##### 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 endedSeptember 30, 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
    
    (IRS Employer Identification No.)incorporation or organization)
  
  
  
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




---



##### 



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
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    16Item 4T. Controls and Procedures
    
    
    17PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    18Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    18Item 3. Defaults Upon Senior Securities
    
    
    18Item 4. Submission of Matters to a Vote of Security Holders
    
    
    19Item 5. Other Information
    
    
    19Item 6. Exhibits
    
    
    19SIGNATURES
    
    
    20EX-4EX-31.1EX-31.2EX-32.1EX-32.2
  2




---



##### Table of Contents



ITEM 1. Financial Statements
 Greenville Federal Financial Corporation
Consolidated Balance Sheets
(In thousands, except share data)
 September 30,
    
    
    June 30,2008
    
    
    2008(Unaudited)ASSETSCash and due from banks
    
    $
    2,136
    
    
    $
    1,601Interest-bearing deposits in other financial institutions
    
    
    2,860
    
    
    
    5,619Cash and cash equivalents
    
    
    4,996
    
    
    
    7,220Investment securities designated as available for sale  at market
    
    
    14,511
    
    
    
    16,157Investment securities designated as held to maturity  at amortized cost
    
    
    1,019
    
    
    
    2,021Mortgage-backed securities designated as held to maturity  at amortized cost
    
    
    1,219
    
    
    
    1,280Loans receivable  net of allowance for loan losses of $546 and $583 at
September 30, 2008 and June 30, 2008, respectively
    
    
    90,085
    
    
    
    89,851Office premises and equipment  at depreciated cost
    
    
    1,877
    
    
    
    1,907Real estate acquired through foreclosure
    
    
    848
    
    
    
    687Stock in Federal Home Loan Bank  at cost
    
    
    2,003
    
    
    
    1,976Cash surrender value of life insurance
    
    
    4,042
    
    
    
    4,002Accrued interest receivable
    
    
    519
    
    
    
    549Deferred federal income taxes
    
    
    154
    
    
    
    157Prepaid expenses and other assets
    
    
    337
    
    
    
    319Total assets
    
    $
    121,610
    
    
    $
    126,126LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    81,913
    
    
    $
    83,697Advances from the Federal Home Loan Bank
    
    
    18,205
    
    
    
    19,214Advances by borrowers for taxes and insurance
    
    
    301
    
    
    
    398Accrued interest payable
    
    
    177
    
    
    
    215Other liabilities
    
    
    394
    
    
    
    691Accrued federal income taxes
    
    
    66
    
    
    
    55Total liabilities
    
    
    101,056
    
    
    
    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
    
    
    9,039
    
    
    
    9,021Retained earnings  restricted
    
    
    12,123
    
    
    
    13,443Shares acquired by Employee Stock Ownership Plan
    
    
    (631
    )
    
    
    (631
    )Total stockholders equity
    
    
    20,554
    
    
    
    21,856Total liabilities and stockholders equity
    
    $
    121,610
    
    
    $
    126,126
 See notes to consolidated financial statements.
 3




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)
 Three months endedSeptember 30,2008
    
    
    2007Interest incomeLoans
    
    $
    1,494
    
    
    $
    1,510Mortgage-backed securities
    
    
    17
    
    
    
    24Investment securities
    
    
    178
    
    
    
    334Interest-bearing deposits and other
    
    
    45
    
    
    
    51Total interest income
    
    
    1,734
    
    
    
    1,919Interest expenseDeposits
    
    
    458
    
    
    
    614Borrowings
    
    
    205
    
    
    
    324Total interest expense
    
    
    663
    
    
    
    938Net interest income
    
    
    1,071
    
    
    
    981Provision for losses on loans
    
    
    
    
    
    
    Net interest income after provision for losses on loans
    
    
    1,071
    
    
    
    981Other incomeCustomer service charges
    
    
    156
    
    
    
    154Other operating
    
    
    71
    
    
    
    61Total other income
    
    
    227
    
    
    
    215General, administrative and other expenseEmployee compensation and benefits
    
    
    567
    
    
    
    524Occupancy and equipment
    
    
    99
    
    
    
    91Franchise taxes
    
    
    48
    
    
    
    59Data processing
    
    
    145
    
    
    
    126Advertising
    
    
    19
    
    
    
    18Other operating
    
    
    205
    
    
    
    156Impairment charge on investment securities
    
    
    1,392
    
    
    
    Loss on redemption of investment securities
    
    
    4
    
    
    
    Provision for loss on real estate acquired through foreclosure
    
    
    13
    
    
    
    Total general, administrative and other expense
    
    
    2,492
    
    
    
    974Income before income taxes
    
    
    (1,194
    )
    
