UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





(Mark
One)


ý     QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31,
2009





OR





o     TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from _________ to __________





Commission
file number 000-50820





FIRST CLOVER LEAF FINANCIAL
CORP.


(Exact
name of registrant as specified in its charter)





Maryland
            20-4797391(State
      or other jurisdiction of
            (I.R.S.
      Employer Identification No.)incorporation
      or organization)6814 Goshen Road,
      Edwardsville, IL
            62025(Address
      of principal executive office)
            (Zip
      Code)





Registrant's
telephone number, including area code (618)
656-6122





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Sections 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 ý.  No
o.





Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate website, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files).Yes o.  No
o.





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.





Large
      accelerated filer   o
              Accelerated
      filer  ýNon-accelerated
      filer   o  (do
      not check if smaller reporting company)
              Smaller
      reporting company     o





Indicate
by check mark whether the Registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o.  No
ý.





Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.





Class
            Outstanding May 7,
      2009Common
      Stock, par value $.10 per share
            8,254,099


FIRST
CLOVER LEAF FINANCIAL CORP.


FORM
10-Q





FOR THE
QUARTER ENDED MARCH 31, 2009





INDEX





PAGE
      NO.PART I - Financial InformationItem 1.  Financial
      Statements   (Unaudited)Consolidated Balance Sheets
            3Consolidated Statements of Income
            4Consolidated Statements of Comprehensive
    Income
            5Consolidated Statements of Cash Flows
            6Notes to Consolidated Financial Statements
            8Item 2.  Management's Discussion and Analysis of
      Financial Condition and Results of Operations
            17Item 3.  Quantitative and Qualitative Disclosures
      about Market Risk
            28Item 4.  Controls and Procedures
            30PART II - Other InformationItem 1.  Legal Proceedings
            31Item 1A.  Risk Factors
            31Item 2.  Unregistered Sales of Equity Securities and
      Use of Proceeds
            31Item 3.  Defaults Upon Senior
      Securities
            31Item 4.  Submission of Matters to a Vote of Security
      Holders
            31Item 5.  Other Information
            31Item 6.  Exhibits
            32Signatures
            33








Index
 FIRST
CLOVER LEAF FINANCIAL CORP.


Consolidated Balance Sheets


(Unaudited)




March
      31,
                              
                              
                              December
      31,Assets
                              
                              2009
                              
                              
                              2008Cash
      and due from banks
                              
                              $
                              14,842,851
                              
                              
                              $
                              19,290,559Interest-earning
      deposits
                              
                              
                              6,619,093
                              
                              
                              
                              13,562,730Federal
      funds sold
                              
                              
                              32,762,030
                              
                              
                              
                              34,282,095Total
      cash and cash equivalents
                              
                              
                              54,223,974
                              
                              
                              
                              67,135,384Interest-earning
      time deposits
                              
                              
                              15,634,230
                              
                              
                              
                              5,210,461Securities
      available for sale
                              
                              
                              99,342,071
                              
                              
                              
                              103,567,578Federal
      Home Loan Bank stock
                              
                              
                              6,306,273
                              
                              
                              
                              6,306,273Loans,
      net of allowance for loan lossesof
      $4,053,232 and $3,895,246, respectively
                              
                              
                              416,114,082
                              
                              
                              
                              430,678,727Loans
      held for sale
                              
                              
                              6,237,784
                              
                              
                              
                              240,000Property
      and equipment, net
                              
                              
                              12,733,042
                              
                              
                              
                              12,512,865Accrued
      interest receivable
                              
                              
                              2,511,477
                              
                              
                              
                              2,461,320Goodwill
                              
                              
                              20,685,323
                              
                              
                              
                              20,685,323Core
      deposit intangible
                              
                              
                              1,817,001
                              
                              
                              
                              1,948,001Foreclosed
      assets
                              
                              
                              1,036,399
                              
                              
                              
                              632,796Mortgage
      servicing rights
                              
                              
                              674,955
                              
                              
                              
                              657,660Other
      assets
                              
                              
                              1,593,304
                              
                              
                              
                              1,288,406Total
      assets
                              
                              $
                              638,909,915
                              
                              
                              $
                              653,324,794Liabilities
      and Stockholders' EquityLiabilities:Deposits:Non-interest
      bearing deposits
                              
                              $
                              26,288,160
                              
                              
                              $
                              24,994,196Interest
      bearing deposits
                              
                              
                              432,337,485
                              
                              
                              
                              422,308,722Total
      deposits
                              
                              
                              458,625,645
                              
                              
                              
                              447,302,918Federal
      Home Loan Bank advances
                              
                              
                              48,504,000
                              
                              
                              
                              49,967,919Securities
      sold under agreements to repurchase
                              
                              
                              30,789,166
                              
                              
                              
                              55,103,313Subordinated
      debentures
                              
                              
                              3,897,160
                              
                              
                              
                              3,886,144Accrued
      interest payable
                              
                              
                              1,203,291
                              
                              
                              
                              1,245,555Other
      liabilities
                              
                              
                              3,219,156
                              
                              
                              
                              2,162,236Total
      liabilities
                              
                              
                              546,238,418
                              
                              
                              
                              559,668,085Stockholders'
      Equity:Preferred
      stock, $.10 par value; 10,000,000 sharesauthorized;
      no shares issued
                              
                              
                              -
                              
                              
                              
                              -Common
      stock, $.10 par value; 20,000,000 shares authorized;10,142,123
      shares issued; 8,556,965 and 8,793,753 shares outstandingat
      March 31, 2009 and December 31, 2008, respectively
                              
                              
                              1,014,212
                              
                              
                              
                              1,014,212Additional
      paid-in capital
                              
                              
                              81,344,590
                              
                              
                              
                              81,339,895Retained
      earnings
                              
                              
                              23,767,717
                              
                              
                              
                              23,230,811Accumulated
      other comprehensive income
                              
                              
                              1,436,430
                              
                              
                              
                              1,195,673Unearned
      Employee Stock Ownership Plan shares
                              
                              
                              (647,875
                              )
                              
                              
                              (658,856
                              )Treasury
      Stock, at cost; 1,585,158 and 1,348,370 shares atMarch
      31, 2009 and December 31, 2008, respectively
                              
                              
                              (14,243,577
                              )
                              
                              
                              (12,465,026
                              )Total
      stockholders' equity
                              
                              
                              92,671,497
                              
                              
                              
                              93,656,709Total
      liabilities and stockholders' equity
                              
                              $
                              638,909,915
                              
                              
                              $
                              653,324,794See
      Accompanying Notes to Consolidated Financial Statements.


3
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.


Consolidated
Statements of Income


(Unaudited)




Three
      Months EndedMarch
      31,2009
                                                  
                                                  2008Interest
      income:Interest
      and fees on loans
                                                  
                                                  $
                                                  6,136,907
                                                  
                                                  
                                                  $
                                                  4,818,015Securities:Taxable
      interest income
                                                  
                                                  
                                                  940,376
                                                  
                                                  
                                                  
                                                  676,864Non-taxable
      interest income
                                                  
                                                  
                                                  131,105
                                                  
                                                  
                                                  
                                                  47,985Interest-earning
      deposits, federal funds sold, and other
                                                  
                                                  
                                                  60,028
                                                  
                                                  
                                                  
                                                  314,439Total
      interest income
                                                  
                                                  
                                                  7,268,416
                                                  
                                                  
                                                  
                                                  5,857,303Interest
      expense:Deposits
                                                  
                                                  
                                                  2,593,066
                                                  
                                                  
                                                  
                                                  2,801,979Federal
      Home Loan Bank advances
                                                  
                                                  
                                                  469,366
                                                  
                                                  
                                                  
                                                  179,429Securities
      sold under agreements to repurchase
                                                  
                                                  
                                                  20,239
                                                  
                                                  
                                                  
                                                  107,254Subordinated
      debentures
                                                  
                                                  
                                                  73,701
                                                  
                                                  
                                                  
                                                  74,397Total
      interest expense
                                                  
                                                  
                                                  3,156,372
                                                  
                                                  
                                                  
                                                  3,163,059Net
      interest income
                                                  
                                                  
                                                  4,112,044
                                                  
                                                  
                                                  
                                                  2,694,244Provision
      for loan losses
                                                  
                                                  
                                                  240,270
                                                  
                                                  
                                                  
                                                  170,833Net
      interest income after provision for loan losses
                                                  
                                                  
                                                  3,871,774
                                                  
                                                  
                                                  
                                                  2,523,411Non-interest
      income:Service
      fees on deposit accounts
                                                  
                                                  
                                                  65,741
                                                  
                                                  
                                                  
                                                  46,963Other
      service charges and fees
                                                  
                                                  
                                                  58,899
                                                  
                                                  
                                                  
                                                  34,632Loan
      servicing fees
                                                  
                                                  
                                                  43,252
                                                  
                                                  
                                                  
                                                  30,007Gain
      on sale of loans
                                                  
                                                  
                                                  214,015
                                                  
                                                  
                                                  
                                                  34,380Other
                                                  
                                                  
                                                  21,027
                                                  
                                                  
                                                  
                                                  4,284Total
      non-interest income
                                                  
                                                  
                                                  402,934
                                                  
                                                  
                                                  
                                                  150,266Non-interest
      expense:Compensation
      and employee benefits
                                                  
                                                  
                                                  1,133,963
                                                  
                                                  
                                                  
                                                  792,804Occupancy
      expense
                                                  
                                                  
                                                  372,757
                                                  
                                                  
                                                  
                                                  240,324Data
      processing services
                                                  
                                                  
                                                  132,595
                                                  
                                                  
                                                  
                                                  114,963Director
      fees
                                                  
                                                  
                                                  55,100
                                                  
                                                  
                                                  
                                                  59,050Professional
      fees
                                                  
                                                  
                                                  202,831
                                                  
                                                  
                                                  
                                                  117,134Amortization
      of core deposit intangible
                                                  
                                                  
                                                  131,000
                                                  
                                                  
                                                  
                                                  116,000Amortization
      of mortgage servicing rights
                                                  
                                                  
                                                  91,222
                                                  
                                                  
                                                  
                                                  34,804Other
                                                  
                                                  
                                                  489,849
                                                  
                                                  
                                                  
                                                  272,245Total
      non-interest expense
                                                  
                                                  
                                                  2,609,317
                                                  
                                                  
                                                  
                                                  1,747,324Income
      before income taxes
                                                  
                                                  
                                                  1,665,391
                                                  
                                                  
                                                  
                                                  926,353Income
      taxes
                                                  
                                                  
                                                  611,496
                                                  
                                                  
                                                  
                                                  351,900Net
      income
                                                  
                                                  $
                                                  1,053,895
                                                  
                                                  
                                                  $
                                                  574,453Basic
      and diluted income per share (see Note 6)
                                                  
                                                  $
                                                  0.12
                                                  
                                                  
                                                  $
                                                  0.07Dividends
      per share
                                                  
                                                  $
                                                  0.06
                                                  
                                                  
                                                  $
                                                  0.06See
      Accompanying Notes to Consolidated Financial Statements.


