##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 31, 2008
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the transition period from  to
 Commission File Number: 000-51668
 GREENVILLE FEDERAL FINANCIAL CORPORATION
  Ohio
    
    20-3742295(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer Identification No.)
 
 
 
  þ o
  Large accelerated filer o
    
    Accelerated filer oNon-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



Greenville Federal Financial Corporation
  PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Consolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Comprehensive Income (Loss)
    
    
    6Consolidated Statements of Cash Flows
    
    
    7Notes to Consolidated Financial Statements
    
    
    9Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    13Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4T.
    
    Controls and Procedures
    
    
    19PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    20Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3.
    
    Defaults Upon Senior Securities
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    21Item 6.
    
    Exhibits
    
    
    21SIGNATURES
    
    
    22EX-4EX-31.1EX-31.2EX-32.1EX-32.2
 2






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##### Table of Contents



ITEM 1. Financial Statements
 
 Greenville Federal Financial Corporation
Consolidated Balance Sheets
(In thousands, except share data)
 December 31,
    
    
    June 30,2008
    
    
    2008(Unaudited)ASSETSCash and due from banks
    
    $
    2,058
    
    
    $
    1,601Interest-bearing deposits in other financial institutions
    
    
    4,288
    
    
    
    5,619Cash and cash equivalents
    
    
    6,346
    
    
    
    7,220Investment securities designated as available for sale  at market
    
    
    12,801
    
    
    
    16,157Investment securities designated as held to maturity  at amortized cost
    
    
    16
    
    
    
    2,021Mortgage-backed securities designated as held to maturity  at amortized cost
    
    
    2,182
    
    
    
    1,280Loans receivable  net of allowance for loan losses of $558 and $583 at
December 31, 2008 and June 30, 2008, respectively
    
    
    90,463
    
    
    
    89,851Office premises and equipment  at depreciated cost
    
    
    1,930
    
    
    
    1,907Real estate acquired through foreclosure
    
    
    576
    
    
    
    687Stock in Federal Home Loan Bank  at cost
    
    
    2,003
    
    
    
    1,976Cash surrender value of life insurance
    
    
    4,079
    
    
    
    4,002Accrued interest receivable
    
    
    501
    
    
    
    549Deferred federal income taxes
    
    
    168
    
    
    
    157Prepaid expenses and other assets
    
    
    291
    
    
    
    319Total assets
    
    $
    121,356
    
    
    $
    126,126LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    80,608
    
    
    $
    83,697Advances from the Federal Home Loan Bank
    
    
    20,504
    
    
    
    19,214Advances by borrowers for taxes and insurance
    
    
    468
    
    
    
    398Accrued interest payable
    
    
    151
    
    
    
    215Other liabilities
    
    
    580
    
    
    
    691Accrued federal income taxes
    
    
    
    
    
    
    55Total liabilities
    
    
    102,311
    
    
    
    104,270Commitments and contingencies
    
    
    
    
    
    
    Stockholders equityPreferred stock  authorized 1,000,000 shares, $.01 par value; no shares issued
    
    
    
    
    
    
    Common stock  authorized 8,000,000 shares of $.01 par value; 2,298,411 shares
issued and outstanding
    
    
    23
    
    
    
    23Additional paid-in capital
    
    
    9,057
    
    
    
    9,021Retained earnings  restricted
    
    
    10,596
    
    
    
    13,443Shares acquired by Employee Stock Ownership Plan
    
    
    (631
    )
    
    
    (631
    )Total stockholders equity
    
    
    19,045
    
    
    
    21,856Total liabilities and stockholders equity
    
    $
    121,356
    
    
    $
    126,126
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
 Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest incomeLoans
    
    $
    1,494
    
    
    $
    1,531
    
    
    $
    2,988
    
    
    $
    3,041Mortgage-backed securities
    
    
    23
    
    
    
    23
    
    
    
    40
    
    
    
    47Investment securities
    
    
    171
    
    
    
    310
    
    
    
    349
    
    
    
    644Interest-bearing deposits and other
    
    
    28
    
    
    
    53
    
    
    
    73
    
    
    
    104Total interest income
    
    
    1,716
    
    
    
    1,917
    
    
    
    3,450
    
    
    
    3,836Interest expenseDeposits
    
    
    447
    
    
    
    625
    
    
    
    905
    
    
    
    1,239Borrowings
    
    
    202
    
    
    
    305
    
    
    
