UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549





FORM
10-Q





QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended March 31,
2008








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 incorporation or organization)
            (I.R.S.
      Employer Identification No.)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.YesT.  No£.





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  £
            Accelerated
      filer  TNon-accelerated
      filer  £  (do
      not check if smaller reporting company)
            Smaller
      reporting company  £





Indicate
by checkmark whether the Registrant is a shell company (as defined in Rule 12b-2
of the Exchange Act).


Yes  £.  No  T.





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 9, 2008Common
      Stock, par value $.10 per share
            
            8,176,731













FIRST CLOVERLEAF FINANCIAL CORP.





FORM
10-Q





FOR THE
QUARTER ENDED MARCH 31, 2008





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
            16Item
      3.
            Quantitative and Qualitative Disclosures about Market
      Risk
            25Item
      4.
            Controls and Procedures
            27PART
      II - Other InformationItem
      1.
            Legal Proceedings
            28Item
      1A.
            Risk Factors
            28Item
      2.
            Unregistered Sales of Equity Securities and Use of
      Proceeds
            30Item
      3.
            Defaults Upon Senior Securities
            30Item
      4.
            Submission of Matters to a Vote of Security
      Holders
            30Item
      5.
            Other Information
            30Item
      6.
            Exhibits
            30Signatures
            31





Index





FIRST CLOVERLEAF FINANCIAL CORP.





Consolidated
Balance Sheets


(Unaudited)





March 31,
            
            
            December 31,Assets
            
            2008
            
            
            2007Cash
      and due from banks
            
            $
            5,840,466
            
            
            $
            8,927,314Interest-earning
      deposits
            
            
            11,857,282
            
            
            
            2,431,724Federal
      funds sold
            
            
            3,498,830
            
            
            
            25,725,537Total
      cash and cash equivalents
            
            
            21,196,578
            
            
            
            37,084,575Interest-earning
      time deposits
            
            
            5,025,984
            
            
            
            10,048,058Securities
      available for sale
            
            
            50,630,524
            
            
            
            54,150,008Federal
      Home Loan Bank stock
            
            
            5,603,773
            
            
            
            5,603,773Loans,
      net of allowance for loan losses of $2,039,824 and $1,897,945,
      respectively
            
            
            302,889,713
            
            
            
            284,919,446Loans
      held for sale
            
            
            2,687,923
            
            
            
            -Property
      and equipment, net
            
            
            8,333,646
            
            
            
            7,396,104Accrued
      interest receivable
            
            
            1,834,380
            
            
            
            1,756,954Mortgage
      servicing rights
            
            
            388,080
            
            
            
            404,441Goodwill
            
            
            9,402,608
            
            
            
            9,402,608Core
      deposit intangible
            
            
            1,412,001
            
            
            
            1,528,001Other
      assets
            
            
            1,015,057
            
            
            
            957,858Total
      assets
            
            $
            410,420,267
            
            
            $
            413,251,826Liabilities
      and Stockholders' EquityLiabilities:Deposits:Non-interest
      bearing deposits
            
            $
            12,869,914
            
            
            $
            14,799,051Interest
      bearing deposits
            
            
            266,745,680
            
            
            
            276,395,967Total
      deposits
            
            
            279,615,594
            
            
            
            291,195,018Federal
      Home Loan Bank advances
            
            
            17,443,919
            
            
            
            10,431,919Securities
      sold under agreements to repurchase
            
            
            20,987,804
            
            
            
            15,893,350Subordinated
      debentures
            
            
            3,853,096
            
            
            
            3,842,080Accrued
      interest payable
            
            
            971,048
            
            
            
            1,107,781Other
      liabilities
            
            
            2,667,653
            
            
            
            2,100,275Total
      liabilities
            
            
            325,539,114
            
            
            
            324,570,423Stockholders'
      Equity:Preferred
      stock, $.10 par value; 10,000,000 shares authorized; no shares
      issued
            
            
            -
            
            
            
            -Common
      stock, $.10 par value; 20,000,000 shares authorized; 9,074,031 shares
      issued; 8,176,731 and 8,582,831 shares outstanding at March 31, 2008 and
      December 31, 2007, respectively
            
            
            907,403
            
            
            
            907,403Additional
      paid-in capital
            
            
            71,107,510
            
            
            
            71,039,791Retained
      earnings
            
            
            22,614,235
            
            
            
            22,522,223Accumulated
      other comprehensive income
            
            
            522,079
            
            
            
            242,750Unearned
      Employee Stock Ownership Plan shares
            
            
            (691,798
            )
            
            
            (645,318
            )Treasury
      Stock, at cost; 897,300 and 491,200 shares at March 31, 2008and December
      31, 2007, respectively
            
            
            (9,578,276
            )
            
            
            (5,385,446
            )Total
      stockholders' equity
            
            
            84,881,153
            
            
            
            88,681,403Total
      liabilities and stockholders' equity
            
            $
            410,420,267
            
            
            $
            413,251,826See
      Accompanying Notes to Consolidated Financial Statements.





3
 Index





FIRST CLOVERLEAF FINANCIAL CORP.





Consolidated
Statements of Income


(Unaudited)





Three
      Months EndedMarch 31,2008
            
            
            2007Interest
      and dividend income:Interest
      and fees on loans
            
            $
            4,818,015
            
            
            $
            4,179,047Securities:Taxable
      interest income
            
            
            676,864
            
            
            
            605,970Non-taxable
      interest income
            
            
            47,985
            
            
            
            37,772Federal
      Home Loan Bank dividends
            
            
            -
            
            
            
            51,350Interest-earning
      deposits, federal funds sold, and other
            
            
            314,439
            
            
            
            631,477Total
      interest and dividend income
            
            
            5,857,303
            
            
            
            5,505,616Interest
      Expense:Deposits
            
            
            2,801,979
            
            
            
            2,465,501Federal
      Home Loan Bank advances
            
            
            179,429
            
            
            
            146,254Securities
      sold under agreements to repurchase
            
            
            107,254
            
            
            
            186,749Subordinated
      debentures
            
            
            74,397
            
            
            
            73,444Total
      interest expense
            
            
            3,163,059
            
            
            
            2,871,948Net
      interest income
            
            
            2,694,244
            
            
            
            2,633,668Provision
      for loan losses
            
            
            170,833
            
            
            
            45,000Net
      interest income after provision for loan losses
            
            
            2,523,411
            
            
            
            2,588,668Noninterest
      income:Service
      fees on deposit accounts
            
            
            46,963
            
            
            
            39,216Other
      service charges and fees
            
            
            34,632
            
            
            
            33,753Loan
      servicing fees
            
            
            30,007
            
            
            
            27,783Gain
      on sale of loans
            
            
            34,380
            
            
            