4
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.





Consolidated
Statements of Comprehensive Income


(Unaudited)





Three
      Months EndedMarch
      31,2009
                            
                            
                            2008Net
      income
                            
                            $
                            1,053,895
                            
                            
                            $
                            574,453Other
      comprehensive income:Unrealized
      gains on securitiesarising
      during the period, net of tax
                            
                            
                            240,757
                            
                            
                            
                            279,329Comprehensive
      income
                            
                            $
                            1,294,652
                            
                            
                            $
                            853,782See
      Accompanying Notes to Consolidated Financial Statements.




















5
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.


Consolidated
Statements of Cash Flows


(Unaudited)





Three
      Months EndedMarch
      31,2009
                            
                            
                            2008Cash
      flows from operating activities:Net
      income
                            
                            $
                            1,053,895
                            
                            
                            $
                            574,453Adjustments
      to reconcile net income to net cash provided by(used
      in) operating activities:Amortization
      of:Deferred
      loan origination costs, net
                            
                            
                            22,783
                            
                            
                            
                            21,987Premiums
      and discounts on securities
                            
                            
                            (71,500
                            )
                            
                            
                            (82,594
                            )Core
      deposit intangible
                            
                            
                            131,000
                            
                            
                            
                            116,000Mortgage
      servicing rights
                            
                            
                            91,222
                            
                            
                            
                            34,804Amortization
      of fair value adjustments on:Loans
                            
                            
                            (31,000
                            )
                            
                            
                            (88,000
                            )Time
      deposits
                            
                            
                            (64,168
                            )
                            
                            
                            6,000Federal
      Home Loan Bank advances
                            
                            
                            (8,999
                            )
                            
                            
                            12,000Subordinated
      debentures
                            
                            
                            11,016
                            
                            
                            
                            11,016Investment
      securities
                            
                            
                            (14,700
                            )
                            
                            
                            (38,600
                            )Property
      and equipment
                            
                            
                            4,018
                            
                            
                            
                            4,018Provision
      for loan losses
                            
                            
                            240,270
                            
                            
                            
                            170,833Depreciation
      expense
                            
                            
                            178,546
                            
                            
                            
                            113,480ESOP
      expense
                            
                            
                            15,676
                            
                            
                            
                            21,239Gain
      on sale of loans
                            
                            
                            (214,015
                            )
                            
                            
                            (34,380
                            )Gain
      on sale of foreclosed real estate
                            
                            
                            (3,700
                            )
                            
                            
                            -Proceeds
      from sales of loans held for sale
                            
                            
                            10,451,491
                            
                            
                            
                            1,774,254Originations
      of loans held for sale
                            
                            
                            (16,235,260
                            )
                            
                            
                            (4,427,797
                            )Change
      in assets and liabilities:Increase
      in accrued interest receivable
                            
                            
                            (50,157
                            )
                            
                            
                            (77,426
                            )Increase
      in mortgage servicing rights
                            
                            
                            (108,517
                            )
                            
                            
                            (18,443
                            )Increase
      in other assets
                            
                            
                            (304,898
                            )
                            
                            
                            (57,199
                            )Decrease
      in accrued interest payable
                            
                            
                            (42,264
                            )
                            
                            
                            (136,733
                            )Increase
      in other liabilities
                            
                            
                            915,541
                            
                            
                            
                            402,613Net
      cash flows from operating activities
                            
                            
                            (4,033,720
                            )
                            
                            
                            (1,698,475
                            )Cash
      flows from investing activities:Proceeds
      from maturity of interest-earning time deposits
                            
                            
                            5,210,461
                            
                            
                            
                            15,049,994Purchase
      of interest-earning time deposits
                            
                            
                            (15,634,230
                            )
                            
                            
                            (10,027,920
                            )Available
      for sale securities:Purchases
                            
                            
                            (11,000,000
                            )
                            
                            
                            (11,850,000
                            )Proceeds
      from calls, maturities and paydowns
                            
                            
                            15,693,843
                            
                            
                            
                            15,934,772Net
      decrease (increase) in loans
                            
                            
                            13,400,710
                            
                            
                            
                            (18,075,087
                            )Purchase
      of property and equipment
                            
                            
                            (402,741
                            )
                            
                            
                            (1,055,040
                            )Proceeds
      from the sale of foreclosed real estate
                            
                            
                            531,979
                            
                            
                            
                            -Net
      cash flows from investing activities
                            
                            $
                            7,800,022
                            
                            
                            $
                            (10,023,281
                            )(Continued)


6
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.


Consolidated
Statements of Cash Flows


(Unaudited)





(Continued)Three
      Months EndedMarch
      31,2009
                                  
                                  
                                  2008Cash
      flows from financing activities:Net
      increase (decrease) in deposits
                                  
                                  $
                                  11,386,895
                                  
                                  
                                  $
                                  (11,585,424
                                  )Net
      increase (decrease) in securities sold under agreements to
      repurchase
                                  
                                  
                                  (24,314,147
                                  )
                                  
                                  
                                  5,094,454Proceeds
      from Federal Home Loan Bank advances
                                  
                                  
                                  5,000,000
                                  
                                  
                                  
                                  10,000,000Repayment
      of Federal Home Loan Bank advances
                                  
                                  
                                  (6,454,920
                                  )
                                  
                                  
                                  (3,000,000
                                  )Repurchase
      of Common Stock
                                  
                                  
                                  (1,778,551
                                  )
                                  
                                  
                                  (4,192,830
                                  )Cash
      dividends
                                  
                                  
                                  (516,989
                                  )
                                  
                                  
                                  (482,441
                                  )Net
      cash flows from financing activities
                                  
                                  
                                  (16,677,712
                                  )
                                  
                                  
                                  (4,166,241
                                  )Net
      decrease in cash and cash equivalents
                                  
                                  
                                  (12,911,410
                                  )
                                  
                                  
                                  (15,887,997
                                  )Cash
      and cash equivalents at beginning of period
                                  
                                  
                                  67,135,384
                                  
                                  
                                  
                                  37,084,575Cash
      and cash equivalents at end of period
                                  
                                  $
                                  54,223,974
                                  
                                  
                                  $
                                  21,196,578Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
                                  
                                  $
                                  3,260,787
                                  
                                  
                                  $
                                  3,270,776Income
      tax (refunds) payments, net
                                  
                                  
                                  (112,407
                                  )
                                  
                                  
                                  -Non-cash
      transactionsLoans
      transferred to foreclosed asets
                                  
                                  
                                  931,882
                                  
                                  
                                  
                                  -See
      Accompanying Notes to Consolidated Financial Statements.





7
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(1)
            Summary of Significant Accounting
Policies:





The
information contained in the accompanying consolidated financial statements is
unaudited.  In the opinion of management, the consolidated financial
statements contain all adjustments (none of which were other than normal
recurring entries) necessary for a fair statement of the results of operations
for the interim periods.  The results of operations for the interim
periods are not necessarily indicative of the results which may be expected for
the entire fiscal year.  These consolidated financial statements
should be read in conjunction with the consolidated financial statements of
First Clover Leaf Financial Corp. (the “Company”) for the year ended December
31, 2008 contained in the 2008 Annual Report to Stockholders that is filed as an
exhibit to the Company’s Annual Report on Form 10-K.





First
Clover Leaf Financial Corp. (“First Clover Leaf”) is a Maryland corporation that
was incorporated in March 2006 as the successor corporation to First Federal
Financial Services, Inc., in connection with the July 2006 “second-step”
conversion of First Federal Financial Services, MHC and the simultaneous
acquisition of Clover Leaf Financial Corp. and its wholly owned savings bank
subsidiary, Clover Leaf Bank.  The accompanying interim consolidated
financial statements include the accounts of First Clover Leaf Financial Corp.,
its wholly owned subsidiary, First Clover Leaf Bank (the “Bank”) and its wholly
owned subsidiary, Clover Leaf Financial Services.  First Clover Leaf’s
common stock is traded on the NASDAQ Capital Market under the symbol
“FCLF.”





Reclassifications
have been made to certain balances, with no effect on net income or
stockholders’ equity, for the three months ended March 31, 2008, to be
consistent with the classifications adopted for the three months ended March 31,
2009.


8
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(2)
            Intangible
      Assets:





The gross
carrying value and accumulated amortization of the core deposit intangible is
presented below:




March
      31,
                            
                            
                            December
      31,2009
                            
                            
                            2008Core
      deposit intangible
                            
                            $
                            3,258,000
                            
                            
                            $
                            3,258,000Accumulated
      amortization
                            
                            
                            (1,440,999
                            )
                            
                            
                            (1,309,999
                            )Total
                            
                            $
                            1,817,001
                            
                            
                            $
                            1,948,001




Amortization
expense on core deposit intangible for the three months ended March 31, 2009 and
2008 was $131,000 and $116,000, respectively.





