##### 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 March 31, 2009
 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
  o o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ  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)
    
    
    5Consolidated Statements of Cash Flows
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    19Item 4T.
    
    Controls and Procedures
    
    
    19PART II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    19Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    19Item 3.
    
    Defaults Upon Senior Securities
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits
    
    
    20SIGNATURES
    
    
    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)
 March 31,
    
    
    June 30,2009
    
    
    2008(Unaudited)ASSETSCash and due from banks
    
    $
    2,128
    
    
    $
    1,601Interest-bearing deposits in other financial institutions
    
    
    3,780
    
    
    
    5,619Cash and cash equivalents
    
    
    5,908
    
    
    
    7,220Investment securities designated as available for sale  at market
    
    
    12,073
    
    
    
    16,157Investment securities designated as held to maturity  at amortized cost
    
    
    13
    
    
    
    2,021Mortgage-backed securities designated as held to maturity  at amortized cost
    
    
    2,029
    
    
    
    1,280Loans receivable  net of allowance for loan losses of $575 and $583 at
March 31, 2009 and June 30, 2008, respectively
    
    
    91,723
    
    
    
    89,851Office premises and equipment  at depreciated cost
    
    
    1,988
    
    
    
    1,907Real estate acquired through foreclosure
    
    
    672
    
    
    
    687Stock in Federal Home Loan Bank  at cost
    
    
    2,003
    
    
    
    1,976Cash surrender value of life insurance
    
    
    4,115
    
    
    
    4,002Accrued interest receivable
    
    
    466
    
    
    
    549Deferred federal income taxes
    
    
    137
    
    
    
    157Prepaid expenses and other assets
    
    
    394
    
    
    
    319Total assets
    
    $
    121,521
    
    
    $
    126,126LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    76,229
    
    
    $
    83,697Advances from the Federal Home Loan Bank
    
    
    25,707
    
    
    
    19,214Advances by borrowers for taxes and insurance
    
    
    306
    
    
    
    398Accrued interest payable
    
    
    142
    
    
    
    215Other liabilities
    
    
    523
    
    
    
    691Accrued federal income taxes
    
    
    
    
    
    
    55Total liabilities
    
    
    102,907
    
    
    
    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 2,297,851 outstanding
    
    
    23
    
    
    
    23Additional paid-in capital
    
    
    9,108
    
    
    
    9,021Treasury Stock, at cost, 560 shares
    
    
    (4
    )
    
    
    Retained earnings  restricted
    
    
    10,118
    
    
    
    13,443Shares acquired by Employee Stock Ownership Plan
    
    
    (631
    )
    
    
    (631
    )Total stockholders equity
    
    
    18,614
    
    
    
    21,856Total liabilities and stockholders equity
    
    $
    121,521
    
    
    $
    126,126
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Operations
(In thousands)
(Unaudited)
 Three months ended
    
    
    Nine months endedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Interest incomeLoans
    
    $
    1,518
    
    
    $
    1,500
    
    
    $
    4,505
    
    
    $
    4,541Mortgage-backed securities
    
    
    30
    
    
    
    22
    
    
    
    70
    
    
    
    69Investment securities
    
    
    134
    
    
    
    254
    
    
    
    483
    
    
    
    898Interest-bearing deposits and other
    
    
    23
    
    
    
    45
    
    
    
    96
    
    
    
    149Total interest income
    
    
    1,705
    
    
    
    1,821
    
    
    
    5,154
    
    
    
    5,657Interest expenseDeposits
    
    
    385
    
    
    
    572
    
    
    
    1,289
    
    
    
    1,811Borrowings
    
    
    236
    
    
    
    256
    
    
    
    643
    
    
    
    885Total interest expense
    
    
    621
    
    
    
    828
    
    
    
    1,932
    
    
    
    2,696Net interest income
    
    
    1,084
    
    
    
    993
    
    
    
    3,222
    
    
    
    2,961Provision for losses on loans
    
    
    35
    
    
    
    
    
    
    
    85
    
    
    
    Net interest income after
provision for losses on loans
    
    
    1,049
    
    
    
    993
    
    
    
    3,137
    
    
    
    2,961Other incomeCustomer service charges
    
    
    126
    
    
    
