**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **Washington,
        D.C. 20549**
 
 **FORM
        10-Q**
 
 QUARTERLY
        REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
 For
                    the quarterly period ended
                March
                    31, 2007Commission
                    File Number:
                0-27672NORTH
                    CENTRAL BANCSHARES, INC.(Exact
                    name of registrant as specified in its
                    charter)
  Iowa
                42-1449849(State
                    or other jurisdiction of incorporation or organization)
                (I.R.S.
                    Employer Identification No.)
  825
                    Central Avenue, Fort Dodge, Iowa
                50501(Address
                    of principal executive offices)
                (Zip
                    Code)
  515-576-7531(Registrant’s
                    telephone number, including area
                    code)
 
 Indicate
        by check mark whether the registrant (1) has filed all reports required to
        be
        filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
        the
        preceding 12 months (or for such shorter period that the registrant was required
        to file such reports), and (2) has been subject to such filing requirements
        for
        the past 90 days.
 Yes þ No  ̈
 
 Indicate
        by check mark whether the registrant is a large accelerated filer, an
        accelerated filer, or a non-accelerated filer. See definition of “accelerated
        filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
        one):
  Large accelerated filer  ̈
              Accelerated
                  filer  ̈
              Non-accelerated
                  filer þ
 
 Indicate
        by check mark whether the registrant is a shell company (as defined in Rule
        12b-2 of the Exchange Act).
 Yes  ̈ No þ
  Indicate
        the number of shares outstanding of each of the issuer's classes of common
        stock, as of the latest practicable date.
 
 Class
              
              Outstanding
                  at May 1, 2007Common
                  Stock, $.01 par value
              
              1,366,753
  NORTH
        CENTRAL BANCSHARES, INC.
 
 INDEX
  Part
        I.
        Financial Information
 
 Item
        1.
        Consolidated Condensed
 Financial
        Statements (Unaudited)
 
 Consolidated
        Condensed Statements of
 Financial
        Condition at March 31, 2007
 and
        December 31, 2006
 
 Consolidated
        Condensed Statements of
 Income
        for the Three Months Ended
 March
        31,
        2007 and 2006
 
 Consolidated
        Condensed Statements of
 Cash
        Flows for the Three Months Ended
 March
        31,
        2007 and 2006
 
 Notes
        to
        Consolidated Condensed Financial
 Statements
 
 Item
        2.
        Management's Discussion and Analysis
 of
        Financial Condition and Results of Operations
  Item
        3.
        Quantitative and Qualitative Disclosures
 About
        Market Risk
 
 Item
        4.
        Controls and Procedures
 
 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
 
 Item
        4.
        Submission of Matters to a Vote of Security Holders
 
 Item
        5.
        Other Information
 
 Item
        6.
        Exhibits
 
 Signatures
 
 Exhibits
 
  **PART
        I. FINANCIAL INFORMATION**
 **ITEM
        1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)**
 
  **NORTH
        CENTRAL BANCSHARES, INC. AND SUBSIDIARIES**
  **CONSOLIDATED
        CONDENSED STATEMENTS OF FINANCIAL CONDITION**
 (Unaudited)
 **March
                  31,**
              
              **December
                  31,****ASSETS**
              
              **2007**
              
              **2006**Cash
                  and due from banks:
                Interest-bearing
              
              $
              5,169,088
              
              $
              12,430,709Noninterest-bearing
              
              
              7,358,349
              
              
              7,591,567Securities
                  available-for-sale
              
              
              14,391,129
              
              
              14,554,052Federal
                  Home Loan Bank stock, at cost
              
              
              5,186,400
              
              
              5,476,000Loans
                  receivable, net
              
              
              452,176,836
              
              
              449,043,259Loans
                  held for sale
              
              
              675,636
              
              
              583,700Accrued
                  interest receivable
              
              
              2,234,040
              
              
              2,262,273Foreclosed
                  real estate
              
              
              680,055
              
              
              468,117Premises
                  and equipment, net
              
              
              12,590,877
              
              
              12,633,711Rental
                  real estate
              
              
              2,565,384
              
              
              2,583,492Title
                  plant
              
              
              671,704
              
              
              671,704Goodwill
              
              
              4,946,960
              
              
              4,946,960Deferred
                  taxes
              
              
              983,598
              
              
              1,027,680Prepaid
                  expenses and other assets
              
              
              1,177,218
              
              
              1,241,504**Total
                  assets**
              
              $
              510,807,274
              
              $
              515,514,728
 
 **LIABILITIES
        AND STOCKHOLDERS' EQUITY**
 **LIABILITIES**Deposits
              
              $
              362,584,211
              
              $
              360,329,810Borrowed
                  funds
              
              
              101,900,475
              
              
              107,907,563Advances
                  from borrowers for taxes and insurance
              
              
              1,225,449
              
              
              2,050,991Dividends
                  payable
              
              
              477,628
              
              
              455,616Accrued
                  expenses and other liabilities
              
              
              2,736,769
              
              
              2,578,799**Total
                  liabilities**
              
              
              468,924,532
              
              
              473,322,779COMMITMENTS
                  AND CONTINGENCIES**STOCKHOLDERS'
                  EQUITY**Preferred
                  stock ($.01 par value, authorized
                3,000,000
                  shares; none issued and outstanding)
              
              
              -
              
              
              -Common
                  stock ($.01 par value, authorized 15,500,000
                shares; issued and outstanding at March 31, 2007,
                1,364,653;
                  at December 31, 2006, 1,380,653 shares)
              
              
              13,646
              
              
              13,807Additional
                  paid-in capital
              
              
              17,750,859
              
              
              17,723,697Retained
                  earnings, substantially restricted
              
              
              23,927,343
              
              
              24,358,445Accumulated
                  other comprehensive gain
              
              
              190,894
              
              
              96,000**Total
                  stockholders' equity**
              
              
              41,882,742
              
              
              42,191,949**Total
                  liabilities and stockholders' equity**
              
              $
              510,807,274
              
              $
              515,514,728
 
 See
        Notes
        to Consolidated Condensed Financial Statements
  
  **NORTH
        CENTRAL BANCSHARES, INC. AND SUBSIDIARIES**
 
 **CONSOLIDATED
        CONDENSED STATEMENTS OF INCOME**
 (Unaudited)
 **Three
                    Months Ended****March
                    31,****2007**
                
                **2006**Interest
                    income:Loans
                    receivable
                
                $
                7,135,629
                
                $
                6,529,897Securities
                    and cash deposits
                
                
                417,342
                
                
                245,1937,552,971
                
                
                6,775,090Interest
                    expense:Deposits
                
                
                3,024,408
                
                
                2,219,434Borrowed
                    funds
                
                
                1,253,305
                
                
                1,232,4384,277,713
                
                
                3,451,872Net
                    interest income
                
                
                3,275,258
                
                
                3,323,218Provision
                    for loan losses
                
                
                30,000
                
                
                60,000Net
                    interest income after provision for
                  loan
                    losses
                
                
                3,245,258
                
                
                3,263,218Noninterest
                    income:Fees
                    and service charges
                
                
                1,007,123
                
                
                1,259,050Abstract
                    fees
                
                
                237,837
                
                
                332,874Mortgage
                    banking income
                
                
                57,065
                
                
                37,615Other
                    income
                
                
                339,520
                
                
                296,006Total
                    noninterest income
                
                
                1,641,545
                
                
                1,925,545Noninterest
                    expense:Compensation
                    and employee benefits
                
                
                1,954,940
                
                
                1,882,159Premises
                    and equipment
                
                
                387,000
                
                
                389,960Data
                    processing
                
                
                167,075
                
                
                161,773Other
                    expenses
                
                
                922,223
                
                
                942,165Total
                    noninterest expense
                
                
                3,431,238
                
                
                3,376,057Income
                    before income taxes
                
                
                1,455,565
                
                
                1,812,706Provision
                    for income taxes
                
                
                421,300
                
                
                571,750Net
                    income
                
                $
                1,034,265
                
                $
                1,240,956Basic
                    earnings per common share
                
                $
                0.75
                
                $
                0.84Diluted
                    earnings per common share
                
                $
                0.75
                
                $
                0.82Dividends
                    declared per common share
                
                $
                0.35
                
                $
                0.33Comprehensive
                    income
                
                $
                1,129,159
                
                $
                1,310,192
 See
        Notes
        to Consolidated Condensed Financial Statements.
  
