##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-51153
 FEDFIRST FINANCIAL CORPORATION
  United States
(State or other jurisdiction of incorporation or organization)
    
    25-1828028
(I.R.S. Employer Identification No.)
 Donner at Sixth Street, Monessen, Pennsylvania
    
    15062(Address of principal executive offices)
    
    (Zip Code)
 (724) 684-6800
 þ o
  Large accelerated filer o
    
    Accelerated filer
o
    
    Non-accelerated filer o

(Do not check if a smaller reporting company)
   
   Smaller reporting company
þ
 o þ




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##### 



FORM 10-Q
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    1Consolidated Statements of Financial Condition at June 30, 2008
(Unaudited) and December 31, 2007
    
    
    1Consolidated Statements of Operations (Unaudited) for the Three and Six
Months Ended June 30, 2008 and 2007
    
    
    2Consolidated Statements of Changes in Stockholders Equity and
Comprehensive (Loss) Income for the Six Months Ended June 30, 2008 and 2007
(Unaudited)
    
    
    3Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007 (Unaudited)
    
    
    4Notes to the Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults Upon Senior Securities
    
    
    24Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25SIGNATURESEX-10.1EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
 June 30,
    
    December 31,2008
    
    2007(Dollars in thousands, except share data)
    
    (UNAUDITED)Assets:Cash and cash equivalents:Cash and due from banks
    
    $
    1,914
    
    
    $
    2,127Interest-earning deposits
    
    
    5,369
    
    
    
    3,425Total cash and cash equivalents
    
    
    7,283
    
    
    
    5,552Securities available-for-sale
    
    
    96,245
    
    
    
    89,073Loans, net
    
    
    207,253
    
    
    
    187,954Federal Home Loan Bank (FHLB) stock, at cost
    
    
    6,017
    
    
    
    5,076Accrued interest receivable  loans
    
    
    1,011
    
    
    
    966Accrued interest receivable  securities
    
    
    636
    
    
    
    651Premises and equipment, net
    
    
    2,846
    
    
    
    2,956Bank-owned life insurance
    
    
    7,674
    
    
    
    7,538Goodwill
    
    
    1,080
    
    
    
    1,080Real estate owned
    
    
    974
    
    
    
    1,119Other assets
    
    
    564
    
    
    
    366Deferred tax assets
    
    
    4,071
    
    
    
    2,942Total assets
    
    $
    335,654
    
    
    $
    305,273Liabilities and Stockholders Equity:Deposits:Noninterest-bearing
    
    
    11,137
    
    
    
    8,918Interest-bearing
    
    
    157,420
    
    
    
    146,640Total deposits
    
    
    168,557
    
    
    
    155,558Borrowings
    
    
    120,908
    
    
    
    101,074Advance payments by borrowers for taxes and insurance
    
    
    616
    
    
    
    477Accrued interest payable  deposits
    
    
    787
    
    
    
    1,116Accrued interest payable  borrowings
    
    
    485
    
    
    
    413Other liabilities
    
    
    3,361
    
    
    
    2,782Total liabilities
    
    
    294,714
    
    
    
    261,420Minority interest in subsidiary
    
    
    83
    
    
    
    80Stockholders equity:Preferred stock $0.01 par value; 10,000,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock $0.01 par value; 20,000,000 shares authorized; 6,707,500
shares
issued and 6,397,075 and 6,518,200 shares outstanding
    
    
    67
    
    
    
    67Additional paid-in-capital
    
    
    29,241
    
    
    
    29,084Retained earnings  substantially restricted
    
    
    18,408
    
    
    
    18,520Accumulated other comprehensive loss, net of deferred taxes of
$(1,375) and $(45)
    
    
    (2,133
    )
    
    
    (70
    )Unearned Employee Stock Ownership Plan (ESOP)
    
    
    (1,987
    )
    
    
    (2,074
    )Common stock held in treasury, at cost (310,425 and 189,300 shares)
    
    
    (2,739
    )
    
    
    (1,754
    )Total stockholders equity
    
    
    40,857
    
    
    
    43,773Total liabilities and stockholders equity
    
    $
    335,654
    
    
    $
    305,273
  1




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##### Table of Contents



CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
 For the Three Months
    
    For the Six MonthsEnded June 30,
    
    Ended June 30,(Dollars in thousands, except per share data)
    
    2008
    
    2007
    
    2008
    
    2007Interest income:Loans
    
    $
    2,901
    
    
    $
    2,581
    
    
    $
    5,719
    
    
    $
    5,075Securities
    
    
    1,373
    
    
    
    969
    
    
    
    2,759
    
    
    
    1,994Other interest-earning assets
    
    
    81
    
    
    
    158
    
    
    
    183
    
    
    
    277Total interest income
    
    
    4,355
    
    
    
    3,708
    
    
    
    8,661
    
    
    
    7,346Interest expense:Deposits
    
    
    1,231
    
    
    
    1,249
    
    
    
    2,539
    
    
    
    2,417Borrowings
    
    
    1,125
    
    
    
    809
    
    
    
    2,243
    
    
    
    1,765Total interest expense
    
    
    2,356
    
    
    
    2,058
    
    
    
    4,782
    
    
    
    4,182Net interest income
    
    
    1,999
    
    
    
    1,650
    
    
    
    3,879
    
    
    
    3,164Provision for loan losses
    
    
    220
    
    
    
    30
    
    
    
    279
    
    
    
    75Net interest income after provision for loan losses
    
    
    1,779
    
    
    
    1,620
    
    
    
    3,600
    
    
    
    3,089Noninterest income:Fees and service charges
    
    
    118
    
    
    
    101
    
    
    
    220
    
    
    
    196Insurance commissions
    
    
    393
    
    
    
    340
    
    
    
    1,113
    
    
    
    931Income from bank-owned life insurance
    
    
    69
    
    
    
    72
    
    
    
    136
    
    
    
    142Net gain (loss) on sales of securities
    
    
    
    
    
    
    (1
    )
    
    
    156
    
    
    
    (1,410
    )Loss on sale of real estate owned
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    Other
    
    
    9
    
    
    
    4
    
    
    
    12
    
    
    
    7Total noninterest income
    
    
    589
    
    
    