    142
    
    
    
    429
    
    
    
    457Gain on sale of real estate acquired through
foreclosure
    
    
    
    
    
    
    1
    
    
    
    4
    
    
    
    1Other operating
    
    
    55
    
    
    
    63
    
    
    
    203
    
    
    
    193Total other income
    
    
    181
    
    
    
    206
    
    
    
    636
    
    
    
    651General, administrative and other expenseEmployee compensation and benefits
    
    
    607
    
    
    
    517
    
    
    
    1,784
    
    
    
    1,558Occupancy and equipment
    
    
    113
    
    
    
    96
    
    
    
    309
    
    
    
    282Franchise taxes
    
    
    35
    
    
    
    50
    
    
    
    131
    
    
    
    167Data processing
    
    
    82
    
    
    
    141
    
    
    
    322
    
    
    
    396Advertising
    
    
    12
    
    
    
    19
    
    
    
    49
    
    
    
    52Loss (gain) on redemption of investment
securities
    
    
    (3
    )
    
    
    
    
    
    
    5
    
    
    
    Impairment charge on investment securities
    
    
    482
    
    
    
    
    
    
    
    3,329
    
    
    
    Loss on sale of real estate acquired through
foreclosure
    
    
    10
    
    
    
    
    
    
    
    10
    
    
    
    Provision for loss on real estate acquired
through foreclosure
    
    
    10
    
    
    
    22
    
    
    
    193
    
    
    
    22Other operating
    
    
    231
    
    
    
    167
    
    
    
    677
    
    
    
    489Total general, administrative
and other expense
    
    
    1,579
    
    
    
    1,012
    
    
    
    6,809
    
    
    
    2,966Income (loss) before income taxes
    
    
    (349
    )
    
    
    187
    
    
    
    (3,036
    )
    
    
    646Federal incomes taxesCurrent
    
    
    22
    
    
    
    (19
    )
    
    
    39
    
    
    
    148Deferred
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    33Total federal income taxes
    
    
    22
    
    
    
    51
    
    
    
    39
    
    
    
    181NET INCOME (LOSS)
    
    $
    (371
    )
    
    $
    136
    
    
    $
    (3,075
    )
    
    $
    465Earnings (loss) per share  basic and diluted
    
    $
    (.17
    )
    
    $
    0.06
    
    
    $
    (1.38
    )
    
    $
    0.21Dividends declared per share
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.21
    
    
    $
    0.21
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    (371
    )
    
    $
    136
    
    
    $
    (3,075
    )
    
    $
    465Other comprehensive income
(losses), net of related tax
benefits:Unrealized holding gains
(losses) on securities
during the period, net
of taxes (benefits) of
$0,$(62), $0 and $(62)
for the respective
periods
    
    
    
    
    
    
    (120
    )
    
    
    
    
    
    
    (120
    )Comprehensive income (loss)
    
    $
    (371
    )
    
    $
    16
    
    
    $
    (3075
    )
    
    $
    345Accumulated comprehensive loss
    
    $
    
    
    
    $
    (459
    )
    
    $
    
    
    
    $
    (459
    )
 See notes to consolidated financial statements.
 5




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Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows
For the nine months ended March 31, 2009 and 2008
(In thousands)
(Unaudited)
 2009
    
    
    2008Cash flows from operating activities:Net income (loss) for the period
    
    $
    (3,075
    )
    
    $
    465Adjustments to reconcile net income (loss) to net cash provided by operating
activities:Accretion and amortization of premiums and discounts on investments and
mortgage-backed securities  net
    
    
    (2
    )
    
    
    (2
    )Amortization of deferred loan origination fees
    
    
    (80
    )
    
    
    (33
    )Depreciation and amortization
    
    
    98
    
    
    
    94Amortization of expense related to stock benefit plans
    
    
    54
    
    
    
    17Amortization of mortgage servicing rights
    
    
    23
    
    
    
    22Provision for losses on loans
    
    
    85
    
    
    
    Other-than-temporary impairment of investment securities designated as
available for sale
    
    
    3,329
    
    
    
    Loss on redemption of investment securities
    
    
    5
    
    
    
    Provision for losses on real estate acquired through foreclosure
    
    
    193
    
    
    