Estimated
amortization expense on the core deposit intangible for the remaining nine
months of 2009 and each of the five succeeding fiscal years is as
follows:





CoreDepositIntangibleNine
      months ending December 31, 2009
                      
                      $
                      336,000Year
      ending December 31, 2010
                      
                      
                      359,000Year
      ending December 31, 2011
                      
                      
                      304,000Year
      ending December 31, 2012
                      
                      
                      281,000Year
      ending December 31, 2013
                      
                      
                      223,000Year
      ending December 31, 2014
                      
                      
                      116,001





(3)
            Investment
      Securities:





The
following table sets forth the composition of our available-for-sale securities
portfolio at the dates indicated:





March
      31,
                                                    
                                                    
                                                    December
      31,2009
                                                    
                                                    
                                                    2008Amortized
                                                    
                                                    
                                                    Fair
                                                    
                                                    
                                                    Amortized
                                                    
                                                    
                                                    FairCost
                                                    
                                                    
                                                    Value
                                                    
                                                    
                                                    Cost
                                                    
                                                    
                                                    ValueInvestment
      Securities:U.S.
      government agency obligations
                                                    
                                                    $
                                                    56,052,148
                                                    
                                                    
                                                    $
                                                    56,991,395
                                                    
                                                    
                                                    $
                                                    58,413,597
                                                    
                                                    
                                                    $
                                                    59,346,145Corporate
      bonds
                                                    
                                                    
                                                    3,094,095
                                                    
                                                    
                                                    
                                                    2,494,260
                                                    
                                                    
                                                    
                                                    3,093,991
                                                    
                                                    
                                                    
                                                    2,829,266State
      and municipal securities
                                                    
                                                    
                                                    12,120,951
                                                    
                                                    
                                                    
                                                    12,787,492
                                                    
                                                    
                                                    
                                                    12,238,209
                                                    
                                                    
                                                    
                                                    12,450,583Other
      securities
                                                    
                                                    
                                                    75,251
                                                    
                                                    
                                                    
                                                    75,251
                                                    
                                                    
                                                    
                                                    75,251
                                                    
                                                    
                                                    
                                                    75,251Mortgage-backed
      securities
                                                    
                                                    
                                                    25,719,577
                                                    
                                                    
                                                    
                                                    26,993,673
                                                    
                                                    
                                                    
                                                    27,848,619
                                                    
                                                    
                                                    
                                                    28,866,333Total
      Investment Securites available for sale
                                                    
                                                    $
                                                    97,062,022
                                                    
                                                    
                                                    $
                                                    99,342,071
                                                    
                                                    
                                                    $
                                                    101,669,667
                                                    
                                                    
                                                    $
                                                    103,567,578


9
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(3)
            Investment Securities
      (Continued):





Unrealized
losses and fair value, aggregated by investment category and length of time that
individual securities have been in a continuous unrealized loss position, as of
March 31, 2009, are summarized as follows:





Less
      than 12 Months
                            
                            
                            12
      Months or More
                            
                            
                            TotalFair
                            
                            
                            Unrealized
                            
                            
                            Fair
                            
                            
                            Unrealized
                            
                            
                            Fair
                            
                            
                            UnrealizedValue
                            
                            
                            loss
                            
                            
                            Value
                            
                            
                            loss
                            
                            
                            Value
                            
                            
                            lossU.S.
      government agency
                            
                            $
                            5,453,350
                            
                            
                            $
                            42,354
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            5,453,350
                            
                            
                            $
                            42,354obligationsCorporate
      bonds
                            
                            
                            468,470
                            
                            
                            
                            130,705
                            
                            
                            
                            2,025,790
                            
                            
                            
                            469,129
                            
                            
                            
                            2,494,260
                            
                            
                            
                            599,834State
      and municipal securities
                            
                            
                            740,507
                            
                            
                            
                            12,511
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            740,507
                            
                            
                            
                            12,511Mortgage-backed
      securities
                            
                            
                            72,608
                            
                            
                            
                            73
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            72,608
                            
                            
                            
                            73$
                            6,734,935
                            
                            
                            $
                            185,643
                            
                            
                            $
                            2,025,790
                            
                            
                            $
                            469,129
                            
                            
                            $
                            8,760,725
                            
                            
                            $
                            654,772




These
unrealized losses relate principally to the fluctuations in the current interest
rate environment.  In analyzing an issuer’s financial condition,
management considers whether the securities are issued by the federal government
or its agencies and whether downgrades by bond rating agencies have
occurred.  While management has the ability and intent to hold debt
securities until maturity or recovery of loss, management continues to evaluate
all securities in a loss position and may consider selling them if it is in the
best interest of the Company.


10
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(4)
            Loans:





The
following table sets forth the composition of our loan portfolio by type of loan
at the dates indicated:




At
      March 31,
                                                    
                                                    
                                                    At
      December 31,2009
                                                    
                                                    
                                                    2008Amount
                                                    
                                                    
                                                    Percent
                                                    
                                                    
                                                    Amount
                                                    
                                                    
                                                    PercentReal
      Estate LoansOne-
      to four-family residential loans(1)
                                                    
                                                    $
                                                    106,465,808
                                                    
                                                    
                                                    
                                                    24.8
                                                    %
                                                    
                                                    $
                                                    110,925,168
                                                    
                                                    
                                                    
                                                    25.3
                                                    %Multi-family
                                                    
                                                    
                                                    18,097,932
                                                    
                                                    
                                                    
                                                    4.2
                                                    
                                                    
                                                    
                                                    18,150,435
                                                    
                                                    
                                                    
                                                    4.2Commercial
                                                    
                                                    
                                                    172,083,498
                                                    
                                                    
                                                    
                                                    40.1
                                                    
                                                    
                                                    
                                                    168,432,417
                                                    
                                                    
                                                    
                                                    38.4Construction
      and land
                                                    
                                                    
                                                    52,963,140
                                                    
                                                    
                                                    
                                                    12.4
                                                    
                                                    
                                                    
                                                    52,337,453
                                                    
                                                    
                                                    
                                                    11.9Total
      real estate loans
                                                    
                                                    
                                                    349,610,378
                                                    
                                                    
                                                    
                                                    81.5
                                                    
                                                    
                                                    
                                                    349,845,473
                                                    
                                                    
                                                    
                                                    79.8Commercial
      business
                                                    
                                                    
                                                    68,943,033
                                                    
                                                    
                                                    
                                                    16.1
                                                    
                                                    
                                                    
                                                    78,159,496
                                                    
                                                    
                                                    
                                                    17.8Consumer
      Loans
                                                    
                                                    
                                                    10,080,029
                                                    
                                                    
                                                    
                                                    2.4
                                                    
                                                    
                                                    
                                                    10,269,781
                                                    
                                                    
                                                    
                                                    2.4Total
      loans and loans held for sale
                                                    
                                                    
                                                    428,633,440
                                                    
                                                    
                                                    
                                                    100.0
                                                    %
                                                    
                                                    
                                                    438,274,750
                                                    
                                                    
                                                    
                                                    100.0
                                                    %Less:Undisbursed
      portion of construction loans
                                                    
                                                    
                                                    2,191,455
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    3,401,803Deferred
      loan origination fees, net
                                                    
                                                    
                                                    36,887
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    58,974Allowance
      for loan losses
                                                    
                                                    
                                                    4,053,232
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    3,895,246Total
      loans and loans held for sale, net
                                                    
                                                    $
                                                    422,351,866
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    
                                                    $
                                                    430,918,727(1)
      Includes loans held for sale of $6,237,784 and $240,000 at March 31, 2009
      and December 31, 2008, respectively.


11
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(5)
            Asset
      Quality:





The
following table sets forth information with respect to the Company’s
nonperforming and impaired loans at the dates indicated:





March
      31,
                          
                          
                          December
      31,2009
                          
                          
                          2008Loans
      90 days or more past due and still accruing
                          
                          $
                          66,593
                          
                          
                          $
                          763,659Nonaccrual
      loans
                          
                          
                          5,908,666
                          
                          
                          
                          5,617,507Other
      impaired loans
                          
                          
                          3,754,405
                          
                          
                          
                          1,152,151Total
      nonperforming and impaired loans
                          
                          $
                          9,729,664
                          
                          
                          $
                          7,533,317Allowance
      for losses on nonperforming and impaired loans
                          
                          $
                          656,362
                          
                          
                          $
                          670,547





Asset
Quality Ratios:





Non-performing
      assets and impaired loans to total assets
                    
                    
                    1.52
                    %
                    
                    
                    1.15
                    %Non-performing
      and impaired loans to total loans
                    
                    
                    2.34
                    
                    
                    
                    1.75Allowance
      for loan losses to non-performing and impaired loans
                    
                    
                    41.66
                    
                    
                    
                    51.71Allowance
      for loan losses to total loans
                    
                    
                    0.97
                    
                    
                    
                    0.90





Following
is a summary of activity in the allowance for loan losses:





Three
      Months EndedMarch
      31,2009
                                  
                                  
                                  2008Balance
      at beginning of period
                                  
                                  $
                                  3,895,246
                                  
                                  
                                  $
                                  1,897,945Charge-offs
                                  
                                  
                                  (82,284
                                  )
                                  
                                  
                                  (30,446
                                  )Recoveries
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,492Provision
      charged to expense
                                  
                                  
                                  240,270
                                  
                                  
                                  
                                  170,833Balance
      at end of period
                                  
                                  $
                                  4,053,232
                                  
                                  
                                  $
                                  2,039,824


12
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(6)
            Earnings per
      Share:





Basic and
diluted income per share (EPS) represents income available to common
stockholders divided by the weighted average number of common shares
outstanding.  Employee stock ownership plan shares which are committed
to be released are considered outstanding for basic and diluted income per
share.





