---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q



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



FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2005



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



FIRST COMMUNITY FINANCIAL CORPORATION

(Exact name of small business issuer as specified in its charter)



|                                                              |  |                                    
|------------------------------------------------------------- |  | -----------------------------------
|PENNSYLVANIA                                                  |  | 23-2321079                         
|(State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification 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)



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 an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).



Yes ̈No 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 practicable date: COMMON STOCK, Par Value $5.00 per share 1,400,000 shares outstanding as of October 31, 2005



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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)       |         |   |                 
|                                                                                                |  | September 30,2005 |         |   | December 31,2004
|ASSETS                                                                                          |  |                   |         |   |                  |   |        
|Cash & Due from Banks                                                                           |  | $                 | 8,015   |   |                  | $ | 6,830  
|Interest Bearing Deposits with Banks                                                            |  |                   | 1,242   |   |                  |   | 1,276  
|                                                                                                |  |                   |         |   |                  |   |        
|Cash & Cash Equivalents                                                                         |  |                   | 9,257   |   |                  |   | 8,106  
|Time Certificates of Deposit                                                                    |  |                   | 2,775   |   |                  |   | 1,785  
|Securities available for sale                                                                   |  |                   | 53,598  |   |                  |   | 51,120 
|Securities held to maturity, fair value 2005 $25,517; 2004 $23,560                              |  |                   | 25,427  |   |                  |   | 23,327 
|Loans - Net of allowance for loan losses 2005 $1,257; 2004 $1,264                               |  |                   | 156,136 |   |                  |   | 147,518
|Premises and Equipment                                                                          |  |                   | 7,617   |   |                  |   | 7,442  
|Restricted investment in bank stocks                                                            |  |                   | 1,954   |   |                  |   | 1,902  
|Investment in life insurance                                                                    |  |                   | 4,476   |   |                  |   | 4,362  
|Other Assets                                                                                    |  |                   | 3,071   |   |                  |   | 2,093  
|                                                                                                |  |                   |         |   |                  |   |        
|TOTAL ASSETS                                                                                    |  | $                 | 264,311 |   |                  | $ | 247,655
|                                                                                                |  |                   |         |   |                  |   |        
|LIABILITIES                                                                                     |  |                   |         |   |                  |   |        
|Deposits:                                                                                       |  |                   |         |   |                  |   |        
|Non-Interest Bearing                                                                            |  | $                 | 22,468  |   |                  | $ | 23,495 
|Interest Bearing                                                                                |  |                   | 190,587 |   |                  |   | 179,635
|                                                                                                |  |                   |         |   |                  |   |        
|Total Deposits                                                                                  |  |                   | 213,055 |   |                  |   | 203,130
|Short-Term Borrowings                                                                           |  |                   | 5,299   |   |                  |   | 4,449  
|Long-Term Borrowings                                                                            |  |                   | 21,000  |   |                  |   | 16,000 
|Junior Subordinated Debt                                                                        |  |                   | 5,155   |   |                  |   | 5,155  
|Other Liabilities                                                                               |  |                   | 1,644   |   |                  |   | 1,513  
|                                                                                                |  |                   |         |   |                  |   |        
|TOTAL LIABILITIES                                                                               |  |                   | 246,153 |   |                  |   | 230,247
|                                                                                                |  |                   |         |   |                  |   |        
|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                                                                               |  |                   | 10,977  |   |                  |   | 9,967  
|Accumulated Other Comprehensive Income (Loss)                                                   |  |                   | (64     | ) |                  |   | 196    
|                                                                                                |  |                   |         |   |                  |   |        
|TOTAL SHAREHOLDERS EQUITY                                                                      |  |                   | 18,158  |   |                  |   | 17,408 
|                                                                                                |  |                   |         |   |                  |   |        
|TOTAL LIABILITIES & SHAREHOLDERS EQUITY                                                        |  | $                 | 264,311 |   |                  | $ | 247,655
|                                                                                                |  |                   |         |   |                  |   |        



