UNITED
STATES





SECURITIES
AND EXCHANGE COMMISSION





Washington,
D.C. 20549





FORM
10-Q





(Mark
One)





T
            QUARTERLY
      REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
quarterly period ended March 31,
2009








£
            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(Exact
      name of registrant as specified in its charter)





United
      States
              
              25-1828028(State
      or other jurisdiction of incorporation or organization)
              
              (I.R.S.
      Employer Identification No.)





Donner
      at Sixth Street, Monessen, Pennsylvania
              
              15062(Address
      of principal executive offices)
              
              (Zip
      Code)





(724)
      684-6800(Registrant’s
      telephone number, including area code)





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes T     No
£





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).  Yes £    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
            £Non-accelerated
      filer
              (Do
      not check if a smaller reporting company)
            £
            
            Smaller
      reporting company
            T





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





As of May
13, 2009, the issuer had 6,336,775 shares of common stock
outstanding.

















FORM
10-Q





INDEX




PagePART
      I – FINANCIAL INFORMATION
                                                      1Item
      1. Financial
      Statements.
                                                      1Consolidated
      Statements of Financial Condition atMarch
      31, 2009(Unaudited) and December 31, 2008
                                                      1Consolidated
      Statements of Operations (Unaudited) for the ThreeMonths
      EndedMarch
      31, 2009and 2008
                                                      2Consolidated
      Statements of Changes in Stockholders’ Equity and
      ComprehensiveIncome
      for theThreeMonths EndedMarch
      31, 2009and 2008
      Unaudited)
                                                      3Consolidated
      Statements of Cash Flows for theThreeMonths EndedMarch
      31, 2009and 2008(Unaudited)
                                                      5Notes
      to the Unaudited Consolidated Financial
    Statements
                                                      6Item
      2.Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations.
                                                      17Item
      3. Quantitative
      and Qualitative Disclosures About Market Risk.
                                                      22Item
      4. Controls
      and Procedures.
                                                      22PART
      II – OTHER INFORMATION
                                                      23Item
      1. Legal
      Proceedings.
                                                      23Item 1A. Risk Factors.
                                                      23Item 2. Unregistered Sales of Equity Securities and Use of
      Proceeds.
                                                      23Item 3. Defaults Upon Senior Securities.
                                                      23Item 4. Submission of Matters to a Vote of Security
      Holders.
                                                      23Item 5. Other Information.
                                                      23Item 6. Exhibits.
                                                      24SIGNATURES
                                                      25










PART
I – FINANCIAL INFORMATION





Item 1.  Financial Statements.





CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION





March
      31,
                
                
                December
      31,2009
                
                
                2008(Dollars in
      thousands, except share data)
                
                (UNAUDITED)Assets:Cash and cash
      equivalents:Cash and due
      from banks
                
                $
                1,838
                
                
                $
                2,224Interest-earning
      deposits
                
                
                7,774
                
                
                
                5,623Total cash and
      cash equivalents
                
                
                9,612
                
                
                
                7,847Securities
      available-for-sale
                
                
                76,472
                
                
                
                85,433Loans,
      net
                
                
                229,512
                
                
                
                230,184Federal Home Loan Bank ("FHLB")
      stock, at cost
                
                
                6,901
                
                
                
                6,901Accrued interest receivable -
      loans
                
                
                1,099
                
                
                
                1,147Accrued interest receivable -
      securities
                
                
                390
                
                
                
                505Premises and equipment,
      net
                
                
                2,656
                
                
                
                2,735Bank-owned life
      insurance
                
                
                7,500
                
                
                
                7,431Goodwill
                
                
                1,080
                
                
                
                1,080Real estate
      owned
                
                
                316
                
                
                
                295Deferred tax
      assets
                
                
                4,479
                
                
                
                4,930Other
      assets
                
                
                919
                
                
                
                1,273Total
      assets
                
                $
                340,936
                
                
                $
                349,761Liabilities
      and Stockholders' Equity:Deposits:Noninterest-bearing
                
                
                14,411
                
                
                
                12,005Interest-bearing
                
                
                167,037
                
                
                
                160,799Total
      deposits
                
                
                181,448
                
                
                
                172,804Borrowings
                
                
                114,450
                
                
                
                132,410Advance payments by borrowers for
      taxes and insurance
                
                
                678
                
                
                
                474Accrued interest payable -
      deposits
                
                
                589
                
                
                
                743Accrued interest payable -
      borrowings
                
                
                480
                
                
                
                546Other
      liabilities
                
                
                3,136
                
                
                
                3,360Total
      liabilities
                
                
                300,781
                
                
                
                310,337Stockholders'
      equityFedFirst
      Financial Corporation stockholders' 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
sharesissued and 6,336,775 and
      6,351,775 shares outstanding
                
                
                67
                
                
                
                67Additional
      paid-in-capital
                
                
                29,338
                
                
                
                29,291Retained earnings - substantially
      restricted
                
                
                16,249
                
                
                
                15,930Accumulated other comprehensive
      loss, net of deferred taxes of$(442) and
      $(716)
                
                
                (685
                )
                
                
                (1,111
                )Unearned Employee Stock Ownership
      Plan ("ESOP")
                
                
                (1,858
                )
                
                
                (1,901
                )Common stock held in treasury, at
      cost (370,725 and 355,725 shares)
                
                
                (3,022
                )
                
                
                (2,955
                )Total FedFirst Financial
      Corporation stockholders' equity
                
                
                40,089
                
                
                
                39,321Noncontrolling
      interest in subsidiary
                
                
                66
                
                
                
                103Total stockholders'
      equity
                
                
                40,155
                
                
                
                39,424Total
      liabilities and stockholders' equity
                
                $
                340,936
                
                
                $
                349,761




See Notes
to the Unaudited Consolidated Financial Statements


1








CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)




For
      the Three MonthsEnded March
      31,(Dollars in
      thousands, except per share data)
            
            2009
            
            
            2008Interest
      income:Loans
            
            $
            3,355
            
            
            $
            2,818Securities
            
            
            1,209
            
            
            
            1,386Other
      interest-earning assets
            
            
            6
            
            
            
            102Total interest
      income
            
            
            4,570
            
            
            
            4,306Interest
      expense:Deposits
            
            
            1,124
            
            
            
            1,308Borrowings
            
            
            1,226
            
            
            
            1,118Total interest
      expense
            
            
            2,350
            
            
            
            2,426Net interest
      income
            
            
            2,220
            
            
            
            1,880Provision for loan
      losses
            
            
            160
            
            
            
            59Net interest
      income after provision for loan losses
            
            
            2,060
            
            
            
            1,821Noninterest
      income:Fees and
      service charges
            
            
            132
            
            
            
            102Insurance
      commissions
            
            
            701
            
            
            
            720Income
      frombank-owned life insurance
            
            
            74
            
            
            
            67Net gain on
      sales of available-for-sale securities
            
            
            -
            
            
            
            156Loss on sale
      of real estate owned
            
            
            -
            
            
            
            (3
            )Other
            
            
            6
            
            
            
            3Total
      noninterest income
            
            
            913
            
            
            
            1,045Noninterest
      expense:Compensation
      and employee benefits
            
            
            1,458
            
            
            
            1,462Occupancy
            
            
            354
            
            
            
            341FDIC insurance
      premiums
            
            
            9
            
            
            
            6Data
      processing
            
            
            107
            
            
            
            106Professional
      services
            
            
            131
            
            
            
            128Other
            
            
            339
            
            
            
            311Total
      noninterest expense
            
            
            2,398
            
            
            
            2,354Income before income tax
      expense and noncontrolling interest in net income of
      consolidated subsidiary
            
            
            575
            
            
            
            512Income tax
      expense
            
            
            218
            
            
            
            201Net income before
      noncontrolling interest in net income of consolidated
      subsidiary
            
            
            357
            
            
            
            311Noncontrolling
      interest in net income of consolidated
    subsidiary
            
            
            38
            
            
            
            43Net income of
      FedFirst Financial Corporation
            
            $
            319
            
            
            $
            268Earnings per
      share:Basic and
      diluted
            
            $
            0.05
            
            
            $
            0.04Weighted-average
      shares outstanding:Basic
            
            
            6,077,749
            
            
            
            6,231,354Diluted
            
            
            6,077,749
            
            
            
            6,231,516


See Notes
to the Unaudited Consolidated Financial Statements


2








CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND
COMPREHENSIVE INCOME (UNAUDITED)




Accumulated
            
            
            
            
            
            CommonAdditional
            
            
            
            
            
            Other
            
            
            
            
            
            Stock
            
            
            Noncontrolling
            
            
            TotalCommon
            
            
            
            Paid-in-
            
            
            Retained
            
            
            Comprehensive
            
            
            Unearned
            
            
            Held
      in
            
            
            Interest
      in
            
            
            Stockholders'
            
            
            Comprehensive(Dollars in
    thousands)
            
            Stock
            
            
            
            Capital
            
            
            Earnings
            
            
            Loss
            
            
            ESOP
            
            
            Treasury
            
            
            Subsidiary
            
            
            Equity
            
            
            IncomeBalance at January 1,
      2008
            
            $
            67
            
            
            
            $
            29,084
            
            
            $
            18,520
            
            
            $
            (70
            )
            
            $
            (2,074
            )
            
            $
            (1,754
            )
            
            $
            80
            
            
            $
            43,853Comprehensive
      income:Net
      income
            
            
            -
            
            
            
            
            -
            
            
            
            268
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            43
            
            
            
            311
            
            
            $
            311Unrealized gain on
      securitiesavailable-for-sale,net of tax of
      $87
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            135
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            135
            
            
            