Three
      Months EndedMarch
      31,2009
                                  
                                  
                                  2008Net
      income available to common stockholders
                                  
                                  $
                                  1,053,895
                                  
                                  
                                  $
                                  574,453Basic
      potential common shares:Weighted
      average shares outstanding
                                  
                                  
                                  8,716,104
                                  
                                  
                                  
                                  8,334,447Weighted
      average unallocated Employee StockOwnership
      Plan shares
                                  
                                  
                                  (127,531
                                  )
                                  
                                  
                                  (136,036
                                  )Basic
      weighted average shares outstanding
                                  
                                  
                                  8,588,573
                                  
                                  
                                  
                                  8,198,411Dilutive
      potential common shares
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Dilutive
      weighted average shares outstanding
                                  
                                  
                                  8,588,573
                                  
                                  
                                  
                                  8,198,411Basic
      and diluted income per share
                                  
                                  $
                                  0.12
                                  
                                  
                                  $
                                  0.07





(7)
            Employee Stock Ownership
      Plan:





The
Company has an employee stock ownership plan (ESOP) which covers substantially
all employees who have attained the age of 21 and completed one year of
service.  In connection with its initial stock offering in 2004, the
Company loaned funds to the ESOP for the purchase of its common stock at the
initial public offering price.  The loan is being repaid based on a
variable interest rate over 20 years beginning December 31, 2004.  All
shares are held in a suspense account for allocation among the participants as
the loan is repaid.  Shares are released for allocation to
participants based upon the ratio of the current year’s debt service to the sum
of total principal and interest payments over the remaining life of the
note.  Shares released from the suspense account are allocated among
the participants based upon their pro rata annual compensation.  The
purchase of shares by the ESOP was recorded by the Company as unearned ESOP
shares in a contra equity account.  As ESOP shares are committed to be
released to compensate employees, the contra equity account is reduced and the
Company recognizes compensation expense equal to the average fair market value
of the shares committed to be released.  Compensation expense of
$15,676 and $21,239 was incurred for the three months ended March 31, 2009 and
2008, respectively.














13
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements


(7)       Employee Stock Ownership Plan
(Continued):





Dividends
on unallocated ESOP shares, together with Company contributions, are used by the
ESOP to repay principal and interest on the outstanding note.





The
following table reflects the shares held by the plan at March 31, 2009 and
December 31, 2008:





March
      31,
                        
                        
                        December
      31,2009
                        
                        
                        2008Unallocated
      shares (fair value at March 31, 2009 andDecember
      31, 2008 of $970,820 and $875,027, respectively)
                        
                        
                        125,429
                        
                        
                        
                        127,555Allocated
      Shares
                        
                        
                        45,330
                        
                        
                        
                        43,204Total
      ESOP Shares
                        
                        
                        170,759
                        
                        
                        
                        170,759





(8)
            Recent Accounting
      Pronouncements:





In April
2009, the Financial Accounting Standards Board (“FASB”) issued the following new
accounting standards:





i.)
              FASB
      Staff Position (“FSP”) FAS 157-4, Determining Whether a Market
      Is Not Active and a Transaction Is Not Distressed, which provides
      guidelines for making fair value measurements more consistent with the
      principles presented in Statement of Financial Accounting Standards
      157.  FSP FAS 157-4 provides additional authoritative guidance
      in determining whether a market is active or inactive, and whether a
      transaction is distressed, is applicable to all assets and liabilities
      (i.e. financial and nonfinancial) and will require enhanced
      disclosures.





ii.)
                FASB
      Staff Position FAS 115-2 and FAS 124-2, Recognition and Presentation
      of Other –Than-Temporary Impairments, provides additional guidance
      to provide greater clarity about the credit and noncredit component of an
      other-than-temporary impairment event and to more effectively communicate
      when an other-than-temporary impairment event has
      occurred.  This FSP applies to debt
  securities.





iii.)
              FASB
      Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about Fair
      Value of Financial Instruments, amends FASB Statement No. 107,
      Disclosures about Fair
      Value of Financial Instruments, to require disclosures about fair
      value of financial instruments in interim as well as in annual financial
      statements.  This FSP also amends APB Opinion No. 28, Interim Financial
      Reporting, to require those disclosures in all interim financial
      statements.





These
standards are effective for periods ending after June 15, 2009, with early
adoption permitted for periods ending after March 15, 2009.  The
Company has elected to adopt these statements effective for the quarter ending
June 30, 2009.  The Company is currently evaluating the impact that
the adoption of these standards will have on its financial position and results
of operations.


14
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements





(9)
            Fair Value
      Disclosures





The
Company determines the fair market values of its financial instruments based on
the fair value hierarchy established in SFAS No. 157, Fair Value Measurements,
which requires an entity to maximize the use of observable inputs and minimizes
the use of unobservable inputs when measuring fair value.  The
standard describes three levels of inputs that may be used to measure fair
value.  The Company carries its available-for-sale securities,
impaired loans and foreclosed assets at fair value.





Level 1
inputs are unadjusted quoted prices in active markets for identical assets or
liabilities that the Company has the ability to access at the measurement
date.  Level 2 inputs are inputs other than quoted prices included
with Level 1 that are observable for the asset or liability either directly or
indirectly.  These might include quoted prices for similar assets or
liabilities in active markets, quoted prices for identical or similar assets or
liabilities in markets that are not active, inputs other than quoted prices that
are observable for the asset or liability (such as interest rates, volatilities,
prepayment speeds, credit risks, etc.) or inputs that are derived from or
corroborated by market data by correlation or other means.  Level 3
inputs are unobservable inputs for determining the fair value of assets or
liabilities that reflect an entity’s own assumptions about the assumptions that
market participants would use in pricing the assets or liabilities.





Assets
and liabilities measured at fair value on a recurring basis segregated by fair
value hierarchy level during the period ended March 31, 2009 are summarized
below:




Quoted
      Prices in Active Markets for Identical Assets
                                        
                                        
                                        Significant
      OtherObservable Inputs
                                        
                                        
                                        Significant
      UnobservableInputsAssets:
                                        
                                        (Level
      1)
                                        
                                        
                                        (Level
      2)
                                        
                                        
                                        (Level
      3)
                                        
                                        
                                        TotalSecurities
      available-for-sale
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        99,342,071
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        99,342,071




Assets
and liabilities measured at fair value on a nonrecurring basis by fair value
hierarchy level during the period ended March 31, 2009 are summarized
below:





Quoted
      Prices in Active Markets for Identical Assets
                        
                        
                        Significant
      OtherObservable Inputs
                        
                        
                        Significant
      UnobservableInputs(Level
      1)
                        
                        
                        (Level
      2)
                        
                        
                        (Level
      3)
                        
                        
                        TotalImpaired
      loans
                        
                        $
                        -
                        
                        
                        $
                        9,729,664
                        
                        
                        $
                        -
                        
                        
                        $
                        9,729,664Foreclosed
      assets
                        
                        $
                        -
                        
                        
                        $
                        1,036,399
                        
                        
                        $
                        -
                        
                        
                        $
                        1,036,399


Impaired
loans that are collateral dependent have been written down to their fair value,
less costs to sell, of $9.7 million through the establishment of specific
reserves or by recording charge-offs when the carrying value exceeds the fair
value.  Valuation techniques consistent with the market approach,
income approach, and/or cost approach were used to measure fair value and
primarily included observable inputs for the individual impaired loans being
evaluated such as recent sales of similar assets or observable market data for
operational or carrying costs.  In cases where such inputs were
unobservable, the loan balance would be reflected within the Level 3
hierarchy.


15
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Notes
to Consolidated Financial Statements





(10)
            Subsequent
      Events:





On
      April 28, 2009, the Board of Directors of the Company declared a cash
      dividend on the Company’s common stock of $0.06 per share for the quarter
      ended March 31, 2009.  The dividend will be payable to
      stockholders of record as of May 15, 2009 and is expected to be paid on
      May 22, 2009.















16
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.


Item
2.   Management’s Discussion and Analysis
of Financial Condition and Results of Operations





Forward-Looking
Statements





When used
in this Form 10-Q, the words or phrases “will likely result,” “are expected to,”
“will continue,” “is anticipated,” “estimate,” “project” or similar expressions
are intended to identify “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995.  Such statements are
subject to certain risks and uncertainties including changes in economic
conditions in our market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in our market area, and
competition that could cause actual results to differ materially from historical
earnings and those presently anticipated or projected.  The Company
wishes to caution you not to place undue reliance on any such forward-looking
statements, which only speak as of the date made.  The Company wishes
to advise you that the factors listed above could affect the Company’s financial
performance and could cause the Company’s actual results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements.





The
Company does not undertake, and specifically disclaims any obligation, to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.








Critical Accounting
Policies





We
consider accounting policies involving significant judgments and assumptions by
management that have, or could have, a material impact on the carrying value of
certain assets or on income to be critical accounting
policies.  Management makes significant estimates and has identified
the allowance for loan losses and goodwill and other intangible assets as
critical accounting policies.





Allowance for
loan losses.  The allowance for loan losses is established as
losses are estimated to have occurred through a provision for loan losses
charged to earnings. Loan losses are charged against the allowance when
management believes the uncollectibility of a loan balance is confirmed.
Subsequent recoveries, if any, are credited to the allowance.





The
allowance for loan losses is evaluated on a regular basis by management and is
based upon management’s periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of any underlying collateral and prevailing economic conditions. This
evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes
available.





The
allowance consists of specific and general components. The specific component
relates to loans that are classified as doubtful, substandard or special
mention. For such loans that are also classified as impaired, an allowance is
established when the discounted cash flows (or collateral value or observable
market price) of the impaired loan is lower than the carrying value of that
loan. The general component covers non-classified loans and is based on
historical loss experience adjusted for qualitative factors.


17
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


A loan is
considered impaired when, based on current information and events, it is
probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled
principal and interest payments when due. Loans that experience insignificant
payment delays and payment shortfalls generally are not classified as impaired.
Management determines the significance of payment delays and payment shortfalls
on a case-by-case basis, taking into consideration all of the circumstances
surrounding the loan and the borrower, including the length of the delay, the
reasons for the delay, the borrower’s prior payment record, and the amount of
the shortfall in relation to the principal and interest owed. Impairment is
measured on a loan by loan basis for commercial and construction loans by either
the present value of expected future cash flows discounted at the loan’s
effective interest rate, the loan’s obtainable market price, or the fair value
of the collateral if the loan is collateral dependent.





Large
groups of smaller balance homogeneous loans are collectively evaluated for
impairment. Accordingly, the Company does not separately identify individual
consumer and residential loans for impairment disclosures, unless such loans are
the subject of a restructuring agreement.





Goodwill and
Other Intangible Assets.  Over the past several years, First
Clover Leaf has grown through acquisitions accounted for under the purchase
method of accounting.  Under the purchase method, First Clover Leaf is
required to allocate the cost of an acquired company to the assets acquired,
including identified intangible assets, and liabilities assumed based on their
estimated fair values at the date of acquisition.  The excess cost
over the net assets acquired represents goodwill, which is not subject to
periodic amortization.