    516
    
    
    
    1,634
    
    
    
    (134
    )Noninterest expense:Compensation and employee benefits
    
    
    1,312
    
    
    
    1,356
    
    
    
    2,774
    
    
    
    2,776Occupancy
    
    
    318
    
    
    
    278
    
    
    
    659
    
    
    
    531FDIC insurance premiums
    
    
    5
    
    
    
    5
    
    
    
    11
    
    
    
    11Data processing
    
    
    105
    
    
    
    95
    
    
    
    211
    
    
    
    185Other
    
    
    496
    
    
    
    471
    
    
    
    935
    
    
    
    916Total noninterest expense
    
    
    2,236
    
    
    
    2,205
    
    
    
    4,590
    
    
    
    4,419Minority interest in net income of consolidated
subsidiary
    
    
    13
    
    
    
    7
    
    
    
    56
    
    
    
    38Income (loss) before income tax expense (benefit)
    
    
    119
    
    
    
    (76
    )
    
    
    588
    
    
    
    (1,502
    )Income tax expense (benefit)
    
    
    54
    
    
    
    (18
    )
    
    
    255
    
    
    
    (475
    )Net income (loss)
    
    $
    65
    
    
    $
    (58
    )
    
    $
    333
    
    
    $
    (1,027
    )Earnings (loss) per share:Basic and diluted
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06
    
    
    $
    (0.16
    )Weighted-average shares outstanding:Basic
    
    
    5,995,088
    
    
    
    6,444,010
    
    
    
    5,983,500
    
    
    
    6,414,977Diluted
    
    
    5,995,088
    
    
    
    6,448,038
    
    
    
    5,983,500
    
    
    
    6,419,483
  2




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND
COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
 Accumulated
    
    
    
    
    
    
    CommonAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Stock
    
    
    TotalCommon
    
    
    Paid-in-
    
    
    Retained
    
    
    Comprehensive
    
    
    Unearned
    
    
    Held in
    
    
    Stockholders
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    ESOP
    
    
    Treasury
    
    
    Equity
    
    
    Loss(Dollars in thousands)Balance at January 1, 2007
    
    $
    67
    
    
    $
    28,787
    
    
    $
    20,475
    
    
    $
    (737
    )
    
    $
    (2,246
    )
    
    $
    
    
    
    $
    46,346Comprehensive income:Net loss
    
    
    
    
    
    
    
    
    
    
    (1,027
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,027
    )
    
    $
    (1,027
    )Transfer of securities to
held for trading,
net of
tax of $(552)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    857
    
    
    
    
    
    
    
    
    
    
    
    857
    
    
    
    857Unrealized loss on securities
available-for-sale,
net of
tax of $(435)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (675
    )
    
    
    
    
    
    
    
    
    
    
    (675
    )
    
    
    (675
    )Purchase of common stock to
stock to be
held in
treasury (65,300 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (611
    )
    
    
    (611
    )ESOP shares committed to be
released (8,640 shares)
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    80Stock-based compensation
expense
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167Stock awards
forfeited
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (845
    )Balance at June 30,
2007
    
    $
    67
    
    
    $
    28,958
    
    
    $
    19,448
    
    
    $
    (555
    )
    
    $
    (2,160
    )
    
    $
    (621
    )
    
    $
    45,137
 Accumulated
    
    
    
    
    
    
    CommonAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    Stock
    
    
    TotalCommon
    
    
    Paid-in-
    
    
    Retained
    
    
    Comprehensive
    
    
    Unearned
    
    
    Held in
    
    
    Stockholders
    
    
    ComprehensiveStock
    
    
    Capital
    
    
    Earnings
    
    
    Loss
    
    
    ESOP
    
    
    Treasury
    
    
    Equity
    
    
    LossBalance at January 1, 2008
    
    $
    67
    
    
    $
    29,084
    
    
    $
    18,520
    
    
    $
    (70
    )
    
    $
    (2,074
    )
    
    $
    (1,754
    )
    
    $
    43,773Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    333
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    333
    
    
    $
    333Unrealized loss on securities
available-for-sale,
net of
tax of $(1,269)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    
    
    
    
    
    
    
    
    (1,969
    )
    
    
    (1,969
    )Reclassification adjustment
on sales of securities
available-for-sale,
net of
tax of $60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    (94
    )
    
    
    (94
    )Cumulative effect
adjustment on benefit
plan reserve
    
    
    
    
    
    
    
    
    
    
    (445
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (445
    )Purchase of
common
stock to be
held in
treasury (121,125 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (985
    )
    
    
    (985
    )ESOP shares committed to be
released (8,640 shares)
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    
    
    
    
    87
    
    
    
    
    
    
    
    71Stock-based compensation
expense
    
    
    
    
    
    
    173
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    173Total comprehensive
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,730
    )Balance at June 30,
2008
    
    $
    67
    
    
    $
    29,241
    
    
    $
    18,408
    
    
    $
    (2,133
    )
    
    $
    (1,987
    )
    
    $
    (2,739
    )
    
    $
    40,857
  3




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##### Table of Contents



CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 For the PeriodEnded June 30,(Dollars in thousands)
    
    2008
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    333
    
    
    $
    (1,027
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activitiesMinority interest in net income of consolidated subsidiary
    
    
    56
    
    
    
    38Provision for loan losses
    
    
    279
    
    
    
    75Depreciation
    
    
    248
    
    
    
    181Net (gain) loss on sales of securities
    
    
    (156
    )
    
    
    1,410Proceeds from sales of securities held for trading
    
    
    
    
    
    
    40,483Proceeds from principal repayments of securities held for trading
    
    
    
    
    
    
    638Net loss on sale of real estate owned
    
    
    3
    
    
    
    Net amortization of security premiums and loan costs
    
    
    (53
    )
    
    
    (651
    )Non cash expense for ESOP
    
    
    71
    
    
    
    80Non cash expense for stock-based compensation
    
    
    173
    
    
    
    167Increase in bank-owned life insurance
    
    
    (136
    )
    
    
    (142
    )(Increase) decrease in other assets
    
    
    (566
    )
    
    
    339Increase (decrease) in other liabilities
    
    
    356
    
    
    
