##### 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, 2007
 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)
 690 Wagner Avenue, Greenville, Ohio 45331
   (Issuers telephone number)
  (Former name, former address and former fiscal year, if changed since last report)
  þ o
  o o o þ
   o þ




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##### 



Greenville Federal Financial Corporation
  PagePART I  FINANCIAL INFORMATIONItem 1. Consolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Comprehensive Income
    
    
    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
    
    
    17Item 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-31.1EX-31.2EX-32.1EX-32.2
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ITEM 1. Financial Statements
 Greenville Federal Financial Corporation
 
 Consolidated Balance Sheets
 (In thousands, except share data)
 December 31, 2007
    
    
    June 30, 2007(Unaudited)ASSETSCash and due from banks
    
    $
    2,073
    
    
    $
    2,030Interest-bearing deposits in other financial institutions
    
    
    1,165
    
    
    
    1,497Cash and cash equivalents
    
    
    3,238
    
    
    
    3,527Investment securities designated as available for sale  at market
    
    
    17,463
    
    
    
    17,013Investment securities designated as held to maturity  at amortized cost
    
    
    9,026
    
    
    
    11,031Mortgage-backed securities designated as held to maturity  at amortized cost
    
    
    1,485
    
    
    
    1,684Loans receivable  net of allowance for loan losses of $558 and $579 at
December 31, 2007 and June 30, 2007, respectively
    
    
    88,622
    
    
    
    87,413Office premises and equipment  at depreciated cost
    
    
    1,958
    
    
    
    2,022Real estate acquired through foreclosure
    
    
    247
    
    
    
    247Stock in Federal Home Loan Bank  at cost
    
    
    1,925
    
    
    
    1,925Cash surrender value of life insurance
    
    
    3,926
    
    
    
    3,849Accrued interest receivable on loans
    
    
    460
    
    
    
    442Accrued interest receivable on mortgage-backed securities
    
    
    8
    
    
    
    9Accrued interest receivable on investment securities and other
    
    
    84
    
    
    
    99Prepaid expenses and other assets
    
    
    261
    
    
    
    447Total assets
    
    $
    128,703
    
    
    $
    129,708LIABILITIES AND STOCKHOLDERS EQUITYDeposits
    
    $
    77,758
    
    
    $
    79,633Advances from the Federal Home Loan Bank
    
    
    26,810
    
    
    
    26,125Advances by borrowers for taxes and insurance
    
    
    455
    
    
    
    382Accrued interest payable
    
    
    260
    
    
    
    333Other liabilities
    
    
    508
    
    
    
    387Accrued federal income taxes
    
    
    100
    
    
    
    Deferred federal income taxes
    
    
    67
    
    
    
    104Total liabilities
    
    
    105,958
    
    
    
    106,964Commitments 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
    
    
    8,962
    
    
    
    9,145Retained earnings  restricted
    
    
    14,820
    
    
    
    14,636Shares acquired by Employee Stock Ownership Plan
    
    
    (721
    )
    
    
    (721
    )Accumulated comprehensive loss  unrealized losses on securities designated as
available for sale, net of related tax effects
    
    
    (339
    )
    
    
    (339
    )Total stockholders equity
    
    
    22,745
    
    
    
    22,744Total liabilities and stockholders equity
    
    $
    128,703
    
    
    $
    129,708
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
 
 Consolidated Statements of Income
 (In thousands, except share data)
(Unaudited)
 Three months ended
    
    
    Six months endedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Interest incomeLoans
    
    $
    1,531
    
    
    $
    1,458
    
    
    $
    3,041
    
    
    $
    2,876Mortgage-backed securities
    
    
    23
    
    
    
    27
    
    
    
    47
    
    
    
    55Investment securities
    
    
    310
    
    
    
    348
    
    
    
    644
    
    
    
    690Interest-bearing deposits and other
    
    
    53
    
    
    
    50
    
    
    
    104
    
    
    
    101Total interest income
    
    
    1,917
    
    
    
    1,883
    
    
    
    3,836
    
    
    
    3,722Interest expenseDeposits
    
    
    625
    
    
    
    555
    
    
    
    1,239
    
    
    
    1,103Borrowings
    
    
    305
    
    
    
    358
    
    
    
    629
    
    
    
    698Total interest expense
    
    
    930
    
    
    
    913
    
    
    
    1,868
    
    
    
    1,801Net interest income
    
    
    987
    
    
    
    970
    
    
    
    1,968
    
    
    
    1,921Provision for losses on loans
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    10Net interest income after
provision for losses on
loans
    
    
    987
    
    
    
    962
    
    
    
    1,968
    
    
    
    1,911Other incomeCustomer service charges
    
    
    161
    
    
    
    147
    
    
    
    315
    
    
    
    278Other operating
    
    
    69
    
    
    
    59
    
    
    
    130
    
    
    
    119Total other income
    
    
    230
    
    
    
    206
    
    
    
    445
    
    
    
    397General, administrative and other expenseEmployee compensation and benefits
    
    
    517
    
    
    
    518
    
    
    
    1,041
    
    
    