            27,263Other
            
            
            4,284
            
            
            
            1,222Total
      noninterest income
            
            
            150,266
            
            
            
            129,237Noninterest
      expense:Compensation
      and employee benefits
            
            
            792,804
            
            
            
            698,783Occupancy
      expense
            
            
            240,324
            
            
            
            206,139Data
      processing services
            
            
            114,963
            
            
            
            106,590Director
      fees
            
            
            59,050
            
            
            
            58,300Professional
      fees
            
            
            117,134
            
            
            
            122,759Amortization
      of core deposit intangible
            
            
            116,000
            
            
            
            156,999Amortization
      of mortgage servicing rights
            
            
            34,804
            
            
            
            20,543Other
            
            
            272,245
            
            
            
            273,091Total
      noninterest expense
            
            
            1,747,324
            
            
            
            1,643,204Income
      before income taxes
            
            
            926,353
            
            
            
            1,074,701Income
      taxes
            
            
            351,900
            
            
            
            386,750Net
      income
            
            $
            574,453
            
            
            $
            687,951Basic
      and diluted income per share (see Note 6)
            
            $
            0.07
            
            
            $
            0.08Dividends
      per share
            
            $
            0.06
            
            
            $
            0.06See
      Accompanying Notes to Consolidated Financial Statements.





4
 Index





FIRSTCLOVER LEAF FINANCIAL CORP.





Consolidated
Statements of Comprehensive Income


(Unaudited)





Three
      Months EndedMarch 31,2008
            
            
            2007Net
      income
            
            $
            574,453
            
            
            $
            687,951Other
      comprehensive income:Unrealized
      gains on securities arising during the period, net of tax
            
            
            279,329
            
            
            
            26,843Comprehensive
      income
            
            $
            853,782
            
            
            $
            714,794See
      Accompanying Notes to Consolidated Financial Statements.





5
 Index





FIRST CLOVERLEAF FINANCIAL CORP.





Consolidated
Statements of Cash Flows


(Unaudited)





Three
      Months EndedMarch 31,2008
            
            
            2007Cash
      flows from operating activities:Net
      income
            
            $
            574,453
            
            
            $
            687,951Adjustments
      to reconcile net income to net cash provided by operating
      activities:Amortization
      of:Deferred
      loan origination (fees) costs, net
            
            
            21,987
            
            
            
            (11,195
            )Premiums
      and discounts on securities
            
            
            (82,594
            )
            
            
            89,927Core
      deposit intangible
            
            
            116,000
            
            
            
            156,999Mortgage
      servicing rights
            
            
            34,804
            
            
            
            20,543Amortization
      of fair value adjustments on:Loans
            
            
            (88,000
            )
            
            
            (150,000
            )Time
      deposits
            
            
            6,000
            
            
            
            (4,000
            )Federal
      Home Loan Bank advances
            
            
            12,000
            
            
            
            36,999Subordinated
      debentures
            
            
            11,016
            
            
            
            11,016Investment
      securities
            
            
            (38,600
            )
            
            
            (66,700
            )Provision
      for loan losses
            
            
            170,833
            
            
            
            45,000Depreciation
      expense
            
            
            117,498
            
            
            
            97,152ESOP
      expense
            
            
            21,239
            
            
            
            21,000Gain
      on sale of loans
            
            
            (34,380
            )
            
            
            (27,263
            )Proceeds
      from sales of loans held for sale
            
            
            1,774,254
            
            
            
            1,310,098Originations
      of loans held for sale
            
            
            (4,427,797
            )
            
            
            (856,911
            )Change
      in assets and liabilities:Decrease
      (increase) in accrued interest receivable
            
            
            (77,426
            )
            
            
            14,522Increase
      in mortgage servicing rights
            
            
            (18,443
            )
            
            
            (9,940
            )Decrease
      (increase) in other assets
            
            
            (57,199
            )
            
            
            14,350Increase
      (decrease) in accrued interest payable
            
            
            (136,733
            )
            
            
            26,660Increase
      (decrease) in other liabilities
            
            
            402,613
            
            
            
            (500,577
            )Net
      cash flows from operating activities
            
            
            (1,698,475
            )
            
            
            905,631Cash
      flows from investing activities:Proceeds
      from maturity of interest-earning time deposits
            
            
            15,049,994
            
            
            
            -Purchase
      of interest-earning time deposits
            
            
            (10,027,920
            )
            
            
            (49,994
            )Available
      for sale securities:Purchases
            
            
            (11,850,000
            )
            
            
            (8,029,559
            )Proceeds
      from calls, maturities and paydowns
            
            
            15,934,772
            
            
            
            1,328,515Loan
      originations, net of principal collected
            
            
            (18,075,087
            )
            
            
            (5,255,100
            )Purchase
      of property and equipment
            
            
            (1,055,040
            )
            
            
            (451,703
            )Net
      cash flows from investing activities
            
            $
            (10,023,281
            )
            
            $
            (12,457,841
            )(Continued)





6
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Consolidated
Statements of Cash Flows


(Unaudited)





(Continued)Three
      Months EndedMarch 31,2008
            
            
            2007Cash
      flows from financing activities:Net
      decrease in deposits
            
            $
            (11,585,424
            )
            
            $
            (27,413,028
            )Net
      increase (decrease) in securities sold under agreements to
      repurchase
            
            
            5,094,454
            
            
            
            (4,604,785
            )Proceeds
      from Federal Home Loan Bank advances
            
            
            10,000,000
            
            
            
            -Repayment
      of Federal Home Loan Bank advances
            
            
            (3,000,000
            )
            
            
            -Repurchase
      of Common Stock
            
            
            (4,192,830
            )
            
            
            -Cash
      dividends
            
            
            (482,441
            )
            
            
            (535,768
            )Net
      cash flows from financing activities
            
            
            (4,166,241
            )
            
            
            (32,553,581
            )Net
      increase (decrease) in cash and cash equivalents
            
            
            (15,887,997
            )
            
            
            (44,105,791
            )Cash
      and cash equivalents at beginning of period
            
            
            37,084,575
            
            
            
            92,664,953Cash
      and cash equivalents at end of period
            
            $
            21,196,578
            
            
            $
            48,559,162Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
            
            $
            3,270,776
            
            
            $
            2,801,273Income
      taxes, net of refunds
            
            
            -
            
            
            
            850,000See
      Accompanying Notes to Consolidated Financial Statements.





7
 Index





FIRST CLOVERLEAF 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, 2007 contained in the 2007 Annual Report to stockholders that is filed as an
exhibit to the Company’s Annual Report on Form 10-KSB.