            135Reclassification
      adjustmenton sales of
      securitiesavailable-for-sale,net of tax
      $61
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            (95
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (95
            )
            
            
            (95
            )Cumulative
      effectadjustment on
      benefitplan
      reserve
            
            
            -
            
            
            
            
            -
            
            
            
            (445
            )
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (445
            )Purchase of
      commonstock to be held
      intreasury (39,100
      shares)
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (350
            )
            
            
            -
            
            
            
            (350
            )ESOP shares
      committed to bereleased (4,320
      shares)
            
            
            -
            
            
            
            
            (6
            )
            
            
            -
            
            
            
            -
            
            
            
            44
            
            
            
            -
            
            
            
            -
            
            
            
            38Stock-based
      compensationexpense
            
            
            -
            
            
            
            
            87
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            87Distribution
      to minorityshareholder
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (52
            )
            
            
            (52
            )Total comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            351Comprehensive
      incomeattributable to
      thenoncontrolling
      interestin
      subsidiary
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            43Comprehensive
      incomeattributable to
      FedFirstFinancial
      Corporation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            308Balance at March 31,
      2008
            
            $
            67
            
            
            
            $
            29,165
            
            
            $
            18,343
            
            
            $
            (30
            )
            
            $
            (2,030
            )
            
            $
            (2,104
            )
            
            $
            71
            
            
            $
            43,482




See Notes
to the Unaudited Consolidated Financial Statements





3





Accumulated
            
            
            
            
            
            CommonAdditional
            
            
            
            
            
            Other
            
            
            
            
            
            Stock
            
            
            Noncontrolling
            
            
            TotalCommon
            
            
            
            Paid-in-
            
            
            Retained
            
            
            Comprehensive
            
            
            Unearned
            
            
            Held
      in
            
            
            Interest
      in
            
            
            Stockholders'
            
            
            ComprehensiveStock
            
            
            
            Capital
            
            
            Earnings
            
            
            Loss
            
            
            ESOP
            
            
            Treasury
            
            
            Subsidiary
            
            
            Equity
            
            
            IncomeBalance at January 1,
      2009
            
            $
            67
            
            
            
            $
            29,291
            
            
            $
            15,930
            
            
            $
            (1,111
            )
            
            $
            (1,901
            )
            
            $
            (2,955
            )
            
            $
            103
            
            
            $
            39,424Comprehensive
      income:Net
      income
            
            
            -
            
            
            
            
            -
            
            
            
            319
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            38
            
            
            
            357
            
            
            $
            357Unrealized gain on
      securitiesavailable-for-sale,net of tax of
      $275
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            426
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            426
            
            
            
            426Purchase of
      commonstock to be held
      intreasury (15,000
      shares)
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (67
            )
            
            
            -
            
            
            
            (67
            )ESOP shares
      committed to bereleased (4,320
      shares)
            
            
            -
            
            
            
            
            (26
            )
            
            
            -
            
            
            
            -
            
            
            
            43
            
            
            
            -
            
            
            
            -
            
            
            
            17Stock-based
      compensationexpense
            
            
            -
            
            
            
            
            73
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            73Distribution
      to minorityshareholder
            
            
            -
            
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (75
            )
            
            
            (75
            )Total comprehensive
      income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            783Comprehensive
      incomeattributable to
      thenoncontrolling
      interestin
      subsidiary
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            38Comprehensive
      incomeattributable to
      FedFirstFinancial
      Corporation
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            745Balance at March 31,
      2009
            
            $
            67
            
            
            
            $
            29,338
            
            
            $
            16,249
            
            
            $
            (685
            )
            
            $
            (1,858
            )
            
            $
            (3,022
            )
            
            $
            66
            
            
            $
            40,155




See Notes
to the Unaudited Consolidated Financial Statements


4





CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)





For
      the Three MonthsEnded March
      31,(Dollars in
      thousands)
                
                2009
                
                
                2008Cash flows
      from operating activities:Net income of
      FedFirst Financial Corporation
                
                $
                319
                
                
                $
                268Adjustments to
      reconcile net income to net cash providedby operating
      activitiesMinority interest in net income
      of consolidated subsidiary
                
                
                38
                
                
                
                43Provision for loan
      losses
                
                
                160
                
                
                
                59Depreciation
                
                
                134
                
                
                
                122Net gain on sales of
      securities
                
                
                -
                
                
                
                (156
                )Net loss on sale of real estate
      owned
                
                
                -
                
                
                
                3Net accretion (amortization) of
      security premiums and loan costs
                
                
                106
                
                
                
                (20
                )Noncash expense for
      ESOP
                
                
                17
                
                
                
                38Noncash expense for stock-based
      compensation
                
                
                73
                
                
                
                87Noncash benefit plan
      reserve
                
                
                -
                
                
                
                445Increase in bank-owned life
      insurance
                
                
                (74
                )
                
                
                (67
                )Decrease (increase) in other
      assets
                
                
                1,257
                
                
                
                (293
                )(Decrease) increase in other
      liabilities
                
                
                (476
                )
                
                
                60Net
      cash provided by operating activities
                
                
                1,554
                
                
                
                589Cash flows
      from investing activities:Net loan
      repayments (originations)
                
                
                467
                
                
                
                (5,445
                )Proceeds from
      maturities of and principal repayments ofsecurities
      available-for-sale
                
                
                11,585
                
                
                
                5,402Proceeds from
      sales of securities available-for-sale
                
                
                -
                
                
                
                8,766Purchases of
      securities available-for-sale
                
                
                (2,007
                )
                
                
                (28,352
                )Purchases of
      premises and equipment
                
                
                (55
                )
                
                
                (64
                )Acquisition
      of Allsurance Insurance Agency
                
                
                (600
                )
                
                
                -Increase in
      FHLB stock, at cost
                
                
                -
                
                
                
                (885
                )Net
      cash provided by (used in) investing
    activities
                
                
                9,390
                
                
                
                (20,578
                )Cash flows
      from financing activities:Net decrease
      in-short term borrowings
                
                
                (2,400
                )
                
                
                (11,900
                )Proceeds from
      long-term borrowings
                
                
                -
                
                
                
                30,500Repayments of
      long-term borrowings
                
                
                (15,560
                )
                
                
                (4,527
                )Net increase
      in deposits
                
                
                8,644
                
                
                
                6,307Increase
      (decrease) in advance payments by borrowers for taxes and
      insurance
                
                
                204
                
                
                
                (5
                )Purchases of
      common stock held in treasury
                
                
                (67
                )
                
                
                (350
                )Net
      cash (used in) provided by financing
    activities
                
                
                (9,179
                )
                
                
                20,025Net increase in cash and cash
      equivalents
                
                
                1,765
                
                
                
                36Cash and cash equivalents,
      beginning of period
                
                
                7,847
                
                
                
                5,552Cash and cash
      equivalents, end of period
                
                $
                9,612
                
                
                $
                5,588Supplemental
      cash flow information:Cash paid
      for:Interest on deposits and
      borrowings
                
                $
                2,570
                
                
                $
                2,241Income tax
      expense
                
                
                86
                
                
                
                16Real estate
      acquired in settlement of loans
                
                
                22
                
                
                
                160


See Notes
to the Unaudited Consolidated Financial Statements


5







Notes to the Unaudited Consolidated Financial
Statements




Note
1.  Basis of Presentation/Nature of Operations




The
accompanying unaudited Consolidated Financial Statements include the accounts of
FedFirst Financial Corporation, a federally chartered holding company (“FedFirst
Financial” or the “Company”), whose wholly owned subsidiary is First Federal
Savings Bank (the “Bank”), a federally chartered stock savings bank, which owns
FedFirst Exchange Corporation (“FFEC”), a subsidiary of the Bank. FFEC has an
80% controlling interest in Exchange Underwriters, Inc. Exchange Underwriters,
Inc. is an independent insurance agency that offers property and casualty, life,
health, commercial general liability, surety and other insurance products. The
Company is a majority owned subsidiary of FedFirst Financial Mutual Holding
Company (“FFMHC”), a federally chartered mutual holding company. FFMHC has
virtually no operations and assets other than an investment in the Company, and
is not included in these financial statements. All significant intercompany
transactions have been eliminated.




We
operate as a community-oriented financial institution offering residential,
multi-family and commercial mortgages, consumer loans and commercial business
loans as well as a variety of deposit products for individuals and businesses
from nine locations in southwestern Pennsylvania. We conduct insurance brokerage
activities through Exchange Underwriters, Inc. In March 2009, the Company
announced that Exchange
Underwriters, Inc. expanded its operation through the acquisition of the
Allsurance Insurance Agency, which is a full service independent insurance
agency that offers life, health and property and casualty insurance for
individuals and small businesses. The Bank is subject to competition from other
financial institutions and to the regulations of certain federal and state
agencies and undergoes periodic examinations by those regulatory
authorities.




The
unaudited consolidated financial statements were prepared in accordance with
instructions to Form 10-Q and, therefore, do not include information or notes
necessary for a complete presentation of financial position, results of
operations, changes in stockholders’ equity and cash flows in conformity with
accounting principles generally accepted in the United States of America
(“GAAP”). However, all normal recurring adjustments that, in the opinion of
management, are necessary to make the consolidated financial statements not
misleading have been included.  These interim condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto in the Company’s Annual Report on Form
10-K for the year ended December 31, 2008. Certain items previously reported
have been reclassified to conform with the current reporting period’s format.
The results of operations for the three months ended March 31, 2009 are not
necessarily indicative of the results that may be expected for the full year or
any other interim period.