    1,014Occupancy and equipment
    
    
    95
    
    
    
    97
    
    
    
    186
    
    
    
    199Franchise taxes
    
    
    58
    
    
    
    38
    
    
    
    117
    
    
    
    95Data processing
    
    
    129
    
    
    
    109
    
    
    
    255
    
    
    
    219Advertising
    
    
    15
    
    
    
    20
    
    
    
    33
    
    
    
    40Other operating
    
    
    166
    
    
    
    180
    
    
    
    322
    
    
    
    340Total general,
administrative and other
expense
    
    
    980
    
    
    
    962
    
    
    
    1,954
    
    
    
    1,907Income before income taxes
    
    
    237
    
    
    
    206
    
    
    
    459
    
    
    
    401Federal incomes taxesCurrent
    
    
    90
    
    
    
    51
    
    
    
    167
    
    
    
    118Deferred
    
    
    (23
    )
    
    
    7
    
    
    
    (37
    )
    
    
    (6
    )Total federal income taxes
    
    
    67
    
    
    
    58
    
    
    
    130
    
    
    
    112NET INCOME
    
    $
    170
    
    
    $
    148
    
    
    $
    329
    
    
    $
    289Earnings per share  basic and diluted
    
    $
    0.08
    
    
    $
    0.07
    
    
    $
    0.15
    
    
    $
    0.13Dividends declared per share
    
    $
    0.07
    
    
    $
    0.07
    
    
    $
    0.14
    
    
    $
    0.14
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
 
 Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)
 Three Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income
    
    $
    170
    
    
    $
    148
    
    
    $
    329
    
    
    $
    289Other comprehensive income
(losses), net of related tax
benefits:Unrealized holding gains
(losses) on securities
during the period, net
of taxes (benefits) of
$6, $(12), $0 and $11
for the respective
periods
    
    
    12
    
    
    
    (23
    )
    
    
    
    
    
    
    22Comprehensive income
    
    $
    182
    
    
    $
    125
    
    
    $
    329
    
    
    $
    311Accumulated comprehensive loss
    
    $
    (339
    )
    
    $
    (293
    )
    
    $
    (339
    )
    
    $
    (293
    )
 See notes to consolidated financial statements.
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Greenville Federal Financial Corporation
 
 Consolidated Statements of Cash Flows
 For the six months ended December 31, 2007 and 2006
(In thousands)
(Unaudited)
 2007
    
    
    2006Cash flows from operating activities:Net income for the period
    
    $
    329
    
    
    $
    289Adjustments 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
    )
    
    
    Amortization of deferred loan origination fees
    
    
    (17
    )
    
    
    (28
    )Depreciation and amortization
    
    
    64
    
    
    
    75Amortization of mortgage servicing rights
    
    
    14
    
    
    
    19Provision for losses on loans
    
    
    
    
    
    
    10Federal Home Loan Bank stock dividends
    
    
    
    
    
    
    (56
    )Increase in cash surrender value of life insurance
    
    
    (77
    )
    
    
    (72
    )Increase (decrease) in cash due to changes in:Accrued interest receivable on loans
    
    
    (18
    )
    
    
    (15
    )Accrued interest receivable on mortgage-backed securities
    
    
    1
    
    
    
    1Accrued interest receivable on investment securities and other
    
    
    15
    
    
    
    4Prepaid expenses and other assets
    
    
    172
    
    
    
    7Accrued interest payable
    
    
    (73
    )
    
    
    48Other liabilities
    
    
    121
    
    
    
    47Federal income taxesCurrent
    
    
    100
    
    
    
    (14
    )Deferred
    
    
    (37
    )
    
    
    (6
    )Net cash provided by operating activities
    
    
    593
    
    
    
    309Cash flows used in investing activities:Purchases of investment securities designated as available for sale
    
    
    (450
    )
    
    
    (413
    )Proceeds from maturity of investment securities designated as held to maturity
    
    
    2,005
    
    
    
    2,005Proceeds from repayment of mortgage-backed securities
    
    
    200
    
    
    
    194Loan principal repayments
    
    
    6,420
    
    
    
    8,005Loan disbursements
    
    
    (7,612
    )
    
    
    (10,607
    )Purchase of office equipment
    
    
    
    
    
    
    (46
    )Proceeds from sale of real estate acquired through foreclosure
    
    
    
    
    
    
    499Net cash provided by (used in) investing activities
    
    
    563
    
    
    
    (363
    )Net cash provided by (used in) operating and investing activities
(balance carried forward)
    
    
    1,156
    
    
    
    (54
    )
 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, 2007 and 2006
(In thousands)
(Unaudited)
 2007
    
    
    2006Net cash provided by (used in) operating and investing activities
(balance brought forward)
    
    $
    1,156
    
    
    $
    (54
    )Cash flows provided by financing activities:Net increase (decrease) in deposit accounts
    
    
    (1,875
    )
    
    
    24Proceeds from Federal Home Loan Bank advances
    
    
    18,500
    
    
    
    19,000Repayments of Federal Home Loan Bank advances
    
    
    (17,815
    )
    