First
Clover Leaf Financial Corp. (“First Clover Leaf”) is a Maryland corporation that
was incorporated on March 17, 2006 and was formed by our predecessor company,
First Federal Financial Services, Inc., in connection with the “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, a former Illinois bank headquartered in
Edwardsville, Illinois. The second-step conversion and stock offering and the
simultaneous acquisition of Clover Leaf Financial Corp. were consummated on July
10, 2006. As a result of these transactions, Clover Leaf Financial Corp. was
merged with and into First Clover Leaf and Clover Leaf Bank was merged with and
into our wholly owned subsidiary, First Federal Savings and Loan Association of
Edwardsville, which was renamed First Clover Leaf Bank. The accompanying interim
consolidated financial statements include the accounts of First Clover Leaf
Financial Corp. and 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.”





Certain
reclassifications have been made to the balances, with no effect on net income
or stockholders’ equity, as of and for the three months ended March 31, 2007, to
be consistent with the classifications adopted as of and for the three months
ended March 31, 2008.





On April
22, 2008, the Board of Directors of the Company declared a cash dividend on the
Company’s common stock of $.06 per share for the quarter ended March 31,
2008.  The dividend will be payable to stockholders of record as of
May 16, 2008 and is expected to be paid on May 23, 2008.





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 31,2008
            
            
            2007Core
      deposit intangible
            
            $
            2,391,000
            
            
            $
            2,391,000Accumulated
      amortization
            
            
            (978,999
            )
            
            
            (862,999
            )Total
            
            $
            1,412,001
            
            
            $
            1,528,001





Amortization
expense on core deposit intangible for the three months ended March 31, 2008 and
2007 was $116,000 and $156,999, respectively.





Estimated
amortization expense on core deposit intangible for the nine months ending
December 31, 2008 and each of the five succeeding fiscal years is as
follows:





IntangibleNine
      months ended December 31, 2008
            
            $
            286,000Year
      ended December 31, 2009
            
            
            297,000Year
      ended December 31, 2010
            
            
            224,000Year
      ended December 31, 2011
            
            
            196,000Year
      ended December 31, 2012
            
            
            196,000Year
      ended December 31, 2013
            
            
            196,000





(3)
            Investment
      Securities:





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





March 31,
            
            
            December 31,2008
            
            
            2007Amortized
            
            
            Fair
            
            
            Amortized
            
            
            FairCost
            
            
            Value
            
            
            Cost
            
            
            ValueInvestment
      Securities:Federal
      agency obligations
            
            $
            35,927,499
            
            
            $
            36,585,563
            
            
            $
            40,466,021
            
            
            $
            40,882,870Corporate
            
            
            3,593,974
            
            
            
            3,529,452
            
            
            
            3,594,044
            
            
            
            3,491,186State
      and municipal securities
            
            
            4,042,436
            
            
            
            4,098,704
            
            
            
            3,132,417
            
            
            
            3,143,041Mortgage-backed
      securities
            
            
            6,236,549
            
            
            
            6,416,805
            
            
            
            6,571,557
            
            
            
            6,632,911Total
      Investment Securites available for sale
            
            $
            49,800,458
            
            
            $
            50,630,524
            
            
            $
            53,764,039
            
            
            $
            54,150,008





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, 2008, are summarized as follows:





Less than 12 Months
            
            
            12 Months or More
            
            
            TotalFair
            
            
            Unrealized
            
            
            Fair
            
            
            Unrealized
            
            
            Fair
            
            
            UnrealizedValue
            
            
            loss
            
            
            Value
            
            
            loss
            
            
            Value
            
            
            lossCorporate
      bonds
            
            $
            1,942,306
            
            
            $
            6,179
            
            
            $
            873,956
            
            
            $
            73,110
            
            
            $
            2,816,262
            
            
            $
            79,289$
            1,942,306
            
            
            $
            6,179
            
            
            $
            873,956
            
            
            $
            73,110
            
            
            $
            2,816,262
            
            
            $
            79,289





For all
of the above securities, the unrealized losses are primarily due to changes in
interest rates and, as such, are considered to be temporary by the
Company.





(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 31,2008
            
            
            2007Amount
            
            
            Percent
            
            
            Amount
            
            
            PercentReal
      Estate LoansOne-
      to four-family residential loans(1)
            
            $
            113,787,886
            
            
            
            36.9
            %
            
            $
            112,764,226
            
            
            
            39.2
            %Multi-family
            
            
            15,047,910
            
            
            
            4.9
            
            
            
            13,930,737
            
            
            
            4.8Commercial
            
            
            107,315,366
            
            
            
            34.8
            
            
            
            97,809,933
            
            
            
            34.0Construction
      and land
            
            
            24,894,582
            
            
            
            8.1
            
            
            
            20,775,576
            
            
            
            7.2Total
      real estate loans
            
            
            261,045,744
            
            
            
            84.5
            
            
            
            245,280,472
            
            
            
            85.2Commercial
      business
            
            
            38,790,249
            
            
            
            12.6
            
            
            
            34,782,808
            
            
            
            12.1Consumer
      Loans
            
            
            8,937,852
            
            
            
            2.9
            
            
            
            7,770,555
            
            
            
            2.7Total
      loans and loans held for sale
            
            
            308,773,845
            
            
            
            100.0
            %
            
            
            287,833,835
            
            
            
            100.0
            %Less:Undisbursed
      portion of construction loans
            
            
            1,021,424
            
            
            
            
            
            
            
            859,504Deferred
      loan origination fees, net
            
            
            134,961
            
            
            
            
            
            
            
            156,940Allowance
      for loan losses
            
            
            2,039,824
            
            
            
            
            
            
            
            1,897,945Total
      loans and loans held for sale, net
            
            $
            305,577,636
            
            
            
            
            
            
            $
            284,919,446(1)
      Includes loans held for sale of $2.7 million and $0 at March 31, 2008 and
      December 31, 2007, respectively.