  **NORTH
        CENTRAL BANCSHARES, INC. AND SUBSIDIARIES**
 
 **CONSOLIDATED
        CONDENSED STATEMENTS OF CASH FLOWS**
 (Unaudited)
 **Three
                  Months Ended**
                **March
                  31,****2007**
              
              **2006****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  income
              
              $
              1,034,265
              
              $
              1,240,956Adjustments
                  to reconcile net income to net cash provided by operating
                  activities:Provision
                  for loan losses
              
              
              30,000
              
              
              60,000Depreciation
              
              
              200,853
              
              
              167,166Amortization
                  and accretion
              
              
              93,241
              
              
              111,904Deferred
                  taxes
              
              
              (12,449
              )
              
              (14,134
              )Effect
                  of contribution to employee stock ownership plan
              
              
              -
              
              
              59,958Stock-based
                  compensation
              
              
              12,704
              
              
              51,621Net
                  tax benefit related to stock-based compensation
              
              
              (77,683
              )
              
              (56,215
              )(Gain)
                  on sale of foreclosed real estate and loans, net
              
              
              (61,835
              )
              
              (48,170
              )Write-down
                  of other real estate owned
              
              
              -
              
              
              73,118Loss
                  on sale or disposal of equipment and other assets, net
              
              
              535
              
              
              -Proceeds
                  from sales of loans held-for-sale
              
              
              4,672,267
              
              
              2,769,584Originations
                  of loans held-for-sale
              
              
              (4,707,138
              )
              
              (2,082,481
              )Change
                  in assets and liabilities:Accrued
                  interest receivable
              
              
              28,233
              
              
              33,056Prepaid
                  expenses and other assets
              
              
              64,286
              
              
              31,369Accrued
                  expenses and other liabilities
              
              
              35,653
              
              
              426,789Net
                  cash provided by operating activities
              
              
              1,312,932
              
              
              2,824,521**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Net
                  change in loans
              
              
              8,961,168
              
              
              8,758,162Purchase
                  of loans
              
              
              (12,456,752
              )
              
              (15,748,011
              )Purchase
                  of securities available-for-sale
              
              
              -
              
              
              (1,494,666
              )Proceeds
                  from maturities and calls of securities available-for-sale
              
              
              311,719
              
              
              343,634Proceeds
                  from redemption of Federal Home Loan Bank stock
              
              
              289,600
              
              
              183,900Purchase
                  of Federal Home Loan Bank stock
              
              
              -
              
              
              (339,300
              )Purchase
                  of premises, equipment and rental real estate
              
              
              (140,446
              )
              
              (621,090
              )Net
                  proceeds from sale of foreclosed real estate
              
              
              34,226
              
              
              70,710Net
                  cash (used in) investing activities
              
              
              (3,000,485
              )
              
              (8,846,661
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Net
                  increase (decrease) in deposits
              
              
              2,254,401
              
              
              4,618,258Net
                  increase (decrease) in advances from borrowers for taxes and
                  insurance
              
              
              (825,542
              )
              
              (715,450
              )Net
                  increase (decrease) in short-term borrowings
              
              
              -
              
              
              (1,000,000
              )Proceeds
                  from other borrowed funds
              
              
              -
              
              
              10,000,000Payments
                  of other borrowed funds
              
              
              (6,007,088
              )
              
              (4,006,823
              )Purchase
                  of common stock for retirement
              
              
              (1,050,740
              )
              
              (3,330,819
              )Proceeds
                  from issuance of common stock
              
              
              199,615
              
              
              159,190Net
                  tax benefit related to stock-based compensation
              
              
              77,683
              
              
              56,215Dividends
                  paid
              
              
              (455,615
              )
              
              (434,880
              )Net
                  cash provided by (used in) financing activities
              
              
              (5,807,286
              )
              
              5,345,691Net
                  increase (decrease) in cash
              
              
              (7,494,839
              )
              
              (676,449
              )**CASH
                  AND DUE FROM BANKS**Beginning
              
              
              20,022,276
              
              
              8,639,672Ending
              
              $
              12,527,437
              
              $
              7,963,223
  
  
 **CONSOLIDATED
                  CONDENSED STATEMENTS OF CASH FLOWS-**Continued
                (Unaudited)**SUPPLEMENTAL
                  DISCLOSURES OF CASH FLOW INFORMATION**Cash
                  payments for:Interest
                  paid to depositors
              
              $
              3,064,299
              
              $
              2,126,890Interest
                  paid on borrowings
              
              
              1,253,305
              
              
              1,232,416Income
                  taxes
              
              
              5,029
              
              
              -**SUPPLEMENTAL
                  DISCLOSURE OF NONCASH OPERATING,**
                **INVESTING
                  AND FINANCING ACTIVITIES**Transfers
                  from loans to other real estate owned
              
              $
              241,394
              
              $
              (173,855
              )Cumulative
                  effect of adoption of FIN 48
              
              
              200,000
              
              
              -See
                  Notes to Consolidated Condensed Financial Statements.
  
  **NORTH
        CENTRAL BANCSHARES, INC. AND SUBSIDIARIES**
 
 **NOTES
        TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)**
 
 **1.**  **SIGNIFICANT
        ACCOUNTING POLICIES**
 
 The
        consolidated condensed financial statements for the three month periods ended
        March 31, 2007 and 2006 are unaudited. In the opinion of the management of
        North
        Central Bancshares, Inc. (the “Company”), these financial statements reflect all
        adjustments, consisting only of normal recurring accruals, necessary to present
        fairly these consolidated financial statements. The results of operations
        for
        the interim periods are not necessarily indicative of results that may be
        expected for an entire year. Certain information and footnote disclosures
        normally included in complete financial statements prepared in accordance
        with
        generally accepted accounting principles have been omitted in accordance
        with
        the requirements for interim financial statements. The financial statements
        and
        notes thereto should be read in conjunction with the Company's 2006 Annual
        Report on Form 10-K.
 
 The
        consolidated condensed financial statements include the accounts of the Company
        and its wholly owned subsidiaries. All significant intercompany balances
        and
        transactions have been eliminated in consolidation.
 
 **2.**  **EARNINGS
        PER SHARE**
 
 The
        earnings per share amounts were computed using the weighted-average number
        of
        shares outstanding during the periods presented. In accordance with Statement
        of
        Position No. 93-6, *Employers'
        Accounting for Employee Stock Ownership Plans,* issued
        by the American Institute of Certified Public Accountants, shares owned by
        First
        Federal Savings Bank of Iowa’s Employee Stock Ownership Plan that have not been
        committed to be released are not considered to be outstanding for the purpose
        of
        computing earnings per share. For the three-month period ended March 31,
        2007,
        the weighted-average number of shares outstanding for basic and diluted earnings
        per share computation were 1,371,409 and 1,386,172, respectively. For the
        three-month period ended March 31, 2006, the weighted-average number of shares
        outstanding for basic and diluted earnings per share computation were 1,475,911
        and 1,507,748, respectively.
 
 **3.**  **DIVIDENDS**
 
 On
        February 23, 2007, the Company declared a cash dividend on its common stock,
        payable on April 5, 2007 to stockholders of record as of March 15, 2007,
        equal
        to $0.35 per share.
 