In
preparing financial statements in conformity with GAAP, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and income and expenses during the reporting period.
Actual results could differ significantly from those estimates. Material
estimates that are particularly susceptible to significant change in the near
term relate to determination of the allowance for losses on loans, the valuation
of real estate acquired in connection with foreclosures or in satisfaction of
loans, evaluation of securities for other-than-temporary impairment, goodwill
impairment, and the valuation of deferred tax assets.




Note
2.  Recent Accounting Pronouncements




Effective
Date of FASB Statement No. 157:In February
2008, the FASB issued FASB Staff
Position (“FSP”)157-2,Effective
Date of FASB Statement No. 157, that permits
a one-year deferral in applying the measurement provisions of SFASNo.157 to
non-financial assets and non-financial liabilities (non-financial items) that
are not recognized or disclosed at fair value in an entity’s financial
statements on a recurring basis (at least annually). Therefore, if the change in
fair value of a non-financial item is not required to be recognized or disclosed
in the financial statements on an annual basis or more frequently, the effective
date of application of SFASNo.157 to that
item is deferred until fiscal years beginning after November 15, 2008 and
interim periods within those fiscal years. This deferral does not apply,
however, to an entity that applied SFASNo.157 in interim
or annual financial statements prior to the issuance of FSP 157-2. This
FSP was adopted on January 1, 2009 and did not have a material effect on the
Company’s financial condition or results of
operations.




6







Noncontrolling
Interests in Consolidated Financial Statements – an amendment of Accounting
Research Bulletin (“ARB”) No. 51.In December 2007 the FASB
issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements – an amendment of ARB No.
51. SFAS 160 establishes standards related to the treatment of
noncontrolling interests. A noncontrolling interest, sometimes called a minority
interest, is the portion of equity in a subsidiary not attributable, directly or
indirectly, to a parent. SFAS No. 160 will require noncontrolling interests to
be treated as a separate component of equity, not as a liability or other item
outside permanent equity. The Statement applies to the accounting for
noncontrolling interests and transactions with noncontrolling interest holders
in consolidated financial statements. The objective of this Statement is to
improve the relevance, comparability, and transparency of the financial
information that a reporting entity provides in its consolidated financial
statements. Before this Statement was issued, limited guidance existed for
reporting noncontrolling interests. As a result, considerable diversity in
practice existed. So-called minority interests were reported in the consolidated
statement of financial position as liabilities or in the mezzanine section
between liabilities and equity. This statement is effective for fiscal years and
interim periods within those fiscal years beginning on or after December 15,
2008. Earlier application is prohibited. This statement was adopted on January
1, 2009 and did not have a material effect on the Company’s financial condition
or results of operations.




Determining
Whether a Market Is Not Active and a Transaction Is Not Distressed.In
April 2009, FASB issued FSP No. FAS 157-4, Determining
Fair Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not
Orderly. SFAS No. 157, Fair Value
Measurements, defines fair value as the price that would be received to
sell the asset or transfer the liability in an orderly transaction (that is, not
a forced liquidation or distressed sale) between market participants at the
measurement date under current market conditions. FSP FAS 157-4 provides
additional guidance on determining when the volume and level of activity for the
asset or liability has significantly decreased. The FSP also includes guidance
on identifying circumstances when a transaction may not be considered orderly.
FSP FAS 157-4 provides a list of factors that a reporting entity should evaluate
to determine whether there has been a significant decrease in the volume and
level of activity for the asset or liability in relation to normal market
activity for the asset or liability. When the reporting entity concludes there
has been a significant decrease in the volume and level of activity for the
asset or liability, further analysis of the information from that market is
needed and significant adjustments to the related prices may be necessary to
estimate fair value in accordance with SFAS No. 157.




This
FSP clarifies that when there has been a significant decrease in the volume and
level of activity for the asset or liability, some transactions may not be
orderly. In those situations, the entity must evaluate the weight of the
evidence to determine whether the transaction is orderly. The FSP provides a
list of circumstances that may indicate that a transaction is not orderly. A
transaction price that is not associated with an orderly transaction is given
little, if any, weight when estimating fair value.




This
FSP is effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009.  An entity early adopting FSP FAS 157-4 must also
early adopt FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments.  The Company is currently reviewing
the effect this new pronouncement will have on its financial condition or
results of operations.




Recognition
and Presentation of Other-Than-Temporary Impairments.In April 2009, the
FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition
and Presentation of Other-Than-Temporary
Impairments.   FSP FAS 115-2 and FAS 124-2 clarifies the
interaction of the factors that should be considered when determining whether a
debt security is other-than-temporarily impaired. For debt securities,
management must assess whether (a) it has the intent to sell the security
and (b) it is more likely than not that it will be required to sell the
security prior to its anticipated recovery. These steps are done before
assessing whether the entity will recover the cost basis of the investment.
Previously, this assessment required management to assert it has both the intent
and the ability to hold a security for a period of time sufficient to allow for
an anticipated recovery in fair value to avoid recognizing an
other-than-temporary impairment. This change does not affect the need to
forecast recovery of the value of the security through either cash flows or
market price.




7





In
instances when a determination is made that an other-than-temporary impairment
exists but the investor does not intend to sell the debt security and it is not
more likely than not that it will be required to sell the debt security prior to
its anticipated recovery, FSP FAS 115-2 and FAS 124-2 changes the presentation
and amount of the other-than-temporary impairment recognized in the income
statement. The other-than-temporary impairment is separated into (a) the
amount of the total other-than-temporary impairment related to a decrease in
cash flows expected to be collected from the debt security (the credit loss) and
(b) the amount of the total other-than-temporary impairment related to all
other factors. The amount of the total other-than-temporary impairment related
to the credit loss is recognized in earnings. The amount of the total
other-than-temporary impairment related to all other factors is recognized in
other comprehensive income.




This
FSP is effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009. An entity early adopting FSP FAS 115-2 and FAS 124-2 must
also early adopt FSP FAS 157-4. The Company is currently reviewing the effect
this new pronouncement will have on its financial condition or results of
operations.




Interim
Disclosures about Fair Value of Financial Instruments. In April 2009, the
FASB issued FSP No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments. FSP FAS 107-1 and
APB 28-1 amends SFAS No. 107, Disclosures
about Fair Value of Financial Instruments, to require disclosures about
fair value of financial instruments for interim reporting periods of publicly
traded companies as well as in annual financial statements. This FSP also amends
APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized financial
information at interim reporting periods.




This
FSP is effective for interim and annual reporting periods ending after
June 15, 2009, with early adoption permitted for periods ending after
March 15, 2009.  An entity early adopting FSP FAS 107-1 and APB
28-1 must also early adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2. The
Company is currently reviewing the effect this new pronouncement will have on
its financial condition or results of operations.




8





Note
3.  Securities




The
following table sets forth the amortized cost and fair value of securities
available-for-sale at the dates indicated (dollars in thousands).




Gross
            
            
            GrossAmortized
            
            
            Unrealized
            
            
            Unrealized
            
            
            FairMarch 31,
      2009
            
            Cost
            
            
            Gains
            
            
            Losses
            
            
            ValueGovernment-Sponsored
      Enterprises
            
            $
            1,000
            
            
            $
            4
            
            
            $
            -
            
            
            $
            1,004Municipal
      bonds
            
            
            2,006
            
            
            
            3
            
            
            
            -
            
            
            
            2,009Mortgage-backed
            
            
            39,299
            
            
            
            1,246
            
            
            
            9
            
            
            
            40,536REMICs
            
            
            31,250
            
            
            
            779
            
            
            
            839
            
            
            
            31,190Corporate
      debt
            
            
            3,995
            
            
            
            -
            
            
            
            2,311
            
            
            
            1,684Equities
            
            
            49
            
            
            
            -
            
            
            
            -
            
            
            
            49Total securities
      available-for-sale
            
            $
            77,599
            
            
            $
            2,032
            
            
            $
            3,159
            
            
            $
            76,472December 31,
      2008Government-Sponsored
      Enterprises
            
            $
            9,267
            
            
            $
            99
            
            
            $
            -
            
            
            $
            9,366Mortgage-backed
            
            
            41,359
            
            
            
            708
            
            
            
            87
            
            
            
            41,980REMICs
            
            
            32,590
            
            
            
            318
            
            
            
            525
            
            
            
            32,383Corporate
      debt
            
            
            3,995
            
            
            
            -
            
            
            
            2,340
            
            
            
            1,655Equities
            
            
            49
            
            
            
            -
            
            
            
            -
            
            
            
            49Total securities
      available-for-sale
            
            $
            87,260
            
            
            $
            1,125
            
            
            $
            2,952
            
            
            $
            85,433March 31,
      2008Government-Sponsored
      Enterprises
            
            $
            15,712
            
            
            $
            421
            
            
            $
            -
            
            
            $
            16,133Mortgage-backed
            
            
            57,173
            
            
            
            814
            
            
            
            11
            
            
            
            57,976REMICs
            
            
            26,616
            
            
            
            290
            
            
            
            1,005
            
            
            
            25,901Corporate
      debt
            
            
            3,995
            
            
            
            -
            
            
            
            558
            
            
            
            3,437Equities
            
            
            49
            
            
            
            -
            
            
            
            -
            
            
            
            49Total securities
      available-for-sale
            
            $
            103,545
            
            
            $
            1,525
            
            
            $
            1,574
            
            
            $
            103,496




The
Company reviews its position quarterly to determine if there is an
other-than-temporary impairment on any of its securities. The policy of the
Company is to recognize an other-than-temporary impairment on equity securities
where the fair value has been significantly below cost for three consecutive
quarters. For fixed-maturity investments with unrealized losses due to interest
rates where the Company has the positive intent and ability to hold the
investment for a period of time sufficient to allow a market recovery, declines
in value below cost are not assumed to be other-than-temporary. The Company
evaluates the creditworthiness of the issuers/guarantors as well as the
underlying collateral, if applicable. The Company also monitors the credit
ratings of all securities for downgrades as well as placement on negative
outlook or credit watch. Management may also evaluate other facts and
circumstances that may be indicative of an other-than-temporary impairment
condition.




