##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 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 September 30, 2008
 or
 o
    
    Transition report under Section 13 or 15(d) of the Exchange Act
 For the transition period from  to
 Commission file number: 000-49814
 MONARCH COMMUNITY BANCORP, INC.
 (Exact name of registrant as specified in its charter)
 Maryland
    
    04-3627031(State or other jurisdiction
    
    (I.R.S. employerof incorporation or organization)
    
    identification no.)
  (Address of principal executive offices)
  (Registrants telephone number)
 þ o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ




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##### 



Monarch Community Bancorp, Inc.
 PART I  FINANCIAL INFORMATIONItem 1  Condensed Financial Statements:Condensed Consolidated Balance Sheets  September 30, 2008 and
December 31, 2007
    
    
    1Condensed Consolidated Statements of Income  Three and Nine Months
Ended September 30, 2008 and 2007
    
    
    2Condensed Consolidated Statements of Changes in Stockholders Equity 
Nine Months Ended September 30, 2008 and 2007
    
    
    3Condensed Consolidated Statements of Cash Flows  Nine Months Ended
September 30, 2008 and 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5-7Item 2  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    7-14Item 3  Quantitative and Qualitative Disclosures about Market Risk
    
    
    14Item 4T Controls and Procedures
    
    
    15PART II  OTHER INFORMATIONItem 1  Legal Proceedings
    
    
    15Item 1A  Risk Factors
    
    
    15Item 2  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    15Item 3  Defaults Upon Senior Securities
    
    
    16Item 4  Submission of Matters to a Vote of Security Holders
    
    
    16Item 5  Other Information
    
    
    16Item 6  Exhibits
    
    
    16SIGNATURES
    
    
    17CERTIFICATIONS
    
    
    18-21EX-31.1EX-31.2EX-32




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##### Table of Contents



PART IFINANCIAL INFORMATION
 
 Item 1. CONDENSED FINANCIAL STATEMENTS
 
 Condensed Consolidated Balance Sheets
 (Unaudited)September
    
    
    December 31,2008
    
    
    2007(Dollars in thousands,except per share data)AssetsCash and due from banks
    
    
    7,468
    
    
    $
    7,691Federal Home Loan Bank overnight time and
other interest bearing deposits
    
    
    1,309
    
    
    
    6,151Total cash and cash equivalents
    
    
    8,777
    
    
    
    13,842Securities  Available for sale
    
    
    8,932
    
    
    
    11,084Securities  Held to maturity
    
    
    37
    
    
    
    238Other securities
    
    
    4,237
    
    
    
    4,237Loans held for sale
    
    
    770
    
    
    
    422Loans, net
    
    
    241,578
    
    
    
    224,797Foreclosed assets, net
    
    
    1,731
    
    
    
    1,515Premises and equipment
    
    
    4,531
    
    
    
    4,675Goodwill
    
    
    9,606
    
    
    
    9,606Core deposit intangible
    
    
    723
    
    
    
    862Other assets
    
    
    7,051
    
    
    
    7,930Total assets
    
    $
    287,973
    
    
    $
    279,208Liabilities and Stockholders EquityLiabilitiesDeposits:Non-interest bearing
    
    $
    14,463
    
    
    $
    13,609Interest bearing
    
    
    176,730
    
    
    
    164,327Total deposits
    
    
    191,193
    
    
    
    177,936Federal Home Loan Bank advances
    
    
    57,330
    
    
    
    59,330Accrued expenses and other liabilities
    
    
    2,687
    
    
    
    2,856Total liabilities
    
    
    251,210
    
    
    
    240,122Stockholders EquityCommon stock  $0.01 par value, 20,000,000 shares
authorized, 2,063,948 shares issued and outstanding
at September 30, 2008 and 2,321,585 shares issued and
outstanding at December 31, 2007
    
    
    20
    
    
    
    23Additional paid-in capital
    
    
    21,240
    
    
    
    23,828Retained earnings
    
    
    16,391
    
    
    
    16,341Accumulated other comprehensive income
    
    
    50
    
    
    
    52Unearned compensation
    
    
    (938
    )
    
    
    (1,158
    )Total stockholders equity
    
    
    36,763
    
    
    