 **4.**  **GOODWILL**
 
 As
        of
        January 1, 2002, the Company adopted Statement of Financial Accounting Standards
        (SFAS) No. 142, *Goodwill
        and Other Intangible Assets* that
        eliminated the amortization and required a goodwill impairment test. The
        Company
        completed the goodwill impairment test during the year ended December 31,
        2006
        and has determined that there has been no impairment of goodwill.
 
 As
        of
        March 31, 2007 and December 31, 2006, the Company had goodwill of $4,946,960.
        There was no goodwill impairment loss or amortization related to goodwill
        during
        the three months ended March 31, 2007 or March 31, 2006.
 
 **5.**  **OPERATING
        SEGMENTS**
 
 An
        operating segment is generally defined as a component of a business for which
        discrete financial information is available and whose results are reviewed
        by
        the chief operating decision-maker. The Company has determined that it has
        two
        reportable segments: a traditional banking segment and a nonbank segment.
        The
        traditional banking segment consists of the Company’s banking subsidiary, First
        Federal Savings Bank of Iowa, and the holding company. First Federal Savings
        Bank of Iowa operates as a federal savings bank providing deposit, loan and
        other related products to individuals and small businesses, primarily in
        the
        communities where their offices are located. The remaining grouping under
        the
        caption “All Others” consists of the operations of the subsidiaries under the
        Bank, which includes real estate abstracting services, insurance and investment
        services, and ownership of low-income housing tax credit apartment
        complexes.
 
 Transactions
        between affiliates, the resulting revenues of which are shown in the
        inter-segment revenue category, are conducted at market prices, meaning prices
        that would be paid if the companies were not affiliates.
 
 **Three
                  Months Ended March 31, 2007****Traditional****Banking**
              
              **All
                  Others**
              
              **Total**Interest
                  income
              
              $
              7,552,971
              
              $
              -
              
              $
              7,552,971Interest
                  expense
              
              
              4,277,713
              
              
              -
              
              
              4,277,713**Net
                  interest income (loss)**
              
              
              3,275,258
              
              
              -
              
              
              3,275,258Provision
                  for loan losses
              
              
              30,000
              
              
              -
              
              
              30,000**Net
                  interest income (loss) after provision**
                **for
                  loan losses**
              
              
              3,245,258
              
              
              -
              
              
              3,245,258Noninterest
                  income
              
              
              1,115,362
              
              
              526,183
              
              
              1,641,545Noninterest
                  expense
              
              
              3,095,109
              
              
              336,129
              
              
              3,431,238**Income
                  before income taxes**
              
              
              1,265,511
              
              
              190,054
              
              
              1,455,565Provision
                  for income taxes
              
              
              419,600
              
              
              1,700
              
              
              421,300**Net
                  income**
              
              $
              845,911
              
              $
              188,354
              
              $
              1,034,265Inter-segment
                  revenue (expense)
              
              $
              231,364
              
              $
              (231,364
              )
              $
              -Total
                  assets
              
              $
              507,154,320
              
              $
              3,652,954
              
              $
              510,807,274Total
                  deposits
              
              $
              362,584,211
              
              $
              -
              
              $
              362,584,211
 
 **Three
                  Months Ended March 31, 2006****Traditional****Banking**
              
              **All
                  Others**
              
              **Total**Interest
                  income
              
              $
              6,775,090
              
              $
              -
              
              $
              6,775,090Interest
                  expense
              
              
              3,451,851
              
              
              21
              
              
              3,451,872**Net
                  interest income (loss)**
              
              
              3,323,239
              
              
              (21
              )
              
              3,323,218Provision
                  for loan losses
              
              
              60,000
              
              
              -
              
              
              60,000**Net
                  interest income (loss) after provision**
                **for
                  loan losses**
              
              
              3,263,239
              
              
              (21
              )
              
              3,263,218Noninterest
                  income
              
              
              1,336,436
              
              
              589,109
              
              
              1,925,545Noninterest
                  expense
              
              
              3,003,519
              
              
              372,538
              
              
              3,376,057**Income
                  before income taxes**
              
              
              1,596,156
              
              
              216,550
              
              
              1,812,706Provision
                  for income taxes
              
              
              551,900
              
              
              19,850
              
              
              571,750**Net
                  income**
              
              $
              1,044,256
              
              $
              196,700
              
              $
              1,240,956Inter-segment
                  revenue (expense)
              
              $
              267,722
              
              $
              (267,722
              )
              $
              -Total
                  assets
              
              $
              488,271,337
              
              $
              4,057,824
              
              $
              492,329,161Total
                  deposits
              
              $
              338,955,841
              
              $
              -
              
              $
              338,955,841
 
 **6.**  **RECENT
        ACCOUNTING PRONOUNCEMENTS**
 
 In
        February 2006, the Financial Accounting Standards Board (FASB) issued SFAS
        No.
        155, *Accounting for Certain Hybrid Financial Instruments*, which
        permits, but does not require, fair value accounting for any hybrid financial
        instrument that contains an embedded derivative that would otherwise require
        bifurcation in accordance with SFAS No. 133, *Accounting for Derivative
        Instruments and Hedging Activities*. The statement also subjects beneficial
        interests in securitized financial assets to the requirements of SFAS No.
        133.
        For the Company, this statement is effective for all financial instruments
        acquired, issued, or subject to remeasurement after the beginning of its
        fiscal
        year that begins after September 15, 2006, with earlier adoption permitted.
        The Company adopted SAFS No. 155 during the first quarter of 2007 with no
        material effects on its financial position, results of operation and cash
        flows.
 
 In
        March
        2006, the FASB issued SFAS No. 156, *Accounting for Servicing of Financial
        Assets, an amendment of FASB Statement No. 140*. The statement amends
        SFAS No. 140 by (1) requiring the separate accounting for servicing assets
        and
        servicing liabilities, which arise from the sale of financial assets; (2)
        requiring all separately recognized servicing assets and servicing liabilities
        to be initially measured at fair value, if practicable; and (3)
        permitting an entity to choose between an amortization method or a fair
        value method for subsequent measurement for each class of separately recognized
        servicing assets and servicing liabilities. This statement is effective for
        fiscal years beginning after September 15, 2006, with earlier adoption
        permitted. The Company adopted SAFS No. 156 during the first quarter of 2007
        with no material effects on its financial position, results of operation
        and
        cash flows.
 
 In
        June
        2006, the FASB issued FASB Interpretation No. 48 (FIN 48), *Accounting
        for Uncertainty in Income Taxes* .
        This
        interpretation applies to all tax positions accounted for in accordance with
        SFAS No. 109, *Accounting
        for Income Taxes* .
        FIN 48
        clarifies the application of SFAS No. 109 by defining the criteria that an
        individual tax position must meet in order for the position to be recognized
        within the financial statements and provides guidance
        on measurement, de-recognition, classification, interest and penalties,
        accounting in interim periods, disclosure and transition for tax positions.
        This
        interpretation is effective for fiscal years beginning after December 15,
        2006,
        with earlier adoption permitted. The Company adopted the provisions of FIN
        48,
        effective as of January 1, 2007. (See Note 7.)
 
 In
        September 2006, the FASB issued SFAS No. 157, *Fair
        Value Measurements* .
        This
        statement defines fair value, establishes a framework for measuring
        fair value, and expands disclosures about fair value measurements. It clarifies
        that fair value is the price that would be received to sell an asset
        or  paid
        to
        transfer a liability in an orderly transaction between market participants
        in
        the market in which the reporting entity transacts. This Statement does
        not  require
        any new fair value measurements, but rather, it provides enhanced guidance
        to
        other pronouncements that require or permit assets or liabilities to
        be  measured
        at fair value. This statement is effective for fiscal years beginning after
        November 15, 2007, with earlier adoption permitted. The Company is currently
        evaluating the impact that the adoption of this interpretation will have
        on its
        financial position, results of operation and cash flows.
 