    407
    
    
    
    629Total interest expense
    
    
    649
    
    
    
    930
    
    
    
    1,312
    
    
    
    1,868Net interest income
    
    
    1,067
    
    
    
    987
    
    
    
    2,138
    
    
    
    1,968Provision for losses on loans
    
    
    50
    
    
    
    
    
    
    
    50
    
    
    
    Net interest income after
provision for losses on loans
    
    
    1,017
    
    
    
    987
    
    
    
    2,088
    
    
    
    1,968Other incomeCustomer service charges
    
    
    147
    
    
    
    161
    
    
    
    303
    
    
    
    315Gain on sale of real estate acquired through
foreclosure
    
    
    4
    
    
    
    
    
    
    
    4
    
    
    
    Other operating
    
    
    76
    
    
    
    69
    
    
    
    147
    
    
    
    130Total other income
    
    
    227
    
    
    
    230
    
    
    
    454
    
    
    
    445General, administrative and other expenseEmployee compensation and benefits
    
    
    610
    
    
    
    517
    
    
    
    1,177
    
    
    
    1,041Occupancy and equipment
    
    
    97
    
    
    
    95
    
    
    
    196
    
    
    
    186Franchise taxes
    
    
    48
    
    
    
    58
    
    
    
    96
    
    
    
    117Data processing
    
    
    95
    
    
    
    129
    
    
    
    240
    
    
    
    255Advertising
    
    
    18
    
    
    
    15
    
    
    
    37
    
    
    
    33Loss on redemption of investment securities
    
    
    4
    
    
    
    
    
    
    
    8
    
    
    
    Impairment charge on investment securities
    
    
    1,456
    
    
    
    
    
    
    
    2,848
    
    
    
    Provision for loss on real estate acquired
through foreclosure
    
    
    170
    
    
    
    
    
    
    
    183
    
    
    
    Other operating
    
    
    238
    
    
    
    166
    
    
    
    443
    
    
    
    322Total general, administrative
and other expense
    
    
    2,736
    
    
    
    980
    
    
    
    5,228
    
    
    
    1,954Income (loss) before income taxes
    
    
    (1,492
    )
    
    
    237
    
    
    
    (2,686
    )
    
    
    459
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
 Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Federal income taxesCurrent
    
    
    (36
    )
    
    
    90
    
    
    
    18
    
    
    
    167Deferred
    
    
    
    
    
    
    (23
    )
    
    
    
    
    
    
    (37
    )Total federal income taxes
    
    
    (36
    )
    
    
    67
    
    
    
    18
    
    
    
    130NET INCOME (LOSS)
    
    $
    (1,456
    )
    
    $
    170
    
    
    $
    (2,704
    )
    
    $
    329Earnings per share  basic and diluted
    
    $
    (0.66
    )
    
    $
    0.08
    
    
    $
    (1.22
    )
    
    $
    0.15Dividends declared per share
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.14
 See notes to consolidated financial statements.
 5




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Greenville Federal Financial Corporation
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    (1,456
    )
    
    $
    170
    
    
    $
    (2,704
    )
    
    $
    329Other comprehensive income
(losses), net of related tax
benefits:Unrealized holding gains
(losses) on securities
during the period, net
of taxes (benefits) of
$0, $6, $0 and $0 for
the respective periods
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    Comprehensive income
    
    $
    (1,456
    )
    
    $
    182
    
    
    $
    (2,704
    )
    
    $
    329Accumulated comprehensive loss
    
    $
    
    
    
    $
    (339
    )
    
    $
    
    
    
    $
    (339
    )
 See notes to consolidated financial statements.
 6




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Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows
For the six months ended December 31, 2008 and 2007
(In thousands)
(Unaudited)
 2008
    
    
    2007Cash flows from operating activities:Net income (loss) for the period
    
    $
    (2,704
    )
    
    $
    329Adjustments to reconcile net income to net cash provided by operating activities:Accretion and amortization of premiums and discounts on investments and
mortgage-backed securities  net
    
    
    (1
    )
    
    
    (1
    )Amortization of deferred loan origination fees
    
    
    (23
    )
    
    
    (17
    )Depreciation and amortization
    
    
    60
    
    
    
    64Amortization of mortgage servicing rights
    
    
    7
    
    
    
    14Amortization of expense related to stock benefit plans
    
    
    36
    
    
    
    Other-than-temporary impairment of investment securities designated as
available for sale
    