    22Loss on sale of real estate acquired through foreclosure
    
    
    10
    
    
    
    Gain on sale of real estate acquired through foreclosure
    
    
    (4
    )
    
    
    (1
    )Federal Home Loan Bank stock dividends
    
    
    (27
    )
    
    
    (25
    )Increase in cash surrender value of life insurance
    
    
    (113
    )
    
    
    (114
    )Increase (decrease) in cash due to changes in:Accrued interest receivable on loans
    
    
    57
    
    
    
    11Accrued interest receivable on mortgage-backed securities
    
    
    (3
    )
    
    
    1Accrued interest receivable on investment securities and other
    
    
    29
    
    
    
    11Prepaid expenses and other assets
    
    
    (78
    )
    
    
    24Accrued interest payable
    
    
    (73
    )
    
    
    (164
    )Other liabilities
    
    
    (168
    )
    
    
    538Federal income taxesCurrent
    
    
    (55
    )
    
    
    Deferred
    
    
    
    
    
    
    33Net cash provided by operating activities
    
    
    205
    
    
    
    899Cash flows provided by (used in) investing activities:Purchases of investment securities designated as available for sale
    
    
    
    
    
    
    (450
    )Proceeds from maturity of investment securities designated as held to maturity
    
    
    2,008
    
    
    
    9,007Sale/redemption of investment securities
    
    
    750
    
    
    
    Purchases of mortgage-backed securities designated as held to maturity
    
    
    (1,004
    )
    
    
    Proceeds from repayment of mortgage-backed securities
    
    
    257
    
    
    
    284Loan principal repayments
    
    
    9,693
    
    
    
    9,675Loan disbursements
    
    
    (11,964
    )
    
    
    (11,999
    )Purchase of office equipment
    
    
    (179
    )
    
    
    (7
    )Additions to real estate acquired through foreclosure
    
    
    (14
    )
    
    
    Proceeds from sale of real estate acquired through foreclosure
    
    
    224
    
    
    
    85Net cash provided by (used in) investing activities
    
    
    (229
    )
    
    
    6,595Net cash provided by (used in) operating and investing activities
(balance carried forward)
    
    
    (24
    )
    
    
    7,494
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows (Continued)
For the nine months ended March 31, 2009 and 2008
(In thousands)
(Unaudited)
 2009
    
    
    2008Net cash provided by (used in) operating and investing activities
(balance brought forward)
    
    $
    (24
    )
    
    $
    7,494Cash flows used in financing activities:Net increase (decrease) in deposit accounts
    
    
    (7,468
    )
    
    
    677Proceeds from Federal Home Loan Bank advances
    
    
    9,500
    
    
    
    30,000Repayments of Federal Home Loan Bank advances
    
    
    (3,007
    )
    
    
    (35,146
    )Advances by borrowers for taxes and insurance
    
    
    (92
    )
    
    
    (85
    )Shares acquired by 2006 Equity Plan
    
    
    
    
    
    
    (183
    )Purchase of treasury shares
    
    
    (4
    )
    
    
    Dividends on common stock
    
    
    (217
    )
    
    
    (217
    )Net cash used in financing activities
    
    
    (1,288
    )
    
    
    (4,954
    )Net increase (decrease) in cash and cash equivalents
    
    
    (1,312
    )
    
    
    2,540Cash and cash equivalents at beginning of period
    
    
    7,220
    
    
    
    3,527Cash and cash equivalents at end of period
    
    $
    5,908
    
    
    $
    6,067Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    2,005
    
    
    $
    2,860Federal income taxes
    
    $
    92
    
    
    $
    83Supplemental disclosure of noncash investing activities:Transfers from loans to real estate acquired through foreclosure
    
    $
    394
    
    
    $
    Unrealized gains (losses) on securities designated as available
for sale, net of related tax effects
    
    $
    
    
    
    $
    (120
    )
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008
 Note 1: Basis of Presentation
    Note 2: Principles of Consolidation
  Note 3: Earnings Per Share
  8




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008
   Note 4: Recent Accounting Developments
    9




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008
   
    
    FAS SFAS 157-4 Determining Fair Value When the Volume and Level of Activity for the
Assets or Liability Have Significantly Decreased and Identifying Transactions That Are Not
Orderlyaddresses the criteria to be used in the determination of an active market in
determining whether observable transactions are Level 1 or Level 2 under the framework
established by SFAS 157, Fair Value Measurements.The FSP reiterates that fair value is
based on the notion of exit price in an orderly transaction between willing market
participants at the valuation date.
    
    FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-than-Temporary
Impairmentsprovide additional guidance designed to create greater clarity and consistency
in accounting for and presenting impairment losses on debt securities.
    
    FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instrumentsenhances consistency in financial reporting by increasing the frequency of
fair value disclosures.
  Note 5: Commitments
  10




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008
 Note 6: Disclosures About Fair Value of Assets and Liabilities
 Fair Value Measurements
  Level 1
    
    Quoted prices in active markets for identical assets
or liabilities.Level 2
    
    Observable inputs other than Level 1 prices, such as
quoted prices for similar assets or liabilities; quoted prices in
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.
 11




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008
  Available-for-Sale Securities
   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
    
    $
    12,073,000
    
    
    
    
    
    
    $
    12,073,000
  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 March 31, 2009
     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
  March 31, 2009Minimum Required To BeWell Capitalized UnderMinimum Required For
    
    Prompt Corrective ActionActual
    
    Capital Adequacy Purposes
    
    RegulationsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(Dollars in thousands)Tangible capital
    
    $
    10,251
    
    
    
    8.4
    %
    
    $
    1,822
    
    
    
    1.5
    %
    
    $
    6,075
    
    
    
    5.0
    %Core capital
    
    $
    10,251
    
    
    
    8.4
    %
    
    $
    4,860
    
    
    
    4.0
    %
    
    $
    7,290
    
    
    
    6.0
    %Risk-based capital
    
    $
    10,708
    
    
    
    15.3
    %
    
    $
    5,605
    
    
    
    8.0
    %
    
    $
    7,007
    
    
    
    10.0
    %
 Comparison of Operating Results for the Three-Month Periods Ended March 31, 2009 and 2008
 General
  Net Interest Income
   15




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
  Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
   16




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
  Federal Income Taxes
  Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2009 and 2008
 General
   Net Interest Income
   17




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
   Provision for Losses on Loans
  Other Income
  General, Administrative and Other Expense
   Federal Income Taxes
 18




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
  Current Financial Market Turmoil
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4T. Controls and Procedures
   
 ITEM 1. Legal Proceedings
  ITEM 1A. Risk Factors
  
 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 19




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
  Maximum Number (orTotal Number of
    
    Approximate DollarShares (or Units)
    
    Value) of SharesPurchased as Part
    
    (or Units) That MayTotal Number of
    
    
    
    
    
    of Publicly
    
    Be Purchased UnderShares (or Units)
    
    Average Price Paid
    
    Announced Plans or
    
    the Plans orPeriod
    
    Purchased(1)
    
    Per Share (or Unit)
    
    Programs
    
    ProgramsFebruary 2009
    
    
    560
    
    
    $
    8.00
    
    
    
    
    
    
    
    
 
 (1)
    
    All of the 560 shares were repurchased pursuant to a put
option under the Companys employee stock ownership plan. 
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 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 Bylaws (as amended on April 21, 2009)4
    
    Agreement to Furnish Long-Term Debt Instruments and Agreements10.1
    
    Employment Agreement with Jeff D. Kniese31.1
    
    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 2002
 20




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
 32.1
    
    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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Greenville Federal Financial Corporation
 
 SIGNATURES
  GREENVILLE FEDERAL FINANCIAL CORPORATIONDate:    May 14, 2009
    By:

/s/ Jeff D. KnieseJeff D. KniesePresident and Chief Executive OfficerDate:    May 14, 2009
    By:

/s/ Susan J. AllreadSusan J. AllreadChief Financial Officer 22




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##### Table of Contents



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 (as
Amended on April 21, 2009)
(Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the
Registrant with the Securities and Exchange Commission on April 24, 2009)4
    
    Agreement to Furnish Long-Term Debt Instruments and Agreements10.1
    
    Employment Agreement with Jeff D. Kniese
(Incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Registrant with the
Securities and Exchange Commission on April 14, 2009)31.1
    
    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