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

                                   ----------

                                   FORM 10-QSB

(Mark One)

|X|   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _______________

                         Commission File Number: 0-19609
                                                 -------

                             FirstFed Bancorp, Inc.
        -----------------------------------------------------------------
        (Exact name of Small Business Issuer as specified in its charter)

           Delaware                                             63-1048648
-------------------------------                              ----------------
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                              Identification No.)

1630 Fourth Avenue North
Bessemer, Alabama                                                  35020
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number, including area code: (205) 428-8472
                                                --------------

Check whether the issuer (1) 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 |_|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.

           Class                                 Outstanding at November 9, 2004
----------------------------                     -------------------------------
Common Stock, $.01 par value                            2,394,561 shares

Transitional Small Business Disclosure Format
(Check one):

      YES |_| NO |X|

<PAGE>

                             FIRSTFED BANCORP, INC.
                             ----------------------

<TABLE>
<CAPTION>
                                                                                    Page
                                                                                    ----
<S>                                                                                  <C>
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003.......................................2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME  FOR THE THREE
 AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003.....................................3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR
  THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003 ...................................4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
  NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003........................................5

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ........................6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
  OF OPERATION....................................................................... 11

ITEM 3.  CONTROLS AND PROCEDURES......................................................16

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS............................................................16

ITEM 2.  CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY
  SECURITIES..........................................................................16

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES..............................................16

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........................16

ITEM 5.  OTHER INFORMATION............................................................17

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.............................................17

SIGNATURES............................................................................18

THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE NOT BEEN
    AUDITED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN
    THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS NECESSARY FOR A FAIR
    PRESENTATION OF FINANCIAL CONDITION AND THE RESULTS OF OPERATIONS FOR
    THE PERIODS PRESENTED.
</TABLE>


                                       i.
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             FIRSTFED BANCORP, INC.
                             ----------------------
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
       ------------------------------------------------------------------
                 As of September 30, 2004 and December 31, 2003
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                   September 30,   December 31,
ASSETS                                                                                 2004            2003
                                                                                     ---------       ---------
<S>                                                                                  <C>             <C>
Cash and Cash Equivalents:
         Cash on hand and in banks                                                   $   2,780       $   2,952
         Interest-bearing deposits in other banks                                        5,292           4,440
         Federal funds sold                                                                301             229
                                                                                     ---------       ---------
                                                                                         8,373           7,621
Securities available-for-sale, at fair value                                            24,935          30,740
Loans held for sale                                                                      1,261           1,033
Loans receivable, net                                                                  157,584         136,099
Land, buildings and equipment, net                                                       5,656           4,908
Bank owned life insurance                                                                6,278           6,009
Real estate owned                                                                        1,300           4,216
Accrued interest receivable                                                              1,070           1,095
Goodwill and other intangibles                                                           1,179           1,216
Other assets                                                                             4,638           1,274
                                                                                     ---------       ---------
                                                                                     $ 212,274       $ 194,211
                                                                                     =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
         Deposits                                                                    $ 159,824       $ 151,109
         Borrowings                                                                     27,078          23,780
         Subordinated debentures                                                         6,000              --
         Accrued interest payable                                                          227             217
         Dividends payable                                                                 167             166
         Other liabilities                                                                 647             387
                                                                                     ---------       ---------
                                                                                       193,943         175,659
                                                                                     ---------       ---------
Stockholders' Equity:
         Preferred stock, $.01 par value, 1,000,000 shares
                  authorized, none outstanding                                              --              --
         Common stock, $.01 par value, 10,000,000 shares
                  authorized, 3,220,787 shares issued and 2,390,839 shares
                  outstanding at September 30, 2004 and 3,205,485 shares issued
                  and 2,329,192 shares outstanding at
                  December 31, 2003                                                         32              32
         Paid-in capital                                                                 8,528           8,426
         Retained earnings                                                              15,824          16,047
         Deferred compensation obligation                                                2,074           1,969
         Deferred compensation treasury stock (233,748
                  shares at September 30, 2004 and 221,283 shares
                  at December 31, 2003)                                                 (2,074)         (1,969)
         Treasury stock, at cost (829,948 shares at September 30, 2004
                  and December 31, 2003)                                                (6,088)         (6,088)
         Unearned compensation                                                            (330)           (416)
         Accumulated other comprehensive income                                            365             551
                                                                                     ---------       ---------
                                                                                        18,331          18,552
                                                                                     ---------       ---------
                                                                                     $ 212,274       $ 194,211
                                                                                     =========       =========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                        2
<PAGE>

                             FIRSTFED BANCORP, INC.
                             ----------------------
              UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
              -----------------------------------------------------
         For the Three and Nine Months Ended September 30, 2004 and 2003
            (Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Three Months Ended             Nine Months Ended
                                                    September 30,                  September 30,
                                             --------------------------      --------------------------
                                                2004            2003            2004            2003
                                             ----------      ----------      ----------      ----------
<S>                                          <C>             <C>             <C>             <C>
INTEREST INCOME:
         Interest and fees on loans          $    2,241      $    1,868      $    6,365      $    5,542
         Interest and dividends on
           securities                               283             316             874           1,057
         Other interest income                        3              31              10             142
                                             ----------      ----------      ----------      ----------
           Total interest income                  2,527           2,215           7,249           6,741
                                             ----------      ----------      ----------      ----------

INTEREST EXPENSE:
         Interest on deposits                       753             764           2,183           2,366
         Interest on other borrowings               330             225             877             671
                                             ----------      ----------      ----------      ----------
           Total interest expense                 1,083             989           3,060           3,037
                                             ----------      ----------      ----------      ----------

  Net interest income                             1,444           1,226           4,189           3,704
         Provision for loan losses                  119             170             548             596
                                             ----------      ----------      ----------      ----------
  Net interest income after
    provision for loan losses                     1,325           1,056           3,641           3,108
                                             ----------      ----------      ----------      ----------

NONINTEREST INCOME:
         Fees and other noninterest
           income                                   624             438           1,863           1,221
         Gain on sale of investments                 --              --               7             299
         Bank owned life insurance                   90              91             269             277
                                             ----------      ----------      ----------      ----------
           Total noninterest income                 714             529           2,139           1,797
                                             ----------      ----------      ----------      ----------

NONINTEREST EXPENSE:
         Salaries and employee benefits             923             759           2,539           2,324
         Office building and equipment
           expenses                                 215             188             676             589
         Other operating expenses                   610             484           2,025           1,383
                                             ----------      ----------      ----------      ----------
           Total noninterest expense              1,748           1,431           5,240           4,296
                                             ----------      ----------      ----------      ----------