    
    2,848
    
    
    
    Loss on redemption of investment security
    
    
    8
    
    
    
    Provision for losses on loans
    
    
    50
    
    
    
    Provision for loss on real estate acquired through foreclosure
    
    
    183
    
    
    
    Gain on disposition of real estate acquired through foreclosure
    
    
    (4
    )
    
    
    Federal Home Loan Bank stock dividends
    
    
    (27
    )
    
    
    Increase in cash surrender value of life insurance
    
    
    (77
    )
    
    
    (77
    )Increase (decrease) in cash due to changes in:Accrued interest receivable on loans
    
    
    30
    
    
    
    (18
    )Accrued interest receivable on mortgage-backed securities
    
    
    (4
    )
    
    
    1Accrued interest receivable on investment securities and other
    
    
    22
    
    
    
    15Prepaid expenses and other assets
    
    
    10
    
    
    
    172Accrued interest payable
    
    
    (64
    )
    
    
    (73
    )Other liabilities
    
    
    (111
    )
    
    
    121Federal income taxesCurrent
    
    
    (55
    )
    
    
    100Deferred
    
    
    
    
    
    
    (37
    )Net cash provided by operating activities
    
    
    184
    
    
    
    593Cash flows used in investing activities:Purchases of investment securities designated as available for sale
    
    
    
    
    
    
    (450
    )Purchases of mortgage-backed securities designated as held to maturity
    
    
    (1,004
    )
    
    
    Sale/redemption of investment securities
    
    
    500
    
    
    
    Proceeds from maturity of investment securities designated as held to maturity
    
    
    2,005
    
    
    
    2,005Proceeds from repayment of mortgage-backed securities
    
    
    103
    
    
    
    200Loan principal repayments
    
    
    6,032
    
    
    
    6,420Loan disbursements
    
    
    (6,881
    )
    
    
    (7,612
    )Purchase of office equipment
    
    
    (83
    )
    
    
    Additions to real estate acquired through foreclosure
    
    
    
    
    
    
    (13
    )Proceeds from sale of real estate acquired through foreclosure
    
    
    155
    
    
    
    Net cash provided by investing activities
    
    
    814
    
    
    
    563Net cash provided by operating and investing activities
(balance carried forward)
    
    
    998
    
    
    
    1,156
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows (Continued)
For the six months ended December 31, 2008 and 2007
(In thousands)
(Unaudited)
 2008
    
    
    2007Net cash provided by operating and investing activities
(balance brought forward)
    
    $
    998
    
    
    $
    1,156Cash flows provided by financing activities:Net increase (decrease) in deposit accounts
    
    
    (3,089
    )
    
    
    (1,875
    )Proceeds from Federal Home Loan Bank advances
    
    
    3,500
    
    
    
    18,500Repayments of Federal Home Loan Bank advances
    
    
    (2,210
    )
    
    
    (17,815
    )Advances by borrowers for taxes and insurance
    
    
    70
    
    
    
    73Shares acquired by 2006 Equity Plan
    
    
    
    
    
    
    (183
    )Dividends on common stock
    
    
    (143
    )
    
    
    (145
    )Net cash used in financing activities
    
    
    (1,872
    )
    
    
    (1,445
    )Net decrease in cash and cash equivalents
    
    
    (874
    )
    
    
    (289
    )Cash and cash equivalents at beginning of period
    
    
    7,220
    
    
    
    3,527Cash and cash equivalents at end of period
    
    $
    6,346
    
    
    $
    3,238Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    1,376
    
    
    $
    1,941Federal income taxes
    
    $
    92
    
    
    $
    Supplemental disclosure of noncash investing activities:Transfers from loans to real estate acquired through foreclosure
    
    $
    210
    
    
    $
    Unrealized gains on securities designated as available for
sale, net of related tax effects
    
    $
    
    
    
    $
    
 See notes to consolidated financial statements.
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Greenville
Federal Financial Corporation
 Notes to Consolidated Financial Statements
For the six- and three-month periods ended December 31, 2008 and 2007
 Note 1: Basis of Presentation
    Note 2: Principles of Consolidation
  Note 3: Earnings Per Share
  9




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Greenville
Federal Financial Corporation
 Notes to Consolidated Financial Statements
   Note 4: Recent Accounting Developments
     10