 In
        September 2006, the FASB issued Statement No. 158, (SFAS No. 158), *Employers’
        Accounting for Defined Benefit Pension and Other* *Postretirement
        Plans - an amendment of FASB Statements No. 87, 88, 106 and
        132(R)* .
        SFAS
        No. 158 requires a company that sponsors a postretirement  benefit
        plan (other than a multi-employer plan) to fully recognize, as an asset or
        liability, the over- or underfunded status of its benefit plan in its balance
        sheet. The funded status is measured as the
        difference between the fair value of the plan’s assets and its benefit
        obligation (projected benefit obligation for pension plans and accumulated postretirement
        benefit obligation for other postretirement benefit plans). Currently, the
        funded status of such  plans
        are
        reported in the notes to the financial statements. This provision is effective for public companies for fiscal years
        ending after December 15, 2006. In addition, SFAS No. 158 also requires a company
        to measure its plan assets and benefit obligations as of its year-end balance
        sheet date. Currently, a company is permitted to choose a
        measurement  date
        up
        to three months prior to its year-end to measure the plan assets and
        obligations. This provision is effective for all companies for fiscal years
        ending  after
        December 15, 2008. Since the Company participates in a multi-employer pension
        plan, it expects that the adoption of SFAS No. 158 will not have a material
        impact on its financial position, results of operations and cash
        flows.
 
 In
        February 2007, the Financial Accounting Standards Board (FASB) issued FASB
        Statement No. 159, The Fair Value Option for Financial Assets and Financial
        Liabilities - Including an amendment of FASB Statement No. 115, which provides
        all entities, including not-for-profit organizations, with an option to report
        selected financial assets and liabilities at fair value. The objective of
        the
        Statement is to improve financial reporting by providing entities with the
        opportunity to mitigate volatility in earnings caused by measuring related
        assets and liabilities differently without having to apply the complex
        provisions of hedge accounting. Certain specified items are eligible for
        the
        irrevocable fair value measurement option as established by Statement No.
        159.
        Statement No. 159 is effective as of the beginning of an entity's first fiscal
        year beginning after November 15, 2007. Early adoption is permitted as of
        the
        beginning of a fiscal year that begins on or before November 15, 2007 provided
        the entity also elects to apply the provisions of Statement No. 157, Fair
        Value
        Measurements. The Company is currently evaluating the impact that the adoption
        of this Statement will have on its financial position, results of operation
        and
        cash flows.
 
 **7.**  **INCOME
        TAXES**
 
 The
        Company adopted the provisions of FASB Interpretation No. 48 (FIN 48), *Accounting
        for Uncertainty in Income Taxes* ,
        an
        interpretation of FASB Statement No. 109, effective as of January 1, 2007.
        As a
        result of the implementation of FIN 48, the Company recognized an increase
        of
        $200,000 in income tax liability for uncertain income tax expense. This increase
        was accounted for as an adjustment reducing the beginning balance of retained
        earnings on the Statement of Financial Condition by $200,000; $170,000 in
        taxes
        and $30,000 in interest. The Company recognizes interest and penalties related
        to uncertain tax positions in income tax expense.
 
 The
        tax
        years 2004-2006 remain open to examination by the major taxing jurisdictions
        to
        which we are subject.
 
 **8.**  **RECLASSIFICATIONS**
 
 Certain
        amounts in the prior period financial statements have been reclassified,
        with no
        effect on net income or stockholders’ equity, to be consistent with the current
        period classification.
  
  **ITEM
        2.**
 
 **MANAGEMENT'S
        DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
        OPERATIONS**
  **EXPLANATORY
        NOTE**
 
 This
        Quarterly Report on Form 10-Q contains forward-looking statements consisting
        of
        estimates with respect to the consolidated financial condition, results of
        operations and business of the Company and its subsidiaries, including the
        Bank,
        that are subject to various factors which could cause actual results to differ
        materially from these estimates. These factors include changes in general,
        economic, market, legislative and regulatory conditions, and the development
        of
        an interest rate environment that adversely affects the interest rate spread
        or
        other income anticipated from the Company's operations and investments. The
        Company's actual results may differ from the results discussed in the
        forward-looking statements. The Company disclaims any obligation to publicly
        announce future events or developments that may affect the forward-looking
        financial statements contained herein.
 
 **Executive
        Overview**
 
 The
        Company’s business strategy is to operate the Bank as a well-capitalized,
        profitable and independent community-oriented savings bank. Specifically,
        the
        Company’s business strategy incorporates the following elements: (1) increasing
        loan and deposit balances in existing branch offices as well as by establishing
        de novo branch offices in markets where population growth trends are positive,
        such as the Des Moines, Iowa metropolitan area; (2) maintaining high asset
        quality by emphasizing investment in residential mortgage, multifamily and
        commercial real estate loans and consumer loans; (3) emphasizing growth in
        core
        deposits, which includes demand deposit, NOW, money market and savings accounts;
        (4) maintaining capital in excess of regulatory requirements; (5) controlling
        noninterest expense; (6) managing interest rate risk exposure; and (7)
        increasing noninterest income through increases in fees, service charges
        and
        sales of noninsured products.
 
 The
        purpose of this summary is to provide an overview of the items that management
        focuses on when evaluating the condition of the Company and our success in
        implementing our stockholder value strategy. Our stockholder value strategy
        has
        three major themes: (1) enhancing our shareholders’ value; (2) making our retail
        banking franchise more valuable; and (3) efficiently utilizing our capital.
 
 Management
        believes the following points were the most important to that analysis this
        quarter:
 
 •
              The
                  Company has effectively managed its capital since the Company’s inception
                  in 1996. Annual dividends per share have increased from $0.25 per
                  share in
                  1997 to $1.32 per share in 2006. In 2007, the Company increased
                  its
                  quarterly dividend 6.1%, to $0.35 per share. An active stock repurchase
                  program has also been consistently used by the Company to manage
                  capital
                  and increase earnings per share. The Company repurchased 26,300
                  shares
                  during the three months ended March 31, 2007. As of March 31, 2007,
                  the
                  Company has repurchased 2,963,104 shares at a cost of $61.1 million,
                  since
                  its inception.
 
 •
              In
                  recent years the Bank has opened new offices in the Des Moines
                  metropolitan area, where population growth trends are positive.
                  In August,
                  2006, the Bank opened a new branch office in West Des Moines, Iowa
                  near
                  Jordan Town Center Mall. The Company will continue to analyze de
                  novo
                  branch opportunities in the Des Moines metropolitan area. We believe
                  that
                  this strategy will result in long-term loan and deposit growth
                  for the
                  Company, but will negatively impact short-term earnings until each
                  de novo
                  branch achieves profitability.
 
 •
              Consistent
                  with the Bank’s emphasis on attracting and retaining core deposits, growth
                  in deposit fees, including overdraft fees, continued a strong positive
                  trend.
 
 •
              The
                  Company continues to be liability sensitive. The growth of
                  interest-bearing liabilities primarily reflects the growth of higher
                  cost
                  certificates of deposit, including brokered certificates of deposit.
                  Also
                  contributing to the liability sensitivity of the Company is the
                  continuing
                  shift of lower cost non-maturing deposits into higher cost short-term
                  certificates of deposit.
 
 •
              The
                  Company began utilizing brokered certificates of deposits in 2005
                  as an
                  alternative funding source. At March 31, 2007, the Company had
                  brokered
                  certificates of deposit of $30.4 million, compared to $7.9 million
                  at
                  March 31, 2006.
 
 •
              Management
                  believes that the allowance for loan losses is adequate. The allowance
                  for
                  loan losses to nonaccrual loans was 984% at March 31, 2007. Net
                  annualized
                  chargeoffs as of March 31, 2007 were 0.01% of total loans and have
                  averaged 0.04% of total loans for the past five years. During the
                  three
                  months ended March 31, 2007, the Company’s net loan portfolio increased
                  $3.1 million, or 0.7%. The increase was due to increases in commercial
                  real estate and consumer loans, offset in part by decreases in
                  multifamily
                  and one-to four-family real estate loans. The Company’s provision for loan
                  losses for the three months ended March 31, 2007 was
                  $30,000.
 