The
Company invests in and is subject to credit risk related to private label
mortgage-backed securities that are directly supported by underlying mortgage
loans. The Company’s private label mortgage-backed securities are
credit-enhanced, senior tranches of securities in which the subordinate classes
of the securities provide credit support for the senior class of securities.
Losses in the underlying loan pool would generally have to exceed the credit
support provided by the subordinate classes of securities before the senior
class of securities would experience any credit losses. The Company also invests
in corporate debt and is subject to credit risk related to pooled trust
preferred insurance corporation term obligations.




9







The
Company has reviewed its available for sale investment securities at March 31,
2009 and has determined that all unrealized losses are temporary, based on an
evaluation of the creditworthiness of the issuers/guarantors as well as the
underlying collateral, if applicable, and other facts and circumstances. The
Company monitors the credit ratings of all securities for downgrades as well as
placement on negative outlook or credit watch. Also, management evaluates other
facts and circumstances that may be indicative of an other-than-temporary
impairment condition. Additionally, the Company has the ability and the intent
to hold such securities through to recovery of the unrealized losses. The
ability and intent of the Company is demonstrated by the fact that the Company
is well capitalized and has no need to sell these securities.  As a
result of this evaluation, management does not believe it is probable that the
Company will be unable to collect all amounts due according to the contractual
terms of the individual securities. Therefore, the Company does not consider the
investments to be other-than-temporarily impaired at March 31,
2009.




The
following table presents gross unrealized losses and fair value of securities
aggregated by category and length of time that individual securities have been
in a continuous loss position at the dates indicated (dollars in
thousands).




Less
      than 12 months
              
              
              12 months or more
              
              
              TotalNumber
      of
              
              
              Fair
              
              
              Unrealized
              
              
              Number
      of
              
              
              Fair
              
              
              Unrealized
              
              
              Number
      of
              
              
              Fair
              
              
              UnrealizedMarch 31,
      2009
              
              Securities
              
              
              Value
              
              
              Losses
              
              
              Securities
              
              
              Value
              
              
              Losses
              
              
              Securities
              
              
              Value
              
              
              LossesMortgage-backed
              
              
              30
              
              
              $
              1,440
              
              
              $
              9
              
              
              
              2
              
              
              $
              14
              
              
              $
              -
              
              
              
              32
              
              
              $
              1,454
              
              
              $
              9REMICs:Private label
      issuer:Prime
      fixed and adjustable rate
              
              
              3
              
              
              
              1,241
              
              
              
              200
              
              
              
              3
              
              
              
              1,208
              
              
              
              93
              
              
              
              6
              
              
              
              2,449
              
              
              
              293Alt-A
      fixed rate
              
              
              7
              
              
              
              4,516
              
              
              
              532
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7
              
              
              
              4,516
              
              
              
              532Government-sponsored
      enterprises
              
              
              2
              
              
              
              1,504
              
              
              
              13
              
              
              
              1
              
              
              
              269
              
              
              
              1
              
              
              
              3
              
              
              
              1,773
              
              
              
              14Total
      REMICs
              
              
              12
              
              
              
              7,261
              
              
              
              745
              
              
              
              4
              
              
              
              1,477
              
              
              
              94
              
              
              
              16
              
              
              
              8,738
              
              
              
              839Corporate
      debt
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3
              
              
              
              1,684
              
              
              
              2,311
              
              
              
              3
              
              
              
              1,684
              
              
              
              2,311Total securities temporarily
      impaired
              
              
              42
              
              
              $
              8,701
              
              
              $
              754
              
              
              
              9
              
              
              $
              3,175
              
              
              $
              2,405
              
              
              
              51
              
              
              $
              11,876
              
              
              $
              3,159




Less
      than 12 months
              
              
              12
      months or more
              
              
              TotalNumber
      of
              
              
              Fair
              
              
              Unrealized
              
              
              Number
      of
              
              
              Fair
              
              
              Unrealized
              
              
              Number
      of
              
              
              Fair
              
              
              UnrealizedDecember 31,
      2008
              
              Securities
              
              
              Value
              
              
              Losses
              
              
              Securities
              
              
              Value
              
              
              Losses
              
              
              Securities
              
              
              Value
              
              
              LossesMortgage-backed
              
              
              71
              
              
              $
              9,052
              
              
              $
              86
              
              
              
              2
              
              
              $
              14
              
              
              $
              1
              
              
              
              73
              
              
              $
              9,066
              
              
              $
              87REMICs:Private label
      issuer:Prime
      fixed and adjustable rate
              
              
              3
              
              
              
              1,277
              
              
              
              137
              
              
              
              2
              
              
              
              710
              
              
              
              185
              
              
              
              5
              
              
              
              1,987
              
              
              
              322Alt-A
      fixed rate
              
              
              1
              
              
              
              894
              
              
              
              23
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              1
              
              
              
              894
              
              
              
              23Government-sponsored
      enterprises
              
              
              7
              
              
              
              3,406
              
              
              
              180
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              7
              
              
              
              3,406
              
              
              
              180Total
      REMICs
              
              
              11
              
              
              
              5,577
              
              
              
              340
              
              
              
              2
              
              
              
              710
              
              
              
              185
              
              
              
              13
              
              
              
              6,287
              
              
              
              525Corporate
      debt
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              3
              
              
              
              1,655
              
              
              
              2,340
              
              
              
              3
              
              
              
              1,655
              
              
              
              2,340Total securities temporarily
      impaired
              
              
              82
              
              
              $
              14,629
              
              
              $
              426
              
              
              
              7
              
              
              $
              2,379
              
              
              $
              2,526
              
              
              
              89
              
              
              $
              17,008
              
              
              $
              2,952




As
part of the Company’s review of its available-for-sale securities at December
31, 2008, it was determined that 11 private label mortgage-backed securities for
vintages 2005 through 2007 with an unrealized loss of $4.8 million had
other-than-temporary impairment. Of these securities, 9 were significantly
downgraded by the rating agencies in December 2008 with all but one accorded
below investment grade status. In addition to the decrease in fair market value,
the underlying assets reflected further deterioration with respect to
delinquencies, foreclosures and payment speed which identified a potential loss
of principal based on cash flow analysis.




10







Note
4.  Loans




The
following table sets forth the composition of our loan portfolio at the dates
indicated.




March
      31, 2009
                                                        
                                                        December
      31, 2008
                                                        
                                                        March
      31, 2008(Dollars in
      thousands)
                                                        
                                                        Amount
                                                        
                                                        Percent
                                                        
                                                        Amount
                                                        
                                                        Percent
                                                        
                                                        Amount
                                                        
                                                        PercentReal
      estate-mortgage:One-to-four
      family residential
                                                        
                                                        $
                                                        154,044
                                                        
                                                        
                                                        
                                                        65.6
                                                        %
                                                        
                                                        $
                                                        155,871
                                                        
                                                        
                                                        
                                                        65.7
                                                        %
                                                        
                                                        $
                                                        137,827
                                                        
                                                        
                                                        
                                                        70.1
                                                        %Multi-family
                                                        
                                                        
                                                        10,882
                                                        
                                                        
                                                        
                                                        4.6
                                                        
                                                        
                                                        
                                                        10,946
                                                        
                                                        
                                                        
                                                        4.6
                                                        
                                                        
                                                        
                                                        11,085
                                                        
                                                        
                                                        
                                                        5.6Commercial
                                                        
                                                        
                                                        25,651
                                                        
                                                        
                                                        
                                                        10.9
                                                        
                                                        
                                                        
                                                        24,301
                                                        
                                                        
                                                        
                                                        10.3
                                                        
                                                        
                                                        
                                                        15,091
                                                        
                                                        
                                                        
                                                        7.8Total real
      estate-mortgage
                                                        
                                                        
                                                        190,577
                                                        
                                                        
                                                        
                                                        81.1
                                                        
                                                        
                                                        
                                                        191,118
                                                        
                                                        
                                                        
                                                        80.6
                                                        
                                                        
                                                        
                                                        164,003
                                                        
                                                        
                                                        
                                                        83.5Real
      estate-construction:Residential
                                                        
                                                        
                                                        7,059
                                                        
                                                        
                                                        
                                                        3.0
                                                        
                                                        
                                                        
                                                        9,833
                                                        
                                                        
                                                        
                                                        4.2
                                                        
                                                        
                                                        
                                                        5,503
                                                        
                                                        
                                                        
                                                        2.8Commercial
                                                        
                                                        
                                                        3,443
                                                        
                                                        
                                                        
                                                        1.5
                                                        
                                                        
                                                        
                                                        3,443
                                                        
                                                        
                                                        
                                                        1.5
                                                        
                                                        
                                                        
                                                        -Total real
      estate-construction
                                                        
                                                        
                                                        10,502
                                                        
                                                        
                                                        
                                                        4.5
                                                        
                                                        
                                                        
                                                        13,276
                                                        
                                                        
                                                        
                                                        5.7
                                                        
                                                        
                                                        
                                                        5,503
                                                        
                                                        
                                                        
                                                        2.8Consumer:Home
      equity
                                                        
                                                        
                                                        23,099
                                                        
                                                        
                                                        
                                                        9.8
                                                        
                                                        
                                                        
                                                        22,344
                                                        
                                                        
                                                        