  Income before income taxes                        291             154             540             609
         Provision for income taxes                  72              19              95             112
                                             ----------      ----------      ----------      ----------
  NET INCOME                                 $      219      $      135      $      445      $      497
                                             ==========      ==========      ==========      ==========
AVERAGE NUMBER OF SHARES
         OUTSTANDING - BASIC                  2,338,221       2,309,890       2,350,332       2,300,319
                                             ==========      ==========      ==========      ==========
BASIC EARNINGS PER SHARE                     $      .09      $      .06      $      .19      $      .21
                                             ==========      ==========      ==========      ==========
AVERAGE NUMBER OF SHARES
         OUTSTANDING - DILUTED                2,369,329       2,342,486       2,388,010       2,326,016
                                             ==========      ==========      ==========      ==========
DILUTED EARNINGS PER SHARE                   $      .09      $      .06      $      .19      $      .21
                                             ==========      ==========      ==========      ==========
DIVIDENDS DECLARED PER SHARE                 $      .07      $      .07      $      .28      $      .28
                                             ==========      ==========      ==========      ==========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                        3
<PAGE>

                             FIRSTFED BANCORP, INC.
                             ----------------------
     UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND
     -----------------------------------------------------------------------
                              COMPREHENSIVE INCOME
                              --------------------
              For the Nine Months Ended September 30, 2004 and 2003
            (Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                                                 Accumu-
                                                                                 Deferred                         lated
                                                                      Deferred    Compen-                          Other    Compre-
                                                                       Compen-    sation              Unearned    Compre-   hensive
                                       Common   Paid-In    Retained    sation    Treasury   Treasury   Compen-    hensive    Income
                                        Stock   Capital    Earnings  Obligation    Stock      Stock    sation     Income    (Note 1)
                                       ------   -------    --------  ----------  --------   --------  --------   --------   --------
<S>                                     <C>     <C>        <C>         <C>        <C>        <C>        <C>       <C>        <C>
BALANCE, December 31, 2002              $  32   $ 8,159    $ 16,467    $1,876     $(1,876)   $(6,088)   $(518)    $ 756

     Net income                            --        --         497        --          --         --       --        --      $ 497
     Change in unrealized gain
         (loss) on securities
         available for sale, net
         of tax of $141                    --        --          --        --          --         --       --      (163)      (163)
                                                                                                                             -----
     Comprehensive income                  --        --          --        --          --         --       --        --      $ 334
                                                                                                                             =====
     Amortization of unearned
         compensation                      --        --          --        --          --         --      104        --
     Dividends declared ($.28
         per share)                        --        --        (658)       --          --         --       --        --
     Exercise of stock options             --        73          --        --          --         --       --        --
     Purchase of Deferred
         Compensation Treasury
         Shares                            --        --          --        27         (27)        --       --        --
     Stock issued under Dividend
         Reinvestment Plan                 --        86          --        --          --         --       --        --
     Change in stock value of
         Employee Stock
         Ownership Plan                    --       (22)         --        --          --         --       --        --
                                        -----   -------    --------    ------     -------    -------    -----     -----

BALANCE, September 30, 2003             $  32   $ 8,296    $ 16,306    $1,903     $(1,903)   $(6,088)   $(414)    $ 593
                                        =====   =======    ========    ======     =======    =======    =====     =====

BALANCE, December 31, 2003              $  32   $ 8,426    $ 16,047    $1,969     $(1,969)   $(6,088)   $(416)    $ 551

     Net income                            --        --         445        --          --         --       --        --      $ 445
     Change in unrealized gain
         (loss) on securities
         available for sale, net
         of tax of $138                    --        --          --        --          --         --       --      (186)      (186)
                                                                                                                             -----
     Comprehensive income                  --        --          --        --          --         --       --        --      $ 259
                                                                                                                             =====
     Amortization of unearned
         compensation                      --        --          --        --          --         --       86        --
     Dividends declared ($.28
         per share)                        --        --        (668)       --          --         --       --        --
     Exercise of stock options             --        15          --        --          --         --       --        --
     Purchase of Deferred Compensation
         Treasury Shares                   --        --          --       105        (105)        --       --        --
     Stock issued under Dividend
         Reinvestment Plan                 --       101          --        --          --         --       --        --
     Change in stock value of
         Employee Stock
         Ownership Plan                    --       (14)         --        --          --         --       --        --
                                        -----   -------    --------    ------     -------    -------    -----     -----

BALANCE, September 30, 2004             $  32   $ 8,528    $ 15,824    $2,074     $(2,074)   $(6,088)   $(330)    $ 365
                                        =====   =======    ========    ======     =======    =======    =====     =====
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                        4
<PAGE>

                             FIRSTFED BANCORP, INC.
                             ----------------------
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
            ---------------------------------------------------------
              For the Nine Months Ended September 30, 2004 and 2003
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                       -----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:                                                    2004           2003
                                                                                       --------       --------
<S>                                                                                    <C>            <C>
  Net income                                                                           $    445       $    497
  Adjustments to reconcile net income
     to net cash provided by (used in) operating activities:
       Depreciation, amortization and accretion                                             432            372
       Loan fees (cost) deferred, net                                                       169            188
       Provision for loan losses                                                            548            596
       Gain on sale of investments                                                           (7)          (299)
       Gain on sale of fixed assets                                                          (9)            --
       Loss on sale of real estate, net                                                     133             70
       Origination of loans held for sale                                                (8,883)       (17,566)
       Proceeds from loans held for sale                                                  8,655         18,376
       Provision for deferred compensation                                                  105             27
       Increase in surrender value of Bank Owned Life Insurance                            (269)          (277)
  Decrease (increase) in assets:
       Accrued interest receivable                                                           25            225
       Other assets                                                                         131           (143)
  Increase (decrease) in liabilities:
       Accrued interest payable                                                              10            (12)
       Other liabilities                                                                    204            431
                                                                                       --------       --------
         Net cash provided by (used in) operating activities                              1,689          2,485
                                                                                       --------       --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of branch, net of cash acquired                                                   --          2,458
  Proceeds from maturities, calls and repayments of securities available-for-sale         8,495          7,153
  Proceeds from sale of securities available-for-sale                                     3,000          6,048
  Purchase of securities available-for-sale                                              (6,238)       (10,325)
  Proceeds from sales of real estate and repossessed assets                               1,441          1,478
  Purchase of loans                                                                      (3,500)            --
  Net loan originations                                                                 (19,715)       (21,060)
  Capital expenditures                                                                   (1,776)          (705)
                                                                                       --------       --------
         Net cash provided by (used in) investing activities                            (18,293)       (14,953)
                                                                                       --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in deposits, net                                                    8,715          7,445
  Proceeds from borrowings                                                               83,485            600
  Repayment of borrowings                                                               (80,187)          (750)
  Proceeds from issuance of subordinated debentures                                       6,000             --
  Proceeds from exercise of stock options                                                    15             73
  Dividends paid                                                                           (668)          (658)
  Proceeds from dividend reinvestment                                                       101             86
  Purchase of treasury stock for Deferred Compensation Plan                                (105)           (27)
                                                                                       --------       --------
         Net cash provided by (used in) financing activities                             17,356          6,769
                                                                                       --------       --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                        752         (5,699)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                          7,621         25,432
                                                                                       --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                             $  8,373       $ 19,733
                                                                                       ========       ========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for -
       Income taxes                                                                    $    145       $    238
       Interest                                                                           3,060          3,046
  Non-cash transactions -
       Transfer of loans receivable to real estate owned                                  1,211            700
       Transfer of leased real estate owned to other assets                               3,246             --
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.