Customer
relationship intangibles are required to be amortized over their estimated
useful lives.  The method of amortization reflects the pattern in
which the economic benefits of the intangible assets are estimated to be
consumed or otherwise used up.  Since First Clover Leaf’s acquired
customer relationships are subject to routine customer attrition, the
relationships are more likely to produce greater benefits in the near-term than
in the long-term, which typically supports the use of an accelerated method of
amortization for the related intangible assets.  Management is
required to evaluate the useful life of customer relationship intangibles to
determine if events or circumstances warrant a change in the estimated
life.  Should management determine that the estimated life of any
intangible asset is shorter than originally estimated, First Clover Leaf would
adjust the amortization of that asset, which could increase future amortization
expense.




Goodwill
arising from business combinations represents the value attributable to
unidentifiable intangible elements in the business acquired.  Goodwill
recorded by First Clover Leaf in connection with its acquisitions relates to the
inherent value in the businesses acquired, and this value is dependent upon
First Clover Leaf’s ability to provide quality, cost effective services in a
competitive market place.  The continued value of recorded goodwill is
dependent on the value of our stock and continued profitability of the
organization.  In the event that the stock price experiences
significant declines or the operations of the company lack profitability an
impairment of goodwill would need to be recognized.  Any impairment
recognized would adversely impact earnings in the period in which it is
recognized.







18
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


First
Clover Leaf utilizes a two step valuation approach to test for goodwill
impairment. We estimate the fair value as of the measurement date utilizing two
valuation methodologies including the comparable transactions approach, and the
control premium approach.  We then compare the estimated fair value to
the current carrying value to determine if goodwill impairment had occurred as
of the measurement date.  At December 31, 2008, we concluded no
impairment existed since the fair value exceeded the carrying value.  
Future events, such as adverse changes to First Clover Leaf’s business, could
cause management to conclude that impairment indicators exist and require
management to re-evaluate goodwill.  Should such re-evaluation
determine goodwill is impaired, any resulting impairment loss recognized could
have a material, adverse impact on First Clover Leaf’s financial condition and
results of operations.  In accordance with current accounting
guidance, management has determined that the Company has only one reporting unit
for purposes of evaluating goodwill.





Overview





Net
income increased to $1.1 million for the three months ended March 31, 2009 from
$574,000 for the same period last year.  The increase in net income
was due primarily to an increase in interest and fees on loans and gain on sale
of loans.  These increases were offset slightly by an increase in
non-interest expense.  Basic and diluted income per share was $0.12
and $0.07 for the three months ended March 31, 2009 and 2008,
respectively.





Financial
Condition





Total
Assets.  Total assets decreased to $638.9 million at March 31,
2009 from $653.3 million at December 31, 2008.  Total cash and cash
equivalents decreased to $54.2 million at March 31, 2009 from $67.1 million at
December 31, 2008.  The decrease in cash and cash equivalents was due
primarily to a decrease in interest-earning deposits.  These represent
deposits held at correspondent banks.  In contrast, the Bank’s
interest-earning time deposits increased to $15.6 million at March 31, 2009 from
$5.2 million at December 31, 2008.  Securities available for sale
decreased to $99.3 million at March 31, 2009 from $103.6 million at December 31,
2008.  The decrease was due primarily to calls, maturities and
pay-downs of $15.7 million, partially offset by purchases of $11.0
million.  Loans, net amounted to $422.4 million at March 31, 2009,
compared to $430.9 million at December 31, 2008.  This decrease was a
result of loan paydowns and maturities exceeding new loan
originations.  Loans held for sale increased to $6.2 million at March
31, 2009 from $240,000 at December 31, 2008 primarily due to the significant
increase in loan refinancing during the three-month period ending March 31,
2009.





19
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


Total
Liabilities.  Deposits increased to $458.6 million at March 31,
2009 from $447.3 million at December 31, 2008.  Securities sold under
agreements to repurchase decreased to $30.8 million at March 31, 2009 from $55.1
million at December 31, 2008.  The change in the deposit accounts and
securities sold under agreements to repurchase accounts was due primarily to
fluctuations by one significant customer.  This type of fluctuation is
a normal occurrence for this customer.  Federal Home Loan Bank
advances at March 31, 2009 were $48.5 million compared to $50.0 million at
December 31, 2008.  Other liabilities increased to $3.2 million at
March 31, 2009 from $2.2 million at December 31, 2008.





Stockholders’
Equity.  Stockholders’ equity decreased to $92.7 million at
March 31, 2009 from $93.7 million at December 31, 2008, principally as a result
of the repurchase of $1.8 million of the Company’s common stock, and the payment
of cash dividends of $517,000.  The decrease in equity was partially
offset by $1.1 million in net income.





Asset
Quality





At March
31, 2009, the Company’s nonaccrual loans increased $291,000 from December 31,
2008, while other impaired loans increased $2.6 million from December 31,
2008.  The increase in other impaired loans is due primarily to the
addition of two relationships that had not previously been classified as
impaired.  Both of these relationships are real estate related
loans.  The larger of the two relationships is primarily secured by
commercial real estate, while the other is secured by residential rental
property.  Currently the collateral on each of the loans in the larger
relationship is sufficient to cover the outstanding loan balance.  We
are obtaining new appraisals on the second, and the credit will be restructured
to allow for cash flow to match debt requirements.  Management
performs periodic reviews of the collateral to ensure adequate debt
coverage.





Under the
Company’s internal review policy, loans classified as substandard totaled $8.9
million at March 31, 2009 and $6.1 million at December 31, 2008.  This
increase was due primarily to the reclassification of two loan
relationships.  These loans are for the purchase of real estate
investment properties, and they are secured by commercial real estate and
residential rental property.  We believe the collateral on these loans
is sufficient to cover the outstanding loan balances, but we are having some of
the property serving as loan collateral reevaluated given the changes in the
real estate market.




Results of
Operations





General.  Net
income increased by $479,000 to $1.1 million for the three months ended March
31, 2009 from $574,000 for the same period last year.  The increase in
net income was due primarily to higher net interest income and non-interest
income, which more than offset the higher non-interest expense and higher
taxes.





Yields on
all interest-earning assets declined for the three months ended March 31, 2009
compared to the same period in 2008 due to the interest rate cuts instituted by
the Federal Reserve.  These rate cuts resulted in declining yields in
our loan portfolio, as a significant number of our loans are adjustable-rate
loans that reprice immediately.  The rate cuts also impacted our
interest-earning deposits with depository institutions as those assets also have
adjustable-rates versus fixed rates.  The declining rate environment
has resulted in a number of the bonds in our securities portfolio being called
and being replaced with lower yielding bonds.  We continue to attempt
to absorb the effects of the interest rate cuts through


20
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


lowering
the rates we pay on deposits.  However, our ability to lower rates
paid on deposits is limited due to the already low deposit rates and the
competitive environment in which we operate.  In addition, a
significant number of our interest-bearing deposits are time deposits, which are
fixed-rate contracts until maturity that do not allow for immediate repricing as
rates fluctuate.  Overall, further downward pressure on interest rates
is unlikely to benefit our net interest margin or net income.





The results for the three months ended
March 31, 2009 reflect the October 2008 acquisition of Partners Bank, which had
$170.0 million in assets, $101.6 million in loans, and $108.7 million of
deposits at the time of acquisition.





Net interest
income.  Net interest income increased to $4.1 million for the
three months ended March 31, 2009 from $2.7 million for the comparable period in
2008.  Net average interest-earning assets were $67.9 million for the
three months ended March 31, 2009, compared to $77.9 million for the same period
in 2008. The ratio of interest-earning assets to interest-bearing liabilities
decreased to 112.50% for the three months ended March 31, 2009 from 125.17% for
the same period in 2008.  The net interest rate spread increased to
2.46% for the three months ended March 31, 2009, compared to 1.96% for the
comparable period in 2008.  The average rate earned on
interest-earning assets decreased by 123 basis points for the three months ended
March 31, 2009 compared to the same period in 2008, while the average rate paid
on interest-bearing liabilities decreased by 173 basis points.  The
increase in the interest rate spread was attributable to the cost of funds
declining faster than the yield on interest-earning assets.


21
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


The
following table sets forth average balance sheets, average yields and costs, and
certain other information for the periods indicated.  No
tax-equivalent yield adjustments were made, as the effect thereof was not
material.  All average balances are daily average
balances.  Non-accrual loans were included in the computation of
average balances, but have been reflected in the table as loans carrying a zero
yield.  The yields set forth below include the effect of deferred loan
fees, discounts and premiums that are amortized or accreted to interest income
or expense.  Yields and rates have been annualized.




