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, 2005

|_|   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 |_|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

      YES |_|   NO |X|

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 1, 2005
----------------------------                   -------------------------------
Common Stock, $.01 par value                           2,445,850 shares

Transitional Small Business Disclosure Format
(Check one):

      YES |_|   NO |X|

<PAGE>

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

                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS:

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
  AS OF SEPTEMBER 30, 2005 AND DECEMBER 31, 2004...............................2

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME  FOR THE THREE
 AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004.............................3

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY FOR
  THE NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004 ...........................4

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE
  NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004................................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.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS..........16

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES......................................17

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................17

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

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


                                       i.
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                             FIRSTFED BANCORP, INC.
                             ----------------------
       UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
       ------------------------------------------------------------------
                 As of September 30, 2005 and December 31, 2004
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                               September 30,    December 31,
                                                                                   2005            2004
                                                                                 ---------       ---------
<S>                                                                              <C>             <C>
ASSETS
Cash and Cash Equivalents:
       Cash on hand and in banks                                                 $   6,441       $   3,125
       Interest-bearing deposits in other banks                                      1,017           1,489
       Federal funds sold                                                               25             176
                                                                                 ---------       ---------
                                                                                     7,483           4,790
Securities available-for-sale, at fair value                                         7,340          22,941
Loans held for sale                                                                  1,013             739
Loans receivable, net                                                              167,520         161,841
Land, buildings and equipment, net                                                   7,695           7,377
Bank owned life insurance                                                            6,649           6,368
Real estate owned                                                                    1,187             986
Assets held for sale                                                                   940              --
Accrued interest receivable                                                            873           1,134
Goodwill and other intangibles                                                       1,129           1,167
Other assets                                                                         3,976           7,100
                                                                                 ---------       ---------
                                                                                 $ 205,805       $ 214,443
                                                                                 =========       =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
       Deposits                                                                  $ 162,327       $ 157,545
       Borrowings                                                                   18,000          31,494
       Subordinated debentures                                                       6,000           6,000
       Accrued interest payable                                                        256             238
       Dividends payable                                                               171             168
       Other liabilities                                                               672             580
                                                                                 ---------       ---------
                                                                                   187,426         196,025
                                                                                 ---------       ---------
Stockholders' Equity:
       Preferred stock, $.01 par value, 1,000,000 shares
                authorized, none outstanding                                            --              --
       Common stock, $.01 par value, 10,000,000 shares
                authorized, 3,275,798 shares issued and 2,445,850 shares
                outstanding at September 30, 2005 and 3,230,955 shares issued
                and 2,401,007 shares outstanding at
                December 31, 2004                                                       33              32
       Paid-in capital                                                               8,850           8,590
       Retained earnings                                                            15,899          15,976
       Deferred compensation obligation                                              2,130           2,114
       Deferred compensation treasury stock (239,548
                shares at September 30, 2005 and 240,036 shares
                at December 31, 2004)                                               (2,130)         (2,114)
       Treasury stock, at cost (829,948 shares at September 30, 2005
                and December 31, 2004)                                              (6,088)         (6,088)
       Unearned compensation                                                          (241)           (328)
       Accumulated other comprehensive income (loss)                                   (74)            236
                                                                                 ---------       ---------
                                                                                    18,379          18,418
                                                                                 ---------       ---------
                                                                                 $ 205,805       $ 214,443
                                                                                 =========       =========
</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, 2005 and 2004
             (Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                  Three Months Ended           Nine Months Ended
                                                     September 30,               September 30,
                                              --------------------------   -------------------------
                                                  2005           2004          2005          2004
                                              -----------    -----------   -----------   -----------
<S>                                           <C>            <C>           <C>           <C>
INTEREST INCOME:
       Interest and fees on loans             $     2,650    $     2,241   $     7,588   $     6,365
       Interest and dividends on
         securities                                    65            283           235           874
       Other interest income                           51              3            98            10
                                              -----------    -----------   -----------   -----------
         Total interest income                      2,766          2,527         7,921         7,249
                                              -----------    -----------   -----------   -----------

INTEREST EXPENSE:
       Interest on deposits                           869            753         2,485         2,183
       Interest on other borrowings                   326            330           964           877
                                              -----------    -----------   -----------   -----------
         Total interest expense                     1,195          1,083         3,449         3,060
                                              -----------    -----------   -----------   -----------