                                        5
<PAGE>

                             FIRSTFED BANCORP, INC.
                             ----------------------
               NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
               ---------------------------------------------------
                                   STATEMENTS
                                   ----------

1. BASIS OF PRESENTATION:
   ----------------------

FirstFed  Bancorp,  Inc.  (the  "Company")  is  the  holding  company  and  sole
shareholder of First State Corp. ("FSC"),  which in turn is the sole shareholder
of First Financial Bank ("First Financial" or the "Bank").

The accompanying  unaudited condensed  consolidated  financial  statements as of
September  30, 2004,  and  December 31, 2003,  and for the three and nine months
ended September 30, 2004 and 2003, include the accounts of the Company,  FSC and
the Bank.  All  significant  intercompany  transactions  and accounts  have been
eliminated in consolidation.

In the  opinion of  management,  all  adjustments  (none of which are other than
normal recurring  accruals)  necessary for a fair presentation of the results of
such interim periods have been included.  The results of operations for the nine
months ended September 30, 2004, are not  necessarily  indicative of the results
of operations which may be expected for the entire year.

These unaudited  condensed  financial  statements  should be read in conjunction
with the Consolidated Financial Statements and the notes thereto incorporated in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 2003.
The accounting  policies followed by the Company are set forth in the Summary of
Significant Accounting Policies in the Company's December 31, 2003, Consolidated
Financial Statements.

2. SIGNIFICANT ACCOUNTING POLICIES:
   --------------------------------

Loans Held for Sale

Loans held for sale are recorded at the lower of  amortized  cost or fair value,
as such loans are not intended to be held to maturity. As of September 30, 2004,
and December 31, 2003, loans held for sale consisted of mortgage loans that have
been committed for sale to third-party investors.

Loans Receivable

Loans receivable are stated at unpaid principal  balances,  net of the allowance
for loan  losses and  deferred  loan  origination  fees and costs.  Interest  is
credited to income based upon the recorded investment.

The accrual of interest on loans is  discontinued  and an allowance  established
when a loan becomes 90 days past due and/or,  in the opinion of management,  the
ultimate  collection is in doubt. Upon such  discontinuance,  all unpaid accrued
interest is reversed  against  current income unless the collateral for the loan
is sufficient  to cover the accrued  interest.  Interest  received on nonaccrual
loans  generally  is either  applied  against  principal or reported as interest
income,   according  to  management's  judgment  as  to  the  collectibility  of
principal.  Generally,  loans are restored to accrual status when the obligation
is brought  current and the ultimate  collectibility  of the total  contractural
principal and interest is no longer in doubt.

Allowance for Loan Losses

The allowance for loan losses is maintained at levels which management considers
adequate to absorb  losses  currently in the loan  portfolio  at each  reporting
date.  Management's estimation of this amount includes a review of all loans for
which full  collectibility is not reasonably assured and considers,  among other
factors,  prior years' loss  experience,  economic  conditions,  distribution of
portfolio loans by risk class, the estimated value of underlying collateral, and
the balance of any impaired  loans  (generally  considered  to be  nonperforming
loans,  excluding  residential  mortgages and other homogeneous  loans).  Though
management  believes  the  allowance  for loan losses to be  adequate,  ultimate
losses may vary from estimations; however, the allowance is reviewed


                                        6
<PAGE>

periodically  and as adjustments  become necessary they are reported in earnings
in the periods in which they become  known.  Specific  allowances  for  impaired
loans  are  based on  comparisons  of the  carrying  values  of the loans to the
present  value  of the  loans'  estimated  cash  flows at each  loan's  original
effective  interest  rate,  the fair  value  of the  collateral,  or the  loans'
observable market prices.

3. EARNINGS AND DIVIDENDS PER SHARE:
   ---------------------------------

Earnings  per share  ("EPS") for the three and nine months ended  September  30,
2004 and 2003, were as follows:

<TABLE>
<CAPTION>
                                        Three Months                                Three Months
                                  Ended September 30, 2004                    Ended September 30, 2003
                            --------------------------------------      --------------------------------------
                                           Dilutive                                    Dilutive
                                          Effect of                                   Effect of
                                            Options                                     Options
                               Basic        Issued       Diluted           Basic        Issued        Diluted
                            ----------    ---------     ----------      ----------    ---------     ----------
<S>                         <C>                         <C>             <C>                         <C>
Net income                  $  219,000          --      $  219,000      $  445,000          --      $  445,000

Shares available to
   common shareholders       2,338,221      31,108       2,369,329       2,350,332      37,678       2,388,010
                            ----------      ------      ----------      ----------      ------      ----------

Earnings per share          $     0.09          --      $     0.09      $     0.19          --      $     0.19
                            ==========      ======      ==========      ==========      ======      ==========

<CAPTION>
                                         Nine Months                                 Nine Months
                                  Ended September 30, 2004                    Ended September 30, 2003
                            --------------------------------------      --------------------------------------
                                           Dilutive                                    Dilutive
                                          Effect of                                   Effect of
                                            Options                                     Options
                               Basic        Issued       Diluted           Basic        Issued        Diluted
                            ----------    ---------     ----------      ----------    ---------     ----------
<S>                         <C>                         <C>             <C>                         <C>
Net income                  $  135,000          --      $  135,000      $  497,000          --      $  497,000

Shares available to
   common shareholders       2,309,890      32,595       2,342,486       2,300,319      25,697       2,326,016
                            ----------      ------      ----------      ----------      ------      ----------

Earnings per share          $     0.06          --      $     0.06      $     0.21          --      $     0.21
                            ==========      ======      ==========      ==========      ======      ==========
</TABLE>

Options  to  purchase  196,233  and 51,859  shares of common  stock at prices in
excess of the average  market price were  outstanding  during the quarter  ended
September 30, 2004 and 2003,  respectively,  but not included in the computation
of diluted earnings per share.

Options to purchase  9,099 and 43,931 shares of common stock at prices in excess
of the  average  market  price were  outstanding  during the nine  months  ended
September 30, 2004 and 2003,  respectively,  but not included in the computation
of diluted earnings per share.

There were 35,145 and 43,931  shares of common stock held by the Employee  Stock
Ownership  Plan and  unallocated  at September 30, 2004 and 2003,  respectively.
These shares are outstanding but not included in the computation of earnings per
share.

Dividends declared for the quarter ended September 30, 2004, consisted of a $.07
per share quarterly dividend.