 •
              Purchases
                  of out-of-state real estate loans remain an integral part of the
                  Company’s
                  business plan. The Company has continued to purchase out-of-state
                  real
                  estate loans to supplement local mortgage loan originations and
                  to
                  diversify its mortgage loan portfolio
                  geographically.
 
 **FINANCIAL
        CONDITION**
 
 Total
        assets decreased $4.7 million, or 0.9%, to $510.8 million at March 31, 2007,
        from $515.5 million at December 31, 2006. The decrease in assets was primarily
        due to a decrease in cash and cash equivalents, offset in part by an increase
        in
        net loans receivable.
 
 Cash
        and
        cash equivalents decreased $7.5 million, or 37.4%, to $12.5 million at March
        31,
        2007, compared to $20.0 million at December 31, 2006. The decrease in cash
        and
        cash equivalents was primarily due to a decrease in borrowed funds and an
        increase in loans. Net loans
        receivable increased by $3.1 million, or 0.7%, to $452.2 million at March
        31,
        2007, from $449.0 million at December 31, 2006, primarily due to the origination
        of $16.5 million of first mortgage loans primarily secured by one-to four-family
        residences and commercial real estate; the purchase of $12.5 million of first
        mortgage loans secured by commercial real estate, multifamily, and one-to
        four-family residences; and the origination of $6.0 million of second mortgage
        loans during the three months ended March 31, 2007. These purchases and
        originations were offset in part by payments and prepayments of $27.9 million
        and loan sales of $4.6 million during the three months ended March 31, 2007.
        The
        Company sells substantially all fixed-rate loans with maturities of 15 years
        or
        more in the secondary mortgage market in order to reduce interest rate
        risk .
 
 Deposits
        increased $2.3 million, or 0.6%, to $362.6 million at March 31, 2007, from
        $360.3 million at December 31, 2006, primarily reflecting increases in NOW
        and
        savings account balances, offset in part by a decrease in certificates of
        deposit. Borrowings, primarily Federal Home Loan Bank (the “FHLB”) advances,
        decreased $6.0 million, or 5.6%, to $101.9 million at March 31, 2007, from
        $107.9 million at December 31, 2006.
 
 Total
        stockholders' equity decreased $309,000, or 0.7%, to $41.9 million at March
        31,
        2007, from $42.2 million at December 31, 2006, primarily due to stock
        repurchases ($1,051,000), declared dividends ($478,000), and the Company’s
        adoption of FASB Interpretation No. 48 (FIN 48), *Accounting for Uncertainty
        in Income Taxes* ($200,000), offset in part by earnings ($1,035,000), the
        exercise of stock options and FAS No. 123R option expense ($290,000), and
        an
        increase in the unrealized gain on securities available-for-sale ($95,000).
        During the three months ended March 31, 2007, the Company repurchased 26,300
        shares of common stock, or approximately 1.9% of its outstanding shares of
        common stock, at prevailing market prices averaging $39.95 per
        share.
 
  
  The
        Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum
        tangible, leverage (core) and risk-based capital requirements. As of March
        31,
        2007, the Bank exceeded all of its regulatory capital requirements. The Bank's
        required, actual and excess capital levels as of March 31, 2007 were as
        follows:
 
 **Amount**
              
              **Percentage
                  of Assets**(Dollars
                  in thousands)Tangible
                  capital:Capital
                  level
              
              $
              36,062
              
              
              7.12
              %Less
                  Requirement
              
              
              7,601
              
              
              1.50
              %Excess
              
              $
              28,461
              
              
              5.62
              %Core
                  capital:Capital
                  level
              
              $
              36,062
              
              
              7.12
              %Less
                  Requirement
              
              
              20,269
              
              
              4.00
              %Excess
              
              $
              15,793
              
              
              3.12
              %Risk-based
                  capital:Capital
                  level
              
              $
              39,880
              
              
              11.24
              %Less
                  Requirement
              
              
              28,377
              
              
              8.00
              %Excess
              
              $
              11,503
              
              
              3.24
              %
  **LIQUIDITY
        AND CAPITAL RESOURCES**
  The
        Company's primary sources of funds are cash provided by operating activities
        (including net income), certain financing activities (including increases
        in
        deposits and proceeds from borrowings) and certain investing activities
        (including principal payments on loans and maturities, calls and proceeds
        from
        the sale of securities). During the first three months of 2007 and 2006,
        principal payments, prepayments, and proceeds from the sale of loans totaled
        $32.5 million and $27.9, respectively. The net increase in deposits during
        the
        first three months of 2007 and 2006 totaled $2.3 million and $4.6 million,
        respectively. The proceeds from borrowed funds during the three months ended
        March 31, 2007 and 2006 totaled none and $10.0 million, respectively. The
        net
        increase (decrease) in short term borrowings during the three months ended
        March
        31, 2007 and 2006 totaled none and ($1.0) million, respectively. During the
        first three months of 2007 and 2006, the proceeds from the maturities, calls
        and
        sales of securities totaled $601,000 and $528,000, respectively. Cash provided
        from operating activities during the first three months of 2007 and 2006
        totaled
        $1.3 million and $2.8 million, respectively. The Company's primary use of
        funds
        is to originate and purchase loans, purchase securities available-for-sale,
        repay borrowed funds and other financing activities. During the first three
        months of 2007 and 2006, the Company's gross purchases and origination of
        loans
        totaled $35.0 million and $32.3 million, respectively. The purchase of
        securities available-for-sale for the three months ended March 31, 2007 and
        2006
        totaled none and $1.8 million, respectively. The repayment of borrowed funds
        during the first three months of 2007 and 2006 totaled $6.0 million and $4.0
        million, respectively. For additional information about cash flows from the
        Company's operating, financing and investing activities, see the Consolidated
        Condensed Statements of Cash Flows in the Company’s financial statements
        included as Item 1 of this report.
 
 OTS
        regulations require the Company to maintain sufficient liquidity to ensure
        its
        safe and sound operation.
 
 The
        Company has a line of credit agreement in the amount of $3.0 million with
        an
        unaffiliated bank. As of March 31, 2007, there were no borrowings outstanding
        on
        this line of credit. The Company may use this line of credit to fund stock
        repurchases in the future and for general corporate purposes.
  On
        January 5, 2007, the Company paid a quarterly cash dividend of $0.33 per
        share
        on common stock outstanding as of the close of business on December 15, 2006,
        aggregating $456,000. On February 23, 2007, the Company declared a quarterly
        cash dividend of $0.35 per share payable on April 5, 2007 to shareholders
        of
        record as of the close of business on March 15, 2007, aggregating
        $478,000.
  
  **RESULTS
        OF OPERATIONS**
 
 ***Net
        Income*** *.* Net
        income decreased by $207,000 to $1.03 million for the quarter ended March
        31,
        2007, compared to $1.24 million for the quarter ended March 31, 2006. Net
        income
        is an aggregate of net interest income, noninterest income, noninterest expense
        and income tax expense. The decrease in net income was primarily due to a
        decrease in noninterest income, primarily loan prepayment fees and abstract
        fees, and an increase in noninterest expense, offset in part by a decrease
        in
        income tax expense.
 