  Net interest income                               1,571          1,444         4,472         4,189
       Provision for loan losses                      166            119           202           548
                                              -----------    -----------   -----------   -----------
  Net interest income after
    provision for loan losses                       1,405          1,325         4,270         3,641
                                              -----------    -----------   -----------   -----------

NONINTEREST INCOME:
       Fees and other noninterest
         income                                       654            624         2,341         1,863
       Gain on sale of investments                     --             --           354             7
       Bank owned life insurance                       94             90           281           269
                                              -----------    -----------   -----------   -----------
         Total noninterest income                     748            714         2,976         2,139
                                              -----------    -----------   -----------   -----------

NONINTEREST EXPENSE:
       Salaries and employee benefits                 895            923         2,608         2,539
       Office building and equipment
         expenses                                     218            215           632           676
       Pension plan termination expense               843             --           843            --
       Other operating expenses                     1,083            610         2,381         2,025
                                              -----------    -----------   -----------   -----------
         Total noninterest expense                  3,039          1,748         6,464         5,240
                                              -----------    -----------   -----------   -----------

  Income (loss) before income taxes                  (886)           291           782           540
       Provision (benefit) for income taxes          (353)            72           177            95
                                              -----------    -----------   -----------   -----------
NET INCOME (LOSS)                             $      (533)   $       219   $       605   $       445
                                              ===========    ===========   ===========   ===========
AVERAGE NUMBER OF SHARES
       OUTSTANDING - BASIC                      2,420,398      2,338,221     2,404,923     2,350,332
                                              ===========    ===========   ===========   ===========
BASIC EARNINGS (LOSS) PER SHARE               $      (.22)   $       .09   $       .25   $       .19
                                              ===========    ===========   ===========   ===========
AVERAGE NUMBER OF SHARES
       OUTSTANDING - DILUTED                    2,469,678      2,369,329     2,434,112     2,388,010
                                              ===========    ===========   ===========   ===========
DILUTED EARNINGS (LOSS) PER SHARE             $      (.22)   $       .09   $       .25   $       .19
                                              ===========    ===========   ===========   ===========
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, 2005 and 2004
             (Dollar amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                                               Deferred
                                                                                  Deferred     Compen-
                                                                                   Compen-      sation
                                             Common     Paid-In      Retained      sation      Treasury     Treasury
                                             Stock      Capital      Earnings    Obligation     Stock        Stock
                                            --------    --------     --------     --------     --------     --------
<S>                                         <C>         <C>          <C>          <C>          <C>          <C>
BALANCE, December 31, 2003                  $     32    $  8,426     $ 16,047     $  1,969     $ (1,969)    $ (6,088)

   Net income                                     --          --          445           --           --           --
   Change in unrealized gain
       (loss) on securities
       available for sale, net
       of tax of $138                             --          --           --           --           --           --

   Comprehensive income                           --          --           --           --           --           --

   Amortization of unearned
       compensation                               --          --           --           --           --           --
   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)
                                            ========    ========     ========     ========     ========     ========

BALANCE, December 31, 2004                  $     32    $  8,590     $ 15,976     $  2,114     $ (2,114)    $ (6,088)

   Net income                                     --          --          605           --           --           --
   Change in unrealized gain
       (loss) on securities
       available for sale, net
       of tax of $(124)                           --          --           --           --           --           --

   Comprehensive income                           --          --           --           --           --           --

   Amortization of unearned
       compensation                               --          --           --           --           --           --
   Dividends declared ($.28
       per share)                                 --          --         (682)          --           --           --
   Exercise of stock options                       1         194           --           --           --           --
   Purchase of Deferred Compensation
       Treasury Shares                            --          --           --           49          (49)          --
   Distribution of Deferred Compensation
       Treasury Shares                            --          --           --          (33)          33           --
   Stock issued under Dividend
       Reinvestment Plan                          --          79           --           --           --           --
   Change in stock value of
       Employee Stock
       Ownership Plan                             --         (13)          --           --           --           --
                                            --------    --------     --------     --------     --------     --------

BALANCE, September 30, 2005                 $     33    $  8,850     $ 15,899     $  2,130     $ (2,130)    $ (6,088)
                                            ========    ========     ========     ========     ========     ========