4. SEGMENT DISCLOSURE:
   -------------------

The holding company is considered a separate reportable segment from the banking
operations  since it does not  offer  products  or  services  or  interact  with
customers,  but  does  meet  the  quantitative  threshold  as  outlined  in  the
accounting  standards.  The Company's  segment  disclosure is as follows for the
three and nine months ended September 30, 2004 and 2003.


                                        7
<PAGE>

<TABLE>
<CAPTION>
                                                    Three Months Ended September 30, 2004
                                      -------------------------------------------------------------------
                                         Banking          Holding                                Total
                                       Operations         Company          Eliminations         Company
                                      ------------      ------------       ------------      ------------
                                                                (In thousands)
<S>                                   <C>               <C>                <C>               <C>
Net interest income (expense)         $      1,502      $        (58)      $         --      $      1,444
Provision for loan losses                      119                --                 --               119
Noninterest income                             686                28                 --               714
Noninterest expense                          1,674                74                 --             1,748
                                      ------------      ------------       ------------      ------------
     Income (loss) before income
         taxes                                 395              (104)                --               291
Income tax expense (benefit)                   119               (47)                --                72
                                      ------------      ------------       ------------      ------------
     Net income (loss)                $        276      $        (57)      $         --      $        219
                                      ============      ============       ============      ============
     Total assets                     $    209,648      $     24,668       $    (22,042)     $    212,274
                                      ============      ============       ============      ============
     Capital expenditures             $         60      $         --       $         --      $         60
                                      ============      ============       ============      ============

<CAPTION>
                                                     Three Months Ended September 30, 2003
                                      -------------------------------------------------------------------
                                         Banking          Holding                                Total
                                       Operations         Company          Eliminations         Company
                                      ------------      ------------       ------------      ------------
                                                                (In thousands)
<S>                                   <C>               <C>                <C>               <C>
Net interest income                   $      1,220      $          6       $         --      $      1,226
Provision for loan losses                      170                --                 --               170
Noninterest income                             504                25                 --               529
Noninterest expense                          1,308               123                 --             1,431
                                      ------------      ------------       ------------      ------------
     Income (loss) before income
         taxes                                 246               (92)                --               154
Income tax expense (benefit)                    62               (43)                --                19
                                      ------------      ------------       ------------      ------------
     Net income (loss)                $        184      $        (49)      $         --      $        135
                                      ============      ============       ============      ============
     Total assets                     $    191,510      $     19,883       $    (17,890)     $    193,503
                                      ============      ============       ============      ============
     Capital expenditures             $        645      $         --       $         --      $        645
                                      ============      ============       ============      ============

<CAPTION>
                                                     Nine Months Ended September 30, 2004
                                      -------------------------------------------------------------------
                                         Banking          Holding                                Total
                                       Operations         Company          Eliminations         Company
                                      ------------      ------------       ------------      ------------
                                                                (In thousands)
<S>                                   <C>               <C>                <C>               <C>
Net interest income (expense)         $      4,279      $        (90)      $         --      $      4,189
Provision for loan losses                      548                --                 --               548
Noninterest income                           2,056                83                 --             2,139
Noninterest expense                          5,014               226                 --             5,240
                                      ------------      ------------       ------------      ------------
     Income (loss) before income
         taxes                                 773              (233)                --               540
Income tax expense (benefit)                   208              (113)                --                95
                                      ------------      ------------       ------------      ------------
     Net income (loss)                $        565      $       (120)      $         --      $        445
                                      ============      ============       ============      ============
     Total assets                     $    209,648      $     24,668       $    (22,042)     $    212,274
                                      ============      ============       ============      ============
     Capital expenditures             $      1,776      $         --       $         --      $      1,776
                                      ============      ============       ============      ============
</TABLE>


                                        8
<PAGE>

<TABLE>
<CAPTION>
                                                     Nine Months Ended September 30, 2003
                                      -------------------------------------------------------------------
                                         Banking          Holding                                Total
                                       Operations         Company          Eliminations         Company
                                      ------------      ------------       ------------      ------------
                                                                (In thousands)
<S>                                   <C>               <C>                <C>               <C>
Net interest income                   $      3,685      $         19       $         --      $      3,704
Provision for loan losses                      596                --                 --               596
Noninterest income                           1,721                76                 --             1,797
Noninterest expense                          3,900               396                 --             4,296
                                      ------------      ------------       ------------      ------------
     Income (loss) before income
         taxes                                 910              (301)                --               609
Income tax expense (benefit)                   249              (137)                --               112
                                      ------------      ------------       ------------      ------------
     Net income (loss)                $        661      $       (164)      $         --      $        497
                                      ============      ============       ============      ============
     Total assets                     $    191,510      $     19,883       $    (17,890)     $    193,503
                                      ============      ============       ============      ============
     Capital expenditures             $        705      $         --       $         --      $        705
                                      ============      ============       ============      ============
</TABLE>

5. STOCK-BASED COMPENSATION:
   -------------------------

In  accordance  with  provisions of Statement of Financial  Accounting  Standard
("SFAS")  123,  the  Company has elected to continue to apply APB Opinion 25 and
related Interpretations.  In December 2002, SFAS 148, Accounting for Stock-Based
Compensation - Transition and Disclosure,  was issued which provides alternative
methods of transition  for a voluntary  change to the fair value based method of
accounting for stock- based  compensation.  This Statement amends the disclosure
requirements  of SFAS 123 to require  prominent  disclosures  in both annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect of the method used on reported results.

If the Company had elected to recognize  compensation  cost for options  granted
during the three and nine months ended September 30, 2004 and 2003, based on the
fair value of the options as required by SFAS 123,  net income and  earnings per
share would have been reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                   Three Months                Nine Months
                                                       Ended                      Ended
                                                   September 30,              September 30,
                                              ----------------------      ----------------------
                                                2004          2003          2004          2003
                                              --------      --------      --------      --------
                                                  (In thousands, except per share amounts)
<S>                                           <C>           <C>           <C>           <C>
Net income - as reported                      $    219      $    135      $    445      $    497
Stock-based compensation expense                    24            60            27            60
                                              --------      --------      --------      --------
Net income - proforma                              195            75           418           437
                                              ========      ========      ========      ========

Earnings per share - as reported
     Basic                                    $    .09      $    .06      $    .19      $    .21
     Diluted                                  $    .09      $    .06      $    .19      $    .21

Earnings per share - pro forma
     Basic                                    $    .08      $    .03      $    .18      $    .19
     Diluted                                  $    .08      $    .03      $    .18      $    .19
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes option pricing model using the following assumptions:

                                                   2004            2003
                                                  ------          ------

          Expected dividend yield                  4.67%           4.40%
          Expected stock price volitility            31%             38%
          Risk-free interest rate                  3.36%           2.25%
          Expected life of options               5 Years         5 Years