10
 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 31,2008
            
            
            2007Loans
      90 days or more past due and still accruing
            
            $
            104,110
            
            
            $
            285,459Nonaccrual
      loans
            
            
            2,733,409
            
            
            
            2,669,455Other
      impaired loans
            
            
            1,254,366
            
            
            
            1,331,979Total
      nonperforming and impaired loans
            
            $
            4,091,885
            
            
            $
            4,286,893Allowance
      for losses on nonperforming and impaired loans
            
            $
            343,548
            
            
            $
            306,589Nonperforming
      and impaired loans with no allowance for losses
            
            $
            84,457
            
            
            $
            -





Asset
Quality Ratios:





Non-performing
      assets and impaired loans to total assets
            
            
            1.00
            %
            
            
            1.04
            %Non-performing
      and impaired loans to total loans
            
            
            1.35
            
            
            
            1.50Net
      charge-offs to average loans outstanding
            
            
            0.01
            
            
            
            0.06Allowance
      for loan losses to non-performing and impaired loans
            
            
            49.85
            
            
            
            44.29Allowance
      for loan losses to total loans
            
            
            0.67
            
            
            
            0.67





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





Three
      Months EndedMarch 31,2008
            
            
            2007Balance
      at beginning of period
            
            $
            1,897,945
            
            
            $
            1,710,247Charge-offs
            
            
            (30,446
            )
            
            
            -Recoveries
            
            
            1,492
            
            
            
            2,457Provision
      charged to expense
            
            
            170,833
            
            
            
            45,000Balance
      at end of period
            
            $
            2,039,824
            
            
            $
            1,757,704





11
 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 31,2008
            
            
            2007Net
      income available to common stockholders
            
            $
            574,453
            
            
            $
            687,951Basic
      potential common shares:Weighted
      average shares outstanding
            
            
            8,334,447
            
            
            
            9,074,031Weighted
      average unallocated Employee StockOwnership
      Plan shares
            
            
            (136,036
            )
            
            
            (142,437
            )Basic
      weighted average shares outstanding
            
            
            8,198,411
            
            
            
            8,931,594Dilutive
      potential common shares
            
            
            -
            
            
            
            -Dilutive
      weighted average shares outstanding
            
            
            8,198,411
            
            
            
            8,931,594Basic
      and diluted income per share
            
            $
            0.07
            
            
            $
            0.08





(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 the stock offering in 2004, the Company
loaned funds to the ESOP for the purchase of the Company’s common stock at the
initial public offering price using funds loaned by the Company.  The
loan is being repaid with level annual payments of $70,318 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 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 $21,239 and $21,000 was incurred
for the three month periods ended March 31, 2008 and 2007,
respectively.





12
 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, 2008 and
December 31, 2007:





March 31,
            
            
            December 31,2008
            
            
            2007Unallocated
      shares (fair value at March 31, 2008 and December 31, 2007 of
      $1,288,435 and $1,380,999, respectively)
            
            
            133,933
            
            
            
            136,059Allocated
      Shares
            
            
            36,826
            
            
            
            34,700Total
      ESOP Shares
            
            
            170,759
            
            
            
            170,759





(8)
            Recent Accounting
      Pronouncements:





The
following accounting standards were recently issued relating to the financial
services industry:





Effective
January 1, 2008, the Company partially adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 157 Fair Value Measurementswhich
defines fair value, establishes a framework for measuring fair value and expands
disclosures about fair value measurements.  It clarifies that fair
value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants in the market in
which the reporting entity transacts.  This Statement does not require
any new fair value measurements, but rather, it provides enhanced guidance to
other pronouncements that require or permit assets or liabilities to be measured
at fair value.  The standard describes three levels of inputs that may
be used to measure fair value.  Delayed application of this statement
is permitted for nonfinancial assets and nonfinancial liabilities, except for
items that are recognized or disclosed at fair value in the financial statements
on a recurring basis (at least annually), until fiscal years beginning after
November 15, 2008, and interim periods within those fiscal
years.  Refer to Note 9 of the unaudited consolidated financial
statements for additional disclosures.





Effective
January 1, 2008, the Company adopted SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities – Including an amendment of the Financial
Accounting Standards Board (FASB) Statement No. 115, which provides all
entities with an option to report selected financial assets and liabilities at
fair value.  The objective of the Statement is to improve financial
reporting by providing entities with the opportunity to mitigate volatility in
earnings caused by measuring related assets and liabilities differently without
having to apply the complex provisions of hedge accounting.  Certain
specified items are eligible for the irrevocable fair value measurement option
as established by Statement No. 159. Adoption of Statement No. 159 did not have
a significant impact on the Company’s financial statements.





13
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Notes
to Consolidated Financial Statements





(8)
            Recent Accounting
      Pronouncements (Continued):





In
December 2007, FASB issued SFAS No. 141(revised), Business
Combinations.  The Statement establishes principles and
requirements for how an acquirer recognizes and measures tangible assets
acquired, liabilities assumed, goodwill and any noncontrolling interests and
identifies related disclosure requirements for business
combinations.  Measurement requirements will result in all assets,
liabilities, contingencies and contingent consideration being recorded at fair
value on the acquisition date, with limited exceptions.  Acquisition
costs and restructuring costs will generally be expensed as
incurred.  This Statement is effective for business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008.





(9)
            Fair Value
      Disclosures





Effective
January 1, 2008, the Company determines the fair market values of its financial
instruments based on the fair value hierarchy established in SFAS No. 157, 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 and its
loans held for sale 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 are summarized below:





Quoted
      Prices in Active Markets for Identical Assets
            
            
            Significant
      Other Observable Inputs
            
            
            Significant
      Unobservable InputsAssets:
            
            (Level 1)
            
            
            (Level 2)
            
            
            (Level 3)
            
            
            TotalSecurities
      available for sale
            
            $
            -
            
            
            $
            50,630,524
            
            
            $
            -
            
            
            $
            50,630,524Loans
      held for sale
            
            $
            -
            
            
            $
            2,687,923
            
            
            $
            -
            
            
            $
            2,687,923





14
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Notes
to Consolidated Financial Statements





(9)
            Fair Value
      Disclosures(Continued):





Assets
and liabilities measured at fair value on a nonrecurring basis by fair value
hierarchy during the period ended March 31, 2008 are summarized
below:





Quoted
      Prices in Active Markets for Identical Assets
            
            
            Significant
      Other Observable Inputs
            
            
            Significant
      Unobservable Inputs(Level 1)
            
            
            (Level 2)
            
            
            (Level 3)
            
            
            TotalImpaired
      loans
            
            $
            -
            
            
            $
            4,071,534
            
            
            $
            20,351
            
            
            $
            4,091,885





Impaired
loans that are collateral dependent are written down to their fair value, less
costs to sell, of $4.1 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 is reflected within the Level 3
hierarchy.





(10)
            Subsequent
      Event:





On April
30, 2008, the Company entered into a definitive merger agreement to acquire
Partners FinancialHoldings, Inc. (“Partners”), the holding company of Partners
Bank, an Illinois based state bank headquartered in Glen Carbon,
Illinois.





The
aggregate purchase price for the acquisition of Partners is approximately $20.7
million, comprised of shares of First Clover Leaf common stock and cash, plus
approximately $1.5 million in cash payments for outstanding Partners options and
warrants.  Under the terms of the merger agreement, each share of
Partners common stock will be converted into either 5.7971 shares of First
Clover Leaf stock or cash of $56. Shareholders of Partners may elect to receive
First Clover Leaf common stock, cash, or a combination of stock and cash, for
their shares of Partners common stock, subject to possible re-allocation of
their elections in order to ensure that the total mix of consideration in the
transaction is 50% stock and 50% cash.