<CAPTION>
                                                        Accumulated
                                                           Other       Compre-
                                             Unearned      Compre-     hensive
                                              Compen-      hensive      Income
                                              sation       Income      (Note 1)
                                             --------     --------     --------
<S>                                          <C>          <C>          <C>
BALANCE, December 31, 2003                   $   (416)    $    551

   Net income                                      --           --     $    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)                                  --           --
   Exercise of stock options                       --           --
   Purchase of Deferred Compensation
       Treasury Shares                             --           --
   Stock issued under Dividend
       Reinvestment Plan                           --           --
   Change in stock value of
       Employee Stock
       Ownership Plan                              --           --
                                             --------     --------

BALANCE, September 30, 2004                  $   (330)    $    365
                                             ========     ========

BALANCE, December 31, 2004                   $   (328)    $    236

   Net income                                      --           --     $    605
   Change in unrealized gain
       (loss) on securities
       available for sale, net
       of tax of $(124)                            --         (310)        (310)
                                                                       --------
   Comprehensive income                            --           --     $    295
                                                                       ========
   Amortization of unearned
       compensation                                87           --
   Dividends declared ($.28
       per share)                                  --           --
   Exercise of stock options                       --           --
   Purchase of Deferred Compensation
       Treasury Shares                             --           --
   Distribution of Deferred Compensation
       Treasury Shares                             --           --
   Stock issued under Dividend
       Reinvestment Plan                           --           --
   Change in stock value of
       Employee Stock
       Ownership Plan                              --           --
                                             --------     --------

BALANCE, September 30, 2005                  $   (241)    $    (74)
                                             ========     ========
</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, 2005 and 2004
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                         September 30,
                                                                                     ---------------------
                                                                                       2005         2004
                                                                                     --------     --------
<S>                                                                                  <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                         $    605     $    445
  Adjustments to reconcile net income
     to net cash provided by (used in) operating activities:
       Depreciation, amortization and accretion                                           322          432
       Loan fees (cost) deferred, net                                                     128          169
       Provision for loan losses                                                          202          548
       Gain on sale of investments                                                       (354)          (7)
       Gain on sale of fixed assets                                                        --           (9)
       Loss (gain) on sale of real estate, net                                            516          133
       Origination of loans held for sale                                              (5,969)      (8,883)
       Proceeds from loans held for sale                                                5,695        8,655
       Provision for deferred compensation                                                 49          105
       Increase in surrender value of Bank Owned Life Insurance                          (281)        (269)
  Decrease (increase) in assets:
       Accrued interest receivable                                                        261           25
       Other assets                                                                       136          131
  Increase (decrease) in liabilities:
       Accrued interest payable                                                            18           10
       Other liabilities                                                                   92          204
                                                                                     --------     --------
         Net cash provided by (used in) operating activities                            1,420        1,689
                                                                                     --------     --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities, calls and repayments of securities available-for-sale         786        8,495
  Proceeds from sale of securities available-for-sale                                  15,169        3,000
  Purchase of securities available-for-sale                                              (500)      (6,238)
  Proceeds from sales of real estate and repossessed assets                             1,164        1,441
  Purchase of loans                                                                        --       (3,500)
  Net loan originations                                                                (5,078)     (19,715)
  Capital expenditures                                                                 (1,001)      (1,776)
                                                                                     --------     --------
         Net cash provided by (used in) investing activities                           10,440      (18,293)
                                                                                     --------     --------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Increase (decrease) in deposits, net                                                  4,782        8,715
  Proceeds from borrowings                                                              8,304       83,485
  Repayment of borrowings                                                             (21,798)     (80,187)
  Proceeds from issuance of subordinated debentures                                        --        6,000
  Proceeds from exercise of stock options                                                 195           15
  Dividends paid                                                                         (680)        (668)
  Proceeds from dividend reinvestment                                                      79          101
  Purchase of treasury stock for Deferred Compensation Plan                               (49)        (105)
                                                                                     --------     --------
         Net cash provided by (used in) financing activities                           (9,167)      17,356
                                                                                     --------     --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                    2,693          752
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                        4,790        7,621
                                                                                     --------     --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                           $  7,483     $  8,373
                                                                                     ========     ========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid during the period for -
       Income taxes                                                                  $    433     $    145
       Interest                                                                         3,431        3,060
  Non-cash transactions -
       Transfer of loans receivable to real estate owned                                1,228        1,211
       Transfer of leased real estate owned to other assets                                --        3,246
       Transfer of leased real estate to loans receivable                               1,818           --
       Transfer of leased real estate to assets held for sale                             940           --
</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, 2005,  and  December 31, 2004,  and for the three and nine months
ended September 30, 2005 and 2004, 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, 2005, 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, 2004.
The accounting  policies followed by the Company are set forth in the Summary of
Significant Accounting Policies in the Company's December 31, 2004, 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, 2005,
and December 31, 2004, 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.

