      |   | (133    | )
|Increase in other liabilities                                                     |  |                                | 454     |   |      |   | 143     |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                | 1,329   |   |      |   | 1,870   |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Securities held to maturity:                                                      |  |                                |         |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                                | 3,888   |   |      |   | 4,973   |  
|Purchases                                                                         |  |                                | (3,883  | ) |      |   | (4,636  | )
|Securities available for sale:                                                    |  |                                |         |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                                | 11,949  |   |      |   | 11,399  |  
|Purchases                                                                         |  |                                | (22,112 | ) |      |   | (7,881  | )
|Proceeds from sales                                                               |  |                                | 26      |   |      |   | 108     |  
|Net increase in loans receivable                                                  |  |                                | (11,608 | ) |      |   | (15,162 | )
|Net decrease (increase) in restricted investment in bank stocks                   |  |                                | 151     |   |      |   | (169    | )
|Purchases of premises and equipment                                               |  |                                | (94     | ) |      |   | (140    | )
|Proceeds from life insurance                                                      |  |                                | 71      |   |      |   |        |  
|Net maturities of interest bearing time deposits                                  |  |                                | 594     |   |      |   | 1,091   |  
|Proceeds from sale of foreclosed real estate                                      |  |                                | 284     |   |      |   |        |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                                | (20,734 | ) |      |   | (10,417 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Net increase (decrease) in non-interest bearing demand and savings deposits       |  |                                | 1,989   |   |      |   | (2,537  | )
|Net increase in time deposits                                                     |  |                                | 17,309  |   |      |   | 9,668   |  
|Net increase (decrease) in short-term borrowings                                  |  |                                | 1,737   |   |      |   | (1,217  | )
|Proceeds from long-term borrowings                                                |  |                                | 10,000  |   |      |   | 5,000   |  
|Repayment of long-term borrowings                                                 |  |                                | (14,000 | ) |      |   | (4,000  | )
|Dividends paid                                                                    |  |                                | (490    | ) |      |   | (448    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by financing activities                                         |  |                                | 16,545  |   |      |   | 6,466   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net decrease in cash and cash equivalents                                         |  |                                | (2,860  | ) |      |   | (2,081  | )
|Cash and cash equivalents:                                                        |  |                                |         |   |      |   |         |  
|Beginning of year                                                                 |  |                                | 12,432  |   |      |   | 8,150   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|End of period                                                                     |  | $                              | 9,572   |   |      | $ | 6,069   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES:                                                         |  |                                |         |   |      |   |         |  
|Cash payments for interest                                                        |  | $                              | 6,867   |   |      | $ | 5,693   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash payments for income taxes                                                    |  | $                              | 424     |   |      | $ | 394     |  
|                                                                                  |  |                                |         |   |      |   |         |  
|NON CASH INVESTING:                                                               |  |                                |         |   |      |   |         |  
|Transfer of loans to foreclosed real estate                                       |  | $                              | 8       |   |      | $ |        |  
|                                                                                  |  |                                |         |   |      |   |         |  

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)

September 30, 2007

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 nine months ended September 30, 2007, are not necessarily indicative of the results that may be expected for the year ending December 31, 2007.

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, 2006, included in the Corporations Form 10-K filed with the Securities and Exchange Commission on March 13, 2007.

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 EndedSeptember 30, |      |   | Nine Months EndedSeptember 30, |  
|                                                   |  | 2007                            |      |   | 2006                           |   |      | 2007 |  |   | 2006 |  
|                                                   |  | (Dollars in Thousands)          |     
|Unrealized holding gains arising during the period |  | $                               | 475  |   |                                | $ | 515  |      |  | $ | 316  |   |  | $ | 137 |  
|Reclassification of gains realized in net income   |  |                                 |     |   |                                |   | (24  | )    |  |   |     |   |  |   | (22 | )
|                                                   |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  
|                                                   |  |                                 | 475  |   |                                |   | 491  |      |  |   | 316  |   |  |   | 115 |  
|Deferred income tax effect                         |  |                                 | (160 | ) |                                |   | (164 | )    |  |   | (109 | ) |  |   | (34 | )
|                                                   |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  
|Change in accumulated other comprehensive income   |  | $                               | 315  |   |                                | $ | 327  |      |  | $ | 207  |   |  | $ | 81  |  
|                                                   |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  

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 2007 and 2006.

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 $324,000 of standby letters of credit as of September 30,
2007. 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 September 30, 2007 for guarantees under standby letters of credit issued is not material.