    
    (18,464
    )Advances by borrowers for taxes and insurance
    
    
    73
    
    
    
    70Shares acquired by 2006 Equity Plan
    
    
    (183
    )
    
    
    Dividends on common stock
    
    
    (145
    )
    
    
    (145
    )Net cash provided by (used in) financing activities
    
    
    (1,445
    )
    
    
    485Net increase (decrease) in cash and cash equivalents
    
    
    (289
    )
    
    
    431Cash and cash equivalents at beginning of period
    
    
    3,527
    
    
    
    3,254Cash and cash equivalents at end of period
    
    $
    3,238
    
    
    $
    3,685Supplemental disclosure of cash flow information:Cash paid during the period for:Interest on deposits and borrowings
    
    $
    1,941
    
    
    $
    1,753Federal income taxes
    
    $
    
    
    
    $
    133Supplemental disclosure of noncash investing activities:Transfers from loans to real estate acquired through foreclosure
    
    $
    
    
    
    $
    811Unrealized gains on securities designated as available for sale,
net of related tax effects
    
    $
    
    
    
    $
    22
 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, 2007 and 2006
 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 (Continued)
For the six- and three-month periods ended December 31, 2007 and 2006
   Note 4: Recent Accounting Developments
  
    
    Separately recognize financial assets as servicing assets or servicing liabilities, each
time it undertakes an obligation to service a financial asset by entering into certain
kinds of servicing contracts;
    
    Separately present servicing assets and liabilities subsequently measured at fair value
in the statement of financial condition and additional disclosures for all separately
recognized servicing assets and servicing liabilities; and
    
    Initially measure all separately recognized servicing assets and liabilities at fair
value, if practicable.
    9




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements (Continued)
For the six- and three-month periods ended December 31, 2007 and 2006
  Note 5: Stock-Based Compensation Plan
      10




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Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements (Continued)
For the six- and three-month periods ended December 31, 2007 and 2006
  11




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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, 2007 to December 31, 2007
    12




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Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
      Comparison of Operating Results for the Three-Month Periods Ended December 31, 2007 and 2006
 General
  13




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Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
 Net Interest Income
    Provision for Losses on Loans
  Other Income
  14




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Greenville Federal Financial Corporation
Managements Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
 General, Administrative and Other Expense
  Federal Income Taxes
  Comparison of Operating Results for the Six-Month Periods Ended December 31, 2007 and 2006
 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 (Continued)
   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 (Continued)
 Federal Income Taxes
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
  
 ITEM 4T. Controls and Procedures
   17




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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
 (a)
    
    None(b)
    
    None(c)
    
    The following table sets forth certain information regarding repurchases by
the Company for the quarter ended December 31, 2007.
 Total # of
    
    Maximum # of sharesTotal
    
    Average
    
    shares purchased
    
    which may still be# of shares
    
    price paid
    
    as part of the
    
    purchased as partPeriod
    
    purchased
    
    per share
    
    announced plan
    
    of the announced planOctober 1-31, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    19,745November 1-30, 2007
    
    
    19,745
    
    
    $
    9.20
    
    
    
    19,745
    
    
    
    December 1-31, 2007
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
 Notes to the Table:
 On June 29, 2007, the Companys shareholders ratified the 2006 Equity
Plan which provided for 45,048 shares to be awarded to members of
management and the board of directors through the Recognition and
Retention Plan. The purchase in November 2007 completed the
acquisition of shares for this plan by the Company.
 
 ITEM 3. Defaults Upon Senior Securities
  18




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Greenville Federal Financial Corporation
PART II  OTHER INFORMATION (CONTINUED)
 
 ITEM 4. Submission of Matters to a Vote of Security Holders
  For
    
    WithheldDavid T. Feltman
    
    
    2,037,859
    
    
    
    16,275David M. Kepler
    
    
    2,036,649
    
    
    
    17,485
 BKD, LLP
 BrokerFor
    
    Against
    
    Abstain
    
    non-vote2,048,249
    
    
    4,760
    
    
    
    1,125
    
    
    
    0
 BKD, LLP
 BrokerFor
    
    Against
    
    Abstain
    
    non-vote2,049,709
    
    
    3,300
    
    
    
    1,125
    
    
    
    0
 
 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 Bylaws10.1
    
    Employment Agreement with David M. Kepler10.2
    
    Employment Agreement with Susan J. Allread31.1
    
    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
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Greenville Federal Financial Corporation
 
 SIGNATURES
  GREENVILLE FEDERAL FINANCIAL CORPORATIONDate:    February 12, 2008
    By:
    /s/David M. KeplerDavid M. KeplerPresident and Chief Executive OfficerDate:    February 12, 2008
    By:
    /s/Susan J. AllreadSusan J. AllreadChief Financial Officer 20




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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)10.1
    
    Employment Agreement with David M. Kepler (Incorporated by reference to Exhibit 10.1 to the
Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission
on December 21, 2007)10.2
    
    Employment Agreement with Susan J. Allread (Incorporated by reference to Exhibit 10.2 to the
Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission
on December 21, 2007)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