    
    222Federal incomes taxesCurrent
    
    
    54
    
    
    
    77Deferred
    
    
    
    
    
    
    (14
    )Total federal income taxes
    
    
    54
    
    
    
    63NET INCOME (Loss)
    
    $
    (1,248
    )
    
    $
    159Earnings (Loss) per share  basic and diluted
    
    $
    (0.56
    )
    
    $
    0.07Dividends declared per share
    
    $
    0.07
    
    
    $
    0.07
 See notes to consolidated financial statements.
 4




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
 Three Months EndedSeptember 30,2008
    
    
    2007Net income (loss)
    
    $
    (1,248
    )
    
    $
    159Other comprehensive losses, net of related tax benefits:Unrealized holding losses on securities during the
period ending September 30, 2007, net of taxes
(benefits) of $(6)
    
    
    
    
    
    
    (12
    )Comprehensive income (loss)
    
    $
    (1,248
    )
    
    $
    147Accumulated comprehensive loss
    
    $
    
    
    
    $
    (351
    )
 See notes to consolidated financial statements.
 5




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 Consolidated Statements of Cash Flows
For the three months ended September 30, 2008 and 2007
(In thousands)
(Unaudited)
 2008
    
    
    2007Cash flows from operating activities:Net income (loss) for the period
    
    $
    (1,248
    )
    
    $
    159Adjustments 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
    
    
    (16
    )
    
    
    (48
    )Depreciation and amortization
    
    
    30
    
    
    
    32Amortization of mortgage servicing rights
    
    
    4
    
    
    
    9Amortization of ESOP expense
    
    
    15
    
    
    
    Amortization of expense related to stock benefit plans
    
    
    18
    
    
    
    Other-than-temporary impairment of investment securities designated as
available for sale
    
    
    1,392
    
    
    
    Sale/redemption of investment securities
    
    
    250
    
    
    
    Loss on redemption of investment security
    
    
    4
    
    
    
    Provision for loss on real estate acquired through foreclosure
    
    
    13
    
    
    
    Federal Home Loan Bank stock dividends
    
    
    (27
    )
    
    
    Increase in cash surrender value of life insurance
    
    
    (40
    )
    
    
    (38
    )Increase (decrease) in cash due to changes in:Accrued interest receivable on loans
    
    
    24
    
    
    
    (16
    )Accrued interest receivable on mortgage-backed securities
    
    
    1
    
    
    
    1Accrued interest receivable on investment securities and other
    
    
    5
    
    
    
    (54
    )Prepaid expenses and other assets
    
    
    (19
    )
    
    
    40Accrued interest payable
    
    
    (38
    )
    
    
    (88
    )Other liabilities
    
    
    (312
    )
    
    
    11Federal income taxesCurrent
    
    
    11
    
    
    
    77Deferred
    
    
    
    
    
    
    (14
    )Net cash provided by operating activities
    
    
    66
    
    
    
    70Cash flows provided by investing activities:Purchases of investment securities designated as available for sale
    
    
    
    
    
    
    (228
    )Proceeds from maturity of investment securities designated as held to maturity
    
    
    1,002
    
    
    
    1,002Proceeds from repayment of mortgage-backed securities
    
    
    62
    
    
    
    140Loan principal repayments
    
    
    3,105
    
    
    
    3,376Loan disbursements
    
    
    (3,493
    )
    
    
    (3,705
    )Additions to real estate acquired through foreclosure
    
    
    (4
    )
    
    
    Net cash provided by investing activities
    
    
    672
    
    
    
    585Net cash provided by operating and investing activities
(balance carried forward)
    
    
    738
    
    
    
    655
 See notes to consolidated financial statements.
 6




---



##### Table of Contents



Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows (Continued)
For the three months ended September 30, 2008 and 2007
(In thousands)
(Unaudited)
 2008
    
    
    2007Net cash provided by operating and investing activities
(balance brought forward)
    
    $
    738
    
    
    $
    655Cash flows used in financing activities:Net increase in deposit accounts
    
    
    (1,784
    )
    
    
    (15
    )Proceeds from Federal Home Loan Bank advances
    
    
    
    
    
    
    10,500Repayments of Federal Home Loan Bank advances
    
    
    (1,009
    )
    
    
    (11,060
    )Advances by borrowers for taxes and insurance
    
    
    (97
    )
    
    
    (93
    )Shares acquired by 2006 Equity Plan
    
    
    
    
    
    
    Dividends on common stock
    
    
    (72
    )
    
    
    (72
    )Net cash used in financing activities
    
    
    (2,962
    )
    
    
    (740
    )Net decrease in cash and cash equivalents
    
    
    (2,224
    )
    