    39,086Total liabilities and stockholders equity
    
    $
    287,973
    
    
    $
    279,208
  1




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##### Table of Contents



Net Interest Income After Provision for Loan Losses
    
    
    1,453
    
    
    
    1,854
    
    
    
    4,929
    
    
    
    5,546Non-interest IncomeFees and service charges
    
    
    598
    
    
    
    653
    
    
    
    1,741
    
    
    
    1,881Loan servicing fees
    
    
    110
    
    
    
    108
    
    
    
    330
    
    
    
    329Net gain on sale of loans
    
    
    101
    
    
    
    139
    
    
    
    563
    
    
    
    470Net gain (loss) on sale of securities
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    (19
    )Net gain (loss) on sale of fixed assets
    
    
    
    
    
    
    71
    
    
    
    
    
    
    
    71Other income
    
    
    89
    
    
    
    69
    
    
    
    204
    
    
    
    277Total non-interest income
    
    
    898
    
    
    
    1,040
    
    
    
    2,840
    
    
    
    3,009Non-interest Expense
    
    
    
    
    
    
    2,260Salaries and employee benefits
    
    
    1,063
    
    
    
    1,065
    
    
    
    3,330
    
    
    
    3,205Occupancy and equipment
    
    
    262
    
    
    
    250
    
    
    
    779
    
    
    
    763Data processing
    
    
    185
    
    
    
    180
    
    
    
    575
    
    
    
    546Amortization of mortgage servicing rights
    
    
    91
    
    
    
    92
    
    
    
    321
    
    
    
    265Professional services
    
    
    108
    
    
    
    180
    
    
    
    301
    
    
    
    430Amortization of core deposit intangible
    
    
    43
    
    
    
    54
    
    
    
    139
    
    
    
    176NOW account processing
    
    
    40
    
    
    
    42
    
    
    
    129
    
    
    
    133ATM/Debit card processing
    
    
    52
    
    
    
    51
    
    
    
    149
    
    
    
    144Foreclosed property expense
    
    
    84
    
    
    
    86
    
    
    
    169
    
    
    
    125Other general and administrative
    
    
    330
    
    
    
    266
    
    
    
    1,008
    
    
    
    862Total non-interest expense
    
    
    2,258
    
    
    
    2,266
    
    
    
    6,900
    
    
    
    6,649Income  Before income taxes
    
    
    93
    
    
    
    628
    
    
    
    869
    
    
    
    1,906Income Taxes
    
    
    36
    
    
    
    157
    
    
    
    232
    
    
    
    477Net Income
    
    $
    57
    
    
    $
    471
    
    
    $
    637
    
    
    $
    1,429Earnings Per ShareBasic
    
    $
    0.03
    
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.59Diluted
    
    $
    0.03
    
    
    $
    0.14
    
    
    $
    0.30
    
    
    $
    0.59
  2




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Common Stock
    
    
    
    
    
    
    
    
    
    
    AccumulatedOtherNumber of
    
    
    
    
    
    
    Additional Paid
    
    
    Retained
    
    
    Comprehensive
    
    
    UnearnedShares
    
    
    Amount
    
    
    in Capital
    
    
    Earnings
    
    
    Income
    
    
    Compensation
    
    
    TotalBalance- January 1, 2007
    
    
    2,534
    
    
    $
    25
    
    
    $
    26,191
    
    
    $
    15,319
    
    
    $
    (63
    )
    
    $
    (1,486
    )
    
    $
    39,986Vesting of restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    217
    
    
    
    2173,204 shares repurchased at $11.95/share
    
    
    (3
    )
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (38
    )Stock option expenses
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65Comprehensive Income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,429
    
    
    
    
    
    
    
    
    
    
    
    1,429Change in unrealized loss on
securities available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56
    
    
    
    
    
    
    
    56Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,485Dividends paid ($0.14/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (531
    )
    
    
    
    
    
    
    
    
    
    
    (531
    )Balance- September 30, 2007
    
    
    2,531
    
    
    $
    25
    
    
    
    26,218
    
    
    
    16,217
    
    
    
    (7
    )
    
    
    (1,269
    )
    