                                        9
<PAGE>

6. PENSION DISCLOSURES:
   --------------------

The Financial Accounting Standards Board ("FASB") issued SFAS 132 (revised 2003)
in December of 2003. The Statement revises employers'  disclosures about pension
plans and other postretirement  benefits by requiring additional  disclosures to
those in the  original  SFAS 132  about the  assets,  obligations,  cash  flows,
investment  strategy,  and net periodic  benefit cost of defined benefit pension
plans and other defined benefit  postretirement plans. The Company does not have
any postretirement  benefits. The effect of the required interim information for
the Defined Benefit Pension Plan is reflected in the following table:

                                      Three Months Ended      Nine Months Ended
                                         September 30,          September 30,
                                      ------------------      -----------------
                                        2004       2003        2004        2003
                                        ----       ----       -----       -----
                                         (In thousands)         (In thousands)
Service cost                            $ 44       $ 39       $ 132       $ 117
Interest cost                             31         30          93          90
Expected return on plan assets           (25)       (20)        (75)        (60)
Amortization of transitional asset        (1)        (1)         (3)         (3)
Recognized actuarial loss                  6          4          18          12
                                        ----       ----       -----       -----
Net periodic benefit cost               $ 55       $ 52       $ 165       $ 156
                                        ====       ====       =====       =====

The Company previously  disclosed in its financial statements for the year ended
December 31, 2003, that it generally  contributes to the Defined Benefit Pension
Plan the maximum amount deductible based on current income tax laws. The Company
contributed $294,000 in 2004.

7. PENDING ACCOUNTING PRONOUNCEMENTS:
   ----------------------------------

In  October  2003,  the  American  Institute  of  Certified  Public  Accountants
("AICPA")  issued SOP 03-3, which addresses  accounting for differences  between
contractual  cash flows  expected to be  collected  from an  investor's  initial
investment in loans or debt securities  (loans)  acquired in a transfer if those
differences are attributable,  at least in part, to credit quality.  It includes
such  loans  acquired  in  purchase  business  combinations  and  applies to all
nongovernmental entities, including not-for-profit organizations.  This SOP does
not apply to loans originated by the entity.  This SOP limits the yield that may
be  accreted  (accretable  yield) to the excess of the  investor's  estimate  of
undiscounted  expected  principal,  interest,  and other cash flows  (cash flows
expected at acquisition to be collected) over the investor's  initial investment
in the loan.  This SOP requires that the excess of  contractual  cash flows over
cash flows expected to be collected (nonaccretable difference) not be recognized
as an  adjustment  of yield,  loss  accrual,  or valuation  allowance.  This SOP
prohibits investors from displaying accretable yield and nonacretable difference
in the  balance  sheet.  Subsequent  increases  in  cash  flows  expected  to be
collected generally would be recognized  prospectively through adjustment of the
loan's yield over its  remaining  life.  Decreases in cash flows  expected to be
collected would be recognized as impairment.  This SOP prohibits "carrying over"
or creation of  valuation  allowances  in the  initial  accounting  of all loans
acquired in a transfer that are within the scope of this SOP. The prohibition of
the valuation allowance carryover applies to the purchase of an individual loan,
a pool of loans,  a group of loans,  and loans  acquired in a purchase  business
combination.  This SOP is effective for loans acquired in fiscal years beginning
after  December  15,  2004.  There is no  impact to the  Consolidated  Financial
Statements until a business combination is completed.

In March 2004,  the  Securities  and Exchange  Commission  ("SEC")  issued Staff
Accounting  Bulletin ("SAB") 105,  Application of Accounting  Principles to Loan
Commitments,  which  summarizes the views of the staff regarding the application
of generally accepted accounting  principles to loan commitments accounted for a
derivative  instruments.  The SAB requires that the fair value  measurement of a
loan commitment that is accounted for as a derivative  includes only differences
between  the  guaranteed  interest  rate in the  loan  commitment  and a  market
interest rate,  excluding any expected future cash flows related to the customer
relationship  or loan  servicing.  This SAB is  effective  for loan  commitments
entered into after March 31, 2004. The Company adopted SAB 105 on April 1, 2004,
and the effect was not material.

In March 2004, the FASB's Emerging Issues Task Force reached a consensus on EITF
Issue  No.  03-1,  The  Meaning  of  Other-Than-Temporary   Impairment  and  Its
Application to Certain Investments. The guidance


                                       10
<PAGE>

prescribes  a  three-step  model  for  determining   whether  an  investment  is
other-than-temporarily impaired and requires disclosures about unrealized losses
on investments.  The disclosure  requirements are effective for annual reporting
periods  ending after June 15, 2004.  However,  the FASB has approved  issuing a
staff position to delay the requirements to record  impairment.  The Company has
adopted the disclosure requirements of this EITF.

8. SUBORDINATED DEBT:
   ------------------

On June 8, 2004, the Company established FirstFed Statutory Trust I ("Trust"), a
wholly-owned  statutory  business trust.  The Company is the sole sponsor of the
Trust and acquired the Trust's  common  securities  for $186,000.  The Trust was
created for the exclusive  purpose of issuing 30-year  capital trust  securities
("Trust  Preferred  Securities") in the aggregate amount of $6,000,000 and using
proceeds to purchase junior subordinated debentures ("Subordinated  Debentures")
issued  by the  Company.  The  assets  of the  Trust  consist  primarily  of the
Subordinated  Debentures.  The  Company's  $186,000  investment  in the Trust is
included in other assets in the accompanying  consolidated balance sheet and the
$6,000,000 obligation of the Company is included in subordinated debt.

The Trust Preferred  Securities bear a floating  interest rate based on a spread
over  3-month  LIBOR which is set each  quarter  and  matures on June 17,  2034.
Distributions are payable quarterly.  The Trust Preferred Securities are subject
to mandatory  redemption upon repayment of the Subordinated  Debentures at their
stated  maturity  date or their  earlier  redemption in an amount equal to their
liquidation  amount plus  accumulated  and unpaid  distributions  to the date of
redemption. The Company guarantees the payment of distributions and payments for
redemption or  liquidation  of the Trust  Preferred  Securities to the extent of
funds  held by the  Trust.  The  Company's  obligation  under  the  Subordinated
Debentures  together  with  the  guarantee  and  other  back-up  obligation,  in
aggregate,  constitute a full and unconditional  guarantee by the Company of the
obligations of the Trust under the Trust Preferred Securities.