The
merger has been approved by the Boards of Directors of Partners and First Clover
Leaf, and is subject to approval of the stockholders of Partners and the receipt
of required regulatory approvals.  The closing of the merger is
expected to occur late in the third quarter or early in the fourth quarter of
2008.  Following completion of the merger, the combined institution is
expected to serve customers from the current locations of both banks under the
name “First Clover Leaf Bank”.





15
 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 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 as the most critical.





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, general and unallocated 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. An unallocated
component is maintained to cover uncertainties that could affect management’s
estimate of probable losses. The unallocated component of the allowance reflects
the margin of imprecision inherent in the underlying assumptions used in the
methodologies for estimating specific and general losses in the
portfolio.





16
 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.





Overview





Net
income decreased to $574,000 for the three months ended March 31, 2008 from
$688,000 for the same period last year.  The decrease in net income
was due primarily to an increase of $126,000 in provision for loan
losses.  Basic and diluted income per share was $.07 and $.08 for the
three months ended March 31, 2008 and 2007, respectively.





Financial
Condition





Total
Assets.  Total assets decreased to $410.4 million at March 31,
2008 from $413.3 million at December 31, 2007.  Total cash and cash
equivalents decreased to $21.2 million at March 31, 2008 from $37.1 million at
December 31, 2007.  The decrease in cash was due to a decrease in
deposits and an increase in loan funding.  Interest-earning time
deposits decreased to $5.0 million at March 31, 2008 from $10.0 million at
December 31, 2007.  A time certificate held by the Bank matured, and
it was not renewed.  Securities available for sale decreased to $50.6
million at March 31, 2008 from $54.2 million at December 31,
2007.  The decrease was due primarily to calls, maturities and
pay-downs of $15.9 million partially offset by purchases of $11.9
million.  Loans, net amounted to $302.9 million at March 31, 2008,
compared to $284.9 million at December 31, 2007.  The increase was due
primarily to new loan originations in excess of loan collections of $18.1
million.  Loans held for sale increased to $2.7 million at March 31,
2008.  There were no loans held for sale at December 31,
2007.  Property and equipment, net increased to $8.3 million at March
31, 2008 from $7.4 million at December 31, 2007 primarily due to the purchase of
three lots and a newly constructed building prior to final build out in Wood
River, IL and the related construction on that building.  Total cost
of the building is estimated at $1.7 million.





17
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





Total
Liabilities.  Deposits decreased to $279.6 million at March 31,
2008 from $291.2 million at December 31, 2007.  Securities sold under
agreements to repurchase increased to $21.0 million at March 31, 2008 from $15.9
million at December 31, 2007.  The change in the deposit accounts and
securities sold under agreements to repurchase accounts were due to fluctuations
by one significant customer.  Federal Home Loan Bank advances at March
31, 2008 were $17.4 million compared to $10.4 million at December 31,
2007.  The increase was primarily due to the increase in loan
funding.  Other liabilities increased to $2.7 million at March 31,
2008 from $2.1 million at December 31, 2007.





Stockholders’
Equity.  Stockholders’ equity decreased to $84.9 million at
March 31, 2008 from $88.7 million at December 31, 2007, principally as a result
of the repurchase of $4.2 million of the Company’s common stock, and the payment
of cash dividends of $482,000.  The decrease in equity was partially
offset by $574,000 in net income.





Asset
Quality





At March
31, 2008, the Company’s nonaccrual loans increased $64,000 from December 31,
2007, while other impaired loans declined $78,000 from December 31,
2007.  This shift in balances is primarily due to one loan
relationship whose financial condition caused the Company to reclassify their
loans to a nonaccrual status.





Under the
Company’s internal review policy, loans classified as substandard totaled $4.2
million at March 31, 2008 and $4.7 million at December 31, 2007.





At March
31, 2008, the Company had no loans where known information about possible credit
problems of borrowers caused management to have serious concerns as to the
ability of the borrowers to comply with present loan repayment terms and which
may result in disclosure as nonaccrual, 90 days past due or restructured which
were not currently classified as nonaccrual, 90 days or more past due or
restructured.





Results of
Operations





General.  Net
income decreased to $574,000 for the three months ended March 31, 2008 from
$688,000 for the same period last year.  The decrease in net income
was due primarily to an increase of $126,000 in provision for loan
losses.





Net interest
income.  Net interest income before the provision for loan
losses increased to $2.7 million for the three months ended March 31, 2008 from
$2.6 million for the comparable period in 2007.  Net average
interest-earning assets were $77.9 million for the three months ended March 31,
2008, compared to $83.7 million for the same period in 2007. The ratio of
interest-earning assets to interest-bearing liabilities decreased to 125.17% for
the three months ended March 31, 2008 from 131.34% for the same period in
2007.  The average rate on interest-earning assets decreased by 23
basis points, and the average rate on interest-bearing liabilities decreased by
21 basis points.





18
 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 31,2008
            
            
            2007Average Outstanding Balance
            
            
            Interest (4)
            
            
            Yield/ Rate
            
            
            Average Outstanding Balance
            
            
            Interest(4)
            
            
            Yield/ Rate(Dollars
      in thousands)Interest-earning
      assets:Loans,
      gross
            
            $
            296,944
            
            
            $
            4,818
            
            
            
            6.49
            %
            
            $
            244,788
            
            
            $
            4,179
            
            
            
            6.83
            %Securities
            
            
            53,142
            
            
            
            725
            
            
            
            5.46
            
            
            
            49,906
            
            
            
            644
            
            
            
            5.16Federal
      Home Loan Bank stock
            
            
            5,604
            
            
            
            -
            
            
            
            -
            
            
            
            5,595
            
            
            
            51
            
            
            
            3.65Interest-earning
      balances from depository institutions
            
            
            31,605
            
            
            
            314
            
            
            
            3.97
            
            
            
            50,468
            
            
            
            632
            
            
            
            5.01Total
      interest-earning assets
            
            
            387,295
            
            
            
            5,857
            
            
            
            6.05
            
            
            
            350,757
            
            
            
            5,506
            
            
            
            6.28Non-interest-earning
      assets
            
            
            26,699
            
            
            
            
            
            
            
            
            
            
            
            25,805Total
      assets
            
            $
            413,994
            
            
            
            
            
            
            
            
            
            
            $
            376,562Interest-bearing
      liabilities:Interest-bearing
      transaction
            
            $
            77,636
            
            
            
            585
            
            
            
            3.01
            
            
            $
            60,859
            
            
            
            578
            
            
            
            3.80Savings
      deposits
            
            
            18,483
            
            
            
            113
            
            
            
            2.45
            
            
            
            22,566
            
            
            
            138
            
            
            
            2.45Time
      deposits
            
            
            172,939
            
            
            