 ***Net
        Interest Income*** .
        Net
        interest income before provision for loan losses decreased by $48,000 to
        $3.28
        million for the quarter ended March 31, 2007, from $3.32 million for the
        quarter
        ended March 31, 2006. The decrease is due to an increase in the average balance
        of interest-bearing liabilities and an increase in the average cost of funds,
        offset in part by an increase in the average balance of interest-earning
        assets
        and an increase in the yield on interest-earning assets. The interest rate
        spread (i.e., the difference in the average yield on assets and average cost
        of
        liabilities) decreased to 2.44% for the quarter ended March 31, 2007, from
        2.62%
        for the quarter ended March 31, 2006. The decrease in interest rate spread
        reflects the increase in the overall cost of interest-bearing liabilities,
        offset in part by an increase in the yield on interest-earning assets. The
        increase in the cost of interest-bearing liabilities primarily reflects the
        repricing of interest-bearing liabilities at higher current market interest
        rates and the growth of interest-bearing liabilities in higher cost certificates
        of deposit. Also contributing to the increase of the cost of funds is the
        continuing shift of lower cost non-maturing deposits into higher cost short-term
        certificates of deposit.
 
 ***Interest
        Income*** .
        Interest income increased by $778,000 to $7.55 million for the quarter ended
        March 31, 2007, compared to $6.78 million for the quarter ended March 31,
        2006.
        The increase in interest income was due to an increase in the average balance
        of
        interest-earning assets and an increase in the yield on interest-earning
        assets.
        The average balance of interest-earning assets increased $21.1 million to
        $483.0
        million for the quarter ended March 31, 2007, from $461.9 million for the
        quarter ended March 31, 2006. The average yield on interest-earning assets
        increased to 6.29% for the quarter ended March 31, 2007, from 5.88% for the
        quarter ended March 31, 2006, primarily due to an increase in market interest
        rates on consumer loans and adjustable rate mortgage loans. The increase
        in the
        average balance of interest-earning assets primarily reflects increases in
        the
        average balances of interest-bearing cash, first mortgage loans and consumer
        loans, offset in part by a decrease in securities available-for-sale. The
        increase in interest-bearing cash was due to large commercial loan payoffs
        in
        December 2006. The increase in the average balance of first mortgage loans
        was
        derived from the origination and purchase of first mortgage loans secured
        by
        one-to four-family real estate, commercial real estate, and multifamily
        residences, which originations and purchases were offset in part by payments,
        prepayments, and sales of loans during the twelve months ended March 31,
        2007.
        This reflects the Company's continued emphasis on real estate lending. The
        decrease in the average balance of securities available-for-sale was derived
        from payments and calls of securities, offset in part by purchases during
        the
        twelve months ended March 31, 2007.
 
 ***Interest
        Expense*** .
        Interest expense increased by $826,000 to $4.28 million for the quarter ended
        March 31, 2007, compared to $3.45 million for the quarter ended March 31,
        2006.
        The increase in interest expense was due to an increase in the average balance
        of interest-bearing liabilities and an increase in the average cost of funds.
        The average balance of interest-bearing liabilities increased $21.7 million
        to
        $450.7 million for the quarter ended March 31, 2007, from $429.0 million
        for the
        quarter ended March 31, 2006. The increase in the average balance of
        interest-bearing liabilities primarily reflects an increase in the average
        balance of certificates of deposit, offset in part by decreases in NOW, money
        market, and savings account balances and borrowed funds. The increase in
        the
        average balance of certificates of deposit was primarily due to an increase
        in
        the average balance of brokered certificates of deposit, which increased
        $23.4
        million to $30.4 million for the quarter ended March 31, 2007, from $7.0
        million
        for the quarter ended March 31, 2006. The average cost of funds increased
        to
        3.85% for the quarter ended March 31, 2007, from 3.26% for the quarter ended
        March 31, 2006, due to an increase in the current market interest rates,
        a shift
        of core deposits into higher cost certificates of deposits, and an increase
        in
        the average balance of certificates of deposit.
  
  The
        following table sets forth certain information relating to the Company's
        average
        balance sheets and reflects the average yield on assets and average cost
        of
        liabilities for the three months ended March 31, 2007 and 2006,
        respectively.
 **For
                    the Three Months Ended March 31,****2007**
                
                
                **2006****Average**
                  **Balance**
                
                **Interest**
                
                **Average**
                  **Yield/Cost**
                
                
                **Average**
                  **Balance**
                
                **Interest**
                
                **Average**
                  **Yield/Cost**(Dollars
                    in thousands)Assets:Interest-earning
                    assets:Loans
                $
                448,697
                
                $
                7,136
                
                
                6.39
                %
                
                $
                438,907
                
                $
                6,530
                
                
                5.96
                %Securities
                    available-for-sale
                
                19,597
                
                
                235
                
                
                4.80
                
                
                
                21,164
                
                
                226
                
                
                4.28Interest-bearing
                    cash
                
                14,674
                
                
                182
                
                
                5.04
                
                
                
                1,799
                
                
                19
                
                
                4.22Total
                    interest-earning assets
                
                482,968
                
                $
                7,553
                
                
                6.29
                %
                
                
                461,870
                
                $
                6,775
                
                
                5.88
                %Noninterest-earning
                    assets
                
                29,127
                
                
                
                
                
                
                
                
                
                28,674Total
                    assets
                $
                512,095
                
                
                
                
                
                
                
                
                $
                490,544Liabilities
                    and Equity:Interest-bearing
                    liabilities:NOW
                    and money market savings
                $
                83,085
                
                $
                257
                
                
                1.26
                %
                
                $
                89,291
                
                $
                250
                
                
                1.13
                %Passbook
                    savings
                
                26,197
                
                
                26
                
                
                0.39
                
                
                
                27,169
                
                
                21
                
                
                0.32Certificates
                    of deposit
                
                236,645
                
                
                2,742
                
                
                4.70
                
                
                
                205,952
                
                
                1,948
                
                
                3.84Borrowed
                    funds
                
                104,743
                
                
                1,253
                
                
                4.85
                
                
                
                106,556
                
                
                1,233
                
                
                4.69Total
                    interest-bearing liabilities
                
                450,670
                
                $
                4,278
                
                
                3.85
                %
                
                
                428,968
                
                $
                3,452
                
                
                3.26
                %Noninterest-bearing
                    liabilities
                
                19,532
                
                
                
                
                
                
                
                
                
                17,968Total
                    liabilities
                
                470,202
                
                
                
                
                
                
                
                
                
                446,936Equity
                
                41,893
                
                
                
                
                
                
                
                
                
                43,608Total
                    liabilities and equity
                $
                512,095
                
                
                
                
                
                
                
                
                $
                490,544Net
                    interest income
                
                
                
                $
                3,275
                
                
                
                
                
                
                
                
                $
                3,323Net
                    interest rate spread
                
                
                
                
                
                
                
                2.44
                %
                
                
                
                
                
                
                
                
                2.62
                %Net
                    interest margin
                
                
                
                
                
                
                
                2.69
                %
                
                
                
                
                
                
                
                
                2.88
                %Ratio
                    of average interest-earning assetsto
                    average interest-bearing liabilities
                
                
                
                
                
                
                
                107.17
                %
                
                
                
                
                
                
                
                
                107.67
                %
 ***Provision
        for Loan Losses*** .
        The
        Company's provision for loan losses was $30,000 and $60,000 for the quarters
        ended March 31, 2007 and 2006, respectively. The Company establishes provisions
        for loan losses, which are charged to operations, in order to maintain the
        allowance for loan losses at a level which is deemed to be appropriate based
        upon an assessment of prior loss experience, industry standards, past due
        loans,
        economic conditions, the volume and type of loans in the Company's portfolio,
        and other factors related to the collectibility of the Company's loan portfolio.
        The Company’s total loan portfolio increased $15.6 million, or 3.5%, from March
        31, 2006 to March 31, 2007. This increase primarily consisted of increases
        in
        commercial real estate and consumer loans. The Company’s out-of-state real
        estate loans decreased $11.3 million, or 7.6%, from March 31, 2006 to March
        31,
        2007. Purchased out-of-state real estate loans generally constitute a higher
        rate of risk than originated loans due to the size, location and type of
        collateral securing such loans. The economic conditions in the Bank’s primary
        market areas remain stable. The net charge-offs were $5,000 for the three
        months
        ended March 31, 2007, compared to $51,000 for the three months ended March
        31,
        2006 **.** The
        resulting allowance for loan loss was $3.5 million and $3.3 million at March
        31,
        2007 and March 31, 2006, respectively.
 