    (79
    )Net cash provided by operating activities
    
    
    608
    
    
    
    41,512Cash flows from investing activities:Net loan originations
    
    
    (19,921
    )
    
    
    (4,890
    )Proceeds from sale of student loan portfolio
    
    
    
    
    
    
    12Proceeds from maturities of and principal repayments of
securities available-for-sale
    
    
    9,213
    
    
    
    10,702Proceeds from sales of securities available-for-sale
    
    
    8,766
    
    
    
    Purchases of securities available-for-sale
    
    
    (28,352
    )
    
    
    (37,330
    )Purchases of premises and equipment
    
    
    (138
    )
    
    
    (1,095
    )(Increase) decrease in FHLB stock, at cost
    
    
    (941
    )
    
    
    855Proceeds from sale of other real estate owned
    
    
    509
    
    
    
    Net cash used in investing activities
    
    
    (30,864
    )
    
    
    (31,746
    )Cash flows from financing activities:Net increase (decrease) in borrowings
    
    
    19,834
    
    
    
    (19,393
    )Net increase in deposits
    
    
    12,999
    
    
    
    10,562Increase in advance payments by borrowers for taxes and insurance
    
    
    139
    
    
    
    145Purchases of common stock held in treasury
    
    
    (985
    )
    
    
    (611
    )Net cash provided by (used in) financing activities
    
    
    31,987
    
    
    
    (9,297
    )Net increase in cash and cash equivalents
    
    
    1,731
    
    
    
    469Cash and cash equivalents, beginning of period
    
    
    5,552
    
    
    
    4,499Cash and cash equivalents, end of period
    
    $
    7,283
    
    
    $
    4,968Supplemental cash flow information:Cash paid for:Interest on deposits and borrowings
    
    $
    5,039
    
    
    $
    4,310Income tax expense
    
    
    31
    
    
    
    25Transfer of securities from available-for-sale to held for trading
    
    
    
    
    
    
    42,531Real estate acquired in settlement of loans
    
    
    360
    
    
    
    
  4




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##### Table of Contents



Notes to the Unaudited Consolidated Financial Statements
 Note 1. Basis of Presentation/Nature of Operations
     Note 2. Recent Accounting Pronouncements
 The Hierarchy of Generally Accepted Accounting Principles. The
Hierarchy of Generally Accepted Accounting Principles. The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.
 Accounting for Financial Guarantee Insurance Contracts  an interpretation of SFAS No. 60. Accounting for Financial Guarantee Insurance Contracts  an
interpretation of SFAS No. 60. Accounting and Reporting
by
 5




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##### Table of Contents



Insurance Enterprises
 Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating
Securities. Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities.
 Noncontrolling Interests in Consolidated Financial Statements  an amendment of Accounting Research
Bulletin (ARB) No. 51. Noncontrolling Interests
in Consolidated Financial Statements  an amendment of ARB No. 51
 The Fair Value Option for Financial Assets and Financial Liabilities: The Fair Value Option for Financial Assets and Financial Liabilities
 Fair Value Measurements: Fair Value Measurements
 Effective Date of FASB Statement No. 157: Effective
Date of FASB Statement No. 157
 6




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##### Table of Contents



Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar
Life Insurance Arrangements:
 Note 3. Securities
  Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairJune 30, 2008
    
    Cost
    
    Gains
    
    Losses
    
    ValueGovernment-Sponsored Enterprises
    
    $
    15,712
    
    
    $
    113
    
    
    $
    161
    
    
    $
    15,664Mortgage-backed
    
    
    54,965
    
    
    
    111
    
    
    
    1,170
    
    
    
    53,906REMICs
    
    
    25,033
    
    
    
    49
    
    
    
    1,506
    
    
    
    23,576Corporate debt
    
    
    3,994
    
    
    
    
    
    
    
    944
    
    
    
    3,050Equities
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49Total securities available-for-sale
    
    $
    99,753
    
    
    $
    273
    
    
    $
    3,781
    
    
    $
    96,245
 Gross
    
    GrossAmortized
    
    Unrealized
    
    Unrealized
    
    FairDecember 31, 2007
    
    Cost
    
    Gains
    
    Losses
    
    ValueGovernment-Sponsored Enterprises
    
    $
    22,321
    
    
    $
    353
    
    
    $
    
    
    
    $
    22,674Mortgage-backed
    
    
    34,948
    
    
    
    242
    
    
    
    37
    
    
    
    35,153REMICs
    
    
    27,875
    
    
    
    80
    
    
    
    478
    
    
    
    27,477Corporate debt
    
    
    3,995
    
    
    
    
    
    
    
    275
    
    
    
    3,720Equities
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49Total securities available-for-sale
    
    $
    89,188
    
    
    $
    675
    
    
    $
    790
    
    
    $
    89,073
 7




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##### Table of Contents



Level 1

    
    
    Quoted prices for identical instruments in active markets.Level 2

    
    
    Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are active, and model derived
valuations in which significant inputs or significant drivers are observable in active
markets.Level 3

    
    
    Valuations derived from valuation techniques in which one or more
significant inputs or significant drivers are unobservable.
  (Dollars in thousands)
    
    Significant Other
    
    SignificantObservable Inputs
    
    Unobservable InputsJune 30, 2008
    
    (Level 2)
    
    (Level 3)
    
    TotalSecurities available-for-sale
    
    $
    88,723
    
    
    $
    7,522
    
    
    $
    96,245
 Significant(Dollars in thousands)
    
    Unobservable Inputs(Level 3)December 31, 2007
    
    $
    6,390Total unrealized losses
    
    
    (727
    )Paydowns and maturities
    
    
    (164
    )Net transfers in (out) of level 3
    
    
    2,023June 30, 2008
    
    $
    7,522The amount of total unrealized losses for the
period included in earnings (or changes in
net
assets) attributable to the change in
unrealized
gains (losses) relating to assets still held
at June 30, 2008
    
    $
    (727
    )
  8




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##### Table of Contents



Less than 12 months
    
    12 months or more
    
    TotalNumber of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    UnrealizedJune 30, 2008
    