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,
|                                                    |  | 2005                            |       | 2004                           |   | 2005  |  | 2004
|INTEREST INCOME                                     |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Interest & Fees on Loans                            |  | $                               | 2,555 |                                | $ | 2,449 |  | $    | 7,433 |  | $ | 7,270
|Interest on Taxable Securities                      |  |                                 | 518   |                                |   | 408   |  |      | 1,487 |  |   | 1,235
|Interest on Tax-Exempt Securities                   |  |                                 | 219   |                                |   | 194   |  |      | 641   |  |   | 539  
|Other Interest & Dividends                          |  |                                 | 63    |                                |   | 31    |  |      | 150   |  |   | 68   
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|TOTAL INTEREST INCOME                               |  |                                 | 3,355 |                                |   | 3,082 |  |      | 9,711 |  |   | 9,112
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|INTEREST EXPENSE                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Interest on Deposits                                |  |                                 | 1,292 |                                |   | 1,099 |  |      | 3,654 |  |   | 3,250
|Interest on Short Term Borrowings                   |  |                                 | 31    |                                |   | 21    |  |      | 80    |  |   | 50   
|Interest on Long Term Borrowings                    |  |                                 | 297   |                                |   | 223   |  |      | 796   |  |   | 642  
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|TOTAL INTEREST EXPENSE                              |  |                                 | 1,620 |                                |   | 1,343 |  |      | 4,530 |  |   | 3,942
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|NET INTEREST INCOME                                 |  |                                 | 1,735 |                                |   | 1,739 |  |      | 5,181 |  |   | 5,170
|Provision for Loan Losses                           |  |                                 |      |                                |   | 30    |  |      | 15    |  |   | 91   
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |  |                                 | 1,735 |                                |   | 1,709 |  |      | 5,166 |  |   | 5,079
|NON-INTEREST INCOME                                 |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Service Charges on Deposits                         |  |                                 | 164   |                                |   | 125   |  |      | 423   |  |   | 365  
|Fiduciary Activities                                |  |                                 | 75    |                                |   | 100   |  |      | 235   |  |   | 205  
|Earnings on Investment in Life Insurance            |  |                                 | 48    |                                |   | 46    |  |      | 142   |  |   | 142  
|ATM Card Fees                                       |  |                                 | 105   |                                |   | 83    |  |      | 278   |  |   | 232  
|Realized Gains on Sales of Securities               |  |                                 |      |                                |   | 2     |  |      | 129   |  |   | 49   
|Other Income                                        |  |                                 | 43    |                                |   | 42    |  |      | 117   |  |   | 116  
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|TOTAL OTHER INCOME                                  |  |                                 | 435   |                                |   | 398   |  |      | 1,324 |  |   | 1,109
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|NON-INTEREST EXPENSES                               |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Employee Compensation & Benefits                    |  |                                 | 819   |                                |   | 765   |  |      | 2,510 |  |   | 2,243
|Net Occupancy & Equipment                           |  |                                 | 246   |                                |   | 231   |  |      | 735   |  |   | 693  
|ATM Expense                                         |  |                                 | 70    |                                |   | 56    |  |      | 200   |  |   | 169  
|Professional & Regulatory Fees                      |  |                                 | 68    |                                |   | 63    |  |      | 192   |  |   | 188  
|Director & Advisory Boards Compensation             |  |                                 | 71    |                                |   | 55    |  |      | 210   |  |   | 168  
|Supplies & Postage                                  |  |                                 | 57    |                                |   | 57    |  |      | 168   |  |   | 176  
|Other Non-Interest Expenses                         |  |                                 | 247   |                                |   | 208   |  |      | 706   |  |   | 667  
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|TOTAL NON-INTEREST EXPENSES                         |  |                                 | 1,578 |                                |   | 1,435 |  |      | 4,721 |  |   | 4,304
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Income Before Income Taxes                          |  |                                 | 592   |                                |   | 672   |  |      | 1,769 |  |   | 1,884
|Applicable Income Taxes                             |  |                                 | 117   |                                |   | 154   |  |      | 353   |  |   | 426  
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|NET INCOME                                          |  | $                               | 475   |                                | $ | 518   |  | $    | 1,416 |  | $ | 1,458
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Basic Earnings Per Share                            |  | $                               | 0.34  |                                | $ | 0.37  |  | $    | 1.01  |  | $ | 1.04 
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      
|Dividends Per Share                                 |  | $                               | 0.10  |                                | $ | 0.09  |  | $    | 0.29  |  | $ | 0.26 
|                                                    |  |                                 |       |                                |   |       |  |      |       |  |   |      