 The
        allowance for loan losses as a percentage of total loans receivable increased
        to
        0.77% at March 31, 2007 from 0.75% at March 31, 2006. The level of nonperforming
        loans was $358,000 at March 31, 2007 and $1.25 million at March 31,
        2006.
 
 Management
        believes that the allowance for loan losses is adequate as of March 31, 2007.
        While management estimates loan losses using the best available information,
        such as independent appraisals for significant collateral properties, no
        assurance can be made that future adjustments to the allowance will not be
        necessary based on changes in economic and real estate market conditions,
        further information obtained regarding problem loans, identification of
        additional problem loans, and other factors, both within and outside of
        management's control.
 
  
  ***Noninterest
        Income*** *.* Total
        noninterest income decreased by $284,000, or 14.8%, to $1.64 million for
        the
        quarter ended March 31, 2007, from $1.93 million for the quarter ended March
        31,
        2006. The decrease in noninterest income was primarily due to decreases in
        fees
        and service charges, including loan prepayment fees, and abstract fees, offset
        in part by increases in other income and mortgage banking income. Fees and
        service charges decreased $252,000 primarily due to a decrease in loan
        prepayment fees, offset in part by an increase in fees associated with checking
        accounts, including overdraft fees. During the quarter ended March 31, 2007,
        the
        Company recorded $60,000 in loan prepayment fees, compared to $352,000 for
        the
        quarter ended March 31, 2006. Abstract fees decreased $95,000 due in part
        to the
        sale of one of the Company’s three abstract offices at the end of the second
        quarter of 2006. Other income, which primarily includes annuity, securities,
        and
        insurance sales, and income associated with foreclosed real estate, increased
        $44,000 primarily due to an increase in income from insurance and securities
        sales. Mortgage banking income increased $19,000 due to an increase in loans
        originated for the secondary market.
 
 ***Noninterest
        Expense*** *.* Total
        noninterest expense increased by $55,000, or 1.6%, to $3.43 million for the
        quarter ended March 31, 2007, from $3.38 million for the quarter ended March
        31,
        2006. The increase is primarily due to an increase in compensation and employee
        benefits expense. Compensation and employee benefits expense increased $73,000
        primarily due to normal salary increases. The Company's efficiency ratio
        for the
        quarter ended March 31, 2007 and 2006 was 69.79% and 64.32%, respectively.
        The
        Company's ratio of noninterest expense to average assets for the quarters
        ended
        March 31, 2007 and 2006 was 2.68% and 2.75%, respectively.
 
 ***Income
        Taxes*** *.* Income
        taxes decreased by $150,000 to $421,000 for the quarter ended March 31, 2007,
        compared to $572,000 for the quarter ended March 31, 2006. The decrease in
        income taxes was primarily due to the decrease in the income before income
        taxes.
 
 **OFF-BALANCE
        SHEET ARRANGEMENTS**
 
 The
        Company is a party to financial instruments with off-statement of financial
        condition risk in the normal course of business to meet the financing needs
        of
        its customers. These financial instruments consist primarily of commitments
        to
        extend credit. Those instruments involve, to varying degrees, elements of
        credit
        and interest rate risk in excess of the amount recognized in the statement
        of
        financial condition. The contract or notional amounts of those instruments
        reflect the extent of involvement the Company has in a particular class of
        financial instruments.
 
 The
        Company uses the same credit policies in making commitments and conditional
        obligations as it does for on-statement of financial condition instruments.
        The
        Company does require collateral, or other security, to support financial
        instruments with credit risks.
 
 No
        material changes in the Company's off-statement of financial condition
        arrangements have occurred since December 31, 2006.
 
 **CRITICAL
        ACCOUNTING POLICIES**
  The
        section of this report titled “Management’s Discussion and Analysis of Financial
        Condition and Results of Operations,” and the disclosures included within this
        report, are based on the Company’s consolidated financial statements. These
        statements have been prepared in accordance with accounting principles generally
        accepted in the United States of America. The financial information contained
        in
        these statements is, for the most part, based on approximate measures of
        the
        financial effects of transactions and events that have already occurred.
        However, the preparation of these statements requires management to make
        certain
        estimates and judgments that affect the reported amounts of assets, liabilities,
        revenues and expenses.
 
 The
        Company’s accounting policies are described in the “Notes to Consolidated
        Financial Statements” of the Company’s 2006 Annual Report on Form 10-K. Based on
        its consideration of accounting policies that involve the most complex and
        subjective estimates and judgments, management has identified its most critical
        accounting policies to be that related to the allowance for loan losses and
        asset impairment judgments, including the recoverability of
        goodwill.
 
 The
        allowance for loan losses is established through a provision for loan losses
        charged to expense. Loans are charged against the allowance for loan losses
        when
        management believes that collectibility of the principal is unlikely. The
        Company has policies and procedures for evaluating the overall credit quality
        of
        its loan portfolio, including timely identification of potential problem
        credits. On a quarterly basis, management reviews the appropriate level for
        the
        allowance for loan losses, incorporating a variety of risk considerations,
        both
        quantitative and qualitative. Quantitative factors include the Company’s
        historical loss experience, delinquency and charge-off trends, collateral
        values, known information about individual loans and other factors. Qualitative
        factors include the general economic environment in the Company’s market area
        and the expected trend of those economic conditions. To the extent that actual
        results differ from forecasts and management’s judgment, the allowance for loan
        losses may be greater or less than future charge-offs.
 
 Asset
        impairment judgments include evaluating the decline in fair value of
        available-for-sale securities below their cost. Declines in fair value of
        available-for-sale securities below their cost that are deemed to be
        other-than-temporary are reflected in earnings as realized losses. In estimating
        other-than-temporary impairment losses, management considers (1) the length
        of
        time and the extent to which the fair value has been less than cost, (2)
        the
        financial condition and near-term prospects of the issuer, and (3) the intent
        and ability of the Company to retain its investment in the issuer for a period
        of time sufficient to allow for any anticipated recovery in fair
        value.
 
 Goodwill
        represents the excess of the acquisition cost over the fair value of the
        net
        assets acquired in a purchase acquisition. Goodwill is tested for impairment
        at
        least annually.
 
 **ITEM
        3.**
 
 **QUANTITATIVE
        AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**
 
 In
        management's opinion, there has not been a material change in the Company’s
        market risk profile since December 31, 2006. Please see the Company’s 2006
        Annual Report on Form 10-K for a more detailed discussion of the Company’s
        interest rate sensitivity analysis.
 
 **ITEM
        4.**
 
 **CONTROLS
        AND PROCEDURES**
 
 Management,
        including the Company’s President and Chief Executive Officer and the
        Company’s Chief Financial Officer and Treasurer, has evaluated the effectiveness
        of the Company’s disclosure controls and procedures (as defined in Exchange Act
        Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this
        report. Based upon that evaluation, the Company’s President and Chief
        Executive Officer and the Chief Financial Officer and Treasurer concluded
        that
        the disclosure controls and procedures were effective to ensure that information
        required to be disclosed in the reports the Company files and submits under
        the
        Exchange Act is (i) recorded, processed, summarized and reported as and when
        required and (ii) accumulated and communicated to the Company’s management,
        including the Company’s President and Chief Executive Officer and Chief
        Financial Officer and Treasurer, as appropriate to allow timely decisions
        regarding required disclosure.
 