Assets Held For Sale

Assets held for sale are recorded at the selling price less cost to dispose.  As
of  September  30,  2005,  assets  held  for sale  consisted  of one  parcel  of
commercial real estate.

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

Earnings  per share  ("EPS") for the three and nine months ended  September  30,
2005 and 2004, were as follows:

<TABLE>
<CAPTION>
                                            Three Months                                  Three Months
                                      Ended September 30, 2005                      Ended September 30, 2004
                             ------------------------------------------     -----------------------------------------
                                              Dilutive                                      Dilutive
                                              Effect of                                     Effect of
                                               Options                                       Options
                                Basic          Issued         Diluted          Basic         Issued         Diluted
                             -----------     -----------    -----------     -----------    -----------    -----------
<S>                          <C>                  <C>       <C>             <C>                 <C>       <C>
Net income (loss)            $  (533,000)             --    $  (533,000)    $   219,000             --    $   219,000

Shares available to
   common shareholders         2,420,398          49,280      2,469,678       2,338,221         31,108      2,369,329
                             -----------     -----------    -----------     -----------    -----------    -----------

Earnings (loss) per share    $     (0.22)             --    $     (0.22)    $      0.09             --    $      0.09
                             ===========     ===========    ===========     ===========    ===========    ===========

<CAPTION>
                                             Nine Months                                   Nine Months
                                      Ended September 30, 2005                      Ended September 30, 2004
                             ------------------------------------------     -----------------------------------------
                                              Dilutive                                       Dilutive
                                              Effect of                                      Effect of
                                               Options                                        Options
                                Basic          Issued         Diluted          Basic          Issued        Diluted
                             -----------     -----------    -----------     -----------    -----------    -----------
<S>                          <C>                  <C>       <C>             <C>                 <C>       <C>
Net income                   $   605,000              --    $   605,000     $   445,000             --    $   445,000

Shares available to
   common shareholders         2,404,923          29,189      2,434,112       2,350,332         37,678      2,388,010
                             -----------     -----------    -----------     -----------    -----------    -----------

Earnings per share           $      0.25              --    $      0.25     $      0.19             --    $      0.19
                             ===========     ===========    ===========     ===========    ===========    ===========
</TABLE>

Options to purchase 7,099 and 196,233 shares of common stock at prices in excess
of the average market price were outstanding  during the quarter ended September
30, 2005 and 2004, respectively,  but not included in the computation of diluted
earnings per share.

Options to purchase  9,099 and 9,099  shares of common stock at prices in excess
of the  average  market  price were  outstanding  during the nine  months  ended
September 30, 2005 and 2004,  respectively,  but not included in the computation
of diluted earnings per share.

There were 26,359 and 35,145  shares of common stock held by the Employee  Stock
Ownership  Plan and  unallocated  at September 30, 2005 and 2004,  respectively.
These shares are outstanding but not included in the computation of earnings per
share.

Dividends declared for the quarter ended September 30, 2005, 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, 2005 and 2004.


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                           Three Months Ended September 30, 2005
                                  ------------------------------------------------------
                                   Banking        Holding                       Total
                                  Operations      Company      Eliminations    Company
                                  ----------     ----------    ------------   ----------
                                                      (In thousands)
<S>                               <C>            <C>            <C>           <C>
Net interest income (expense)     $    1,657     $      (86)    $       --    $    1,571
Provision for loan losses                166             --             --           166
Noninterest income                       721             27             --           748
Noninterest expense                    2,967             72             --         3,039
                                  ----------     ----------     ----------    ----------
   Income (loss) before income
       taxes                            (755)          (131)            --          (886)
Income tax expense (benefit)            (297)           (56)            --          (353)
                                  ----------     ----------     ----------    ----------
   Net income (loss)              $     (458)    $      (75)    $       --    $     (533)
                                  ==========     ==========     ==========    ==========
   Total assets                   $  203,153     $   25,036     $  (22,384)   $  205,805
                                  ==========     ==========     ==========    ==========
   Capital Expenditures           $      236     $       --     $       --    $      236
                                  ==========     ==========     ==========    ==========