    
    41,184Balance- January 1, 2008
    
    
    2,322
    
    
    $
    23
    
    
    $
    23,828
    
    
    $
    16,341
    
    
    $
    52
    
    
    $
    (1,158
    )
    
    $
    39,086Vesting of restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    220
    
    
    
    220259,733 shares repurchased at an average
price $9.91/share
    
    
    (260
    )
    
    
    (3
    )
    
    
    (2,596
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,599
    )Stock option expenses
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    637
    
    
    
    
    
    
    
    
    
    
    
    637Change in unrealized loss on
securities available-for-sale, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    (2
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635Dividends paid ($0.27/share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (587
    )
    
    
    
    
    
    
    
    
    
    
    (587
    )Balance- September 30, 2008
    
    
    2,062
    
    
    
    20
    
    
    
    21,240
    
    
    
    16,391
    
    
    
    50
    
    
    
    (938
    )
    
    
    36,763
 3




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##### Table of Contents



Nine Months EndedSeptember, 302008
    
    
    2007(Dollars in thousands)Cash Flows From Operating ActivitiesNet Income
    
    $
    637
    
    
    $
    1,429Adjustments to reconcile net income to net cash from
operating activitiesDepreciation and amortization
    
    
    834
    
    
    
    826Provision for loan losses
    
    
    1,488
    
    
    
    689Stock option expense
    
    
    8
    
    
    
    65Gain on sale of foreclosed assets
    
    
    (9
    )
    
    
    (131
    )Mortgage loans originated for sale
    
    
    (25,617
    )
    
    
    (20,548
    )Proceeds from sale of mortgage loans
    
    
    25,832
    
    
    
    20,671Gain on sale of mortgage loans
    
    
    (563
    )
    
    
    (470
    )(Gain) Loss on sale of available for sale securities
    
    
    (2
    )
    
    
    19Earned stock compensation
    
    
    220
    
    
    
    217Gain on disposal of equipment
    
    
    
    
    
    
    (71
    )Net change in:Deferred loan fees
    
    
    (34
    )
    
    
    10Accrued interest receivable
    
    
    76
    
    
    
    18Other assets
    
    
    483
    
    
    
    195Accrued expenses and other liabilities
    
    
    (194
    )
    
    
    (421
    )Net cash provided by operating activities
    
    
    3,159
    
    
    
    2,498Cash Flows From Investing ActivitiesActivity in available-for-sale securities:Purchases
    
    
    (2,268
    )
    
    
    (3,819
    )Proceeds from sales of securities
    
    
    
    
    
    
    2,928Proceeds from maturities of securities
    
    
    4,401
    
    
    
    2,091Activity in held-to-maturity securities:Purchases
    
    
    (7
    )
    
    
    Proceeds from maturities of securities
    
    
    208
    
    
    
    15Loan originations and principal collections, net
    
    
    (20,036
    )
    
    
    393Proceeds from sale of foreclosed assets
    
    
    1,619
    
    
    
    846Proceeds from sale of premises and equipment
    
    
    
    
    
    
    283Purchase of premises and equipment
    
    
    (212
    )
    
    
    (112
    )Net cash provided by (used in) investing activities
    
    
    (16,295
    )
    
    
    2,625Cash Flows From Financing ActivitiesNet increase in deposits
    
    
    13,257
    
    
    
    (11,080
    )Repurchase of common stock
    
    
    (2,599
    )
    
    
    (37
    )Dividends paid
    
    
    (587
    )
    
    
    (531
    )Proceeds from FHLB advances
    
    
    38,500
    
    
    
    33,500Repayment of FHLB advances
    
    
    (40,500
    )
    
    
    (27,500
    )Net cash provided by financing activities
    
    
    8,071
    
    
    
    (5,648
    )Net Increase in Cash and Cash Equivalents
    
    
    (5,065
    )
    
    
    (525
    )Cash and Cash Equivalents Beginning
    
    
    13,842
    
    
    
    15,297Cash and Cash Equivalents End
    
    $
    8,777
    
    
    $
    14,772Supplemental Cash Flow Information:Cash paid for:Interest
    
    
    6,492
    
    
    
    6,961Income taxes
    
    
    385
    
    
    