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, 2004

(Unaudited)

(Dollars In Thousands,
Except Per Share Data)



|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   |        |  
|-------------------------------------------------------------------------------------- |  | ----------- | ----- | --------------------------- | - | ---------------- |  | - | ------------------------------------------ | - |  | ----- | --- | - |  | - | ------ | -
|                                                                                       |  | CommonStock |       | CapitalIn ExcessofPar Value |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |    
|Balance December 31, 2003                                                              |  | $           | 3,500 |                             | $ | 245              |  | $ | 11,834                                     |   |  | $     | 348 |   |  | $ | 15,927 |  
|Comprehensive income:                                                                  |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   |        |  
|Net Income                                                                             |  |             |       |                             |   |                  |  |   | 1,458                                      |   |  |       |     |   |  |   | 1,458  |  
|Net change in unrealized gains (losses) on securities available for sale, net of taxes |  |             |       |                             |   |                  |  |   |                                            |   |  |       | (46 | ) |  |   | (46    | )
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   |        |  
|Total comprehensive income                                                             |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   | 1,412  |  
|Cash dividends, $.26 per share                                                         |  |             |       |                             |   |                  |  |   | (364                                       | ) |  |       |     |   |  |   | (364   | )
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   |        |  
|Balance September 30, 2004                                                             |  | $           | 3,500 |                             | $ | 245              |  | $ | 12,928                                     |   |  | $     | 302 |   |  | $ | 16,975 |  
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |     |   |  |   |        |  



FIRST COMMUNITY
FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

For the Nine Months Ended September 30, 2005

(Unaudited)

(Dollars In Thousands, Except Per Share Data)



|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|-------------------------------------------------------------------------------------- |  | ----------- | ----- | --------------------------- | - | ---------------- |  | - | ------------------------------------------ | - |  | ----- | ---- | - |  | - | ------ | -
|                                                                                       |  | CommonStock |       | CapitalIn ExcessofPar Value |   | RetainedEarnings |  |   | AccumulatedOtherComprehensiveIncome (Loss) |   |  | Total |     
|Balance December 31, 2004                                                              |  | $           | 7,000 |                             | $ | 245              |  | $ | 9,967                                      |   |  | $     | 196  |   |  | $ | 17,408 |  
|Comprehensive income:                                                                  |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Net Income                                                                             |  |             |       |                             |   |                  |  |   | 1,416                                      |   |  |       |      |   |  |   | 1,416  |  
|Net change in unrealized gains (losses) on securities available for sale, net of taxes |  |             |       |                             |   |                  |  |   |                                            |   |  |       | (260 | ) |  |   | (260   | )
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Total comprehensive income                                                             |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   | 1,156  |  
|Cash dividends, $.29 per share                                                         |  |             |       |                             |   |                  |  |   | (406                                       | ) |  |       |      |   |  |   | (406   | )
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  
|Balance September 30, 2005                                                             |  | $           | 7,000 |                             | $ | 245              |  | $ | 10,977                                     |   |  | $     | (64  | ) |  | $ | 18,158 |  
|                                                                                       |  |             |       |                             |   |                  |  |   |                                            |   |  |       |      |   |  |   |        |  