<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>
                                           Nine Months Ended September 30, 2005
                                  -----------------------------------------------------
                                   Banking        Holding                      Total
                                  Operations      Company     Eliminations    Company
                                  ----------    ----------    ------------   ----------
                                                      (In thousands)
<S>                               <C>           <C>            <C>           <C>
Net interest income (expense)     $    4,715    $     (243)    $       --    $    4,472
Provision for loan losses                202            --             --           202
Noninterest income                     2,895            81             --         2,976
Noninterest expense                    6,242           222             --         6,464
                                  ----------    ----------     ----------    ----------
   Income (loss) before income
       taxes                           1,166          (384)            --           782
Income tax expense (benefit)             345          (168)            --           177
                                  ----------    ----------     ----------    ----------
   Net income (loss)              $      821    $     (216)    $       --    $      605
                                  ==========    ==========     ==========    ==========
   Total assets                   $  203,153    $   25,036     $  (22,384)   $  205,805
                                  ==========    ==========     ==========    ==========
   Capital Expenditures           $    1,001    $       --     $       --    $    1,001
                                  ==========    ==========     ==========    ==========
</TABLE>


                                       8
<PAGE>

<TABLE>
<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>

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.

There were no options granted during the quarter and nine months ended September
30, 2005 and all previous grants were fully vested prior to 2005. No stock based
compensation has been recognized for any period presented.

If the Company had elected to recognize  compensation  cost for options  granted
during the quarter and nine months ended  September 30, 2004,  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:

                                          Three Months           Nine Months
                                             Ended                  Ended
                                       September 30, 2004     September 30, 2004
                                       ------------------     ------------------
                                       (In thousands, except per share amounts)

Net income - as reported                      $ 219                 $ 445
Stock-based compensation expense                 24                    27
                                              -----                 -----
Net income - proforma                           195                   418
                                              =====                 =====

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

Earnings per share - pro forma
   Basic                                      $ .08                 $ .18
   Diluted                                    $ .08                 $ .18


                                       9
<PAGE>

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

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

The Company  terminated  the  Defined  Benefit  Pension  Plan  ("Pension  Plan")
effective  June 8, 2005. By terminating  the Pension Plan, the Company  incurred
termination  expense of $843,  during the three months ended September 30, 2005.
Termination of the Pension Plan, distribution to participants of its assets, and
recording  termination  expense occurred when termination  approval was received
from the Pension Benefit Guaranty Corporation in the quarter ended September 30,
2005. A  curtailment  gain of $68 was recorded in the first  quarter ended March
31,  2005,  in  connection  with  the  Board  of  Director's   approval  of  the
termination.

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,
                                    ------------------      -------------------
                                     2005        2004        2005         2004
                                    ------      ------      ------       ------
                                                  (In thousands)
Service cost                        $   --      $   44      $   35       $  132
Interest cost                           --          31          24           93
Expected return on plan assets          --         (25)        (19)         (75)
Amortization of transitional asset      --          (1)          7           (3)
Recognized actuarial loss               --           6          --           18
                                    ------      ------      ------       ------
Net periodic benefit cost           $   --      $   55      $   47       $  165
                                    ======      ======      ======       ======

The  Company  contributed  the  necessary  funds for  termination.  The  Company
contributed $344,000 during the nine month period ended September 30, 2005.

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

In December 2004, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 123(R), Share- Based Payment. SFAS No. 123(R) revises SFAS No. 123 and calls
for  companies  to expense  the fair value of employee  stock  options and other
forms of stock-based compensation. SFAS No. 123(R) requires companies to (1) use
fair value to measure  stock-based  compensation  awards and (2) cease using the
"intrinsic value" method of accounting, which APB No. 25 allowed and resulted in
no expense for many awards of stock options for which the exercise  price of the
option equaled the price of the underlying  stock at the grant date.  Under SFAS
No.  123(R),  the fair value of a stock-based  compensation  award is recognized
over the employee's  service  period.  The Company is required to adopt SFAS No.
123(R) as of January 1, 2006.