Three
      Months Ended March 31,
                                                              
                                                              
                                                              Three
      Months Ended March 31,2009
                                                              
                                                              
                                                              2008Average
      Outstanding Balance
                                                              
                                                              
                                                              Interest
      (4)
                                                              
                                                              
                                                              Yield/
      Rate
                                                              
                                                              
                                                              Average
      Outstanding Balance
                                                              
                                                              
                                                              Interest(4)
                                                              
                                                              
                                                              Yield/
      Rate(Dollars
      in thousands)Interest-earning
      assets:Loans,
      gross
                                                              
                                                              $
                                                              429,261
                                                              
                                                              
                                                              $
                                                              6,137
                                                              
                                                              
                                                              
                                                              5.80
                                                              %
                                                              
                                                              $
                                                              296,944
                                                              
                                                              
                                                              $
                                                              4,818
                                                              
                                                              
                                                              
                                                              6.49
                                                              %Securities
                                                              
                                                              
                                                              99,139
                                                              
                                                              
                                                              
                                                              1,071
                                                              
                                                              
                                                              
                                                              4.38
                                                              
                                                              
                                                              
                                                              53,142
                                                              
                                                              
                                                              
                                                              725
                                                              
                                                              
                                                              
                                                              5.46Federal
      Home Loan Bank stock
                                                              
                                                              
                                                              6,306
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              5,604
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Interest-earning
      balances from depository institutions
                                                              
                                                              
                                                              76,379
                                                              
                                                              
                                                              
                                                              60
                                                              
                                                              
                                                              
                                                              0.32
                                                              
                                                              
                                                              
                                                              31,605
                                                              
                                                              
                                                              
                                                              314
                                                              
                                                              
                                                              
                                                              3.97Total
      interest-earning assets
                                                              
                                                              
                                                              611,085
                                                              
                                                              
                                                              
                                                              7,268
                                                              
                                                              
                                                              
                                                              4.82
                                                              
                                                              
                                                              
                                                              387,295
                                                              
                                                              
                                                              
                                                              5,857
                                                              
                                                              
                                                              
                                                              6.05Non-interest-earning
      assets
                                                              
                                                              
                                                              54,127
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              26,699Total
      assets
                                                              
                                                              $
                                                              665,212
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              413,994Interest-bearing
      liabilities:Interest-bearing
      transaction
                                                              
                                                              $
                                                              212,992
                                                              
                                                              
                                                              
                                                              690
                                                              
                                                              
                                                              
                                                              1.31
                                                              
                                                              
                                                              $
                                                              77,636
                                                              
                                                              
                                                              
                                                              585
                                                              
                                                              
                                                              
                                                              3.01Savings
      deposits
                                                              
                                                              
                                                              18,338
                                                              
                                                              
                                                              
                                                              67
                                                              
                                                              
                                                              
                                                              1.48
                                                              
                                                              
                                                              
                                                              18,483
                                                              
                                                              
                                                              
                                                              113
                                                              
                                                              
                                                              
                                                              2.45Time
      deposits
                                                              
                                                              
                                                              210,029
                                                              
                                                              
                                                              
                                                              1,837
                                                              
                                                              
                                                              
                                                              3.55
                                                              
                                                              
                                                              
                                                              172,939
                                                              
                                                              
                                                              
                                                              2,105
                                                              
                                                              
                                                              
                                                              4.87Securities
      sold under agreements to repurchase
                                                              
                                                              
                                                              48,307
                                                              
                                                              
                                                              
                                                              20
                                                              
                                                              
                                                              
                                                              0.17
                                                              
                                                              
                                                              
                                                              21,709
                                                              
                                                              
                                                              
                                                              107
                                                              
                                                              
                                                              
                                                              1.97Federal
      Home Loan Bank advances
                                                              
                                                              
                                                              49,650
                                                              
                                                              
                                                              
                                                              469
                                                              
                                                              
                                                              
                                                              3.83
                                                              
                                                              
                                                              
                                                              14,799
                                                              
                                                              
                                                              
                                                              179
                                                              
                                                              
                                                              
                                                              4.84Subordinated
      debentures
                                                              
                                                              
                                                              3,890
                                                              
                                                              
                                                              
                                                              74
                                                              
                                                              
                                                              
                                                              7.71
                                                              
                                                              
                                                              
                                                              3,846
                                                              
                                                              
                                                              
                                                              74
                                                              
                                                              
                                                              
                                                              7.70Total
      interest-bearing liabilities
                                                              
                                                              
                                                              543,206
                                                              
                                                              
                                                              
                                                              3,157
                                                              
                                                              
                                                              
                                                              2.36
                                                              
                                                              
                                                              
                                                              309,412
                                                              
                                                              
                                                              
                                                              3,163
                                                              
                                                              
                                                              
                                                              4.09Non-interest-bearing
      liabilities
                                                              
                                                              
                                                              28,239
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              18,059Total
      liabilities
                                                              
                                                              
                                                              571,445
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              327,471Stockholders’
      equity
                                                              
                                                              
                                                              93,767
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              86,523Total
      liabilities and stockholders’ equity
                                                              
                                                              $
                                                              665,212
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              413,994Net
      interest income
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              4,111
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              2,694Net
      interest rate spread (1)
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              2.46
                                                              %
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              1.96
                                                              %Net
      interest-earning assets (2)
                                                              
                                                              $
                                                              67,879
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              $
                                                              77,883Net
      interest margin (3)
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              2.73
                                                              %
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              2.78
                                                              %Ratio
      of interest-earning assets to interest-bearing liabilities
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              112.50
                                                              %
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              125.17
                                                              %(1)
      Net interest rate spread represents the difference between the yield on
      average interest-earning assets and the cost of average interest-bearing
      liabilities.(2)
      Net interest-earning assets represents total interest-earning assets less
      total interest-bearing liabilities.(3)
      Net interest margin represents net interest income divided by average
      total interest-earning assets.(4)
      Interest on loans includes loan fees collected in the amount of $51,898
      and $53,029 for the three months ended March 31, 2009 and 2008,
      respectively.






22
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


Interest
income.  Interest and fee income on loans increased to $6.1
million for the three months ended March 31, 2009 from $4.8 million for the
comparable period in 2008.  Interest income on loans increased
primarily as a result of a higher average balance offset by a lower
yield.  The average balance of loans was $429.3 million and $296.9
million for the three months ended March 31, 2009 and 2008, respectively. The
average balance increased due to the Partners Bank acquisition.  The
average yield on loans decreased to 5.80% for the three months ended March 31,
2009 from 6.49% for the comparable period in 2008.





Interest
income on securities increased to $1.1 million for the three months ended March
31, 2009 from $725,000 for the comparable period in 2008.  The
increase was due primarily to a higher average balance offset by a decline in
yield.  The average balance of securities was $99.1 million and $53.1
million for the three months ended March 31, 2009 and 2008,
respectively.  The average balance increased due to the Partners Bank
acquisition.  The average yield on securities decreased to 4.38% from
5.46% for the three months ended March 31, 2009 and 2008,
respectively.





Interest
on other interest-earning deposits decreased to $60,000 for the three months
ended March 31, 2009 from $314,000 for the comparable period in
2008.  The average balance of other interest-earning deposits
increased to $76.4 million from $31.6 million for the three months ended March
31, 2009 and 2008, respectively, however, the average yield on other
interest-earning deposits decreased to 0.32% for the three months ended March
31, 2009 from 3.97% for the year earlier period.  The lower yield on
other interest-earning deposits was due to a declining interest rate
environment, specifically the federal fund rate, which reprices on a daily
basis.





Interest
expense.  Interest expense on deposits decreased to $2.6
million for the three months ended March 31, 2009 from $2.8 million for the
comparable period in 2008.  The decrease was due primarily to a
decline in yield offset by an increase in average interest-bearing
deposits.  The average balance of interest-bearing deposits was $441.4
million and $269.1 million for the three months ended March 31, 2009 and 2008,
respectively.  The average balance increased due to the Partners Bank
acquisition.





Interest
on securities sold under agreements to repurchase decreased to $20,000 for the
three months ended March 31, 2009 from $107,000 for the three months ended March
31, 2008.  Although the average balance of securities increased to
$48.3 million from $21.7 million for the three months ended March 31, 2009 and
2008, respectively, the yield decreased to 0.17% for the three months ended
March 31, 2009 from 1.97% for the comparable period in 2008.  The
average balance increased due to the Partners Bank acquisition.





Interest
on Federal Home Loan Bank advances increased due primarily to a higher average
balance offset by a decline in yield.  The average balance of Federal
Home Loan Bank advances was $49.7 million and $14.8 million for the three months
ended March 31, 2009 and 2008, respectively.  The average yield on
Federal Home Loan Bank advances decreased to 3.83% for the three months ended
March 31, 2009 compared to 4.84% for the comparable period in 2008.





Provision for
loan losses.  Provisions for loan losses were $240,000 and
$171,000 for the three months ended March 31, 2009 and 2008,
respectively.  The increase for the three months ended March 31, 2009
compared to the same period in 2008 was primarily due to the overall increase in
the loan portfolio, an increase in the nonperforming and impaired loans, as well
as the change in the composition of the portfolio that now includes a larger
share of commercial


23
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


business,
construction and land, and commercial real estate loans.  Provisions
for loan losses are based upon management’s consideration of current economic
conditions, the Company’s loan portfolio composition and historical loss
experience used to estimate probable losses as well as the level of
nonperforming assets and classified assets.  Management also reviews
individual loans for which full collectibility may not be reasonably assured and
considers, among other matters, the estimated fair value of the underlying
collateral.  This evaluation is ongoing and results in variations in
the Company’s provision for loan losses.  The Company is subject to
periodic examination by the Office of Thrift Supervision, which may require the
Company to record increases in the allowance based on its evaluation of
available information.  There can be no assurance that the Office of
Thrift Supervision will not require further increases to the
allowance.





Non-interest
income.  Non-interest income increased to $403,000 for the
three months ended March 31, 2009 from $150,000 for the comparable period in
2008.  The most significant increase was in gain on sale of
loans.  This income category increased $180,000 for the three months
ended March 31, 2009 compared to the same period in 2008.  This was
partially due to refinancing activity related to record low mortgage
rates.  Service fees on deposit accounts increased $19,000 and other
service charges and fees increased $24,000 for the three months ended March 31,
2009 compared to the same period in 2008 due primarily to the increased number
of deposit accounts acquired in the Partners Bank acquisition.





Non-interest
expense.  Non-interest expense totaled $2.6 million for the
three months ended March 31, 2009 and $1.7 million for the same period in
2008.





Compensation
and employee benefits, which is the largest component of non-interest expense,
increased to $1.1 million for the three months ended March 31, 2009 from
$793,000 for the comparable period in 2008.  Compensation and employee
benefits increased primarily as a result of a higher number of personnel due to
growth of the Company, the addition of our Wood River branch in June 2008, and
the Partners Bank acquisition in October 2008.





Occupancy
expense increased to $373,000 for the three months ended March 31, 2009 compared
to $240,000 for the comparable period in 2008.  Occupancy expense
increased primarily due to expenses related to a new branch office that opened
during the second quarter of 2008, the renovation and expansion of an existing
facility in Edwardsville, Illinois, and the acquisition of the Partners Bank
facilities.





Professional
fees increased to $203,000 for the three months ended March 31, 2009 compared to
$117,000 for the comparable period in 2008.  This increase was due
primarily to the consulting agreement entered into with the former CEO of
Partners Bank.





Expenses
related to foreclosed property, which is included in other expenses, increased
to $86,000 for the three months ended March 31, 2009.  There was no
foreclosed property expense for the comparable period in 2008.