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, |        
|                                                                                  |  | 2005                           |         |   | 2004 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Net income                                                                        |  | $                              | 1,416   |   |      | $ | 1,458   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                |         |   |      |   |         |  
|Provision for loan losses                                                         |  |                                | 15      |   |      |   | 91      |  
|Depreciation and amortization                                                     |  |                                | 441     |   |      |   | 401     |  
|Net amortization of securities premium                                            |  |                                | 354     |   |      |   | 365     |  
|Net realized gains on sales of securities                                         |  |                                | (129    | ) |      |   | (49     | )
|Earnings on life insurance                                                        |  |                                | (142    | ) |      |   | (142    | )
|Increase in other assets                                                          |  |                                | (737    | ) |      |   | (227    | )
|Increase (decrease) in other liabilities                                          |  |                                | 131     |   |      |   | (125    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by operating activities                                         |  |                                | 1,349   |   |      |   | 1,772   |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Securities held to maturity:                                                      |  |                                |         |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                                | 1,850   |   |      |   | 1,372   |  
|Purchases                                                                         |  |                                | (4,141  | ) |      |   | (6,319  | )
|Proceeds from sales                                                               |  |                                |        |   |      |   | 388     |  
|Securities available for sale:                                                    |  |                                |         |   |      |   |         |  
|Maturities, calls and principal repayments                                        |  |                                | 11,638  |   |      |   | 11,494  |  
|Purchases                                                                         |  |                                | (14,695 | ) |      |   | (23,480 | )
|Proceeds from sales                                                               |  |                                | 145     |   |      |   | 7,117   |  
|Net increase in loans receivable                                                  |  |                                | (8,765  | ) |      |   | (8,198  | )
|Net increase in restricted investment in bank stocks                              |  |                                | (52     | ) |      |   | (789    | )
|Purchases of premises and equipment                                               |  |                                | (616    | ) |      |   | (969    | )
|Net purchases of interest bearing time deposits                                   |  |                                | (990    | ) |      |   | (497    | )
|Proceeds from sale of foreclosed real estate                                      |  |                                | 59      |   |      |   | 727     |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash used in investing activities                                             |  |                                | (15,567 | ) |      |   | (19,154 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                              |  |                                |         |   |      |   |         |  
|Net increase (decrease) in non-interest bearing demand and savings deposits       |  |                                | (1,027  | ) |      |   | 3,584   |  
|Net increase in time deposits                                                     |  |                                | 10,952  |   |      |   | 9,594   |  
|Net increase (decrease) in short-term borrowings                                  |  |                                | 850     |   |      |   | (354    | )
|Proceeds from long-term borrowings                                                |  |                                | 5,000   |   |      |   | 8,000   |  
|Dividends paid                                                                    |  |                                | (406    | ) |      |   | (364    | )
|                                                                                  |  |                                |         |   |      |   |         |  
|Net cash provided by financing activities                                         |  |                                | 15,369  |   |      |   | 20,460  |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Net increase in cash and cash equivalents                                         |  |                                | 1,151   |   |      |   | 3,078   |  
|Cash and cash equivalents:                                                        |  |                                |         |   |      |   |         |  
|Beginning of year                                                                 |  |                                | 8,106   |   |      |   | 5,342   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|End of period                                                                     |  | $                              | 9,257   |   |      | $ | 8,420   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES:                                                         |  |                                |         |   |      |   |         |  
|Cash payments for interest                                                        |  | $                              | 4,518   |   |      | $ | 3,880   |  
|                                                                                  |  |                                |         |   |      |   |         |  
|Cash payments for income taxes                                                    |  | $                              | 384     |   |      | $ | 537     |  
|                                                                                  |  |                                |         |   |      |   |         |  
|NON CASH INVESTING:                                                               |  |                                |         |   |      |   |         |  
|Transfer of loans to foreclosed real estate                                       |  | $                              | 132     |   |      | $ | 1,096   |  
|                                                                                  |  |                                |         |   |      |   |         |  



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, 2005



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, 2005, are not necessarily indicative of the results that may be expected for
the year ending December 31, 2005.



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, 2004, included in the Corporations Form 10-K filed with the Securities and Exchange
Commission on March 11, 2005.



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



---

Note C  Comprehensive Income (Loss)



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, |  
|                                                            |  | 2005                            |      |   | 2004                           |   |      | 2005 |  |   | 2004 |  
|                                                            |  | (Dollars in Thousands)          |     
|Unrealized holding gains (losses) arising during the period |  | $                               | (158 | ) |                                | $ | 540  |      |  | $ | (271 | ) |  | $ | (16 | )
|Reclassification of gains realized in net income            |  |                                 |     |   |                                |   | (2   | )    |  |   | (129 | ) |  |   | (43 | )
|                                                            |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  
|                                                            |  |                                 | (158 | ) |                                |   | 538  |      |  |   | (400 | ) |  |   | (59 | )
|Deferred income tax effect                                  |  |                                 | 52   |   |                                |   | (184 | )    |  |   | 140  |   |  |   | 13  |  
|                                                            |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  
|Change in accumulated other comprehensive income            |  | $                               | (106 | ) |                                | $ | 354  |      |  | $ | (260 | ) |  | $ | (46 | )
|                                                            |  |                                 |      |   |                                |   |      |      |  |   |      |   |  |   |     |  



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 during the period as adjusted for the 2-for-1 stock split declared in 2004. The weighted average number of common shares outstanding was 1,400,000 in 2005 and
2004.