    600Noncash investing activities:Loans transferred to foreclosed assets
    
    
    1,801
    
    
    
    1,513
  4




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##### Table of Contents



MONARCH COMMUNITY BANCORP, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 ORGANIZATION
   BASIS OF PRESENTATION
     ALLOWANCE FOR LOAN LOSSES
    5




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##### Table of Contents



RECLASSIFICATIONS
  EARNINGS PER SHARE
  Three Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine MonthsEnded
    
    
    Ended
    
    
    Ended
    
    
    EndedSeptember 30, 2008
    
    
    September 30, 2007
    
    
    September 30, 2008
    
    
    September 30, 2007Basic earnings per shareNumerator:Net income
    
    $
    57
    
    
    $
    471
    
    
    $
    637
    
    
    $
    1,429Denominator:Weighted average common shares outstanding
    
    
    2,097
    
    
    
    2,531
    
    
    
    2,196
    
    
    
    2,532Less: Average unallocated ESOP shares
    
    
    (83
    )
    
    
    (93
    )
    
    
    (83
    )
    
    
    (93
    )Less: Average non-vested RRP shares
    
    
    (11
    )
    
    
    (28
    )
    
    
    (35
    )
    
    
    (35
    )Weighted average common shares outstanding
for basic earnings per share
    
    
    2,003
    
    
    
    2,410
    
    
    
    2,078
    
    
    
    2,404Basic earnings per share
    
    $
    0.03
    
    
    $
    0.19
    
    
    $
    0.30
    
    
    $
    0.59Diluted earnings per shareNumerator:Net income
    
    $
    57
    
    
    $
    471
    
    
    $
    637
    
    
    $
    1,429Denominator:Weighted average common shares outstanding
for basic earnings per share
    
    
    2,003
    
    
    
    2,410
    
    
    
    2,078
    
    
    
    2,404Add: Dilutive effects of restricted stock
and stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average common shares and dilutive
potential common shares outstanding
    
    
    2,003
    
    
    
    2,410
    
    
    
    2,078
    
    
    
    2,404Diluted earnings per share
    
    $
    0.03
    
    
    $
    0.19
    
    
    $
    0.30
    
    
    $
    0.59
 RECENT ACCOUNTING PRONOUNCEMENTS
   FAIR VALUE MEASUREMENTS
    6




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##### Table of Contents



SignificantOther
    
    SignificantQuoted Prices in Active
    
    Observable
    
    UnobservableMarkets for Identical
    
    Inputs (Level
    
    Inputs (Level
    
    Balance atAssets (Level 1)
    
    2)
    
    3)
    
    September 30, 2008AssetsInvestment securities- available  for  sale
    
    $
    5,736
    
    
    $
    3,196
    
    
    
    
    
    
    $
    8,932
   
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   FORWARD-LOOKING STATEMENTS
   7




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CRITICAL ACCOUNTING POLICIES
  Allowance for Loan Losses
 Foreclosed Assets .
 Goodwill and Other Intangible Assets
 FINANCIAL CONDITION
 Assets
  Securities
  8




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##### Table of Contents



Loans
  September 30, 2008
    
    
    December 31, 2007Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in thousands)Real Estate Loans:One-to-four family
    
    $
    123,936
    
    
    
    50.7
    
    
    $
    126,780
    
    
    
    55.8
    %Multi-family
    
    
    5,759
    
    
    
    2.4
    
    
    
    5,594
    
    
    
    2.5Commercial
    
    
    74,547
    
    
    
    30.5
    
    
    
    56,714
    
    
    
    25.0Construction or development
    
    
    5,598
    
    
    
    2.2
    
    
    
    6,409
    
    
    
    2.8Total real estate loans
    
    
    209,840
    
    
    
    85.8
    
    
    
    195,497
    
    
    
    86.0Other loans:Consumer loans:Home equity
    
    
    20,666
    
    
    
    8.5
    
    
    
    20,430
    
    
    
    9.0Other
    
    
    5,817
    
    
    
    2.4
    
    
    
    7,014
    
    
    
    3.1Total consumer loans
    
    
    26,483
    
    
    
    10.8
    
    
    
    27,444
    
    
    