Income
taxes.  Income taxes increased to $611,000 for the three months
ended March 31, 2009 from $352,000 for the comparable period in
2008.  The primary reason for the change in income taxes was the
higher level of pre-tax income for the 2009 period.





24
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


Liquidity and Capital
Resources





We
maintain liquid assets at levels considered adequate to meet liquidity
needs.  We adjust our liquidity levels to fund deposit outflows, repay
our borrowings and fund loan commitments.  We also adjust liquidity as
appropriate to meet asset and liability management objectives.




Our
primary sources of liquidity are deposits, amortization and prepayment of loans,
maturities of investment securities and other short-term investments, and
earnings and funds provided from operations.  While scheduled
principal repayments on loans are a relatively predictable source of funds,
deposit flows and loan prepayments are greatly influenced by market interest
rates, economic conditions, and rates offered by our competition.  We
set the interest rates on our deposits to maintain a desired level of total
deposits.  In addition, we invest excess funds in short-term
interest-earning assets, which provide liquidity to meet lending
requirements.




A portion
of our liquidity consists of cash and cash equivalents, which are a product of
our operating, investing and financing activities.  At March 31, 2009
and December 31, 2008, $54.2 million and $67.1 million, respectively, were
invested in cash and cash equivalents.  The primary sources of cash
are principal repayments on loans, proceeds from the calls and maturities of
investment securities, increases in deposit accounts and advances from the
Federal Home Loan Bank of Chicago.




Cash
flows are derived from operating activities, investing activities and financing
activities as reported in the Consolidated Statements of Cash Flows included
with the Consolidated Financial Statements.




Our
primary investing activities are the origination of loans and the purchase of
investment securities.  During the three months ended March 31, 2009
loans decreased by $13.4 million compared to an increase of $18.1 million for
the three months ended March 31, 2008.  Cash received from calls,
maturities, and paydowns of available-for-sale investment securities totaled
$15.7 million and $15.9 million for the three months ended March 31, 2009 and
2008, respectively.  We purchased $11.0 million and $11.9 million in
available-for-sale investment securities during the three months ended March 31,
2009 and 2008, respectively.  We received proceeds of $5.2 million and
$15.0 million from the maturities of interest-earning time deposits during the
three months ended March 31, 2009 and 2008, respectively.  We
purchased $15.6 million and $10.0 million of interest-earning time deposits for
the three months ended March 31, 2009 and 2008, respectively.





Purchases
of premises and equipment were $403,000 for the three months ended March 31,
2009 compared to $1.1 million for the same period in 2008.  Purchases
of premises and equipment for the three months ended March 31, 2008 were
primarily related to the construction of a new branch facility in Wood River,
Illinois.




Deposit
flows are generally affected by the level of interest rates, the interest rates
and products offered by local competitors, and other factors.  Net
deposits increased by $11.4 million for the three months ended March 31,
2009.  During the comparable period in 2008 the net decrease in
deposits was $11.6 million.  Securities sold under agreements to
repurchase had a net decrease of $24.3 million and a net increase of $5.1
million for the three months ended March 31, 2009 and 2008,
respectively.  Proceeds from Federal Home Loan Bank


25
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


advances
of $5.0 million for the three months ended March 31, 2009 were offset by $6.5
million for the repayment of such advances.  For the comparable period
in 2008, proceeds from Federal Home Loan Bank advances of $10.0 million were
offset by $3.0 million for the repayment of such
advances.  Repurchases of the Company’s common stock were $1.8 million
and $4.2 million for the three months ended March 31, 2009 and 2008,
respectively.





Liquidity
management is both a daily and long-term function of business
management.  If we require funds beyond our ability to generate them
internally, borrowing agreements exist with the Federal Home Loan Bank of
Chicago, which provides an additional source of funds.  At March 31,
2009, we had $48.5 million of advances from the Federal Home Loan Bank of
Chicago and additional available credit of approximately $30.5
million.





The Bank
is required to maintain certain minimum capital requirements under Office of
Thrift Supervision regulations.  Failure by a savings institution to
meet minimum capital requirements can result in certain mandatory and possible
discretionary actions by regulators, which, if undertaken, could have a direct
material effect on the Bank’s financial statements.  The Bank was
considered “well-capitalized” at March 31, 2009.  Under the capital
adequacy guidelines and regulatory framework for prompt corrective action, the
Bank must meet specific capital guidelines that involve quantitative measures of
the Bank’s assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices.




The
Bank’s actual and required capital amounts and ratios at March 31, 2009 were as
follows:





Minimum
      Requiredfor
      Capital
                                                  
                                                  
                                                  to
      be "WellActual
                                                  
                                                  
                                                  Adequacy
                                                  
                                                  
                                                  Capitalized"Amount
                                                  
                                                  
                                                  Ratio
                                                  
                                                  
                                                  Amount
                                                  
                                                  
                                                  Ratio
                                                  
                                                  
                                                  Amount
                                                  
                                                  
                                                  Ratio(Dollars
      in Thousands)Stockholders'
      equity
                                                  
                                                  $
                                                  78,805Goodwill
      and core deposit intangible
                                                  
                                                  
                                                  (22,502
                                                  )Disallowed
      servicing assets
                                                  
                                                  
                                                  (675
                                                  )Unrealized
      gain on securities AFS, net
                                                  
                                                  
                                                  (1,436
                                                  )Tangible
      capital to adjusted total assets
                                                  
                                                  $
                                                  54,192
                                                  
                                                  
                                                  
                                                  8.9
                                                  %
                                                  
                                                  $
                                                  9,169
                                                  
                                                  
                                                  
                                                  1.5
                                                  %
                                                  
                                                  
                                                  N/A
                                                  
                                                  
                                                  
                                                  -General
      valuation allowance
                                                  
                                                  
                                                  4,053Deduction
      for low-level recourse
                                                  
                                                  
                                                  (1,473
                                                  )Total
      capital to risk-weighted assets
                                                  
                                                  $
                                                  56,772
                                                  
                                                  
                                                  
                                                  13.1
                                                  %
                                                  
                                                  $
                                                  34,796
                                                  
                                                  
                                                  
                                                  8.0
                                                  %
                                                  
                                                  $
                                                  43,496
                                                  
                                                  
                                                  
                                                  10.0
                                                  %Tier
      1 capital to risk-weighted assets
                                                  
                                                  $
                                                  54,192
                                                  
                                                  
                                                  
                                                  12.5
                                                  %
                                                  
                                                  $
                                                  N/A
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  $
                                                  26,097
                                                  
                                                  
                                                  
                                                  6.0
                                                  %Tier
      1 capital to total assets
                                                  
                                                  $
                                                  54,192
                                                  
                                                  
                                                  
                                                  8.9
                                                  %
                                                  
                                                  $
                                                  24,451
                                                  
                                                  
                                                  
                                                  4.0
                                                  %
                                                  
                                                  $
                                                  30,564
                                                  
                                                  
                                                  
                                                  5.0
                                                  %




26
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Management’s
Discussion and Analysis of Financial Condition and Results of
Operations


Off-Balance Sheet
Arrangements




In the
ordinary course of business, the Company is a party to credit-related financial
instruments with off-balance sheet risk to meet the financing needs of our
customers.  These financial instruments include commitments to extend
credit.  The Company follows the same credit policies in making
commitments as it does for on-balance sheet instruments.




Commitments
to extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract.  Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. The commitments for equity lines of credit may expire
without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. The amount of collateral
obtained, if it is deemed necessary by the Company, is based on management’s
credit evaluation of the customer.  Unfunded commitments under
construction lines of credit for residential and multi-family properties are
commitments for possible future extensions of credit to existing customers.
These lines of credit are uncollateralized and usually do not contain a
specified maturity date and may not be drawn upon to the total extent to which
the Company is committed.




Standby
letters of credit are conditional commitments issued by the Company to guarantee
the performance of a customer to a third party.





A summary
of the notional or contractual amounts of financial instruments, with
off-balance-sheet risk at March 31, 2009 follows:





Range
      ofVariable
                                
                                
                                Fixed
                                
                                
                                
                                
                                
                                Rates
      onRate
                                
                                
                                Rate
                                
                                
                                Total
                                
                                
                                Fixed
      RateCommitments
                                
                                
                                Commitments
                                
                                
                                Commitments
                                
                                
                                Commitments(Dollars
      in thousands)Commitments
      to extend credit
                                
                                $
                                23,168
                                
                                
                                $
                                22,261
                                
                                
                                $
                                45,429
                                
                                
                                
                                2.75%-18.00
                                %Standby
      letters of credit
                                
                                $
                                1,904
                                
                                
                                $
                                4,136
                                
                                
                                $
                                6,040
                                
                                
                                
                                3.25%-9.25
                                %




Loans
sold to the Federal Home Loan Bank (“FHLB”) of Chicago under the Mortgage
Partnership Finance (“MPF”) program were sold with recourse.  The Bank
has an agreement to sell residential loans of up to $71.0 million to the FHLB of
Chicago.  Approximately $65.7 million has been sold.  As a
part of the agreement, the Bank has a maximum credit enhancement of $1.5 million
at March 31, 2009.  Based upon a favorable payment history, the Bank
does not anticipate recognizing any losses on these residential
loans.  During 2008, the FHLB of Chicago announced that they would no
longer enter into new master commitments or renew existing master commitments to
purchase mortgage loans from participating financial
institutions.  The FHLB of Chicago rescinded that decision in October
2008 and has continued to purchase loans under a re-organized MPF
program.  The Company intends to continue originating mortgage loans
and selling them while retaining the servicing.  In addition to the
FHLB of Chicago MPF program, the Company currently has a relationship with
Fannie Mae to purchase loans.








27
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.