The  Subordinated  Debentures  are  unsecured,  bear an interest rate based on a
spread over a 3 month LIBOR  (equal to the spread paid by the Trust on the Trust
Preferred  Securities)  which is set each  quarter and matures on June 17, 2034.
Interest is payable quarterly.  The Company may defer the payment of interest at
any time for a period  not  exceeding  20  consecutive  quarters  provided  that
deferral  period  does not  extend  past the  stated  maturity.  During any such
deferral period,  distributions  on the Trust Preferred  Securities will also be
deferred and the Company's ability to pay dividends on the common shares will be
restricted.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Management's Discussion and Analysis includes certain forward-looking statements
addressing,  among other  things,  the Company's  prospects for earnings,  asset
growth and net interest margin.  Forward-looking  statements are accompanied by,
and  identified  with,  such  terms  as  "anticipates,"  "believes,"  "expects,"
"intends,"  and similar  phrases.  Management's  expectations  for the Company's
future necessarily  involve a number of assumptions and estimates.  Factors that
could cause  actual  results to differ from the  expectations  expressed  herein
include:  changes in interest rates, changes in the general economy,  changes in
the  Company's  strategies  for  credit-risk   management,   interest-rate  risk
management and investment activities, change in accounting principals,  policies
or guidelines,  legislative or regulatory changes, changes in monetary or fiscal
policies,  and  other  economic,  competitive,   governmental,   regulatory  and
technological  factors.  Accordingly,  any forward- looking statements  included
herein do not purport to be  predictions of future events or  circumstances  and
may not be realized.

Comparison  of Financial  Condition as of September  30, 2004,  and December 31,
--------------------------------------------------------------------------------
2003
----

All dollar amounts, except per share amounts, included hereafter in Management's
Discussion and Analysis are in thousands.

Interest-bearing  deposits and federal funds sold increased  $924, or 19.8%,  to
$5,593 at September  30, 2004.  The  increase  was  substantially  the result of
increases in deposits and decreases in investments, net of increases in loans.


                                       11
<PAGE>

Securities   available-for-sale  decreased  $5,805,  or  18.9%,  to  $24,935  at
September 30, 2004. During the nine months ended September 30, 2004, investments
totaling  $8,495 were called or matured,  $6,238 were  purchased and $3,000 were
sold.

Loans  receivable,  net, at September 30, 2004,  were  $157,584,  an increase of
$21,485,  or 15.8%,  from  $136,099 at  December  31,  2003.  The  increase  was
primarily the result of increased  portfolio  originations  in  connection  with
adjustable rate commercial mortgages.  In addition,  the Company purchased loans
totalling $3,500 during the quarter ended June 30, 2004.

The  Company's  consolidated  allowance  for loan losses  increased to $1,653 at
September  30,  2004,  from $1,397 at  December  31,  2003.  This  increase  was
partially  due to a provision to the  allowance  for loan losses of $548 for the
nine months ended  September 30, 2004,  net of  charge-offs  over  recoveries of
$292.  Nonperforming loans at September 30, 2004, decreased to $215, or 0.14% of
loans receivable, from $289, or 0.20% of loans receivable, at December 31, 2003.
At  September  30,  2004,   there  were  no  material   loans  not  included  in
nonperforming  loans which  represented  material credits about which management
was aware of any information  which caused  management to have serious doubts as
to the ability of such borrowers to comply with the loan repayment terms.

Land,  buildings and  equipment,  net,  increased  $748, or 15.2%,  to $5,656 at
September 30, 2004.  The increase was  substantially  the result of a new branch
facility  constructed in Pelham,  Alabama. The previous facility was under lease
and a larger  facility was needed  because of growth.  The branch opened in May,
2004.

Real estate  owned was $1,300 at  September  30, 2004, a decrease of $2,916 from
$4,216 at December 31, 2003. The decrease was  substantially the result of three
commercial  properties totaling $3,246 acquired by foreclosure prior to December
31, 2003,  which are now under lease with one year purchase options and recorded
as other assets.

Other assets increased  $3,364,  or 264.1%,  to $4,638 as of September 30, 2004,
primarily because of the addition of $3,246 of property under lease as discussed
above.

Deposits  increased  $8,715,  or 5.8%, to $159,824 at September  30, 2004,  from
$151,109 at December 31, 2003.  The  increase  was  substantially  the result of
increases in commercial checking accounts and, to a lesser extent,  increases in
certificates of deposit.

Borrowings  increased by $3,298,  or 13.9%,  to $27,078 at  September  30, 2004,
substantially  as a result of an increase in overnight  borrowings  to fund loan
demand.

Subordinated  debentures of $6,000 were  recorded  during the quarter ended June
30, 2004.  The Company  established  FirstFed  Statutory  Trust I  ("Trust"),  a
wholly-owned  statutory  business trust.  The Company is the sole sponsor of the
Trust and acquired the Trust's common securities.  The Trust was created for the
exclusive purpose of issuing 30-year capital trust securities  ("Trust Preferred
Securities")  in the  amount of $6,000 and using  proceeds  to  purchase  junior
subordinated  debentures  issued by the Company.  The proceeds from the offering
are being used to fund  internal  and  external  growth.  See Note 8 of Notes to
Unaudited Condensed Consolidated Financial Statements.

The Company had  stockholders'  equity of $18,331 as of  September  30,  2004, a
decrease of $221, or 1.2%,  from $18,552 as of December 31, 2003. Net income for
the nine months ended  September  30, 2004,  was $445.  Equity was  decreased by
dividends of $.28 per share,  or $668.  Included in such dividends was a special
dividend of $.07 per share,  which was  declared  during the first  quarter.  In
addition,  accumulated other  comprehensive  income decreased $186, or 33.8%, to
$365 at September  30,  2004,  as a result of decreases in the fair value of the
securities available-for-sale primarily due to higher market rates of interest.

Liquidity and Capital Resources
-------------------------------

Liquidity  refers  to  the  ability  of  the  Company  to  meet  its  cash  flow
requirements  in the normal  course of  business,  including  loan  commitments,
deposit withdrawals, and liability maturities, and ensuring that the


                                       12
<PAGE>

Company is in a position to take  advantage  of  investment  opportunities  in a
timely and cost-efficient  manner.  Management  monitors the Company's liquidity
position and reports to the Board of Directors monthly.  The Company may achieve
its desired liquidity  objectives  through  management of assets and liabilities
and  through  funds  provided  by  operations.   Funds  invested  in  short-term
marketable  instruments,  the  continuous  maturing  of  other  interest-earning
assets,  the possible sale of  available-for-sale  securities and the ability to
securitize  certain  types of loans provide  sources of liquidity  from an asset
perspective.  The liability base provides sources of liquidity through deposits.
In addition,  at September  30, 2004,  the Bank has  borrowing  ability from the
Federal  Home  Loan  Bank of  Atlanta  and  correspondent  banks if the need for
additional  funds arises.  At September 30, 2004,  the Bank had  commitments  to
originate and fund loans of $16.6  million.  The Bank  anticipates  that it will
have sufficient funds available to meet its current commitments.

Under applicable regulations,  First Financial and the Company are each required
to maintain  minimum capital  ratios.  Set forth below are actual capital ratios
and the minimum regulatory capital requirements as of September 30, 2004.