7



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Note F  New Accounting Pronouncements

In March 2006, the Financial Accounting Standards Board (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 was effective for the Corporation on January 1, 2007. The adoption of SFAS 156 did not affect the Corporations consolidated financial statements.

In July 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109 (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that companies recognize in their financial statements the impact of a tax position, if that position is more likely than
not of being sustained on audit, based on the technical merits of the position. In May 2007, the FASB issued FASB Staff Position (FSP) FIN 48-1 Definition of Settlement in FASB Interpretation No. 48 (FSP FIN 48-1). FSP
FIN 48-1 provides guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The provisions of FIN 48 and FSP FIN 48-1 were effective for the Corporation on
January 1, 2007, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. The Corporations adoption of FIN 48 did not have a significant effect on its consolidated financial
statements.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, (SFAS 157) which defines fair value,
establishes a framework for measuring fair value under GAAP, and expands disclosures about fair value measurements. SFAS 157 applies to other accounting pronouncements that require or permit fair value measurements. The new guidance is
effective for the Corporation on January 1, 2008, and for interim periods within those fiscal years. The Corporation is currently evaluating the potential impact, if any, of the adoption of SFAS 157 on our consolidated financial position,
results of operations and cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilities-Including and amendment of FASB Statement No. 115 (SFAS 159). SFAS 159 permits entities to chose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for
which the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS 159 is effective for our Corporation on January 1, 2008. The Corporation has not early adopted this standard, and is presently
evaluating the impact that the adoption of SFAS 159 will have on our consolidated financial statements.



8



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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, 2006). The Corporation believes that of its significant accounting policies, the allowance for loan losses involves a
higher degree of judgment and complexity.



9



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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 $18,712,000 or 6.7% during the first nine months of 2007. Net loans increased $11,570,000 or 6.5% and securities increased by $10,493,000 or 15.0% from December 31, 2006 to September 30, 2007. The loan growth was
principally in the Banks residential and commercial real estate loan portfolios.

Total deposits increased by $19,298,000 or 8.7% from
December 31, 2006 while long-term borrowings decreased by $4,000,000 or 18.2% during the same time period. The Corporations new business development was primarily responsible for the deposit growth during the first nine months of 2007.
The bulk of the deposit growth was in time certificates of deposit.

Results of Operations

Net income for the nine months ending September 30, 2007 was $1,506,000 or $1.08 per share compared to $1,420,000 or $1.01 per share for the same period in 2006.
Annualized return on average equity was 10.02% for the first nine months of 2007 and 10.12% for the same period in 2006. Annualized return on average assets was 0.71% for the first nine months of 2007 and 0.70% for the same period in 2006.

Net income for the quarter ending September 30, 2007 was $603,000 or $0.43 per share compared to $508,000 or $0.36 per share for the same period in
2006. Annualized return on average equity was 11.75% for the third quarter of 2007 and 10.63% for the same period in 2006. Annualized return on average assets for the third quarter was 0.82% compared to 0.74% during the third quarter of 2006.

Net interest income for the first nine months of 2007 increased by $113,000 or 2.1% compared to the same period in 2006. This increase is primarily a
result of increased volume of interest earning assets as well as an increase in the yield on earning assets partially offset by an increase in the volume of interest bearing liabilities and an increase in the cost of those liabilities. For the first
nine months of 2007, the net interest margin on a



10



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fully tax equivalent (FTE) basis was 2.92% compared to 3.04% for the same period in 2006. 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 0.40% from 3.09% during the first nine months of 2006 to 3.49% during the same time period in 2007.

Net interest income for the quarter ended
September 30, 2007 increased by $131,000 compared to the same period in 2006. Net interest margin for the quarter ended September 30, 2007 was 2.94% compared to 2.96% during the same period in 2006. The increase in the yield on earning
assets of 0.24% from 6.18% during the third quarter of 2006 to 6.42% during the same period in 2007 was offset by the increase in the cost of funds of 0.26% from 3.22% during the third quarter of 2006 to 3.48% during the same time period in 2007.
Given the current interest rate scenario, expectations are for the net interest margin to remain relatively stable for the next few quarters.