    Securities
    
    Value
    
    Losses
    
    Securities
    
    Value
    
    Losses
    
    Securities
    
    Value
    
    LossesGovernment-sponsored enterprises
    
    
    2
    
    
    $
    3,839
    
    
    $
    161
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    
    2
    
    
    $
    3,839
    
    
    $
    161Mortgage-backed
    
    
    52
    
    
    
    44,902
    
    
    
    1,169
    
    
    
    2
    
    
    
    17
    
    
    
    1
    
    
    
    54
    
    
    
    44,919
    
    
    
    1,170REMICs:Private label issuer:Prime fixed and adjustable rate
    
    
    5
    
    
    
    2,834
    
    
    
    164
    
    
    
    1
    
    
    
    676
    
    
    
    108
    
    
    
    6
    
    
    
    3,510
    
    
    
    272Alt-A fixed rate
    
    
    10
    
    
    
    8,917
    
    
    
    942
    
    
    
    1
    
    
    
    1,360
    
    
    
    235
    
    
    
    11
    
    
    
    10,277
    
    
    
    1,177Government-sponsored enterprises
    
    
    8
    
    
    
    3,651
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    3,651
    
    
    
    57Total REMICs
    
    
    23
    
    
    
    15,402
    
    
    
    1,163
    
    
    
    2
    
    
    
    2,036
    
    
    
    343
    
    
    
    25
    
    
    
    17,438
    
    
    
    1,506Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3,050
    
    
    
    944
    
    
    
    3
    
    
    
    3,050
    
    
    
    944Total securities temporarily impaired
    
    
    77
    
    
    $
    64,143
    
    
    $
    2,493
    
    
    
    7
    
    
    $
    5,103
    
    
    $
    1,288
    
    
    
    84
    
    
    $
    69,246
    
    
    $
    3,781
 Less than 12 months
    
    12 months or more
    
    
    
    
    
    TotalNumber of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    Unrealized
    
    Number of
    
    Fair
    
    UnrealizedDecember 31, 2007
    
    Securities
    
    Value
    
    Losses
    
    Securities
    
    Value
    
    Losses
    
    Securities
    
    Value
    
    LossesMortgage-backed
    
    
    8
    
    
    $
    9,946
    
    
    $
    35
    
    
    
    3
    
    
    $
    119
    
    
    $
    2
    
    
    
    11
    
    
    $
    10,065
    
    
    $
    37REMICs:Private label issuer:Prime fixed and adjustable rate
    
    
    2
    
    
    
    778
    
    
    
    2
    
    
    
    2
    
    
    
    1,028
    
    
    
    16
    
    
    
    4
    
    
    
    1,806
    
    
    
    18Alt-A fixed rate
    
    
    7
    
    
    
    8,390
    
    
    
    380
    
    
    
    1
    
    
    
    766
    
    
    
    57
    
    
    
    8
    
    
    
    9,156
    
    
    
    437Government-sponsored enterprises
    
    
    3
    
    
    
    3,277
    
    
    
    22
    
    
    
    5
    
    
    
    130
    
    
    
    1
    
    
    
    8
    
    
    
    3,407
    
    
    
    23Total REMICs
    
    
    12
    
    
    
    12,445
    
    
    
    404
    
    
    
    8
    
    
    
    1,924
    
    
    
    74
    
    
    
    20
    
    
    
    14,369
    
    
    
    478Corporate debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    3,720
    
    
    
    275
    
    
    
    3
    
    
    
    3,720
    
    
    
    275Total securities temporarily impaired
    
    
    20
    
    
    $
    22,391
    
    
    $
    439
    
    
    
    14
    
    
    $
    5,763
    
    
    $
    351
    
    
    
    34
    
    
    $
    28,154
    
    
    $
    790
   9




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##### Table of Contents



Note 4. Loans
  June 30, 2008
    
    December 31, 2007
    
    June 30, 2007(Dollars in thousands)
    
    Amount
    
    Percent
    
    Amount
    
    Percent
    
    Amount
    
    PercentReal estate-mortgage:One-to-four family residential
    
    $
    146,466
    
    
    
    67.7
    %
    
    $
    135,453
    
    
    
    70.4
    %
    
    $
    132,819
    
    
    
    73.3
    %Multi-family
    
    
    9,215
    
    
    
    4.3
    
    
    
    11,985
    
    
    
    6.2
    
    
    
    15,106
    
    
    
    8.3Commercial
    
    
    18,668
    
    
    
    8.6
    
    
    
    14,483
    
    
    
    7.5
    
    
    
    12,438
    
    
    
    6.9Total real estate-mortgage
    
    
    174,349
    
    
    
    80.6
    
    
    
    161,921
    
    
    
    84.1
    
    
    
    160,363
    
    
    
    88.5Real estate-construction:Residential
    
    
    9,395
    
    
    
    4.3
    
    
    
    6,671
    
    
    
    3.5
    
    
    
    3,206
    
    
    
    1.8Commercial
    
    
    2,673
    
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total real estate-construction
    
    
    12,068
    
    
    
    5.5
    
    
    
    6,671
    
    
    
    3.5
    
    
    
    3,206
    
    
    
    1.8Consumer:Home equity
    
    
    21,143
    
    
    
    9.8
    
    
    
    17,862
    
    
    
    9.3
    
    
    
    12,209
    
    
    
    6.7Loans on savings accounts
    
    
    689
    
    
    
    0.3
    
    
    
    675
    
    
    
    0.4
    
    
    
    410
    
    
    
    0.2Home improvement
    
    
    253
    
    
    
    0.1
    
    
    
    281
    
    
    
    0.1
    
    
    
    318
    
    
    
    0.2Other
    
    
    617
    
    
    
    0.3
    
    
    
    592
    
    
    
    0.3
    
    
    
    666
    
    
    
    0.4Total consumer
    
    
    22,702
    
    
    
    10.5
    
    
    
    19,410
    
    
    
    10.1
    
    
    
    13,603
    
    
    
    7.5Commercial business
    
    
    7,411
    
    
    
    3.4
    
    
    
    4,341
    
    
    
    2.3
    
    
    
    3,916
    
    
    
    2.2Total loans
    
    $
    216,530
    
    
    
    100.0
    %
    
    $
    192,343
    
    
    