                                                        9.4
                                                        
                                                        
                                                        
                                                        19,149
                                                        
                                                        
                                                        
                                                        9.8Loans on
      savings accounts
                                                        
                                                        
                                                        859
                                                        
                                                        
                                                        
                                                        0.4
                                                        
                                                        
                                                        
                                                        886
                                                        
                                                        
                                                        
                                                        0.4
                                                        
                                                        
                                                        
                                                        521
                                                        
                                                        
                                                        
                                                        0.3Home
      improvement
                                                        
                                                        
                                                        223
                                                        
                                                        
                                                        
                                                        0.1
                                                        
                                                        
                                                        
                                                        233
                                                        
                                                        
                                                        
                                                        0.1
                                                        
                                                        
                                                        
                                                        268
                                                        
                                                        
                                                        
                                                        0.1Other
                                                        
                                                        
                                                        528
                                                        
                                                        
                                                        
                                                        0.2
                                                        
                                                        
                                                        
                                                        588
                                                        
                                                        
                                                        
                                                        0.2
                                                        
                                                        
                                                        
                                                        597
                                                        
                                                        
                                                        
                                                        0.3Total
      consumer
                                                        
                                                        
                                                        24,709
                                                        
                                                        
                                                        
                                                        10.5
                                                        
                                                        
                                                        
                                                        24,051
                                                        
                                                        
                                                        
                                                        10.1
                                                        
                                                        
                                                        
                                                        20,535
                                                        
                                                        
                                                        
                                                        10.5Commercial
      business
                                                        
                                                        
                                                        9,151
                                                        
                                                        
                                                        
                                                        3.9
                                                        
                                                        
                                                        
                                                        8,474
                                                        
                                                        
                                                        
                                                        3.6
                                                        
                                                        
                                                        
                                                        6,352
                                                        
                                                        
                                                        
                                                        3.2Total
      loans
                                                        
                                                        $
                                                        234,939
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        236,919
                                                        
                                                        
                                                        
                                                        100.0
                                                        %
                                                        
                                                        $
                                                        196,393
                                                        
                                                        
                                                        
                                                        100.0
                                                        %Net premiums on loans
      purchased
                                                        
                                                        
                                                        119
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        120
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        178Net deferred loan
      costs
                                                        
                                                        
                                                        828
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        850
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        507Loans in
      process
                                                        
                                                        
                                                        (4,421
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (5,899
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (2,550
                                                        )Allowance for loan
      losses
                                                        
                                                        
                                                        (1,953
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (1,806
                                                        )
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        (1,345
                                                        )Loans,
      net
                                                        
                                                        $
                                                        229,512
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        230,184
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        
                                                        $
                                                        193,183




11







Nonperforming
Assets.The following table provides information with respect
to our nonperforming assets at the dates indicated.




March
      31,
            
            
            December31,
            
            
            March
      31,(Dollars in
      thousands)
            
            2009
            
            
            2008
            
            
            2008Nonaccrual
      loans:Real estate -
      mortgage
            
            $
            723
            
            
            $
            632
            
            
            $
            803Consumer
            
            
            94
            
            
            
            4
            
            
            
            23Total
            
            
            817
            
            
            
            636
            
            
            
            826Accruing loans past due 90 days
      or more
            
            
            -
            
            
            
            -
            
            
            
            -Total of
      nonaccrual and 90 days or morepast due loans (nonperforming
      loans)
            
            
            817
            
            
            
            636
            
            
            
            826Real estate
      owned
            
            
            316
            
            
            
            295
            
            
            
            766Total
      nonperforming assets
            
            $
            1,133
            
            
            $
            931
            
            
            $
            1,592Troubled debt
      restructurings
            
            
            -
            
            
            
            -
            
            
            
            -Troubled debt restructurings and
      totalnonperforming
      assets
            
            $
            1,133
            
            
            $
            931
            
            
            $
            1,592Total nonperforming loans to
      total loans
            
            
            0.35
            %
            
            
            0.27
            %
            
            
            0.42
            %Total nonperforming loans to
      total assets
            
            
            0.24
            
            
            
            0.18
            
            
            
            0.25Total nonperforming assets to
      total assets
            
            
            0.33
            
            
            
            0.27
            
            
            
            0.49




Allowance
for loan losses.  The allowance for loan losses is a valuation
allowance for probable losses inherent in the loan portfolio. We evaluate the
need to establish allowances against losses on loans on a quarterly basis. When
additional allowances are necessary, a provision for loan losses is recorded.
The following table summarizes the activity in the allowance for loan losses for
the periods indicated.




Three
      Months Ended
            
            
            Year
      EndedMarch
      31,
            
            
            December
      31,(Dollars in
      thousands)
            
            2009
            
            
            2008
            
            
            2008Allowance at beginning of
      period
            
            $
            1,806
            
            
            $
            1,457
            
            
            $
            1,457Provision for
      loan losses
            
            
            160
            
            
            
            59
            
            
            
            878Charge-offs
            
            
            (14
            )
            
            
            (171
            )
            
            
            (529
            )Recoveries
            
            
            1
            
            
            
            -
            
            
            
            -Net
      charge-offs
            
            
            (13
            )
            
            
            (171
            )
            
            
            (529
            )Allowance at end of
      period
            
            $
            1,953
            
            
            $
            1,345
            
            
            $
            1,806




12







Note
5.  Deposits




The
following table sets forth the balances of our deposit products at the dates
indicated.




March
      31, 2009
            
            
            December
      31, 2008
            
            
            March
      31, 2008(Dollars in
      thousands)
            
            Amount
            
            
            Percent
            
            
            Amount
            
            
            Percent
            
            
            Amount
            
            
            PercentNoninterest-bearing demand
      deposits
            
            $
            14,411
            
            
            
            7.9
            %
            
            $
            12,005
            
            
            
            6.9
            %
            
            $
            10,832
            
            
            
            6.7
            %Interest-bearing demand
      deposits
            
            
            12,520
            
            
            
            6.9
            
            
            
            11,336
            
            
            
            6.6
            
            
            
            11,791
            
            
            
            7.3Savings
      accounts
            
            
            22,813
            
            
            
            12.6
            
            
            
            22,477
            
            
            
            13.0
            
            
            
            23,441
            
            
            
            14.5Money market
      accounts
            
            
            47,295
            
            
            
            26.1
            
            
            
            43,873
            
            
            
            25.4
            
            
            
            18,582
            
            
            
            11.5Certificates of
      deposit
            
            
            84,409
            
            
            
            46.5
            
            
            
            83,113
            
            
            
            48.1
            
            
            
            97,219
            
            
            
            60.0Total
      deposits
            
            $
            181,448
            
            
            
            100.0
            %
            
            $
            172,804
            
            
            
            100.0
            %
            
            $
            161,865
            
            
            
            100.0
            %




The
FDIC is expected to impose a special emergency assessment as of
June 30, 2009 in order to cover losses in its Deposit Insurance
Fund.  Currently, we expect the assessment to
be between 10 and 20 basis points of assessable deposits. If the assessment was
based on deposits at March 31, 2009, the Bank would incur a chargeofapproximately $180,000 to
$365,000.




Note
6.  Borrowings




We
utilize borrowings as a supplemental source of funds for loans and
securities.  The primary source of borrowings are FHLB advances and,
to a limited extent, repurchase agreements. The following table sets forth
information concerning our borrowings for the periods indicated.




Three
      Months
            
            
            Year
            
            
            Three
      MonthsEnded
            
            
            Ended
            
            
            EndedMarch
      31,
            
            
            December
      31,
            
            
            March
      31,(Dollars in
      thousands)
            
            2009
            
            
            2008
            
            
            2008Maximum amount outstanding at any
      month endduring
      the period
            
            $
            127,559
            
            
            $
            135,337
            
            
            $
            121,776Average amounts outstanding
      during the period
            
            
            126,253
            
            
            
            120,704
            
            
            
            109,067Weighted average rate during the
      period
            
            
            3.88
            %
            
            
            3.99
            %
            
            
            4.10
            %Balance outstanding at end of
      period
            
            $
            114,450
            
            
            $
            132,410
            
            
            $
            115,147Weighted average rate at end of
      period
            
            
            4.01
            %
            
            
            3.87
            %
            
            
            3.86
            %




Note
7.  Earnings Per Share




Basic
earnings per common share is calculated by dividing FedFirst Financial’s net
income available to common stockholders by the weighted-average number of common
shares outstanding during the period. Diluted earnings per common share is
computed in a manner similar to basic earnings per common share except that the
weighted-average number of common shares outstanding is increased to include the
incremental common shares (as computed using the treasury stock method) that
would have been outstanding if all potentially dilutive common stock equivalents
were issued during the period. Common stock equivalents include restricted stock
awards and stock options. Anti-dilutive shares are common stock equivalents with
weighted-average exercise prices in excess of the weighted-average market value
for the periods presented. There were no dilution from stock options or awards
for the three months ended March 31, 2009. Unallocated common shares held by the
Employee Stock Ownership Plan (“ESOP”) are not included in the weighted-average
number of common shares outstanding for purposes of calculating both basic and
diluted earnings per common share until they are committed to be
released.




13







Three Months
      EndedMarch
      31,(Dollars in
      thousands, except per share amounts)
            
            2009
            
            
            2008Net income of FedFirst Financial
      Corporation
            
            $
            319
            
            
            $
            268Weighted-average shares
      outstanding:Basic
            
            
            6,077,749
            
            
            
            6,231,354Effect
      of dilutive stock options andrestrictive stock
      awards
            
            
            -
            
            
            
            162Diluted
            
            
            6,077,749
            
            
            
            6,231,516Earnings per
      share:Basic
            
            $
            0.05
            
            
            $
            0.04Diluted
            
            $
            0.05
            
            
            $
            0.04




Note
8.  Fair Value Measurements




SFAS
No. 157 establishes a fair value hierarchy that prioritizes the inputs to
valuation methods used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements).  The three levels of the fair value
hierarchy under SFAS No. 157 are as follows:




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.