            2,105
            
            
            
            4.87
            
            
            
            151,166
            
            
            
            1,750
            
            
            
            4.63Securities
      sold under agreements to repurchase
            
            
            21,709
            
            
            
            107
            
            
            
            1.97
            
            
            
            18,325
            
            
            
            187
            
            
            
            4.08Federal
      Home Loan Bank advances
            
            
            14,799
            
            
            
            179
            
            
            
            4.84
            
            
            
            10,455
            
            
            
            146
            
            
            
            5.59Subordinated
      debentures
            
            
            3,846
            
            
            
            74
            
            
            
            7.70
            
            
            
            3,686
            
            
            
            73
            
            
            
            7.92Total
      interest-bearing liabilities
            
            
            309,412
            
            
            
            3,163
            
            
            
            4.09
            
            
            
            267,057
            
            
            
            2,872
            
            
            
            4.30Non-interest-bearing
      liabilities
            
            
            18,059
            
            
            
            
            
            
            
            
            
            
            
            16,127Total
      liabilities
            
            
            327,471
            
            
            
            
            
            
            
            
            
            
            
            283,184Stockholders’
      equity
            
            
            86,523
            
            
            
            
            
            
            
            
            
            
            
            93,378Total
      liabilities and stockholders’ equity
            
            $
            413,994
            
            
            
            
            
            
            
            
            
            
            $
            376,562Net
      interest income
            
            
            
            
            
            $
            2,694
            
            
            
            
            
            
            
            
            
            
            $
            2,634Net
      interest rate spread (1)
            
            
            
            
            
            
            
            
            
            
            1.96
            %
            
            
            
            
            
            
            
            
            
            
            1.98
            %Net
      interest-earning assets (2)
            
            $
            77,883
            
            
            
            
            
            
            
            
            
            
            $
            83,700Net
      interest margin (3)
            
            
            
            
            
            
            
            
            
            
            2.78
            %
            
            
            
            
            
            
            
            
            
            
            3.00
            %Ratio
      of interest-earning assets to interest-bearing liabilities
            
            
            
            
            
            
            
            
            
            
            125.17
            %
            
            
            
            
            
            
            
            
            
            
            131.34
            %(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 $53,029 and $150,383 of loan fees collected in
      2008 and 2007, respectively.





19
 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 $4.8
million for the three months ended March 31, 2008 from $4.2 million for the
comparable period in 2007.  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 $296.9 million and $244.8
million for the three months ended March 31, 2008 and 2007, respectively. The
average yield on loans decreased to 6.49% for the three months ended March 31,
2008 from 6.83% for the comparable period in 2007.





Interest
income on securities increased to $725,000 for the three months ended March 31,
2008 from $644,000 for the comparable period in 2007.  The increase
was due to a higher yield and a higher average balance of securities totaling
$53.1 million and $49.9 million for the three months ended March 31, 2008 and
2007, respectively.





Interest
income on other interest-earning deposits decreased to $314,000 for the three
months ended March 31, 2008 from $632,000 for the comparable period in
2007.  The average balance of other interest-earning deposits was
$31.6 million and $50.5 million for the three months ended March 31, 2008 and
2007, respectively.  The average yield on other interest-earning
deposits decreased to 3.97% for the three months ended March 31, 2008 compared
to 5.01% for the three months ended March 31, 2007.  Components of
interest income vary from time to time based on the availability and interest
rates of loans, securities, and other interest-earning assets.





Interest
expense.  Interest expense on deposits increased to $2.8
million for the three months ended March 31, 2008 from $2.5 million for the
comparable period in 2007.  The average balance of interest-bearing
deposits was $269.1 million and $234.6 million for the three months ended March
31, 2008 and 2007, respectively.





Interest
expense on securities sold under agreements to repurchase decreased to $107,000
at March 31, 2008 from $187,000 at March 31, 2007 despite a higher average
balance.  The interest rate for securities sold under agreements to
repurchase is tied to the three month treasury bill index.





Provision for
loan losses.  Provision for loan losses was $171,000 and
$45,000 for the three months ended March 31, 2008 and 2007,
respectively.  Provision for loan losses is 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 large increase for the three months ended March 31,
2008 compared to the same period in 2007 is primarily due to the overall
increase in the loan portfolio as well as the change in the composition of the
portfolio that now includes a larger share of commercial and commercial real
estate loans.  The Company is subject to periodic examination by the
OTS, 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 OTS will not require further increases to the allowance.





20
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





Noninterest
income.  Noninterest income increased to $150,000 for the three
months ended March 31, 2008 from $129,000 for the comparable period in
2007.  The increase was due primarily to service charge income on
deposit accounts and gains on the sale of loans that we sold but on which we
retained the servicing rights.





Noninterest
expense.  Noninterest expense totaled $1.7 million for the
three months ended March 31, 2008 and $1.6 million for the same period in
2007.  Compensation and employee benefits, the largest component of
noninterest expense, increased to $793,000 for the three months ended March 31,
2008 from $699,000 for the comparable period in 2007.  Compensation
and employee benefits increased as a result of a higher number of personnel and
merit increases.  The number of full time equivalent employees
increased to 61 at March 31, 2008 from 49 at March 31, 2007.





Occupancy
expense rose to $240,000 for the three months ended March 31, 2008 compared to
$206,000 for the comparable period in 2007.  Occupancy expense
increased primarily due to depreciation on the renovation of one of our branch
offices that was completed in June 2007.





Income
taxes.  Income taxes decreased to $352,000 for the three months
ended March 31, 2008 from $387,000 for the comparable period in
2007.  The primary reason for the change in income taxes was the level
of pre-tax income.





21
 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, pay
real estate taxes on mortgage loans, 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, 2008
and December 31, 2007, $21.2 million and $37.1 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, 2008
and 2007, our loan originations, net of collected principal, totaled $18.1
million and $5.3 million, respectively.  Cash received from calls,
maturities, and paydowns of available-for-sale investment securities totaled
$15.9 million and $1.3 million for the three months ended March 31, 2008 and
2007, respectively.  We purchased $11.9 million and $8.0 million in
available-for-sale investment securities during the three months ended March 31,
2008 and 2007, respectively.  We received proceeds of $15.0 million
from the maturities of interest-earning time deposits during the three months
ended March 31, 2008.  There were no proceeds from the maturities of
interest-earning time deposits for the comparable period in 2007.  We
purchased $10.0 million and $50,000 of interest-earning time deposits for the
three months ended March 31, 2008 and 2007, respectively.





Purchases
of premises and equipment, primarily related to the purchase of three lots and a
newly constructed building prior to final build out in Wood River, IL and the
related construction on that building, were $1.1 million during the three months
ended March 31, 2008.  Purchases of premises and equipment were
$452,000 for the comparable period in 2007.