    100.0
    %
    
    $
    181,088
    
    
    
    100.0
    %Net premiums on loans purchased
    
    
    143
    
    
    
    
    
    
    
    191
    
    
    
    
    
    
    
    251Net deferred loan costs
    
    
    556
    
    
    
    
    
    
    
    491
    
    
    
    
    
    
    
    446Loans in process
    
    
    (8,460
    )
    
    
    
    
    
    
    (3,614
    )
    
    
    
    
    
    
    (1,384
    )Allowance for loan losses
    
    
    (1,516
    )
    
    
    
    
    
    
    (1,457
    )
    
    
    
    
    
    
    (941
    )Loans, net
    
    $
    207,253
    
    
    
    
    
    
    $
    187,954
    
    
    
    
    
    
    $
    179,460
 10




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##### Table of Contents



Nonperforming Assets.
 June 30,
    
    December 31,
    
    June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    2007Nonaccrual loans:Real estate  mortgage
    
    $
    749
    
    
    $
    1,264
    
    
    $
    477Real estate  construction
    
    
    
    
    
    
    
    
    
    
    Consumer
    
    
    4
    
    
    
    17
    
    
    
    169Commercial business
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    753
    
    
    
    1,281
    
    
    
    646Accruing loans past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    Total of nonaccrual and 90 days or more
past due loans (nonperforming loans)
    
    
    753
    
    
    
    1,281
    
    
    
    646Real estate owned
    
    
    974
    
    
    
    1,119
    
    
    
    569Total nonperforming assets
    
    $
    1,727
    
    
    $
    2,400
    
    
    $
    1,215Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    Troubled debt restructurings and total
nonperforming assets
    
    $
    1,727
    
    
    $
    2,400
    
    
    $
    1,215Total nonperforming loans to total loans
    
    
    0.35
    %
    
    
    0.67
    %
    
    
    0.36
    %Total nonperforming loans to total assets
    
    
    0.22
    
    
    
    0.42
    
    
    
    0.24Total nonperforming assets to total assets
    
    
    0.51
    
    
    
    0.79
    
    
    
    0.44
 Allowance for loan losses.
 Three Months Ended
    
    Six Months Ended
    
    Year EndedJune 30,
    
    June 30,
    
    December 31,(Dollars in thousands)
    
    2008
    
    2007
    
    2008
    
    2007
    
    2007Allowance at beginning of period
    
    $
    1,345
    
    
    $
    911
    
    
    $
    1,457
    
    
    $
    866
    
    
    $
    866Provision for loan losses
    
    
    220
    
    
    
    30
    
    
    
    279
    
    
    
    75
    
    
    
    1,119Charge-offs
    
    
    (49
    )
    
    
    
    
    
    
    (220
    )
    
    
    
    
    
    
    (528
    )Recoveries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net charge-offs
    
    
    (49
    )
    
    
    
    
    
    
    (220
    )
    
    
    
    
    
    
    (528
    )Allowance at end of period
    
    $
    1,516
    
    
    $
    941
    
    
    $
    1,516
    
    
    $
    941
    
    
    $
    1,457
 11




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##### Table of Contents



Note 5. Deposits
  June 30, 2008
    
    December 31, 2007
    
    June 30, 2007(Dollars in thousands)
    
    Amount
    
    Percent
    
    Amount
    
    Percent
    
    Amount
    
    PercentNoninterest-bearing demand deposits
    
    $
    11,137
    
    
    
    6.6
    %
    
    $
    8,918
    
    
    
    5.7
    %
    
    $
    8,799
    
    
    
    5.7
    %Interest-bearing demand deposits
    
    
    12,014
    
    
    
    7.1
    
    
    
    11,864
    
    
    
    7.6
    
    
    
    13,341
    
    
    
    8.7Savings accounts
    
    
    23,950
    
    
    
    14.2
    
    
    
    23,056
    
    
    
    14.8
    
    
    
    25,145
    
    
    
    16.3Money market accounts
    
    
    33,154
    
    
    
    19.7
    
    
    
    13,676
    
    
    
    8.8
    
    
    
    12,032
    
    
    
    7.8Certificates of deposit
    
    
    88,302
    
    
    
    52.4
    
    
    
    98,044
    
    
    
    63.1
    
    
    
    94,740
    
    
    
    61.5Total deposits
    
    $
    168,557
    
    
    
    100.0
    %
    
    $
    155,558
    
    
    
    100.0
    %
    
    $
    154,057
    
    
    
    100.0
    %
 Note 6. Borrowings
  Six Months
    
    Year
    
    Six MonthsEnded
    
    Ended
    
    EndedJune 30,
    
    December 31,
    
    June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    2007Maximum amount outstanding at any month end
during the period
    
    $
    121,776
    
    
    $
    101,074
    
    
    $
    89,663Average amounts outstanding during the period
    
    
    111,534
    
    
    
    82,880
    
    
    
    82,659Weighted average rate during the period
    
    
    4.02
    %
    
    
    4.32
    %
    
    
    4.27
    %Balance outstanding at end of period
    
    $
    120,908
    
    
    $
    101,074
    
    
    $
    69,930Weighted average rate at end of period
    
    
    3.84
    %
    
    
    4.30
    %
    
    
    4.10
    %
 Note 7. Earnings (Loss) Per Share
  12




---



##### Table of Contents



Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(Dollars in thousands, except per share amounts)
    
    2008
    
    2007
    
    2008
    
    2007Net income (loss)
    
    $
    65
    
    
    $
    (58
    )
    
    $
    333
    
    
    $
    (1,027
    )Weighted-average shares outstanding:Basic
    
    
    5,995,088
    
    
    
    6,444,010
    
    
    
    5,983,500
    
    
    
    6,414,977Effect of dilutive stock options and
restrictive stock awards
    
    
    
    
    
    
    4,028
    
    
    
    
    
    
    
    4,506Diluted
    
    
    5,995,088
    
    
    
    6,448,038
    
    
    
    5,983,500
    
    
    
    6,419,483Earnings (loss) per share:Basic
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06
    
    
    $
    (0.16
    )Diluted
    
    $
    0.01
    
    
    $
    (0.01
    )
    