The
majority of the Company’s securities are included in Level 2 of the fair value
hierarchy. Fair values were determined by a third party pricing service using
both quoted prices for similar assets, when available, and model-based valuation
techniques that derive fair value based on market-corroborated data, such as
instruments with similar prepayment speeds and default interest rates. In some
instances, the fair value of certain securities cannot be determined using these
techniques due to the lack of relevant market data. As such, these securities
are valued using an alternative technique and classified within Level 3 of the
fair value hierarchy.




At
March 31, 2009, Level 3 includes 12 securities totaling $5.3 million. This
balance is comprised of nine mortgage-backed securities at $3.6 million and
three corporate debt securities at $1.7 million, which are pooled trust
preferred insurance corporation term obligations. The mortgage-backed
securities, which were AAA rated at purchase, do not have an active market and
as such the Company has used an alternative method to determine the fair value
of these securities. The fair value has been determined using a discounted cash
flow model using market assumptions, which generally include cash flow,
collateral and other market assumptions. The corporate debt securities, which
were rated A at purchase and recently downgraded to B+, could not be priced
using quoted market prices, observable market activity or comparable trades, and
the financial market was considered not active. The trust preferred market has
been severely impacted by the lack of liquidity in the credit markets and
concern over the financial services industry. Fair values for trust preferred
securities were obtained from pricing sources with reasonable pricing
transparency, taking into account other unobservable inputs related to the risks
for each issuer. The pooled trust preferred corporate term obligations owned are
collateralized by the trust preferred securities of insurance companies in the
U.S. There has been little or no active trading in these securities; therefore
it was more appropriate to determine fair value using a discounted cash flow
analysis. Determining the appropriate discount rate for the discounted cash flow
analysis combined current and observable market spreads for comparable
structured credit products with specific risks identified within each issue. The
observable market spreads incorporated both credit and liquidity
premiums.




14







The
following tables set forth the fair value hierarchy of securities at March 31,
2009 and December 31, 2008.




(Dollars in
      thousands)
            
            March
      31, 2009
            
            
            December
      31, 2008Significant other observable
      inputs (Level 2)
            
            $
            71,136
            
            
            $
            80,062Significant unobservable inputs
      (Level 3)
            
            
            5,336
            
            
            
            5,371Total
      securities
            
            $
            76,472
            
            
            $
            85,433SignificantUnobservable
      Inputs(Dollars in
      thousands)
            
            (Level
      3)December 31,
      2007
            
            $
            6,390Total
      unrealized gains
            
            
            (2,199
            )Paydowns and
      maturities
            
            
            (307
            )Net transfers
      in (out) of level 3
            
            
            1,487December 31,
      2008
            
            $
            5,371Total
      unrealized gains
            
            
            116Paydowns and
      maturities
            
            
            (151
            )March 31,
      2009
            
            $
            5,336(Dollars in
      thousands)
            
            March
      31, 2009
            
            
            December
      31, 2008The amount of total unrealized
      gains (losses) for the periodincluded in earnings (or changes
      in net assets) attributable tothe change in unrealized gains
      (losses) relating to assets stillheld at period
      indicated
            
            $
            116
            
            
            $
            (2,199
            )




Note
9.  Subsidiary/Segment Reporting




The
consolidated operating results of FedFirst Financial are presented as a single
financial services segment. FedFirst Financial is the parent company of the
Bank, which owns FFEC. FFEC has an 80% controlling interest in Exchange
Underwriters, Inc. Exchange Underwriters, Inc. is managed separately from the
banking and related financial services that the Company offers. Exchange
Underwriters, Inc. is an independent insurance agency that offers property and
casualty, life, health, commercial general liability, surety and other insurance
products. Following is a table of selected financial data for the Company's
subsidiaries and consolidated results for the dates indicated.




15







First
      Federal Savings Bank
            
            
            ExchangeUnderwriters,
      Inc.
            
            
            Other
            
            
            NetEliminations
            
            
            ConsolidatedMarch 31,
      2009Assets
            
            $
            340,896
            
            
            $
            1,217
            
            
            $
            39,331
            
            
            $
            (40,508
            )
            
            $
            340,936Liabilities
            
            
            305,895
            
            
            
            554
            
            
            
            46
            
            
            
            (5,714
            )
            
            
            300,781Stockholders'
      equity
            
            
            35,001
            
            
            
            663
            
            
            
            39,285
            
            
            
            (34,794
            )
            
            
            40,155December 31,
      2008Assets
            
            $
            350,517
            
            
            $
            1,338
            
            
            $
            39,345
            
            
            $
            (41,439
            )
            
            $
            349,761Liabilities
            
            
            316,262
            
            
            
            489
            
            
            
            45
            
            
            
            (6,459
            )
            
            
            310,337Stockholders'
      equity
            
            
            34,255
            
            
            
            849
            
            
            
            39,300
            
            
            
            (34,980
            )
            
            
            39,424March 31,
      2008Assets
            
            $
            326,371
            
            
            $
            1,070
            
            
            $
            26,987
            
            
            $
            (28,638
            )
            
            $
            325,790Liabilities
            
            
            295,325
            
            
            
            379
            
            
            
            45
            
            
            
            (13,441
            )
            
            
            282,308Stockholders'
      equity
            
            
            31,046
            
            
            
            691
            
            
            
            26,942
            
            
            
            (15,197
            )
            
            
            43,482Three Months
      Ended March 31, 2009Total interest
      income
            
            $
            4,564
            
            
            $
            6
            
            
            $
            30
            
            
            $
            (30
            )
            
            $
            4,570Total interest
      expense
            
            
            2,380
            
            
            
            -
            
            
            
            -
            
            
            
            (30
            )
            
            
            2,350Net interest
      income
            
            
            2,184
            
            
            
            6
            
            
            
            30
            
            
            
            -
            
            
            
            2,220Provision for loan
      losses
            
            
            160
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            160Net interest income after
      provision for loan losses
            
            
            2,024
            
            
            
            6
            
            
            
            30
            
            
            
            -
            
            
            
            2,060Noninterest
      income
            
            
            400
            
            
            
            701
            
            
            
            -
            
            
            
            (188
            )
            
            
            913Noninterest
      expense
            
            
            1,961
            
            
            
            382
            
            
            
            55
            
            
            
            -
            
            
            
            2,398Undistributed net loss of
      subsidiary
            
            
            -
            
            
            
            -
            
            
            
            342
            
            
            
            (342
            )
            
            
            -Income (loss) before income tax
      expense (benefit) and noncontrolling interest in net income of
      consolidated subsidiary
            
            
            463
            
            
            
            325
            
            
            
            317
            
            
            
            (530
            )
            
            
            575Income tax expense
      (benefit)
            
            
            83
            
            
            
            137
            
            
            
            (2
            )
            
            
            -
            
            
            
            218Net income
      (loss) before noncontrolling interest in net income of
      consolidated subsidiary
            
            
            380
            
            
            
            188
            
            
            
            319
            
            
            
            (530
            )
            
            
            357Noncontrolling interest in net
      income of consolidated subsidiary
            
            
            38
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            38Net income
      (loss)
            
            $
            342
            
            
            $
            188
            
            
            $
            319
            
            
            $
            (530
            )
            
            $
            319Three Months
      Ended March 31, 2008Total interest
      income
            
            $
            4,295
            
            
            $
            10
            
            
            $
            241
            
            
            $
            (240
            )
            
            $
            4,306Total interest
      expense
            
            
            2,458
            
            
            
            -
            
            
            
            -
            
            
            
            (32
            )
            
            
            2,426Net interest
      income
            
            
            1,837
            
            
            
            10
            
            
            
            241
            
            
            
            (208
            )
            
            
            1,880Provision for loan
      losses
            
            
            59
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            59Net interest income after
      provision for loan losses
            
            
            1,778
            
            
            
            10
            
            
            
            241
            
            
            
            (208
            )
            
            
            1,821Noninterest
      income
            
            
            542
            
            
            
            720
            
            
            
            -
            
            
            
            (217
            )
            
            
            1,045Noninterest
      expense
            
            
            1,936
            
            
            
            359
            
            
            
            59
            
            
            
            -
            
            
            
            2,354Undistributed net loss of
      subsidiary
            
            
            -
            
            
            
            -
            
            
            
            287
            
            
            
            (287
            )
            
            
            -Income (loss) before income tax
      expense (benefit) and noncontrolling interest in net income of
      consolidated subsidiary
            
            
            384
            
            
            
            371
            
            
            
            469
            
            
            
            (712
            )
            
            
            512Income tax expense
      (benefit)
            
            
            54
            
            
            
            155
            
            
            
            (8
            )
            
            
            -
            
            
            
            201Net income (loss) before
      noncontrolling interest in net income of consolidated
      subsidiary
            
            
            330
            
            
            
            216
            
            
            
            477
            
            
            
            (712
            )
            
            
            311Noncontrolling interest in net
      income of consolidated subsidiary
            
            
            43
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            43Net income
      (loss)
            
            $
            287
            
            
            $
            216
            
            
            $
            477
            
            
            $
            (712
            )
            
            $
            268






16







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




This
discussion should be read in conjunction with the unaudited consolidated
financial statements, notes and tables included in this report. For further
information, refer to the consolidated financial statements and notes included
in FedFirst Financial Corporation’s Annual Report on Form 10-K for the year
ended December 31, 2008.