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 $676,000 of standby letters of credit as of September 30, 2005. 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, 2005 for guarantees under standby letters of credit issued is not material.



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Note F  New Accounting Standards



In January 2003, the FASBs Emerging Issues Task Force (EITF) issued EITF Issue No. 03-1, The Meaning of
Other-Than-Temporary Impairment and Its Application to Certain Investors (EITF 03-1), and in March 2004, the EITF issued an update. EITF 03-1 addresses the meaning of other-than-temporary impairment and its application to certain
debt and equity securities. EITF 03-1 aids in the determination of impairment of an investment and gives guidance as to the measurement of impairment loss and the recognition and disclosures of other-than-temporary investments. EITF 03-1 also
provides a model to determine other-than-temporary impairment using evidence-based judgment about the recovery of the fair value up to the cost of the investment by considering the severity and duration of the impairment in relation to the
forecasted recovery of the fair value. In July 2005, FASB adopted the recommendation of its staff to nullify key parts of EITF 03-1. The staffs recommendations were to nullify the guidance on the determination of whether an investment is
impaired as set forth in paragraphs 10-18 of Issue 03-1 and not to provide additional guidance on the meaning of other-than-temporary impairment. Instead, the staff recommends entities recognize other-than-temporary impairments by applying existing
accounting literature such as paragraph 16 of SFAS 115.



|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



8



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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 (iv) 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, 2004). The Corporation believes that of its
significant accounting policies, the allowance for loan losses involves a higher degree of judgment and complexity.



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 $16,656,000 or 6.7% during the first nine months of 2005. Net loans increased $8,618,000 or 5.8%
and securities increased by $4,578,000 or 6.1% from December 31, 2004 to September 30, 2005. The loan growth was principally in the Banks residential loan portfolio.



Total deposits increased by $9,925,000 or 4.9% from December 31, 2004 and long-term borrowings increased by $5,000,000 or 31.3% during
the same time period. The Corporations expansion and business



9



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development were primarily responsible for the deposit growth during the first nine months of 2005. The bulk of the deposit growth was in time certificates
of deposit.



Results of Operations



Net income for the nine months ending September 30, 2005 was $1,416,000 or $1.01 per
share compared to $1,458,000 or $1.04 per share for the same period in 2004. Annualized return on average equity was 10.69% for the first nine months of 2005 and 11.93% for the same period in 2004. Annualized return on average assets was 0.75% for
the first nine months of 2005 and 0.82% for the same period in 2004.



Net
income for the quarter ending September 30, 2005 was $475,000 or $0.34 per share compared to $518,000 or $0.37 per share for the same period in 2004. Annualized return on average equity was 10.43% for the third quarter of 2005 and 12.57% for
the same period in 2004. Annualized return on average assets for the third quarter was 0.72% compared to 0.86% during the third quarter of 2004.



The decrease in net income for both the three month and nine month periods is due to net interest income remaining relatively flat between the periods while the
Corporation experienced growth in other expenses.



Net interest income for the
first nine months of 2005 increased by $11,000 or 0.2% compared to the same period in 2004. This increase is primarily a result of increased volume of interest earning assets. For the first nine months of 2005, the net interest margin on a fully tax
equivalent (FTE) basis was 3.18% compared to 3.37% for the same period in 2004. 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 0.19% from 2.42% during the first nine months of 2004 to 2.61% during the same time period in
2005.



Net interest income for the quarter ended September 30, 2005
decreased by $4,000 compared to the same period in 2004. Net interest margin for the quarter ended September 30, 2005 was 3.08% compared to 3.34% during the same period in 2004. The primary reason for the decrease in the net interest margin was
the increase in the cost of funds of 0.26% from 2.42% during the third quarter of 2004 to 2.68% during the same time period in 2005. Given the current interest rate scenario, expectations are for the net interest margin to remain relatively stable
for the next few quarters.