    12.1Commercial Business Loans
    
    
    8,134
    
    
    
    3.3
    
    
    
    4,228
    
    
    
    1.9Total other loans
    
    
    34,617
    
    
    
    14.2
    
    
    
    31,672
    
    
    
    14.0Total Loans
    
    
    244,457
    
    
    
    100.0
    %
    
    
    227,169
    
    
    
    100.0
    %Allowance for loan losses
    
    
    2,296
    
    
    
    
    
    
    
    1,824Less: Net deferred loan fees
    
    
    583
    
    
    
    
    
    
    
    548Loans in process
    
    
    
    
    
    
    
    
    
    
    Total Loans, net
    
    $
    241,578
    
    
    
    
    
    
    $
    224,797
   Deposits
  9




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##### Table of Contents



Federal Home Loan Bank Advances
  Equity
   RESULTS OF OPERATIONS
 Net Interest Income
     10




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##### Table of Contents



Nine Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007Average
    
    
    Interest
    
    
    
    
    
    
    Average
    
    
    InterestOutstanding
    
    
    Earned/
    
    
    Yield/
    
    
    Outstanding
    
    
    Earned/
    
    
    Yield/Balance
    
    
    Paid
    
    
    Rate
    
    
    Balance
    
    
    Paid
    
    
    Rate(dollars in thousands)Fed Funds and overnight deposits
    
    $
    8,905
    
    
    $
    100
    
    
    
    1.50
    %
    
    $
    9,387
    
    
    $
    344
    
    
    
    4.90
    %Investment securities
    
    
    10,373
    
    
    
    334
    
    
    
    4.29
    
    
    
    13,465
    
    
    
    464
    
    
    
    4.61Other securities
    
    
    4,174
    
    
    
    150
    
    
    
    4.79
    
    
    
    4,174
    
    
    
    141
    
    
    
    4.52Loans receivable
    
    
    236,314
    
    
    
    12,283
    
    
    
    6.92
    
    
    
    228,099
    
    
    
    12,251
    
    
    
    7.18Total earning assets
    
    $
    259,766
    
    
    $
    12,867
    
    
    
    6.60
    
    
    $
    255,125
    
    
    $
    13,200
    
    
    
    6.92Demand and NOW Accounts
    
    $
    32,270
    
    
    $
    72
    
    
    
    0.30
    
    
    $
    33,205
    
    
    $
    53
    
    
    
    0.21Money market accounts
    
    
    34,175
    
    
    
    774
    
    
    
    3.02
    
    
    
    24,897
    
    
    
    666
    
    
    
    3.58Savings accounts
    
    
    19,267
    
    
    
    61
    
    
    
    0.42
    
    
    
    21,621
    
    
    
    69
    
    
    
    0.43Certificates of deposit
    
    
    104,036
    
    
    
    3,551
    
    
    
    4.55
    
    
    
    104,394
    
    
    
    3,843
    
    
    
    4.92Fed Funds Purchased
    
    
    58
    
    
    
    
    
    
    
    0.00
    
    
    
    
    
    
    
    
    
    
    
    0.00Federal Home Loan Bank Advances
    
    
    54,246
    
    
    
    1,992
    
    
    
    4.89
    
    
    
    56,775
    
    
    
    2,334
    
    
    
    5.50Total interest bearing liabilities
    
    $
    244,052
    
    
    
    6,450
    
    
    
    3.52
    
    
    $
    240,892
    
    
    
    6,965
    
    
    
    3.87Net interest income
    
    
    
    
    
    $
    6,417
    
    
    
    
    
    
    
    
    
    
    $
    6,235Net interest spread
    
    
    
    
    
    
    
    
    
    
    3.08
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    3.29
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %
 Provision for Loan Losses
    September 30, 2008
    
    
    December 31,2007(In thousands)Non-performing loans
    
    $
    1,853
    
    
    $
    865Real estate in judgement
    
    
    932
    
    
    
    630Foreclosed and repossessed assets
    
    
    799
    
    
    