Item
3.   Quantitative and Qualitative Disclosures
about Market Risk





The
majority of First Clover Leaf Bank’s assets and liabilities are monetary in
nature.  Consequently, the most significant form of market risk is
interest rate risk.  First Clover Leaf’s assets, consisting primarily
of loans, have longer maturities than its liabilities, consisting primarily of
deposits.  As a result, a principal part of First Clover Leaf’s
business strategy is to manage interest rate risk and reduce the exposure of our
net interest income to changes in market interest rates.  Accordingly,
the Board of Directors has established an Asset/Liability Management Committee
which is responsible for evaluating the interest rate risk inherent in assets
and liabilities, for determining the level of risk that is appropriate given
First Clover Leaf’s business strategy, operating environment, capital, liquidity
and performance objectives, and for managing this risk consistent with the
guidelines approved by the Board of Directors.  Senior management
monitors the level of interest rate risk on a regular basis, and the
Asset/Liability Management Committee meets as needed to review the
asset/liability policies and interest rate risk position.





During
the relatively low interest rate environment that has existed in recent years,
we have implemented the following strategies to manage interest rate risk: (i)
maintaining a high equity-to-assets ratio; and (ii) offering a variety of
adjustable rate loan products, including adjustable rate one- to four-family,
multifamily and non-residential mortgage loans, short-term consumer loans, and a
variety of adjustable-rate commercial loans.  By maintaining a high
equity-to-assets ratio and by investing in adjustable-rate and short-term
assets, we are better positioned to react to increases in market interest
rates.  However, maintaining high equity balances reduces the
return-on-equity ratio, and investments in shorter-term assets generally bear
lower yields than longer-term investments.





The
Office of Thrift Supervision requires the computation of amounts by which the
net present value of an institution’s cash flow from assets, liabilities and
off-balance sheet items (the institution’s net portfolio value or “NPV”) would
change in the event of a range of assumed changes in market interest
rates.  The Office of Thrift Supervision provides all institutions
that file a Consolidated Maturity/Rate Schedule as a part of their quarterly
Thrift Financial Report with an interest rate sensitivity report of net
portfolio value.  The Office of Thrift Supervision simulation model
uses a discounted cash flow analysis and an option-based pricing approach to
measure the interest rate sensitivity of net portfolio
value.  Historically, the Office of Thrift Supervision model estimated
the economic value of each type of asset, liability and off-balance-sheet
contract under the assumption that the United States Treasury yield curve
increases or decreases instantaneously by 100 to 300 basis points in 100 basis
point increments.  However, due to the low interest rate environment,
the Quarterly Interest Rate Risk Exposure Report, provided by the Office of
Thrift Supervision, will not display results for scenarios of minus 200 basis
points or below until further notice, and the model has changed to include the
change increments of plus or minus 50 basis points.  A basis point
equals one-hundredth of one percent, and 100 basis points equals one
percent.  An increase in interest rates from 3% to 4% would mean, for
example, a 100 basis point increase in the “Change in Interest Rates” column
below.


28
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.
 
 Item
3. Quantitative and Qualitative Disclosures about Market Risk (Continued)


The table
below sets forth, as of December 31, 2008, the estimated changes in the NPV that
would result from the designated instantaneous changes in the U.S. Treasury
yield curve. Computations of prospective effects of hypothetical interest rate
changes are based on numerous assumptions including relative levels of market
interest rates, loan prepayments and deposit decay, and should not be relied
upon as indicative of actual results.





December
      31, 2008NPV
                                                  
                                                  Net
      Portfolio Value as a Percentage of Present Value of
    AssetsEstimated
      Increase(Decrease) in NPVChange
      in Interest Rates
                                                  
                                                  Estimated
      NPV
                                                  
                                                  
                                                  Amount
                                                  
                                                  
                                                  Percent
                                                  
                                                  NPV
      Ratio
                                                  
                                                  Change(Dollars
      in thousands)+300
                                                  bp
                                                  
                                                  $
                                                  57,120
                                                  
                                                  
                                                  $
                                                  (9,578
                                                  )
                                                  
                                                  
                                                  (14
                                                  )
      %
                                                  
                                                  
                                                  9.05
                                                  %
                                                  
                                                  
                                                  -121
                                                  bp+200
                                                  bp
                                                  
                                                  
                                                  61,568
                                                  
                                                  
                                                  
                                                  (5,130
                                                  )
                                                  
                                                  
                                                  (8
                                                  )
                                                  
                                                  
                                                  9.64
                                                  
                                                  
                                                  
                                                  -62
                                                  bp+100
                                                  bp
                                                  
                                                  
                                                  65,158
                                                  
                                                  
                                                  
                                                  (1,541
                                                  )
                                                  
                                                  
                                                  (2
                                                  )
                                                  
                                                  
                                                  10.10
                                                  
                                                  
                                                  
                                                  -16
                                                  bp+50
                                                  bp
                                                  
                                                  
                                                  65,955
                                                  
                                                  
                                                  
                                                  (743
                                                  )
                                                  
                                                  
                                                  (1
                                                  )
                                                  
                                                  
                                                  10.18
                                                  
                                                  
                                                  
                                                  -8
                                                  bp0
                                                  bp
                                                  
                                                  
                                                  66,698
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  10.26
                                                  
                                                  
                                                  
                                                  0
                                                  bp-50
                                                  bp
                                                  
                                                  
                                                  66,721
                                                  
                                                  
                                                  
                                                  23
                                                  
                                                  
                                                  
                                                  —
                                                  
                                                  
                                                  
                                                  10.24
                                                  
                                                  
                                                  
                                                  -2
                                                  bp-100
                                                  bp
                                                  
                                                  
                                                  65,417
                                                  
                                                  
                                                  
                                                  (1,281
                                                  )
                                                  
                                                  
                                                  (2
                                                  )
                                                  
                                                  
                                                  10.04
                                                  
                                                  
                                                  
                                                  -22
                                                  bp




The table
above indicates that at December 31, 2008, in the event of a 100 basis point
decrease in interest rates, we would experience a 2% decrease in the net
portfolio value.  In the event of a 300 basis point increase in
interest rates, we would experience a 14% decrease in net portfolio
value.  Management does not believe that the Company’s primary market
risk exposures and how those exposures were managed during the three months
ended March 31, 2009 have changed significantly when compared to the immediately
preceding quarter ended December 31, 2008.  However, the Company’s
primary market risk exposure has not yet been quantified at March 31, 2009 as
the Office of Thrift Supervision Net Portfolio Value Model is not yet available
and the complexity of the model makes it difficult to accurately predict
results.





Certain
shortcomings are inherent in the methodology used in the above interest rate
risk measurement.  Modeling changes in net portfolio value require
making certain assumptions that may or may not reflect the manner in which
actual yields and costs respond to changes in market interest
rates.  In this regard, the net portfolio value table presented
assumes that the composition of the interest-sensitive assets and liabilities
existing at the beginning of a period remains constant over the period being
measured and assumes that a particular change in interest rates is reflected
uniformly across the yield curve regardless of the duration or repricing of
specific assets and liabilities.  Accordingly, although the net
portfolio value table provides an indication of the interest rate risk exposure
at a particular point in time, such measurements are not intended to and do not
provide a precise forecast of the effect of changes in market interest rates on
its net interest income and will differ from actual results.


29
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.





Item
4.  Controls and Procedures





As of the
end of the period covered by this report, the Company carried out an evaluation,
under the supervision and with the participation of the Company’s principal
executive officer and principal financial officer, of the effectiveness of the
design and operation of the Company’s disclosure controls and procedures. Based
on this evaluation, the Company’s principal executive officer and principal
financial officer concluded that the Company’s disclosure controls and
procedures are effective in timely alerting them to material information
required to be included in the Company’s periodic SEC reports.





In
addition, there have been no changes in the Company’s internal control over
financial reporting during the most recent fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company’s internal
control over financial reporting.








30
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.





PART II - Other Information





Item
1 - Legal Proceedings.





There are
no material legal proceedings to which the Company or its subsidiaries is a
party or of which any of its property is subject.  From time to time,
the Company is a party to various legal proceedings incident to its
business.








Item
1A – Risk Factors.





The Company does not believe that its
risks have materially changed from those risks included in the Company’s Annual
Report on Form 10-K filed on March 16, 2009.







Item
2 – UnregisteredSales of Equity Securities and Use of
Proceeds.





(a)
            No
      equity securities were sold during the quarter that were not registered
      under the Securities Exchange Act.


(b)
            Not
      applicable.


(c)
              The
      following table presents for the periods indicated a summary of the
      purchases made by or on behalf of the Company of shares of its common
      stock.




Period
                                
                                Total
                                  Number
      of
                                  Shares
                                  Purchased
                                
                                
                                Average
                                  Price
                                  Paid
      per
                                  Share
                                
                                
                                Total
      Number of
                                  Shares
      Purchased
                                  as
      Part of Publicly
                                  Announced
      Plans or
                                  Programs
                                
                                
                                Maximum
      Number of
                                  Shares
      That May Yet
                                  Be
      Purchased Under
                                  the
      Plans or Programs(1)January
      1 - 31, 2009
                                
                                
                                21,784
                                
                                
                                $
                                7.43
                                
                                
                                
                                21,784
                                
                                
                                
                                834,267February
      1 - 28, 2009
                                
                                
                                54,697
                                
                                
                                $
                                7.53
                                
                                
                                
                                54,697
                                
                                
                                
                                779,570March
      1 - 31, 2009
                                
                                
                                160,307
                                
                                
                                $
                                7.51
                                
                                
                                
                                160,307
                                
                                
                                
                                619,263Total
                                
                                
                                236,788
                                
                                
                                
                                
                                
                                
                                
                                236,788


(1)
            The
      Company’s board of directors approved a stock repurchase program on
      November 12, 2008 for the repurchase of up to 924,480 shares of common
      stock, and on December 11, 2008, they increased the number of shares that
      may be repurchased pursuant to that plan by an additional 382,641
      shares.





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


31
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.








Item
6 – Exhibits.





(a)
            Exhibits.


31.1:
            Certification
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.


31.2:
            Certification
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.


32:
            Certification
      pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002.

















32
 Index
 FIRST
CLOVER LEAF FINANCIAL CORP.





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.





FIRST CLOVER LEAF
      FINANCIAL CORP.(Registrant)DATE:   May 11,
      2009
            
            BY:
            /s/ Dennis M.
      TerryDennis
      M. Terry, President and Chief Executive OfficerBY:
            /s/ Darlene F.
      McDonaldDarlene
      F. McDonald, Senior Vice-President and Chief Financial
    Officer





33