Forward-Looking
Statements




This
report contains certain “forward-looking statements” within the meaning of the
federal securities laws. These statements are not historical facts, rather
statements based on FedFirst Financial’s current expectations regarding its
business strategies, intended results and future performance. Forward-looking
statements are preceded by terms such as “expects,” “believes,” “anticipates,”
“intends” and similar expressions.




Management’s
ability to predict results or the effect of future plans or strategies is
inherently uncertain. Factors which could affect actual results include the
following: interest rate trends; the general economic climate in the market area
in which FedFirst Financial operates, as well as nationwide; FedFirst
Financial’s ability to control costs and expenses; competitive products and
pricing; loan delinquency rates and changes in federal and state legislation and
regulation. Additional factors that may affect our results are discussed in
FedFirst Financial’s Annual Report on Form 10-K under “Item 1A. Risk Factors.”
These factors should be considered in evaluating the forward-looking statements
and undue reliance should not be placed on such statements. FedFirst Financial
assumes no obligation to update any forward-looking statements.




General




FedFirst
Financial Corporation (“FedFirst Financial” or the “Company”) is a federally
chartered savings and loan holding company established in 1999 to be the holding
company for First Federal Savings Bank (“First Federal” or the “Bank”), a
federally chartered savings bank. FedFirst Financial’s business activity is the
ownership of the outstanding capital stock of First Federal. FedFirst Financial
does not own or lease any property, but uses the premises, equipment and other
property of First Federal with the payment of appropriate rental fees, as
required by applicable law and regulations, under the terms of an expense
allocation agreement. In the future, FedFirst Financial may acquire or organize
other operating subsidiaries; however, there are no current plans, arrangements,
agreements or understandings, written or oral, to do
so.




We operate as a
community-oriented financial institution offering residential, multi-family and
commercial mortgages, consumer loans and commercial business loans as well as a
variety of deposit products for individuals and businesses from nine locations
in southwesternPennsylvania. We conduct
insurance brokerage activities through Exchange Underwriters, Inc., an 80%-owned
subsidiary.In March 2009, the Company announced that Exchange
Underwriters, Inc. expanded its operation through the acquisition of the
Allsurance Insurance Agency, which is a full service independent insurance
agency that offers life, health and property and casualty insurance for
individuals and small businesses. The Bank is
subject to competition from other financial institutions and to the regulations
of certain federal and state agencies and undergoes periodic examinations by
those regulatory authorities.




FedFirst
Financial Mutual Holding Company (“FFMHC”) is our federally chartered mutual
holding company parent. As a mutual holding company, FFMHC is a non-stock
company that has as its members the depositors of First Federal. FFMHC does not
engage in any business activity other than owning a majority of the common stock
of FedFirst Financial. So long as we remain in the mutual holding company form
of organization, FFMHC will own a majority of the outstanding shares of FedFirst
Financial.




Our website
address is www.firstfederal-savings.com. Information on our website should not
be considered a part of this Form 10-Q.




Balance
Sheet Analysis




Assets.  Total
assets at March 31, 2009 were $340.9 million, a decrease of $8.8 million, or
2.5%, from total assets of $349.8 million at December 31,
2008.




Securities
available-for-sale decreased $9.0 million, or 10.5%, to $76.5 million at March
31, 2009 compared to $85.4 million at December 31, 2008. The decrease is the
result of $8.3 million of calls on Government-Sponsored Enterprise securities
and paydowns, which was partially offset by the purchase of a $2.0 million
municipal security. In addition, the securities portfolio reflects an unrealized
loss of $1.1 million at March 31, 2009, primarily from corporate debt
securities, compared to $1.8 million at December 31, 2008.




17







Loans,
net, decreased $672,000, or 0.3%, to $229.5 million at March 31, 2009 compared
to $230.2 million at December 31, 2008. The decrease was primarily the result of
paydowns and payoffs on one-to-four family residential real estate loans,
partially offset by growth in commercial real estate, commercial business, and
home equity loans.




Other
assets include approximately $600,000 related to the purchase of the Allsurance
Insurance Agency in March 2009. The valuation to determine the amount of
goodwill and intangible asset related to the purchase is expected to be
finalized in the second quarter of 2009.




Liabilities.  Total
liabilities at March 31, 2009 were $300.8 million, compared to $310.3 million at
December 31, 2008, a decrease of $9.6 million, or
3.1%.




Total
deposits increased $8.6 million, or 5.0%, to $181.4 million at March 31, 2009
compared to $172.8 million at December 31, 2008. The increase in deposits was
primarily in money market, noninterest-bearing demand
deposit and certificates of deposit accounts. Money market account and
certificates of deposit growth were due to the marketing of select promotional
rates. The increase in deposits has provided an opportunity for the Bank to
reduce borrowings.




Borrowings
decreased $18.0 million, or 13.6%, to $114.5 million at March 31, 2009 compared
to $132.4 million at December 31, 2008. Funds generated through deposit growth
and security calls were used to reduce borrowings.




Stockholders’
Equity.Stockholders’ equity was $40.2 million at March 31,
2009, an increase of $731,000  from December 31, 2008. The increase in
stockholders’ equity was primarily due to the $426,000 change in the unrealized
loss position of the securities portfolio, net of tax, and $319,000 in net
income for the three months ended March 31, 2009.




Results
of Operations for the Three Months Ended March 31, 2009 and 2008




Overview.  The
Company had net income of $319,000 for the three months ended March 31, 2009,
compared to $268,000 for the same period in 2008.




Three
      Months Ended March 31,(Dollars
      in thousands)
                                    
                                    2009
                                    
                                    2008Net
      income of FedFirst Financial Corporation
                                    
                                    $
                                    319
                                    
                                    
                                    $
                                    268Return
      on average assets
                                    
                                    
                                    0.37
                                    %
                                    
                                    
                                    0.34
                                    %Return
      on average equity
                                    
                                    
                                    3.20
                                    
                                    
                                    
                                    2.48Average
      equity to average assets
                                    
                                    
                                    11.41
                                    
                                    
                                    
                                    13.54




Net
Interest Income.Net interest income for the three months ended March 31,
2009 increased $340,000 to $2.2 million compared to the three months ended March
31, 2008. Interest rate spread and net interest margin were 2.31% and 2.69%,
respectively, for the three months ended March 31, 2009 compared to 2.01% and
2.50%, respectively, for the three months ended March 31, 2008. The improvement
in interest rate spread and net interest margin is primarily attributed to the
growth in the loan portfolio coupled with lower costs on
deposits.




Interest
income increased $264,000, or 6.1%, to $4.6 million for the three months ended
March 31, 2009 compared to the three months ended March 31, 2008 due to an
increase of $29.8 million in the average balance of interest-earning assets
partially offset by a decrease of 20 basis points in the average yield. Interest
income on loans increased $537,000 due to an increase of $39.4 million in the
average balance, primarily driven by increases in one-to-four family residential
real estate, commercial real estate, commercial business, and home equity loans.
Interest income on securities decreased $177,000 due to a decrease of $12.1
million in the average balance, primarily from calls and paydowns of
Government-sponsored agencies and mortgage-backed securities.




18







Interest
expense decreased $76,000, or 3.1%, to $2.4 million for the three months ended
March 31, 2009 as compared to the three months ended March 31, 2008 due to a
decrease of 50 basis points in cost, partially offset by an increase of $30.5 in
the average balance of interest-bearing liabilities. Interest expense on
deposits decreased $184,000 due to a decrease of 72 basis points in cost,
primarily related to the repricing of money market accounts and maturing
certificates of deposits at lower rates, partially offset by an increase of
$13.3 million in the average balance, primarily in money market accounts.
Interest expense on borrowings increased $108,000 due to an increase of $17.2
million in the average balance, partially offset by a decrease of 22 basis
points in cost related to the repricing of borrowings at lower costs in the
current economic environment.




Average
Balances and Yields.The
following table presents information regarding average balances of assets and
liabilities, the total dollar amounts of interest income and dividends from
average interest-earning assets, the total dollar amounts of interest expense on
average interest-bearing liabilities, and the resulting average yields and
costs. The yields and costs for the periods indicated are derived by dividing
income or expense by the average balances of assets or liabilities,
respectively, for the periods presented and are expressed in annualized rates
(dollars in thousands).