    885Total non-performing assets
    
    $
    3,584
    
    
    $
    2,380Non-performing loans to total loans
    
    
    0.76
    %
    
    
    0.38
    %Non-performing assets to total assets
    
    
    1.24
    %
    
    
    0.85
    %Allowance for loan losses to non-performing loans
    
    
    120.60
    %
    
    
    210.80
    %Allowance for loan losses to net loans receiveable
    
    
    0.91
    %
    
    
    0.81
    %
  11




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##### Table of Contents



Non-interest Income
       Non-interest Expense
   12




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##### Table of Contents



Federal Income Tax Expense
 th
 LIQUIDITY
     13




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##### Table of Contents



CONTRACTUAL OBLIGATIONS AND OFF BALANCE SHEET ARRANGEMENTS
  Contractual Obligations
 Payments Due by PeriodLess than
    
    
    1-3
    
    
    3-5
    
    
    AfterTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 years(Dollars in Thousands)Certificates of deposit
    
    $
    102,479
    
    
    $
    59,584
    
    
    $
    33,069
    
    
    $
    9,826
    
    
    $
    FHLB advances
    
    
    57,330
    
    
    
    14,662
    
    
    
    27,327
    
    
    
    15,291
    
    
    
    50Total
    
    $
    159,809
    
    
    $
    74,246
    
    
    $
    60,396
    
    
    $
    25,117
    
    
    $
    50
 Other Commitments
 Amount of commitment expiration per periodLess than
    
    
    1-3
    
    
    3-5
    
    
    AfterTotal
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 years(Dollars in Thousands)Commitments to grant loans
    
    $
    3,840
    
    
    $
    3,840
    
    
    $
    
    
    
    $
    
    
    
    $
    Unfunded commitments under HELOCs
    
    
    15,029
    
    
    
    1,495
    
    
    
    3,770
    
    
    
    3,376
    
    
    
    6,388Unfunded commitments under Commercial LOCs
    
    
    3,979
    
    
    
    2,038
    
    
    
    1,496
    
    
    
    385
    
    
    
    60Letters of credit
    
    
    10
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    22,858
    
    
    $
    7,383
    
    
    $
    5,266
    
    
    $
    3,761
    
    
    $
    6,448
  CAPITAL RESOURCES
  
 ITEM 3. QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK
   14




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##### Table of Contents



ITEM 4T. 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
(c)
  (a)
    
    
    
    (b)
    
    
    
    (c)
    
    
    
    (d)Total Number of Shares
    
    
    
    Maximum Number (or(or Unit) Purchased as
    
    
    
    Approximate Dollar Value) ofTotal Number of
    
    
    
    
    
    
    
    
    Part of Publicly
    
    
    
    Shares (or Units) that may yetShares (or Units)
    
    
    
    Average Price paid
    
    
    
    Anounced Plans or
    
    
    
    Be Purchased Under thePeriod
    
    
    Purchased
    
    
    
    per Share (or Unit)
    
    
    
    Programs
    
    
    
    Plans or Program7/01/08-7/31/08
    
    
    
    41,100
    
    
    
    $
    9.22
    
    
    
    
    41,100
    
    
    
    
    54,2058/01/08-8/31/08
    
    
    
    21,575
    
    
    
    $
    9.43
    
    
    
    
    21,575
    
    
    
    
    32,6909/01/08-9/30/08
    
    
    
    16,920
    
    
    
    $
    8.98
    
    
    
    
    16,920
    
    
    
    
    15,710Total
    
    
    
    79,595
    
    
    
    $
    9.23
    
    
    
    
    79,595
    
    
    
    
    15,710
  15




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##### Table of Contents



Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
  16




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##### Table of Contents



SIGNATURES
  MONARCH COMMUNITY BANCORP, INC.Date: November 14, 2008
    By:
    /s/ Donald L. DenneyDonald L. DenneyPresident and Chief Executive OfficerDate: November 14, 2008
    And:
    /s/ Rebecca S. CrabillRebecca S. CrabillSenior Vice President, Chief Financial Officer 17




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##### Table of Contents



INDEX TO EXHIBITS
 Exhibit No.
    
    Description of Exhibit31.1
    
    Rule 13a-14(a) Certification of the Corporations President and Chief Executive Officer.31.2
    
    Rule 13a-14(a) Certification of the Corporations Chief Financial Officer.32
    
    Section 1350 Certification.
 18