<TABLE>
<CAPTION>
                                                                September 30, 2004
                                   --------------------------------------------------------------------------
                                                          (Dollar amounts in thousands)
                                                                                              To Be Well
                                                                                           Capitalized Under
                                                                   For Capital             Prompt Corrective
                                           Actual               Adequacy Purposes          Action Provisions
                                   --------------------       ---------------------      --------------------
                                    Amount         Rate        Amount          Rate       Amount         Rate
                                   -------         ----       -------          ----      -------         ----
<S>                                 <C>            <C>        <C>              <C>       <C>              <C>
Tier 1 Risk-Based Capital
     Consolidated                  $22,733         12.9%          N/A           N/A          N/A           N/A
     First Financial Bank           18,190         10.5%      $ 8,335          4.0%      $12,503          6.0%

Total Risk-Based Capital
     Consolidated                  $24,387         13.8%          N/A           N/A          N/A           N/A
     First Financial Bank           19,844         11.4%      $13,925          8.0%      $17,406         10.0%

Tier 1 Leverage
     Consolidated                  $22,733         10.9%          N/A           N/A          N/A           N/A
     First Financial Bank           18,190          8.7%      $ 6,962          4.0%      $ 8,703          5.0%
</TABLE>

As of September  30,  2004,  management  was not aware of any trends,  events or
uncertainties  that will have or are reasonably likely to have a material effect
on the Company's or the Bank's liquidity, capital resources or operations.

Results of Operations - Comparison of the Three Months Ended  September 30, 2004
--------------------------------------------------------------------------------
and 2003
--------

Net income for the three months ended  September 30, 2004, was $219, an increase
of $84, or 62.2%,  from net income of $135 for the three months ended  September
30, 2003.  The increase was  primarily the result of increases in fee income and
net interest  income for the quarter ended  September 30, 2004,  compared to the
same period a year ago, which were somewhat offset by increases in costs related
to real estate acquired through foreclosure and salary and benefit expense.

Interest Income
---------------

Total interest  income  increased $312, or 14.1%, to $2,527 for the three months
ended  September  30, 2004.  This increase was due to an increase in the average
balance on  interest-earning  assets for the three  months ended  September  30,
2004,  compared to the same quarter a year ago,  coupled with an increase in the
average  yield on  interest-earning  assets to 5.5% for the three  months  ended
September 30, 2004, compared to 5.2% for the same quarter a year ago.

Interest Expense
----------------

Interest  expense for the quarter  ended  September  30,  2004,  was $1,083,  an
increase of $94, or 9.5%,  from $989 for the quarter  ended  September 30, 2003.
The increase was  substantially the result of an increase in the average balance
of  interest-bearing  liabilities  compared to the same  quarter a year ago. The
average  rate paid on  interest-bearing  liabilities  increased  to 2.4% for the
three months  ended  September  30, 2004  compared to 2.3% for the same period a
year ago.


                                       13
<PAGE>

Net Interest Income
-------------------

Net interest income for the quarter ended September 30, 2004, increased $218, or
17.8%, to $1,444 from the quarter ended September 30, 2003, level of $1,226. The
increase  was  primarily  the result of an increase in the average net  interest
spread to 3.1% for the quarter ended  September  30, 2004,  compared to 2.9% for
the same period a year ago. The net interest  margin also  increased to 3.1% for
the quarter ended September 30, 2004, from 2.9% for the same quarter a year ago.

Provision for Loan Losses
-------------------------

Management  increased the Company's  total allowance for loan losses by a charge
to the provision of $119 during the quarter ended  September 30, 2004,  compared
to $170 for the quarter ended  September 30, 2003. The allowance for loan losses
is based on management's evaluation of losses inherent in the loan portfolio and
considers,   among  other  factors,  prior  years'  loss  experience,   economic
conditions,  distribution  of  portfolio  loans by risk class and the  estimated
value of the underlying collateral.  The Bank segregates its loan portfolio into
problem and non-problem  loans.  The Bank then determines the allowance for loan
losses  based on specific  review of all problem  loans by internal  loan review
committees. This detailed analysis primarily determines the allowance on problem
loans by specific  evaluation  of  collateral  fair  value.  The  allowance  for
non-problem loans considers  historical  losses and other relevant factors.  The
allowances  are  reviewed  throughout  the year to consider  changes in the loan
portfolio  and  classification  of loans  which  results  in a self-  correcting
mechanism.

Noninterest Income
------------------

Noninterest income during the quarter ended September 30, 2004,  increased $185,
to $714, from the September 30, 2003,  level of $529. The increase was primarily
the result of increased  non-sufficient  funds fees associated with an overdraft
privilege program implemented in December 2003.

Noninterest Expenses
--------------------

Noninterest  expenses  during the quarter ended  September  30, 2004,  increased
$317, or 22.2%, to $1,748,  from the September 30, 2003,  quarter of $1,431. The
increase in other operating  expense was attributable to an increase in expenses
and losses in  connection  with real estate  owned and an increase in salary and
benefits related to increased incentive pay related to growth and performance.

Income Taxes
------------

The  provision  for income  taxes  increased  $53, to $72 for the quarter  ended
September  30,  2004,  as compared to $19 for the  corresponding  quarter in the
previous  year.  The  increased  tax expense was due primarily to an increase in
pretax income.

Results of Operations - Comparison  of the Nine Months Ended  September 30, 2004
--------------------------------------------------------------------------------
and 2003
--------

Net income for the nine months ended September 30, 2004, was $445, a decrease of
$52, or 10.5%,  from net income of $497 for the nine months ended  September 30,
2003.  The  decrease  was  primarily  the  result  of a $299 gain on the sale of
investments  recorded  during the nine months ended  September 30, 2003,  and no
comparable  transaction  was  recorded  during the current  year.  In  addition,
earnings for the nine months ended September 30, 2004, were negatively  impacted
by costs of $520  related to real estate  acquired  through  foreclosure.  These
items were  substantially  offset by an increase of $642,  or 52.5%,  in fee and
noninterest  income and an increase of $485,  or 13.1%,  in net interest  income
when  comparing  the nine months ended  September  30, 2004 to the same period a
year ago.

Interest Income
---------------

Total  interest  income  increased  $508, or 7.5%, to $7,249 for the nine months
ended  September  30, 2004.  This  increase was  substantially  the result of an
increase in the average balance on interest-earning assets for the nine


                                       14
<PAGE>

months ended September 30, 2004,  compared to the same period a year ago, offset
slightly by a decrease in the average  yield on the  interest-earning  assets to
5.3% during the nine months ended  September 30, 2004, from 5.4% during the nine
months ended September 30, 2003.

Interest Expense
----------------

Interest expense for the nine months ended September 30, 2004, increased $23, or
0.8%, to $3,060,  from $3,037  during the nine months ended  September 30, 2003.
This increase was primarily  attributable  to an increase in the average balance
of interest-bearing  liabilities. The increase was somewhat offset by a decrease
in the average rate paid on  interest-bearing  liabilities  to 2.3% for the nine
months ended  September  30,  2004,  compared to 2.5% for the same period a year
ago.