    $
    0.06
    
    
    $
    (0.16
    )
 Note 8. Insurance Activities of Exchange Underwriters, Inc. and Related Information
  Three Months
    
    Six Months
    
    YearEnded
    
    Ended
    
    EndedJune 30,
    
    June 30,
    
    December 31,(Dollars in thousands)
    
    2008
    
    2007
    
    2008
    
    2007
    
    2007Insurance commissions
    
    $
    393
    
    
    $
    340
    
    
    $
    1,113
    
    
    $
    931
    
    
    $
    1,639Income before income tax expense
    
    
    109
    
    
    
    70
    
    
    
    481
    
    
    
    341
    
    
    
    472
 June 30,
    
    December 31,2008
    
    2007
    
    2007Total assets
    
    $
    1,276
    
    
    $
    1,145
    
    
    $
    1,258
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Forward-Looking Statements
   13




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##### Table of Contents



General
     Balance Sheet Analysis
 Assets.
    14




---



##### Table of Contents



Liabilities.
   Stockholders Equity.
 Results of Operations for the Three Months Ended June 30, 2008 and 2007
 Overview.
 Three Months EndedJune 30,(Dollars in thousands)
    
    2008
    
    2007Net income (loss)
    
    $
    65
    
    
    $
    (58
    )Return on average assets
    
    
    0.08
    %
    
    
    (0.08
    )%Return on average equity
    
    
    0.61
    
    
    
    (0.51
    )Average equity to average assets
    
    
    12.83
    
    
    
    16.60
 Net Interest Income.
   15




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##### Table of Contents



Average Balances and Yields .
 Three Months Ended June 30,2008
    
    
    
    
    
    
    
    
    
    2007Interest
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    and
    
    Yield/
    
    Average
    
    and
    
    Yield/Balance
    
    Dividends
    
    Cost
    
    Balance
    
    Dividends
    
    CostAssets:Interest-earning assets:Loans, net (1)(2)
    
    $
    199,979
    
    
    $
    2,901
    
    
    
    5.80
    %
    
    $
    175,986
    
    
    $
    2,581
    
    
    
    5.87
    %Securities (3)
    
    
    101,883
    
    
    
    1,373
    
    
    
    5.39
    
    
    
    71,738
    
    
    
    969
    
    
    
    5.40Other interest-earning assets
    
    
    11,914
    
    
    
    81
    
    
    
    2.72
    
    
    
    11,083
    
    
    
    158
    
    
    
    5.70Total interest-earning
assets
    
    
    313,776
    
    
    $
    4,355
    
    
    
    5.55
    
    
    
    258,807
    
    
    $
    3,708
    
    
    
    5.73Noninterest-earning assets
    
    
    18,150
    
    
    
    
    
    
    
    
    
    
    
    17,541Total assets
    
    $
    331,926
    
    
    
    
    
    
    
    
    
    
    $
    276,348Liabilities and
Stockholders equity:Interest-bearing liablities:Interest-bearing
demand deposits
    
    $
    11,931
    
    
    $
    14
    
    
    
    0.47
    %
    
    $
    13,137
    
    
    $
    16
    
    
    
    0.49
    %Savings accounts
    
    
    23,582
    
    
    
    44
    
    
    
    0.75
    
    
    
    25,418
    
    
    
    64
    
    
    
    1.01Money market accounts
    
    
    27,745
    
    
    
    217
    
    
    
    3.13
    
    
    
    11,235
    
    
    
    112
    
    
    
    3.99Certificates of deposit
    
    
    95,637
    
    
    
    956
    
    
    
    4.00
    
    
    
    92,755
    
    
    
    1,057
    
    
    
    4.56Total interest-bearing
deposits
    
    
    158,895
    
    
    
    1,231
    
    
    
    3.10
    
    
    
    142,545
    
    
    
    1,249
    
    
    
    3.50Borrowings
    
    
    114,001
    
    
    
    1,125
    
    
    
    3.95
    
    
    
    76,519
    
    
    
    809
    
    
    
    4.23Total interest-bearing
liabilities
    
    
    272,896
    
    
    
    2,356
    
    
    
    3.45
    
    
    
    219,064
    
    
    
    2,058
    
    
    
    3.76Noninterest-bearing liabilities
    
    
    16,438
    
    
    
    
    
    
    
    
    
    
    
    11,424Total liabilities
    
    
    289,334
    
    
    
    
    
    
    
    
    
    
    
    230,488Stockholders equity
    
    
    42,592
    
    
    
    
    
    
    
    
    
    
    
    45,860Total liabilities and
stockholders equity
    
    $
    331,926
    
    
    
    
    
    
    
    
    
    
    $
    276,348Net interest income
    
    
    
    
    
    $
    1,999
    
    
    
    
    
    
    
    
    
    
    $
    1,650Interest rate spread (4)
    
    
    
    
    
    
    
    
    
    
    2.10
    %
    
    
    
    
    
    
    
    
    
    
    1.97
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    2.55
    
    
    
    
    
    
    
    
    
    
    
    2.55Average interest-earning
assets to average
interest-bearing liablities
    
    
    
    
    
    
    
    
    
    
    114.98
    %
    
    
    
    
    
    
    
    
    
    
    118.14
    %
 
 (1)
    
    Amount is net of deferred loan costs, loans in process and estimated allowance for loan losses.(2)
    
    Amount includes nonaccrual loans in average balances only.(3)
    
    Amount does not include effect of unrealized gain (loss) on securities available-for-sale.(4)
    
    Interest rate spread represents the difference between the weighted-average yield on
interest-earning assets and the weighted-average cost of interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average interest-earning
assets. 16




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##### Table of Contents



Rate/Volume Analysis .
 Three Months Ended June 30, 2008Compared ToThree Months Ended June 30, 2007Increase (decrease) due to(Dollars in thousands)
    
    Volume
    
    Rate
    
    TotalInterest and dividend income:Loans, net
    
    $
    351
    
    
    $
    (31
    )
    
    $
    320Securities
    
    
    406
    
    
    
    (2
    )
    
    
    404Other interest-earning assets
    
    
    11
    
    
    
    (88
    )
    
    
    (77
    )Total interest-earning assets
    
    
    768
    
    
    
    (121
    )
    