 There
        have been no changes in the Company’s internal control over financial reporting
        identified in connection with the evaluation that occurred during the Company’s
        last fiscal quarter that have materially affected, or that are reasonably
        likely
        to materially affect, the Company’s internal control over financial
        reporting.
   
  **PART
        II. OTHER INFORMATION**
 
 **Item
        1.    Legal Proceedings**
 
 The
        Company is not involved in any pending legal proceedings other than routine
        legal proceedings occurring in the ordinary course of business. Such routine
        legal proceedings, in the aggregate, are believed by management to be immaterial
        to the Company’s financial condition and results of operations.
 
 **Item
        1A. Risk Factors**
 
 There
        have been no material changes to the risk factors disclosed on the Company’s
        2006 Annual Report on Form 10-K.
 
 **Item
        2.   Unregistered Sales of Equity Securities and Use of
        Proceeds**
 
 In
        March
        2006, the Company approved a Stock Repurchase Plan which provides for the
        repurchase of up to 100,000 shares of the Company’s common stock. At March 31,
        2007, there were 22,450 shares which could be purchased under the
        plan.
 
 The
        following table provides information with respect to purchases made by or
        on
        behalf of the Company or any “affiliated purchases” (as defined in rule
        10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common
        stock during the three months ended March 31, 2007.
 
 Period
              
              Total
                  Number of
                Shares
                  Purchased
              
              Average
                  Price Paid
                Per
                  Share
              
              Total
                  Number of
                Shares
                  Purchased as
                Part
                  of Publicly
                Announced
                  Plans
              
              Maximum
                  Number of
                Shares
                  that May Yet
                Be
                  Purchased Under
                The
                  PlanJanuary
                  1, 2007 to
                January
                  31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              48,750February
                  1, 2007 to
                February
                  28, 2007
              
              
              26,300
              
              
              $39.95
              
              
              26,300
              
              
              22,450March
                  1, 2007 to
                March
                  31, 2007
              
              
              -
              
              
              -
              
              
              -
              
              
              22,450Total
              
              
              26,300
              
              
              
              
              
              26,300
  **Item
        3. Defaults Upon Senior Securities**
 
 Not
        applicable.
 
 **Item
        4. Submission of Matters to a Vote of Security Holders**
 
 None.
 
 **Item
        5. Other Information**
 
 None.
  
  **Item
        6. Exhibits**
 **Exhibit
                  No.**
              **Description**
              **Reference
                  No.**3.1
              Articles
                  of Incorporation of North Central Bancshares, Inc.
              (1)3.2
              Bylaws
                  of North Central Bancshares, Inc.
              (1)3.3
              Bylaws
                  of North Central Bancshares, Inc., as amended
              (2)4.1
              Federal
                  Stock Charter of First Federal Savings Bank of Iowa (formerly known
                  as
                  First Federal Savings Bank of Fort Dodge)
              (1)4.2
              Bylaws
                  of First Federal Savings Bank of Iowa (formerly known as First
                  Federal
                  Savings Bank of Fort Dodge).
              (1)4.3
              Specimen
                  Stock Certificate of North Central Bancshares, Inc.
              (1)4.4
              Bylaws
                  of First Federal Savings Bank of Iowa, as amended
              (2)10.1
              Employee
                  Stock Ownership Plan of First Federal Savings Bank of Iowa (formerly
                  known
                  as First Federal Savings Bank of Fort Dodge) and ESOP Trust Agreement
                  (incorporating Amendments 1 and 2)
              (6)10.1A
              Amendment
                  #1 to Employee Stock Ownership Plan of First Federal Savings Bank
                  of Iowa
                  (formerly known as First Federal Savings Bank of Fort Dodge) and
                  ESOP
                  Trust Agreement
              (7)10.1B
              Amendment
                  #2 to Employee Stock Ownership Plan of First Federal Savings Bank
                  of Iowa
                  (formerly known as First Federal Savings Bank of Fort Dodge) and
                  ESOP
                  Trust Agreement
              (7)10.2
              ESOP
                  Loan Documents, dated September 3, 1996
              (5)10.3
              Amended
                  and Restated Employee Retention Agreements between First Federal
                  Savings
                  Bank of Fort Dodge and certain executive officers
              (3)10.4
              Employment
                  Agreement between First Federal Savings Bank of Iowa (formerly
                  known as
                  First Federal Savings Bank of Fort Dodge) and David M. Bradley,
                  effective
                  as of August 31, 1994
              (1)10.6
              Form
                  of Employment Agreement between North Central Bancshares, Inc.
                  and David
                  M. Bradley
              (1)10.8
              North
                  Central Bancshares, Inc. 1996 Stock Option Plan
              (4)10.9
              Amendment
                  No. 1 to the North Central Bancshares, Inc. 1996 Stock Option
                  Plan
              (6)10.10
              Supplemental
                  Retirement and Deferred Compensation Plan of First Federal Savings
                  Bank of
                  Iowa
              (7)10.11
              Form
                  of Employment Agreement between First Federal Savings Bank of Iowa
                  and C.
                  Thomas Chalstrom
              (8)10.12
              Tax
                  Allocation Agreement between North Central Bancshares, Inc. and
                  Subsidiaries
              (2)10.13
              Form
                  of Employment Agreement North Central Bancshares, Inc. and C. Thomas
                  Chalstrom
              (8)10.14
              North
                  Central Bancshares, Inc. 2006 Stock Incentive Plan
              (9)10.15
              North
                  Central Bancshares, Inc. 2006 Incentive Award Plan
              (10)10.16
              Form
                  of Restricted Stock Award Notice
              (11)14.1
              Code
                  of Ethics for Senior Financial Officers of North Central Bancshares,
                  Inc.
              (2)21.1
              Subsidiaries
                  of the Registrant
              (1)31
              Rule
                  13a-14(a)/15d-14(a) Certifications32
              Section
                  1350 Certifications
  
  (1)
              Incorporated
                  herein by reference to Registration Statement No. 33-80493 on Form
                  S-1
                  filed with the SEC on December 18, 1995, as
                  amended.
 
 (2)
              Incorporated
                  herein by reference to the Annual Report on Form 10-K filed with
                  the SEC
                  on March 29, 2004.
 
 (3)
              Incorporated
                  herein by reference to the Quarterly Report on Form 10-Q filed
                  with the
                  SEC on August 13, 1998.
 
 (4)
              Incorporated
                  herein by reference to the Amended Schedule 14A filed with the
                  SEC on
                  August 14, 1996.
 
 (5)
              Incorporated
                  herein by reference to the Annual Report on Form 10-K filed with
                  the SEC
                  on March 31, 1997.
 
 (6)
              Incorporated
                  herein by reference to the Annual Report on Form 10-K filed with
                  the SEC
                  on March 31, 1998.
 
 (7)
              Incorporated
                  herein by reference to the Annual Report on Form 10-K filed with
                  the SEC
                  on March 29, 2002.
 
 (8)
              Incorporated
                  herein by reference to the Annual Report on Form 10-K filed with
                  the SEC
                  on March 31, 2006.
 
 (9)
              Incorporated
                  herein by reference to the Schedule 14A filed with the SEC on March
                  20,
                  2006.
 
 (10)
              Incorporated
                  herein by reference to the Quarterly Report on Form 10-Q filed
                  with the
                  SEC on August 11, 2006.
 
 (11)
              Incorporated
                  herein by reference to the Current Report on Form 8-K filed with
                  the SEC
                  on May 3, 2007.
  
  SIGNATURES
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
  NORTH
                CENTRAL
                BANCSHARES, INC.DATE:
                May 11, 2007
              By:
              /s/ David
                  M.
                  BradleyDavid
                  M. Bradley, Chairman, President and
                Chief
                  Executive Officer
  NORTH
                CENTRAL
                BANCSHARES, INC.DATE:
                May 11, 2007
              By:
              /s/ Ronald J. BlanchetRonald
                  J. Blanchet, Principal Accounting Officer