On March 25, 2005, the SEC issued Staff Accounting Bulletin No. 107 ("SAB 107").
SAB 107  provides  guidance  regarding  the  valuation  of  share-based  payment
arrangements,  the  classification of compensation  expense,  non-GAAP financial
measures,  first-time  adoption  of  SFAS  No.  123(R)  in  an  interim  period,
capitalization of compensation cost related to share-based payment arrangements,
the accounting for income


                                       10
<PAGE>

tax  effects of  share-based  payment  arrangements  upon  adoption  of SFAS No.
123(R), the modification of employee share options prior to adoption of SFAS No.
123(R) and  disclosures in  Management's  Discussion and Analysis  subsequent to
adoption of SFAS No. 123(R).

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, 2005, and December 31,
----------------------------------------------------------------------------
2004
----

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

Cash,  interest-bearing  deposits,  and federal funds sold increased  $2,693, or
56.2%,  to $7,483 at September  30, 2005.  The  increase was  substantially  the
result of increased deposits.

Securities   available-for-sale  decreased  $15,601,  or  68.0%,  to  $7,340  at
September 30, 2005. During the nine months ended September 30, 2005, investments
totaling $786 were called or matured, $500 were purchased and $15,169 were sold.


                                       11
<PAGE>

Loans  receivable,  net, at September 30, 2005,  were  $167,520,  an increase of
$5,679,  or 3.5%, from $161,841 at December 31, 2004. The increase was primarily
the result of an increase in commercial real estate lending.

The  Company's  consolidated  allowance  for loan losses  decreased to $1,605 at
September  30,  2005,  from $1,684 at  December  31,  2004.  This  decrease  was
partially due to charge-offs  over recoveries of $281, net of a provision to the
allowance for loan losses of $202 for the nine months ended  September 30, 2005.
Nonperforming  loans at  September  30, 2005,  increased to $1,607,  or 0.96% of
loans receivable, from $961, or 0.66% of loans receivable, at December 31, 2004.
At  September  30,  2005,   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  $318,  or 4.3%, to $7,695 at
September 30, 2005. The increase was substantially the result of the purchase of
land in McCalla, Alabama, for a new branch facility.

Real estate  owned was $1,187 at September  30,  2005,  an increase of $201 from
$986 at December 31, 2004.  The increase was  substantially  the result of eight
homes under  construction by one builder  acquired by foreclosure  prior to June
30, 2005, net of disposition of several properties.

Assets  held  for  sale of $940  represents  commercial  real  estate  that  was
previously  under a lease contract with a purchase  option.  Management  entered
into a plan to sell during the quarter ended  September  30, 2005.  The property
was  written  down to selling  price less cost to dispose and  transferred  from
Other  Assets to Assets  Held For Sale during the quarter  ended  September  30,
2005. The property was placed under contract subsequent to September 30, 2005.

Other assets decreased by $3,124, or 44.0%, to $3,976 at September 30, 2005. The
decrease  was  primarily  the result of the sale of two  parcels  of  commercial
property that were under lease and the transfer of another  parcel of commercial
property to Assets Held For Sale as previously discussed. The Company recognized
a loss of $446 related to the sale of the two parcels.

Deposits  increased  $4,782,  or 3.0%, to $162,327 at September  30, 2005,  from
$157,545 at December 31, 2004.  The  increase  was  substantially  the result of
increases in commercial checking accounts and, to a lesser extent,  increases in
savings accounts.

Borrowings  decreased by $13,494,  or 42.8%,  to $18,000 at September  30, 2004,
substantially  as a result of the  repayment  of overnight  borrowings  with the
proceeds of investment sales.

The Company had  stockholders'  equity of $18,379 as of  September  30,  2005, a
decrease of $39, or 0.2%,  from $18,418 as of December 31, 2004.  Net income for
the nine months ended  September  30, 2005,  was $605.  Equity was  decreased by
dividends of $.28 per share,  or $682.  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 $310, or 131.4%, due
to an unrealized  loss of $74 at September 30, 2005, as a result of decreases in
fair  value of the  securities  available-for-sale.  This was  primarily  due to
higher  market rates of interest  and the sale of $15,504 in  available-for-sale
securities.