10



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The Corporation recorded a $15,000 provision for loan losses for the first nine months of 2005 compared to $91,000 for
the first nine months of 2004. As a percentage of loans, the allowance for loan losses was 0.81% at September 30, 2005, compared to 0.86% at year-end 2004 and 0.83% at September 30, 2004. 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 2005 increased by $215,000 or 19.4% compared to the same period in 2004. Gains on sales of securities increased by $80,000, income from fiduciary activities increased by
$30,000 as a result of an increase in assets under management, increased activity led to ATM card fees increasing by $46,000, and service charges on deposit accounts increased by $58,000 during the first nine months of 2005 compared to the same
period in 2004.



Non-interest income for the quarter ending September 30,
2005 was $435,000 compared to $398,000 in 2004. This increase is primarily related to the increase in service charges on deposit accounts of $39,000, an increase in ATM card fees of $22,000, partially offset by a decrease of $25,000 in income from
fiduciary activities.



Total non-interest expense increased in the first nine
months of 2005 by $417,000 or 9.7% compared to the first nine months of 2004. Employee compensation and benefits increased by $267,000 or 11.9% compared to the same period in 2004. Several factors contributed to this increase including payroll
increases as a result of normal merit increases, additions to staff relating to the opening of our Bloomfield Borough Office, and increases in medical insurance. Additional increases in employee compensation and benefits are anticipated as the
Corporation continues to grow in size and number of locations. Also, net occupancy & equipment expense increased $42,000, director and advisory board compensation increased $42,000, and ATM expense increased $31,000. 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



11



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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, 2005, total non-interest expense increased
$143,000 compared to the third quarter of 2004. Employee compensation and benefits increased by $54,000, net occupancy & equipment expense increased by $15,000, ATM expense increased by $14,000, and other non-interest expense increased by
$39,000 or 18.8% primarily due to the opening of the Bloomfield Borough Office in October of 2004. These were the principal reasons for the increase in total non-interest expense.



Income tax expense was $353,000 for the nine month time period ending September 30, 2005 compared to $426,000 for the same time period
in 2004. Income tax expense as a percentage of income before income taxes was 20.0% for the period compared to 22.6% for 2004. 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 2005, these sources of tax-exempt income represented a larger portion of the Corporations pre-tax income thereby reducing 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 $213,055,000 in deposits at September 30,
2005, which increased $9,925,000 over total deposits of $203,130,000 at December 31, 2004. Other sources of liquidity at September 30, 2005 are available from the following: (1) investments in interest-bearing deposits with banks,
which totaled $1,242,000, (2) securities and time certificates of deposit maturing in one year or less, which totaled $4,392,000, 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 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 $18,158,000 as of September 30, 2005, representing a $750,000 increase from December 31, 2004. The growth in capital was a result of net earnings retention of $1,010,000



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partially offset by a decrease in accumulated other comprehensive income of $260,000. 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 September 30, 2005, the Bank had a leverage ratio of 8.56%, a Tier I capital to risk-based assets ratio of 15.70% and a total capital to risk-based assets ratio
of 16.59%. 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, 2004. Please refer to the Annual Report on Form 10-K of First
Community Financial Corporation, filed with the Securities and Exchange Commission on March 11, 2005.



|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 Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of
September 30, 2005. Based upon that evaluation, our Chief Executive Officer 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, 2005, that materially affected, or is reasonably likely
to materially affect, the Corporations internal control over financial reporting.



PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



Not Applicable



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



Not Applicable



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------



Not Applicable



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|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 Chief 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 Chief 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.                                                                                                                                                                                                                                                                                                                                                   



14



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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 10, 2005 |  |                                                    |  | BY: |  | /s/    JAMES R.
MCLAUGHLIN               
|      |  |                   |  |                                                    |  |     |  | James R. McLaughlin                      
|      |  |                   |  |                                                    |  |     |  | President andChief Executive Officer     
|      |  |                   |  |                                                   
|Date: |  | November 10, 2005 |  |                                                    |  | BY: |  | /s/    RICHARD R.
LEITZEL                
|      |  |                   |  |                                                    |  |     |  | Richard R. Leitzel                       
|      |  |                   |  |                                                    |  |     |  | Vice President andChief Financial Officer



15