    
    647Interest expense:Deposits
    
    
    133
    
    
    
    (151
    )
    
    
    (18
    )Borrowings
    
    
    373
    
    
    
    (57
    )
    
    
    316Total interest-bearing liablities
    
    
    506
    
    
    
    (208
    )
    
    
    298Change in net interest income
    
    $
    262
    
    
    $
    87
    
    
    $
    349
 Provision for Loan Losses.
 Noninterest Income .
 17




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##### Table of Contents



Noninterest Expense.
 Three Months EndedJune 30,(Dollars in thousands)
    
    2008
    
    2007Compensation and employee benefits
    
    $
    1,312
    
    
    $
    1,356Occupancy
    
    
    318
    
    
    
    278FDIC insurance premiums
    
    
    5
    
    
    
    5Data processing
    
    
    105
    
    
    
    95Advertising
    
    
    38
    
    
    
    44Professional services
    
    
    141
    
    
    
    146Stationary, printing and supplies
    
    
    30
    
    
    
    34Telephone
    
    
    15
    
    
    
    14Postage
    
    
    33
    
    
    
    33Correspondent bank fees
    
    
    36
    
    
    
    30All other
    
    
    203
    
    
    
    170Total noninterest expense
    
    $
    2,236
    
    
    $
    2,205
  Income Tax (Benefit) Expense.
 Results of Operations for the Six Months Ended June 30, 2008 and 2007
 Overview.
 Six Months EndedJune 30,(Dollars in thousands)
    
    2008
    
    2007Net income (loss)
    
    $
    333
    
    
    $
    (1,027
    )Return on average assets
    
    
    0.20
    %
    
    
    (0.73
    )%Return on average equity
    
    
    1.55
    
    
    
    (4.45
    )Average equity to average assets
    
    
    13.18
    
    
    
    16.44
 Net Interest Income.
 18




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19




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##### Table of Contents



Average Balances and Yields .
 Six Months Ended June 30,2008
    
    
    2007Interest
    
    
    
    
    
    
    
    
    
    
    InterestAverage
    
    
    and
    
    
    Yield/
    
    
    Average
    
    
    and
    
    
    Yield/Balance
    
    
    Dividends
    
    
    Cost
    
    
    Balance
    
    
    Dividends
    
    
    CostAssets:Interest-earning assets:Loans, net (1)(2)
    
    $
    195,321
    
    
    $
    5,719
    
    
    
    5.86
    %
    
    $
    175,760
    
    
    $
    5,075
    
    
    
    5.77
    %Securities (3)
    
    
    100,308
    
    
    
    2,759
    
    
    
    5.50
    
    
    
    77,948
    
    
    
    1,994
    
    
    
    5.12Other interest-earning assets
    
    
    11,411
    
    
    
    183
    
    
    
    3.21
    
    
    
    9,742
    
    
    
    277
    
    
    
    5.69Total interest-earning
assets
    
    
    307,040
    
    
    $
    8,661
    
    
    
    5.64
    
    
    
    263,450
    
    
    $
    7,346
    
    
    
    5.58Noninterest-earning assets
    
    
    18,721
    
    
    
    
    
    
    
    
    
    
    
    17,099Total assets
    
    $
    325,761
    
    
    
    
    
    
    
    
    
    
    $
    280,549Liabilities and
Stockholders equity:Interest-bearing liablities:Interest-bearing
demand deposits
    
    $
    11,915
    
    
    $
    28
    
    
    
    0.47
    %
    
    $
    13,067
    
    
    $
    31
    
    
    
    0.47
    %Savings accounts
    
    
    23,347
    
    
    
    95
    
    
    
    0.81
    
    
    
    25,829
    
    
    
    128
    
    
    
    0.99Money market accounts
    
    
    21,507
    
    
    
    344
    
    
    
    3.20
    
    
    
    9,890
    
    
    
    187
    
    
    
    3.78Certificates of deposit
    
    
    98,400
    
    
    
    2,072
    
    
    
    4.21
    
    
    
    92,136
    
    
    
    2,071
    
    
    
    4.50Total interest-bearing
deposits
    
    
    155,169
    
    
    
    2,539
    
    
    
    3.27
    
    
    
    140,922
    
    
    
    2,417
    
    
    
    3.43Borrowings
    
    
    111,534
    
    
    
    2,243
    
    
    
    4.02
    
    
    
    82,659
    
    
    
    1,765
    
    
    
    4.27Total interest-bearing
liabilities
    
    
    266,703
    
    
    
    4,782
    
    
    
    3.59
    
    
    
    223,581
    
    
    
    4,182
    
    
    
    3.74Noninterest-bearing liabilities
    
    
    16,126
    
    
    
    
    
    
    
    
    
    
    
    10,837Total liabilities
    
    
    282,829
    
    
    
    
    
    
    
    
    
    
    
    234,418Stockholders equity:
    
    
    42,932
    
    
    
    
    
    
    
    
    
    
    
    46,131Total liabilities and
stockholders equity
    
    $
    325,761
    
    
    
    
    
    
    
    
    
    
    $
    280,549Net interest income
    
    
    
    
    
    $
    3,879
    
    
    
    
    
    
    
    
    
    
    $
    3,164Interest rate spread (4)
    
    
    
    
    
    
    
    
    
    
    2.05
    %
    
    
    
    
    
    
    
    
    
    
    1.84
    %Net interest margin (5)
    
    
    
    
    
    
    
    
    
    
    2.53
    
    
    
    
    
    
    
    
    
    
    
    2.40Average interest-earning
assets to average
interest-bearing liablities
    
    
    
    
    
    
    
    
    
    
    115.12
    %
    
    
    
    
    
    
    
    
    
    
    117.83
    %
 
 (1)
    
    Amount is net of deferred loan costs, loans in process and estimated allowance for loan losses.(2)
    
    Amount includes nonaccrual loans in average balances only.(3)
    
    Amount does not include effect of unrealized gain (loss) on securities available-for-sale.(4)
    
    Interest rate spread represents the difference between the weighted-average yield on
interest-earning assets and the weighted-average cost of interest-bearing liabilities.(5)
    
    Net interest margin represents net interest income divided by average interest-earning
assets. 20