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 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,
the Bank has borrowing ability from the Federal Home Loan Bank


                                       12
<PAGE>

of Atlanta and  correspondent  banks if the need for additional funds arises. At
September  30, 2005,  the Bank had  commitments  to originate  and fund loans of
$18.2 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, 2005.

<TABLE>
<CAPTION>
                                                        September 30, 2005
                                 -----------------------------------------------------------------
                                                   (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                $ 23,561     13.3%          N/A      N/A           N/A       N/A
     First Financial Bank          19,575     11.4%     $  6,960      4.0%     $ 10,441       6.0%

Total Risk-Based Capital
     Consolidated                $ 25,166     14.2%          N/A      N/A           N/A       N/A
     First Financial Bank          21,131     12.3%     $ 13,921      8.0%     $ 17,401      10.0%

Tier 1 Leverage
     Consolidated                $ 23,561     11.6%          N/A      N/A           N/A       N/A
     First Financial Bank          19,575      9.8%     $  8,113      4.0%     $ 10,142       5.0%
</TABLE>

As of September  30,  2005,  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, 2005
-------------------------------------------------------------------------------
and 2004
--------

Net loss for the three months ended  September 30, 2005, was $533, a decrease of
$752,  from net income of $219 for the three months  ended  September 30 , 2004.
The loss and decrease in earnings was the result of $843 of pension  termination
expense  recorded  during  the three  months  ended  September  30,  2005.  Also
contributing to the loss was $446 recorded in connection with the disposition of
two  parcels  of  commercial  property  and  the  write-down  of one  parcel  of
commercial real estate previously under lease.

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

Total interest  income  increased  $239, or 9.5%, to $2,766 for the three months
ended September 30, 2005. This increase was  substantially due to an increase in
the average yield on interest-earnings assets to 6.3% for the three months ended
September 30, 2005,  compared to 5.5% for the same quarter a year ago, offset by
a decrease  in the  average  balance on  interest-earnings  assets for the three
months  ended  September  30,  2005,  compared  to the same  quarter  a year ago
primarily as a result of the sale of approximately $15,000 in investments in the
first quarter of 2005.

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

Interest  expense for the quarter  ended  September  30,  2005,  was $1,195,  an
increase of $112,  or 10.3%,  from $1,083 for the quarter  ended  September  30,
2004.  The increase was  substantially  the result of an increase in the average
rate paid on  interest-bearing  liabilities  to 2.6% for the three  months ended
September  30,  2005,  compared  to 2.4% for the  corresponding  quarter  of the
previous  year,  somewhat  offset  by a  decrease  in  the  average  balance  of
interest-bearing liabilities compared to the same quarter a year ago as a result
of the repayment of overnight  deposits with funds from the approximate  $15,000
sale of investments in the first quarter of 2005.


                                       13
<PAGE>

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

Net interest income for the quarter ended September 30, 2005, increased $127, or
8.8%, to $1,571 from the quarter ended September 30, 2004, level of $1,444.  The
increase  was  primarily  the result of an increase in the average net  interest
spread to 3.7% for the quarter ended  September  30, 2005,  compared to 3.1% for
the same period a year ago. The net interest  margin also  increased to 3.6% for
the quarter ended September 30, 2005, from 3.1% 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 $166 during the quarter ended  September 30, 2005,  compared
to $119 for the quarter ended  September 30, 2004. 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,  2005,  increased
slightly to $748 from the September 30, 2004, level of $714. The increase is the
result in slight increase of fee income.

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

Noninterest  expenses  during the quarter ended  September  30, 2005,  increased
$1,291,  or 73.9%,  to $3,039,  from the September 30, 2004,  quarter of $1,748.
This increase was  substantially  the result of $843 of pension plan termination
expense  recorded  during  the three  months  ended  September  30,  2005.  Also
contributing   to  the  increase  was  $446  recorded  in  connection  with  the
disposition and write-down of three parcels of commercial real estate previously
under lease.

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

The provision  (benefit) for income taxes  increased  $425, to a benefit of $353
for the quarter ended  September 30, 2005, as compared to a provision of $72 for
the  corresponding  quarter in the previous  year. The decreased tax expense was
due primarily to a decrease in pretax income.