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 decreased by $11.6 million for the three months ended March 31,
2008.  During the comparable period in 2007 the net decrease in
deposits was $27.4 million.  Securities sold under agreements to
repurchase had a net increase of $5.1 million and a net decrease of $4.6 million
for the three months ended March 31, 2008 and 2007,
respectively.  Proceeds from Federal Home Loan Bank advances of $10.0
million for the three months ended March 31, 2008 were offset by $3.0 million
for the repayment of such advances.  There were no proceeds from or
repayments of advances to Federal Home Loan Bank for the comparable period in
2007.  Repurchases of the Company’s common stock were $4.2 million for
the three months ended March 31, 2008.  There were no repurchases of
the Company’s common stock for the comparable period in 2007.





22
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





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,
2008, we had $17.4 million of advances from the Federal Home Loan Bank of
Chicago and an additional available credit of approximately $46.0
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, 2008.  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, 2008 were as
follows:





Minimum Requiredfor
      Capital
            
            
            to
      be "WellActual
            
            
            Adequacy
            
            
            Capitalized"Amount
            
            
            Ratio
            
            
            Amount
            
            
            Ratio
            
            
            Amount
            
            
            Ratio(Dollars
      in Thousands)Stockholders'
      equity
            
            $
            78,973Goodwill
      and core deposit intangible
            
            
            (10,815
            )Disallowed
      servicing assets
            
            
            (388
            )Unrealized
      gain on securities AFS, net
            
            
            (493
            )Tangible
      capital to adjusted total assets
            
            $
            67,277
            
            
            
            17.3
            %
            
            $
            5,847
            
            
            
            1.5
            %
            
            
            N/A
            
            
            
            -General
      valuation allowance
            
            
            2,040Deduction
      for low-level recourse
            
            
            (1,008
            )Total
      capital to risk-weighted assets
            
            $
            68,309
            
            
            
            23.0
            %
            
            $
            23,761
            
            
            
            8.0
            %
            
            $
            29,701
            
            
            
            10.0
            %Tier
      1 capital to risk-weighted assets
            
            $
            67,277
            
            
            
            22.7
            %
            
            $
            N/A
            
            
            
            -
            
            
            $
            17,821
            
            
            
            6.0
            %Tier
      1 capital to total assets
            
            $
            67,277
            
            
            
            17.3
            %
            
            $
            15,591
            
            
            
            4.0
            %
            
            $
            19,489
            
            
            
            5.0
            %





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.





23
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





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, 2008 follows:





Variable
      Rate Commitments
            
            
            Fixed
      Rate Commitments
            
            
            Total
      Commitments
            
            
            Range
      of Rates on Fixed Rate Commitments($
      in thousands)Commitments
      to extend credit
            
            $
            25,029
            
            
            $
            12,548
            
            
            $
            37,577
            
            
            
            4.25%-18.00
            %Standby
      letters of credit
            
            $
            2,397
            
            
            $
            1,035
            
            
            $
            3,432
            
            
            
            5.25%-7.75
            %





Loans
sold to the Federal Home Loan Bank (“FHLB”) of Chicago under the Mortgage
Partnership Finance program are sold with recourse.  The Bank has an
agreement to sell residential loans up to $70.0 million to the FHLB of
Chicago.  Approximately $53.7 million has been sold through March 31,
2008.  Under the agreement, the Bank has a maximum credit enhancement
of $1.0 million at March 31, 2008.  Based upon a favorable payment
history, the Bank does not anticipate recognizing any losses on these
residential loans.





The FHLB
announced in April that they will no longer enter into new master commitments or
renew existing master commitments to purchase mortgage loans from participating
financial institutions under the Mortgage Partnership Finance
Program.  The FHLB will work closely with members that currently
participate in the Mortgage Partnership Finance Program to fund loans through
July 31, 2008.  The Company intends to continue originating mortgage
loans and selling them while retaining the servicing.  The Company
currently has a relationship with the Federal National Mortgage Association
(FNMA) to purchase loans and is currently reviewing other vendors who purchase
mortgage loans.





24
 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, the 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, given the current low level of market
interest rates, First Clover Leaf did not receive an NPV calculation for an
interest rate decrease of greater than 200 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.





25
 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, 2007 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, 2007NPV
            
            Net Portfolio Value as a Percentage of Present
      Value of AssetsChange
      in Interest Rates (basis
      points)
            
            Estimated NPV
            
            Estimated
      Increase (Decrease) in NPV
            
            NPV
      Ratio
            
            Change
      in (basis points)Amount
            
            Percent(Dollars
      in thousands)+300
            
            
            $
            66,381
            
            
            $
            (9,274
            )
            
            
            (12
            )%
            
            
            17.12
            %
            
            
            (161
            )+200
            
            
            
            69,205
            
            
            
            (6,450
            )
            
            
            (9
            )
            
            
            17.62
            
            
            
            (111
            )+100
            
            
            
            72,960
            
            
            
            (2,695
            )
            
            
            (4
            )
            
            
            18.30
            
            
            
            (44
            )—
            
            
            
            75,655
            
            
            
            —
            
            
            
            —
            
            
            
            18.73
            
            
            
            —-100
            
            
            
            76,221
            
            
            
            566
            
            
            
            1
            
            
            
            18.73
            
            
            
            —-200
            
            
            
            75,884
            
            
            
            229
            
            
            
            —
            
            
            
            18.54
            
            
            
            (19
            )





The table
above indicates that at December 31, 2007, in the event of a 200 basis point
decrease in interest rates, we would experience a minor change in the net
portfolio value.  In the event of a 300 basis point increase in
interest rates, we would experience a 12% 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, 2008 have changed significantly when compared to the immediately
preceding quarter ended December 31, 2007.  However, the Company’s
primary market risk exposure has not yet been quantified at March 31, 2008 as
the OTS 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.





26
 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.





27
 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 was previously a “Small Business Issuer,” and, therefore, filed its most
recent annual report with the Securities and Exchange Commission on Form
10-KSB.  In accordance with the rules and regulations of the
Securities and Exchange Commission, such report did not include risk factors
separate and apart from those otherwise described in the annual
report.  The risks set forth below, in addition to the other risks
described in this quarterly report, may adversely affect our business, financial
condition and operating results.  In addition to the risks set forth
below and the other risks described in this quarterly report, there may also be
additional risks and uncertainties that are not currently known to us or that we
currently deem to be immaterial that could materially and adversely affect our
business, financial condition or operating results.  As a result, past
financial performance may not be a reliable indicator of future performance, and
historical trends should not be used to anticipate results or trends in future
periods.