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Greenville
Federal Financial Corporation
 Notes to Consolidated Financial Statements
  Note 5: Commitments
  Note 6: Disclosures About Fair Value of Assets and Liabilities
 Fair Value Measurements
  Level 1
    
    Quoted prices in active markets for identical assets
or liabilitiesLevel 2
    
    Observable inputs other than Level 1 prices, such as
quoted prices for similar assets or liabilities; quoted prices in active
markets that are not active; or other inputs that are observable or can
be corroborated by observable market data for substantially the full
term of the assets or liabilities.Level 3
    
    Unobservable inputs that are supported by little or no
market activity and that are significant to the fair value of the assets
or liabilities
  Available-for-Sale Securities
  11




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Greenville
Federal Financial Corporation
 Notes to Consolidated Financial Statements
  Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    Significant Other
    
    SignificantIdentical Assets
    
    Observable Inputs
    
    Unobservable InputsFair Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Available-for-sale
securities
    
    $
    12,801,000
    
    
    
    
    
    
    $
    12,801,000
  12




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Forward Looking Statements
  Critical Accounting Policies
  Discussion of Financial Condition Changes from June 30, 2008 to December 31, 2008
     13




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
  
     14




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
  December 31, 2008Minimum Required For
    
    Minimum Required To Be WellCapital Adequacy
    
    Capitalized Under PromptActual
    
    Purposes
    
    Corrective Action RegulationsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Tangible capital
    
    $
    10,608
    
    
    
    8.7
    %
    
    $
    1,820
    
    
    
    1.5
    %
    
    $
    6,068
    
    
    
    5.0
    %Core capital
    
    $
    10,608
    
    
    
    8.7
    %
    
    $
    4,854
    
    
    
    4.0
    %
    
    $
    7,282
    
    
    
    6.0
    %Risk-based capital
    
    $
    11,109
    
    
    
    15.9
    %
    
    $
    5,601
    
    
    
    8.0
    %
    
    $
    7,002
    
    
    
    10.0
    %
 Comparison of Operating Results for the Three-Month Periods Ended December 31, 2008 and 2007
 General
  Net Interest Income
  
 15




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
   16




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
  Federal Income Taxes
  Comparison of Operating Results for the Six-Month Periods Ended December 31, 2008 and 2007
 General
   Net Interest Income
   17




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
   Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
   Federal Income Taxes
  18




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Greenville
Federal Financial Corporation
 Managements Discussion and Analysis of Financial Condition
and Results of Operations
 Current Financial Market Turmoil
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4T. Controls and Procedures
   19




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Greenville Federal Financial Corporation
 PART II  OTHER INFORMATION (CONTINUED)
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  For
    
    
    WithheldRichard J. OBrien
    
    
    2,164,707
    
    
    
    18,906Eunice F. Steinbrecher
    
    
    2,163,232
    
    
    
    20,381
 BKD, LLP
 BrokerFor
    
    Against
    
    Abstain
    
    non-vote2,179,552
    
    750
    
    3,311
    
    0
 20




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Greenville Federal Financial Corporation
 PART II  OTHER INFORMATION (CONTINUED)
 
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
 3.1
    
    Greenville Federal Financial Corporation Federal Stock Subsidiary Holding
Company Charter3.2
    
    Greenville Federal Financial Corporation Federal Stock Subsidiary Holding
Company Bylaws4
    
    Agreement to Furnish Long-Term Debt Instruments and Agreements31.1
    
    Chief Executive Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Chief Financial Officer certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Chief Executive Officer certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 21




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##### Table of Contents



Greenville Federal Financial Corporation
 
 SIGNATURES
  GREENVILLE FEDERAL FINANCIAL CORPORATIONDate: February 13, 2009
    By:
    /s/ David M. KeplerDavid M. KeplerPresident and Chief Executive OfficerDate: February 13, 2009
    By:
    /s/ Susan J. AllreadSusan J. AllreadChief Financial Officer 22




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INDEX TO EXHIBITS
 3.1
    
    Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Charter
(Incorporated by reference to Exhibit 2 to the Registration Statement on Form 8-A filed by the
Registrant with the Securities and Exchange Commission on December 14, 2006)3.2
    
    Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Bylaws
(Incorporated by reference to Exhibit 3 to the Registration Statement on Form 8-A filed by the
Registrant with the Securities and Exchange Commission on December 14, 2006)4
    
    Agreement to Furnish Long-Term Debt Instruments and Agreements31.1
    
    Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
    
    Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1
    
    Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 23