Results of Operations - Comparison of the Nine Months Ended September 30, 2005
------------------------------------------------------------------------------
and 2004
--------

Net income for the nine months ended  September 30, 2005,  was $605, an increase
of $160, or 36.0%,  from net income of $445 for the nine months ended  September
30, 2004.  The increase was  primarily the result of an increase in net interest
income  and  a  reduction  in  loan  loss  provision  partially  resulting  from
recoveries.  Included in the nine months  ended  September  30,  2005,  were the
following  transactions;  a gain on sale of  investments  of $354, a gain on the
sale of an equity  investment  in the Bank's  data  processing  company of $363,
pension plan termination expense of $843 and losses totaling $446 on disposition
of two  parcels  of  commercial  property  and the  write-down  of one parcel of
commercial real estate previously under lease.

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

Total  interest  income  increased  $672, or 9.3%, to $7,921 for the nine months
ended  September  30, 2005.  This  increase was  substantially  the result of an
increase in the average yield on the interest-earning assets to 6.0%


                                       14
<PAGE>

during the nine  months  ended  September  30,  2005,  from 5.3% during the nine
months  ended  September  30, 2004,  offset by a slight  decrease in the average
balance on interest-earning assets for the nine months ended September 30, 2005,
compared to the same quarter a year ago.

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

Interest  expense for the nine months ended September 30, 2005,  increased $389,
or 12.7%,  to $3,449,  from $3,060  during the nine months ended  September  30,
2005.  This  increase was primarily  attributable  to an increase in the average
rate paid on  interest-bearing  liabilities  to 2.5% for the nine  month  period
ended  September  30, 2005,  compared to 2.3% for the same period a year ago, in
addition to an increase in the average balance of interest-bearing liabilities.

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

Net interest  income for the nine months  ended  September  30, 2005,  increased
$283, or 6.8 %, to $4,472,  from $4,189 for the nine months ended  September 30,
2004. This increase was due primarily to an increase in the average net interest
spread to 3.5% for the nine months ended  September  30, 2005,  compared to 3.1%
for the same period a year ago.  The net interest  margin  increased to 3.4% for
the nine months ended  September  30, 2005,  from 3.1% for the nine months ended
September 30, 2004.

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

Management  increased the Company's  total allowance for loan losses by a charge
to the  provision  of $202  during the nine months  ended  September  30,  2005,
compared to $548 for the nine months ended September 30, 2004. 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, 2005, totaled $2,976,
as compared to $2,139 for the nine months ended September 30, 2004. The increase
was primarily the result of a gain on the sale of investments of $354 and a gain
on the sale of an equity  investment  in the Bank's data  processing  company of
$363. In addition, a curtailment gain of $68 was recorded in connection with the
termination of the Pension Plan.

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

Noninterest  expenses during the nine months ended September 30, 2005, increased
$1,224 to $6,464 from the 2004 level of $5,240.  The increase was  substantially
the result of $843 of pension plan termination expense recorded during the three
months ended September 30, 2005.  Also  contributing to the increase was $446 of
expense  recorded in connection  with the  disposition  and  write-down of three
parcels of commercial real estate previously under lease.

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

The provision for income taxes  increased $82, to $177 for the nine months ended
September 30, 2005, as compared to $95 for the corresponding period of the prior
year. The increased tax expense was due to the increase in pretax income.


                                       15
<PAGE>

Recent Events
-------------

On  September 8, 2005,  the Company  announced  that the Board of Directors  has
approved  proceeding  with  a  proposed  going  private  transaction  which,  if
completed,  would reduce the number of  stockholders of record to less than 100.
The purpose of the  transaction is to allow the Company to deregister its shares
of common  stock under the  Securities  Exchange  Act of 1934 and to elect to be
taxed as a Subchapter S corporation.  Consummation of the transaction is subject
to approval of the Company's stockholders.

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,  2005,  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  controls 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  in 2006,  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, 2005, 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.


                                       16
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

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


                                       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 14, 2005                         \s\ B. K. Goodwin, III
      ----------------------                    --------------------------------
                                                B. K. Goodwin, III,
                                                Chairman of the Board,
                                                Chief Executive Officer,
                                                and President


Date: November 14, 2005                         \s\ Lynn J. Joyce
      ----------------------                    --------------------------------
                                                Lynn J. Joyce
                                                Chief Financial Officer,
                                                Executive Vice President,
                                                Secretary and Treasurer


                                       18