Commercial
Real Estate and Business Loans Increase Our Exposure to Credit
Risks





At March
31, 2008, our portfolio of commercial real estate and commercial business loans
totaled $146.1 million, or 47.8% of total loans. We plan to continue to
emphasize the origination of these types of loans, which generally exposes us to
a greater risk of non-payment and loss than residential real estate loans
because repayment of such loans often depends on the successful operations and
income stream of the borrowers. Additionally, such loans typically involve
larger loan balances to single borrowers or groups of related borrowers compared
to residential real estate loans. Also, many of our borrowers have more than one
commercial loan outstanding. Consequently, an adverse development with respect
to one loan or one credit relationship can expose us to a significantly greater
risk of loss compared to an adverse development with respect to a residential
real estate loan.





We target
our business lending and marketing strategy towards small to medium-sized
businesses. These small to medium-sized businesses generally have fewer
financial resources in terms of capital or borrowing capacity than larger
entities. If general economic conditions negatively impact these businesses, our
results of operations and financial condition may be adversely
affected.





Increases
to the Allowance for Loan Losses May Cause Our Earnings to Decrease





Our
customers may not repay their loans according to the original terms, and the
collateral securing the payment of those loans may be insufficient to pay any
remaining loan balance. Thus, we may experience significant loan losses, which
could have a material adverse effect on our operating results. We make various
assumptions and judgments about the collectibility of our loan portfolio,
including the creditworthiness of our borrowers and the value of the real estate
and other assets serving as collateral for the repayment of loans. In
determining the amount of the allowance for credit losses, we rely on loan
quality reviews, past experience and an evaluation of economic conditions, among
other factors. If our assumptions prove to be incorrect, our allowance for
credit losses may not be sufficient to cover losses inherent in our loan
portfolio, resulting in additions to the allowance. Material additions to the
allowance would materially decrease our net income.





Our
emphasis on the origination of commercial real estate and commercial business
loans is one of the more significant factors in evaluating our allowance for
loan losses. As we continue to emphasize these types of loans, additional or
increased provisions for loan losses may be necessary and as a result would
decrease our earnings.





28
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Item
1A – Risk Factors (Continued)





Bank
regulators periodically review our allowance for credit losses and may require
us to increase our provision for loan losses or loan charge-offs. Any increase
in our allowance for loan losses or loan charge-offs as required by these
regulatory authorities could have a material adverse effect on our results of
operations and/or financial condition.





Concentration
of Loans in Our Primary Market Area May Increase Risk





Our
success depends primarily on the general economic conditions in the Greater St.
Louis Metropolitan area, and more specifically, on the economic conditions in
Madison County, Illinois, as nearly all of our loans are to customers in this
market. Accordingly, the local economic conditions in our market area have a
significant impact on the ability of borrowers to repay loans. As such, a
decline in real estate valuations in this market would lower the value of the
collateral securing those loans. In addition, a significant weakening in general
economic conditions such as inflation, recession, unemployment or other factors
beyond our control could negatively affect our financial results.





Changes
in Interest Rates Could Adversely Affect Our Results of Operations and Financial
Condition





Our
results of operations and financial condition are significantly affected by
changes in interest rates. Our financial results depend substantially on net
interest income, which is the difference between the interest income that we
earn on interest-earning assets and the interest expense we pay on
interest-bearing liabilities. Because our interest-bearing liabilities generally
reprice or mature more quickly than our interest-earning assets, an increase in
interest rates generally would tend to result in a decrease in our net interest
income. We have taken steps to mitigate this risk such as holding fewer
longer-term residential mortgages as well as investing excess funds in
shorter-term investments.





Changes
in interest rates also affect the value of our interest-earning assets and in
particular our investment securities available for sale. Generally, the value of
our investment securities fluctuates inversely with changes in interest rates.
At March 31, 2008, our investment securities available for sale totaled $50.6
million. Unrealized gains on our securities available for sale, net of tax,
amounted to $522,000 and are reported in other comprehensive income as a
separate component of our stockholders’ equity. Decreases in the fair value of
our securities available for sale, therefore, could have an adverse effect on
our stockholders’ equity.





Changes
in interest rates may also affect the average life of our loans and
mortgage-related securities. Decreases in interest rates can result in increased
prepayments of loans and mortgage-related securities, as borrowers refinance to
reduce borrowing costs. Under these circumstances, we are subject to
reinvestment risk to the extent that we are unable to reinvest the cash received
from such prepayments at rates that are comparable to the rates on our existing
loans and securities. Additionally, increases in interest ratesmay
decrease loan demand and make it more difficult for borrowers to repay
adjustable rate loans.





Strong
Competition May Limit Our Growth and Profitability





Competition
in the banking and financial services industry is intense. We compete with
commercial banks, savings institutions, mortgage brokerage firms, credit unions,
finance companies, mutual funds, insurance companies, and brokerage and
investment banking firms operating locally and elsewhere. Many of these
competitors (whether regional or national institutions) have substantially
greater resources and lending limits than us and may offer certain services that
we do not or cannot provide. Our profitability depends upon our ability to
successfully compete in our market area.





We
Operate in a Highly Regulated Environment and May Be Adversely Affected by
Changes in Laws and Regulations





We are
subject to extensive regulation, supervision and examination by the OTS and the
FDIC. These agencies govern the activities in which we may engage, primarily for
the protection of depositors. These regulatory authorities have extensive
discretion in connection with their supervisory and enforcement activities,
including the imposition of restrictions on the operation of a bank, the
classification of assets by a bank and the adequacy of a bank’s
allowance





29
 Index





FIRST
CLOVER LEAF FINANCIAL CORP.





Item
1A – Risk Factors (Continued)





for loan
losses. Any change in such regulation and oversight, whether in the form of
regulatory policy, regulations, or legislation, could have a material impact on
us and our operations. We believe that we are in substantial compliance with
applicable federal, state and local laws, rules and regulations. Because our
business is highly regulated, the laws, rules and applicable regulations are
subject to regular modification and change. There can be no assurance that
proposed laws, rules and regulations, or any other laws rule or regulation, will
not be adopted in the future, which could make compliance more difficult or
expensive or otherwise adversely affect our business, financial condition or
prospects.





Item 2– Unregistered Sales 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 Programs406,100January
      1 - 31, 2008
            
            
            40,000
            
            
            $
            10.46
            
            
            
            40,000
            
            
            
            366,100February
      1 - 29, 2008
            
            
            366,100
            
            
            $
            10.31
            
            
            
            366,100
            
            
            
            -March
      1 - 31, 2008
            
            
            -
            
            
            
            
            
            
            
            -
            
            
            
            -








Item 3 - Defaults upon Senior Securities.





Not
applicable.





Item 4 - Submission of Matters to a Vote of Security
Holders.





None





Item 5- Other Information.





None





Item 6– Exhibits.





(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.





30
 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 9,
      2008
            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






31