Net Interest Income
-------------------

Net interest  income for the nine months  ended  September  30, 2004,  increased
$485, or 13.1%,  to $4,189,  from $3,704 for the nine months ended September 30,
2003.  This  increase was due primarily to growth of the Company and an increase
in the net interest spread to 3.1% for the nine months ended September 30, 2004,
compared  to 3.0%  for the same  period  a year  ago.  The net  interest  margin
increased to 3.1% for the nine months ended  September  30, 2004,  from 3.0% for
the nine months ended September 30, 2003.

Provision for Loan Losses
-------------------------

Management  increased the Company's  total allowance for loan losses by a charge
to the  provision  of $548  during the nine months  ended  September  30,  2004,
compared to $596 for the nine months ended September 30, 2003. The allowance for
loan losses is based on  management's  evaluation of losses inherent in the loan
portfolio and  considers,  among other  factors,  prior years' loss  experience,
economic  conditions,  distribution  of  portfolio  loans by risk  class and the
estimated  value of the  underlying  collateral.  The Bank  segregates  its loan
portfolio  into problem and  non-problem  loans.  The Bank then  determines  the
allowance  for loan  losses  based on specific  review of all  problem  loans by
internal loan review committees. This detailed analysis primarily determines the
allowance on problem loans by specific  evaluation of collateral fair value. The
allowance for non-problem  loans considers  historical losses and other relevant
factors.  The allowances are reviewed throughout the year to consider changes in
the  loan   portfolio   and   classification   of  loans  which   results  in  a
self-correcting mechanism.

Noninterest Income
------------------

Noninterest  income for the nine months ended September 30, 2004, totaled $2,139
as compared to $1,797 for the nine months ended September 30, 2003. The increase
in noninterest  income was  substantially  the result of an increase of $642, or
52.6%, in fee income for the nine months ended  September 30, 2004,  compared to
the same  period a year ago.  This  increase  was  substantially  the  result of
increased  non-sufficient  funds fees  associated  with an  overdraft  privilege
program  implemented in December 2003. Another  consideration was a $299 gain on
the sale of  investments  recorded  during the nine months ended  September  30,
2003, and there was no comparable transaction in the current year.

Noninterest Expenses
--------------------

Noninterest  expenses during the nine months ended September 30, 2004, increased
$944 to $5,240  from the 2003  level of  $4,296.  The  increase  in  noninterest
expense from a year ago was substantially  attributable to increased expenses in
connection with real estate owned. Also contributing to the increase were slight
increases in compensation  expense,  other operating expenses,  and depreciation
expense.

Income Taxes
------------

The provision for income taxes  decreased  $17, to $95 for the nine months ended
September  30,  2004,  as compared to $112 for the  corresponding  period of the
prior year. The decreased tax expense was due to the decrease in pretax income.


                                       15
<PAGE>

ITEM 3. CONTROLS AND PROCEDURES

The  Company  carried  out an  evaluation  under  the  supervision  and with the
participation  of  the  Company's  management,  including  the  Company's  Chief
Executive   Officer  and  the  Company's   Chief  Financial   Officer,   of  the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures  as of  September  30,  2004,  pursuant  to  Exchange  Act  Rule
13a-15(b). Based upon that evaluation, the Company's Chief Executive Officer and
the Company's Chief Financial  Officer  concluded that the Company's  disclosure
controls and procedures, as designed and implemented,  are effective in alerting
them  in a  timely  manner  to  material  information  relating  to the  Company
(including  its  consolidated  subsidiaries)  required  to be  included  in  the
Company's periodic SEC filings.

In  addition,  the Company  reviewed its  internal  controls.  There has been no
change in the Company's  internal  control over financial  reporting  during the
last fiscal quarter that has  materially  affected,  or is reasonably  likely to
materially affect the Company's internal control over financial reporting.

Disclosure  controls  and  procedures  are  designed to ensure that  information
required to be disclosed in reports  filed by the Company  under the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time  periods  specified in the SEC's rules and forms.  Disclosure  controls are
also  designed  with  the  objective  of  ensuring  that  such   information  is
accumulated and  communicated to the Company's  management,  including the Chief
Executive  Officer and the Chief Financial  Officer,  as  appropriate,  to allow
timely decisions  regarding required  disclosures.  Disclosure  controls include
internal  controls  that are  designed  to  provide  reasonable  assurance  that
transactions   are  properly   authorized,   assets  are   safeguarded   against
unauthorized  or  improper  use  and  transactions  are  properly  recorded  and
reported.

Any control system, no matter how well conceived and operated,  can provide only
reasonable  assurance that its objectives are achieved.  The design of a control
system  inherently  has  limitations,  including the controls'  cost relative to
their benefits.  Additionally,  controls can be circumvented.  No cost-effective
control  system can  provide  absolute  assurance  that all  control  issues and
instances of fraud, will be detected.

Effective as of December 31,  2005,  the Company will become  subject to Section
404 of The Sarbanes-Oxley Act of 2002. Section 404 requires management to assess
and  report  on  the  effectiveness  of the  Company's  internal  controls  over
financial  reporting.   Additionally,  it  requires  the  Company's  independent
registered public  accounting firm to report on management's  assessment as well
as report on its own assessment of the  effectiveness of the Company's  internal
controls over financial reporting. Management is currently establishing policies
and  procedures  to assess and report on internal  controls,  and will retain an
outside firm to assist it in  determining  the  effectiveness  of the  Company's
internal controls over financial reporting.

                            PART II-OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company and Bank are parties to routine legal proceedings
occurring in the ordinary course of business.  At September 30, 2004, there were
no legal  proceedings  to which  the  Company  and/or  the Bank  were a party or
parties,  or to which any of their property was subject,  which were expected by
management to result in a material loss.

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.


                                       16
<PAGE>

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits.

      Exhibit  31.1 -  Certifications  of Chief  Executive  Officer  pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

      Exhibit  31.2 -  Certifications  of Chief  Financial  Officer  pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.

      Exhibit 32.1 - Certification Pursuant to Section 906 of the Sarbanes-Oxley
      Act of 2002

(b)   Reports on Form 8-K.

      A Current Report on Form 8-K dated July 30, 2004, furnishing under Item 12
      ("Results of Operations  and  Financial  Condition")  announcement  of the
      Company's results of operations for the quarter ended June 30, 2004.


                                       17
<PAGE>

                                   SIGNATURES

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

                                              FIRSTFED BANCORP, INC.


Date: November 15, 2004                       \s\ B. K. Goodwin, III
      -----------------                       --------------------------------
                                              B. K. Goodwin, III,
                                              Chairman of the Board,
                                              Chief Executive Officer,
                                              and President


Date: November 15, 2004                       \s\ Lynn J. Joyce
      -----------------                       --------------------------------
                                              Lynn J. Joyce
                                              Chief Financial Officer,
                                              Executive Vice President,
                                              Secretary and Treasurer


                                       18