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##### Table of Contents



Rate/Volume Analysis .
 Six Months Ended June 30, 2008Compared ToSix Months Ended June 30, 2007Increase (decrease) due to(Dollars in thousands)
    
    Volume
    
    Rate
    
    TotalInterest and dividend income:Loans, net
    
    $
    564
    
    
    $
    80
    
    
    $
    644Securities
    
    
    608
    
    
    
    157
    
    
    
    765Other interest-earning assets
    
    
    42
    
    
    
    (136
    )
    
    
    (94
    )Total interest-earning assets
    
    
    1,214
    
    
    
    101
    
    
    
    1,315Interest expense:Deposits
    
    
    236
    
    
    
    (114
    )
    
    
    122Borrowings
    
    
    586
    
    
    
    (108
    )
    
    
    478Total interest-bearing liablities
    
    
    822
    
    
    
    (222
    )
    
    
    600Change in net interest income
    
    $
    392
    
    
    $
    323
    
    
    $
    715
 Provision for Loan Losses.
 Noninterest Income .
 21




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##### Table of Contents



Noninterest Expense.
 Six Months EndedJune 30,(Dollars in thousands)
    
    2008
    
    
    2007Compensation and employee benefits
    
    $
    2,774
    
    
    $
    2,776Occupancy
    
    
    659
    
    
    
    531FDIC insurance premiums
    
    
    11
    
    
    
    11Data processing
    
    
    211
    
    
    
    185Advertising
    
    
    70
    
    
    
    73Professional services
    
    
    270
    
    
    
    284Stationary, printing and supplies
    
    
    58
    
    
    
    65Telephone
    
    
    31
    
    
    
    26Postage
    
    
    71
    
    
    
    64Correspondent bank fees
    
    
    79
    
    
    
    61All other
    
    
    356
    
    
    
    343Total noninterest expense
    
    $
    4,590
    
    
    $
    4,419
  Income Tax (Benefit) Expense.
 Liquidity and Capital Management
 Liquidity Management .
    22




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##### Table of Contents



June 30,(Dollars in thousands)
    
    2008Loans in process
    
    $
    8,460Unused revolving lines of credit
    
    
    2,806Unused commercial business lines of credit
    
    
    1,841One-to-four family residential commitments
    
    
    6,641Consumer commitments
    
    
    863Total commitments outstanding
    
    $
    20,611
 Capital Management.
 Off-Balance Sheet Arrangements.
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
   23




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 1A. Risk Factors.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
  Total Number ofShares Purchased
    
    Maximum Numberas Part of the
    
    of Shares that MayTotal Number
    
    Average Price
    
    Publicly
    
    Yet Be Purchasedof Shares
    
    Paid per
    
    Announced
    
    Under the ProgramPeriod
    
    Purchased
    
    Share
    
    Program(1)
    
    (1)April 2008
    
    
    55,100
    
    
    $
    8.09
    
    
    
    55,100
    
    
    
    15,000May 2008
    
    
    16,350
    
    
    
    6.96
    
    
    
    16,350
    
    
    
    138,650June 2008
    
    
    10,575
    
    
    
    7.14
    
    
    
    10,575
    
    
    
    128,075Total
    
    
    82,025
    
    
    
    7.74
    
    
    
    82,025
 
 (1)
    
    On September 27, 2007, the Company announced that the board of directors had approved a
program allowing the Company to repurchase up to 147,500 shares of the Companys
outstanding common stock, which was approximately 5% of outstanding shares held by persons
other than FFMHC on that date. On May 5, 2008, the Company completed the purchases under
this program.On May 22, 2008, the Company announced that the board of directors had approved a program
allowing the Company to repurchase up to 140,000 shares of the Companys outstanding common
stock, which was approximately 5% of outstanding shares held by persons other than FFMHC on
that date. This repurchase program is scheduled to expire on November 30, 2008. As of June
30, 2008, 11,925 shares of the Companys common stock had been repurchased under this
program. 
 Item 3. Defaults Upon Senior Securities.
  24




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
   Nominees
    
    Votes For
    
    Votes WithheldJoseph U. Frye
    
    
    5,409,681
    
    
    
    379,574John J. LaCarte
    
    
    5,550,031
    
    
    
    239,224
  Percent of SharesSummary
    
    Number
    
    Represented at the Meetingof Votes
    
    of Shares
    
    and Entitled to VoteFor
    
    
    5,678,532
    
    
    
    98.1
    %Against
    
    
    104,706
    
    
    
    1.8
    %Abstain
    
    
    6,017
    
    
    
    0.1
    %
  
 Item 5. Other Information.
  
 Item 6. Exhibits.
 3.1
    
    Amended and Restated Charter of FedFirst Financial Corporation (1)3.2
    
    Amended and Restated Bylaws of FedFirst Financial Corporation (2)4.0
    
    Specimen Stock Certificate of FedFirst Financial Corporation (1)10.1
    
    Amendment, dated June 1, 2008, to the Employment Agreement between Exchange
Underwriters, Inc. and Richard B. Boyer, effective June 1, 2002 (3)31.1
    
    Rule 13a-14 (a) / 15d-14 (a) Certification (President and Chief Executive Officer)31.2
    
    Rule 13a-14 (a) / 15d-14 (a) Certification (Chief Financial Officer)32.1
    
    Certification of John G. Robinson pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Robert C. Barry Jr. pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Incorporated herein by reference to the Exhibits to the Registration Statement on Form SB-2,
and amendments thereto, initially filed on December 17, 2004, Registration No. 333-121405.(2)
    
    Incorporated herein by reference to the Exhibits to FedFirst Financial Corporations Form 8-K
filed on October 26, 2007.(3)
    
    Management contract or compensation plan or arrangement. 
 25




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##### Table of Contents



SIGNATURES
  FEDFIRST FINANCIAL CORPORATION(Registrant)Date: August 8, 2008
    /s/ John G. RobinsonJohn G. RobinsonPresident and Chief Executive OfficerDate: August 8, 2008
    /s/ Robert C. Barry Jr.Robert C. Barry Jr.Chief Financial Officer and Senior Vice President
(Principal Financial Officer and Chief Accounting Officer) 26