    
    (85
    )Cash and cash equivalents at beginning of period
    
    
    7,220
    
    
    
    3,527Cash and cash equivalents at end of period
    
    $
    4,996
    
    
    $
    3,442Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    701
    
    
    $
    1,026Federal income taxes
    
    $
    40
    
    
    $
    Supplemental disclosure of noncash investing activities:Transfers from loans to real estate acquired through foreclosure
    
    $
    173
    
    
    $
    Unrealized losses on securities designated as available for
sale, net of related tax benefits
    
    $
    
    
    
    $
    (12
    )
 See notes to consolidated financial statements.
 7




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 Notes to Consolidated Financial Statements
For the three-month periods ended September 30, 2008 and 2007
 Note 1: Basis of Presentation
    Note 2: Principles of Consolidation
  Note 3: Earnings Per Share
  8




---



##### Table of Contents



Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
   Note 4: Recent Accounting Developments
     9




---



##### Table of Contents



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
  10




---



##### Table of Contents



Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
  Fair Value Measurements UsingQuoted Pricesin Active
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableAssets
    
    Inputs
    
    InputsFair Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Available-for-sale
securities
    
    $
    14,511,000
    
    
    
    
    
    
    $
    14,511,000
  Note 7: Subsequent Events
  11




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 Item 2. 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 September 30, 2008
     12




---



##### Table of Contents



Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations
       13




---



##### Table of Contents



Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations
  September 30, 2008Minimum Required ToMinimum Required For
    
    Be Well CapitalizedCapital Adequacy
    
    Under Prompt CorrectiveActual
    

    Purposes
    
    Action RegulationsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    

Ratio(Dollars in thousands)Tangible capital
    
    $
    12,065
    
    
    
    9.9
    %
    
    $
    1,824
    
    
    
    1.5
    %
    
    $
    6,081
    
    
    
    5.0
    %Core capital
    
    $
    12,065
    
    
    
    9.9
    %
    
    $
    4,864
    
    
    
    4.0
    %
    
    $
    7,297
    
    
    
    6.0
    %Risk-based capital
    
    $
    12,543
    
    
    
    17.7
    %
    
    $
    5,659
    
    
    
    8.0
    %
    
    $
    7,074
    
    
    
    10.0
    %
 Comparison of Operating Results for the Three-Month Periods Ended September 30, 2008 and 2007
 General
   Net Interest Income
   14




---



##### Table of Contents



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
   15




---



##### Table of Contents



Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations
   Federal Income Taxes
  Current Financial Market Turmoil
   
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  16




---



##### Table of Contents



Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations
 
 ITEM 4T. Controls and Procedures
   17




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 PART II  OTHER INFORMATION
 
 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
  18




---



##### Table of Contents



Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
 
 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 Bylaws4
    
    Agreement to Furnish Long-Term Debt Instruments and Agreements10.1
    
    First Amendment to Employment Agreement with David M. Kepler10.2
    
    First Amendment to Employment Agreement with Susan J. Allread10.3
    
    Greenville Federal Financial Corporation Amended and Restated 2006 Equity
Plan10.4
    
    Form of Greenville Federal Financial Corporation 2006 Equity Plan Award
Agreement31.1
    
    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
 19




---



##### Table of Contents



Greenville Federal Financial Corporation
 
 SIGNATURES
  GREENVILLE FEDERAL FINANCIAL CORPORATIONDate: November 14, 2008
    
    By:
    
    /s/David M. Kepler

David M. KeplerPresident and Chief Executive OfficerDate: November 14, 2008
    
    By:
    
    /s/Susan J. Allread

Susan J. AllreadChief Financial Officer
 20




---



##### 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
(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 Agreements10.1
    
    First Amendment to Employment Agreement with David M. Kepler (Incorporated by reference to
Exhibit 10.3 to the Annual Report on Form 10-K filed by the Registrant with the Securities and
Exchange Commission on September 25, 2008)10.2
    
    First Amendment to Employment Agreement with Susan J. Allread (Incorporated by reference to
Exhibit 10.2 to the Annual Report on Form 8-K filed by the Registrant with the Securities and
Exchange Commission on September 25, 2008)10.3
    
    Greenville Federal financial Corporation Amended and Restated 2006 Equity Plan (Incorporated
by reference to Exhibit 10.7 to the Annual Report on Form 10-K filed by the Registrant with
the Securities and Exchange Commission on September 25, 2008)10.4
    
    Form of Greenville Federal Financial Corporation 2006 Equity Plan Award Agreement
(Incorporated by reference to Exhibit 10.8 to the Annual Report on Form 10-K filed by the
Registrant with the Securities and Exchange Commission on September 25, 2008)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