The
Corporation recorded a $30,000 provision for loan losses for the first nine months of 2007 compared to no provision for the first nine months of 2006. As a percentage of loans, the allowance for loan losses was 0.66% at September 30, 2007,
compared to 0.69% at year-end 2006 and 0.71% at September 30, 2006. The decrease in the allowance for loan loss percentage is due to the increase in loan volume with 57.3 % of that increase in residential real estate secured loans.
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. After reviewing the growth in the loan portfolio as well as the other
factors listed above, 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 nine months of 2007 increased by $136,000 or 9.6% compared to the same period in 2006. Gains on sales of securities decreased by $22,000, income from fiduciary activities increased by $45,000, increased
activity led to ATM card fees increasing by $31,000, realized gain on sale of foreclosed real estate increased $21,000 and service charges on deposit accounts increased by $35,000 during the first nine months of 2007 compared to the same period in
2006.



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Non-interest income for the quarter ending September 30, 2007 was $540,000 compared to $534,000 in 2006. This
increase is in income from fiduciary activities of $20,000 and an increase of $8,000 in ATM fees was offset by a decrease in gains on sales of securities of $24,000.

Total non-interest expense increased in the first nine months of 2007 by $78,000 or 1.6% compared to the first nine months of 2006. Net occupancy & equipment expense increased $32,000, or 3.8%, and
professional fees increased by $109,000 as a result of increased legal and accounting fees, including costs associated with outsourced Sarbanes Oxley compliance consulting services. These increases were offset by a decrease in ATM expense of
$49,000. The decrease in ATM expense is a result of the buydown of the current contract by our ATM and debit card processor, which resulted in a refund of amounts previously expensed of $83,000. As the Corporation continues to add new 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 September 30, 2007, total non-interest expense decreased $31,000 compared to the third quarter of 2006. Supplies and postage expense
increased $19,000, professional fees increased $17,000 and ATM expenses decreased $71,000. As discussed above, the decrease in ATM expense is the result of the buydown of the current contract by our ATM and debit card processor.

Income tax expense was $386,000 for the nine month time period ending September 30, 2007 compared to $331,000 for the same time period in 2006. Income tax expense
as a percentage of income before income taxes was 20.4% for the period compared to 18.9% for 2006. 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. In 2007, these sources of tax-exempt income represented a smaller portion of the Corporations pre-tax income thereby increasing the Corporations effective tax rate.

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 $241,672,000 in deposits at September 30, 2007, which increased $19,298,000 over total deposits of $222,374,000 at December 31, 2006. Other sources of liquidity at September 30, 2007 are
available from the following: (1) investments in interest-bearing deposits with banks and federal funds sold, which totaled $2,826,000, (2) securities and time certificates of deposit maturing in one year or less, which totaled $4,411,000,



12



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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 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 $20,897,000 as of September 30, 2007, representing a $1,223,000 increase from December 31, 2006. The growth in capital was a result of net earnings retention of $1,016,000
and an increase in the accumulated other comprehensive income of $207,000. The other comprehensive income during the period is due to the change in value of the Corporations available for sale securities.

At September 30, 2007, the Bank had a leverage ratio of 8.70%, a Tier I capital to risk-based assets ratio of 15.18% and a total capital to risk-based assets ratio
of 15.93%. 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 Disclosure about Market Risk
|------- | ---------------------------------------------------------

There
are no material changes in the Corporations interest rate risk exposure since December 31, 2006. Please refer to the Annual Report on Form 10-K of First Community Financial Corporation, filed with the Securities and Exchange Commission on
March 13, 2007.



|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 September 30, 2007. 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 September 30, 2007, 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, 2006. Please refer to the Annual Report on Form 10-K of First Community Financial Corporation, filed with the Securities and Exchange Commission on March 13, 2007.



|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
|------- | ---------------------------------------------------

Not Applicable



|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 Principal Financial Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).                                                                                                                                                                                                                                                                                                                               



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|     |  |                                                                                                                                                 
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|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 Principal Financial Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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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: November 13, 2007 |  |  |  | BY:                                   |  | /s/ Jody D. Graybill                      
|                        |  |  |  |                                       |  | Jody D. Graybill                          
|                        |  |  |  |                                       |  | President                                 
|                        |  |  |  |                                       |  | (Principal Executive Officer)             
|                        |  |  | 
|Date: November 13, 2007 |  |  |  | BY:                                   |  | /s/ Richard R. Leitzel                    
|                        |  |  |  |                                       |  | Richard R. Leitzel                        
|                        |  |  |  |                                       |  | Vice President and Chief Financial Officer
|                        |  |  |  |                                       |  | (Principal Financial Officer)             



16