Three Months
      Ended March 31,2009
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  2008Interest
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  InterestAverage
                                  
                                  
                                  and
                                  
                                  
                                  Yield/
                                  
                                  Average
                                  
                                  
                                  and
                                  
                                  
                                  Yield/Balance
                                  
                                  
                                  Dividends
                                  
                                  
                                  Cost
                                  
                                  Balance
                                  
                                  
                                  Dividends
                                  
                                  
                                  CostAssets:Interest-earning
      assets:Loans, net(1)(2)
                                  
                                  $
                                  230,047
                                  
                                  
                                  $
                                  3,355
                                  
                                  
                                  
                                  5.83
                                  %
                                  
                                  $
                                  190,664
                                  
                                  
                                  $
                                  2,818
                                  
                                  
                                  
                                  5.91
                                  %Securities(3)
                                  
                                  
                                  86,657
                                  
                                  
                                  
                                  1,209
                                  
                                  
                                  
                                  5.58
                                  
                                  
                                  
                                  98,732
                                  
                                  
                                  
                                  1,386
                                  
                                  
                                  
                                  5.62Other
      interest-earning assets
                                  
                                  
                                  13,392
                                  
                                  
                                  
                                  6
                                  
                                  
                                  
                                  0.18
                                  
                                  
                                  
                                  10,908
                                  
                                  
                                  
                                  102
                                  
                                  
                                  
                                  3.74Total interest-earning
      assets
                                  
                                  
                                  330,096
                                  
                                  
                                  $
                                  4,570
                                  
                                  
                                  
                                  5.54
                                  
                                  
                                  
                                  300,304
                                  
                                  
                                  $
                                  4,306
                                  
                                  
                                  
                                  5.74Noninterest-earning
      assets
                                  
                                  
                                  19,230
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  19,291Total
      assets
                                  
                                  $
                                  349,326
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  319,595Liabilities
      andStockholders'
      equity:Interest-bearing
      liablities:Interest-bearingdemand
      deposits
                                  
                                  $
                                  11,992
                                  
                                  
                                  $
                                  14
                                  
                                  
                                  
                                  0.47
                                  %
                                  
                                  $
                                  11,899
                                  
                                  
                                  $
                                  14
                                  
                                  
                                  
                                  0.47
                                  %Savings
      accounts
                                  
                                  
                                  22,658
                                  
                                  
                                  
                                  41
                                  
                                  
                                  
                                  0.72
                                  
                                  
                                  
                                  23,111
                                  
                                  
                                  
                                  51
                                  
                                  
                                  
                                  0.88Money market
      accounts
                                  
                                  
                                  45,221
                                  
                                  
                                  
                                  301
                                  
                                  
                                  
                                  2.66
                                  
                                  
                                  
                                  15,269
                                  
                                  
                                  
                                  127
                                  
                                  
                                  
                                  3.33Certificates
      of deposit
                                  
                                  
                                  84,843
                                  
                                  
                                  
                                  768
                                  
                                  
                                  
                                  3.62
                                  
                                  
                                  
                                  101,162
                                  
                                  
                                  
                                  1,116
                                  
                                  
                                  
                                  4.41Total interest-bearing
      deposits
                                  
                                  
                                  164,714
                                  
                                  
                                  
                                  1,124
                                  
                                  
                                  
                                  2.73
                                  
                                  
                                  
                                  151,441
                                  
                                  
                                  
                                  1,308
                                  
                                  
                                  
                                  3.45Borrowings
                                  
                                  
                                  126,253
                                  
                                  
                                  
                                  1,226
                                  
                                  
                                  
                                  3.88
                                  
                                  
                                  
                                  109,067
                                  
                                  
                                  
                                  1,118
                                  
                                  
                                  
                                  4.10Total interest-bearing
      liabilities
                                  
                                  
                                  290,967
                                  
                                  
                                  
                                  2,350
                                  
                                  
                                  
                                  3.23
                                  
                                  
                                  
                                  260,508
                                  
                                  
                                  
                                  2,426
                                  
                                  
                                  
                                  3.73Noninterest-bearing
      liabilities
                                  
                                  
                                  18,514
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  15,815Total
      liabilities
                                  
                                  
                                  309,481
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  276,323Stockholders'
      equity
                                  
                                  
                                  39,845
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  43,272Total liabilities
      andstockholders'
      equity
                                  
                                  $
                                  349,326
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  319,595Net interest
      income
                                  
                                  
                                  
                                  
                                  
                                  $
                                  2,220
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  $
                                  1,880Interest rate spread(4)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  2.31
                                  %
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  2.01
                                  %Net interest margin(5)
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  2.69
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  2.50Average
      interest-earningassets to
      averageinterest-bearing
      liablities
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  113.45
                                  %
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  115.28
                                  %




(1)
              Amount is net of
      deferred loan costs, loans in process and 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.






19







Rate/Volume
Analysis.The
following table sets forth the effects of changing rates and vol­umes on our
net interest income. The volume column shows the effects attributable to changes
in volume (changes in volume multiplied by prior rate). The rate column shows
the effects attribut­able to changes in rate (changes in rate multiplied by
prior volume). Changes related to volume/rate are prorated into volume and rate
components. The total column represents the net change in volume and
rate.




Three Months
      Ended March 31, 2009Compared
      ToThree Months
      Ended March 31, 2008Increase
      (decrease) due to(Dollars in
      thousands)
            
            Volume
            
            
            Rate
            
            
            TotalInterest and
      dividend income:Loans,
      net
            
            $
            575
            
            
            $
            (38
            )
            
            $
            537Securities
            
            
            (167
            )
            
            
            (10
            )
            
            
            (177
            )Other
      interest-earning assets
            
            
            19
            
            
            
            (115
            )
            
            
            (96
            )Total interest-earning
      assets
            
            
            427
            
            
            
            (163
            )
            
            
            264Interest
      expense:Deposits
            
            
            107
            
            
            
            (291
            )
            
            
            (184
            )Borrowings
            
            
            170
            
            
            
            (62
            )
            
            
            108Total interest-bearing
      liablities
            
            
            277
            
            
            
            (353
            )
            
            
            (76
            )Change in net
      interest income
            
            $
            150
            
            
            $
            190
            
            
            $
            340




Provision
for Loan Losses.  The provision for loan losses was $160,000
for the three months ended March 31, 2009 compared to $59,000 for the three
months ended March 31, 2008. The increase in the provision is primarily related
to growth in the loan portfolio, predominantly in one-to-four family
residential, commercial real estate and business, and home equity loans. In
addition, there has been a change in the loan portfolio composition with an
increase as a percent of total loans in commercial real estate and business
loans and a decrease in one-to-four family residential. Current conditions in
the housing and credit markets also contributed to the increase in the
provision. Charge-offs in the current period declined to $14,000 for the three
months ended March 31, 2009 compared to $171,000 for the three months ended
March 31, 2008. The current period charge-offs were related to unsecured
consumer loans. The prior period charge-off was related to the Company taking
possession of a one-to-four family property.




Noninterest
Income.  Noninterest
income decreased $132,000 or 12.6%, to $913,000 for the three months ended March
31, 2009 compared to $1.0 million for the three months ended March 31, 2008. The
decrease is primarily attributable to a gain of $156,000 recognized on the sales
of securities in the prior period.




20







Noninterest
Expense.The following table summarizes noninterest expense
for the periods indicated.




Three
      Months EndedMarch
      31,(Dollars in
      thousands)
            
            2009
            
            
            2008Compensation and employee
      benefits
            
            
            1,458
            
            
            
            1,462Occupancy
            
            
            354
            
            
            
            341FDIC insurance
      premiums
            
            
            9
            
            
            
            6Data
      processing
            
            
            107
            
            
            
            106Professional
      services
            
            
            131
            
            
            
            128Advertising
            
            
            44
            
            
            
            32Stationary, printing and
      supplies
            
            
            35
            
            
            
            28Telephone
            
            
            15
            
            
            
            16Postage
            
            
            36
            
            
            
            38Correspondent bank
      fees
            
            
            42
            
            
            
            43All
      other
            
            
            167
            
            
            
            154Total noninterest
      expense
            
            $
            2,398
            
            
            $
            2,354




Income
Tax Expense.  Income tax expense for the three months ended
March 31, 2009 was $218,000 compared to $201,000 for the same period in
2008.




Liquidity
and Capital Management




Liquidity
Management.  Liquidity is
the ability to meet current and future financial obligations of a short-term
nature. Our primary sources of funds consist of deposit inflows, loan
repayments, maturities and sales of available-for-sale securities and
borrowings. While maturities and scheduled amortization of loans and securities
are predictable sources of funds, deposit flows and mortgage prepayments are
greatly influenced by general interest rates, economic conditions and
competition.




We regularly
adjust our investments in liquid assets based upon our assessment of (1)
expected loan demand, (2) expected deposit flows, (3) yields available on
interest-earning deposits and securities and (4) the objectives of our
asset/liability management policy.




Our
most liquid assets are cash and cash equivalents and interest-bearing deposits.
The levels of these assets depend on our operating, financing, lending and
investing activities during any given period. AtMarch
31, 2009,
cash and cash equivalents totaled$9.6million.At
March 31, 2009, securities
classified as available-for-sale totaled$76.5million,
which provides an additional source of liquidity. In addition, atMarch
31, 2009,the
maximum remaining borrowing capacity at the FHLB of Pittsburgh wasapproximately
$103.3million.




Certificates
of deposit due within one year ofMarch
31, 2009totaled
$39.8million,
or47.1%
of certificates of deposit. If these maturing deposits do not remain with us, we
will be required to seek other sources of funds including other certificates of
deposit and borrowings. We believe, however, based on past experience, that a
significant portion of our maturing certificates of deposit will remain with us.
We have the ability to attract and retain deposits by adjusting the interest
rates offered.




21







The following table summarizes the Company’s
commitments at the date
indicated.




March
      31,(Dollars in
      thousands)
            
            2009Loans in
      process
            
            $
            4,421Unused revolving lines of
      credit
            
            
            2,940Unused commercial business lines
      of credit
            
            
            3,109One-to-four family residential
      commitments
            
            
            1,950Consumer
      commitments
            
            
            429Total
      commitments outstanding
            
            $
            12,849




Capital
Management.  We are subject to various regulatory capital
requirements administered by the Office of Thrift Supervision, including a
risk-based capital measure. The risk-based capital guidelines include both a
definition of capital and a framework for calculating risk-weighted assets by
assigning balance sheet assets and off-balance sheet items to broad risk
categories. At March 31, 2009, we exceeded all of our regulatory capital
requirements and are considered “well capitalized” under regulatory guidelines.
After careful analysis, we determined that existing capital is sufficient to
meet anticipated needs and that it would not be in the best interests of
shareholders to participate in the Capital Purchase Program conducted through
the United States Treasury Department as part of the Troubled Asset Relief
Program.




Off-Balance
Sheet Arrangements.  In the normal course of operations, we
engage in a variety of financial transactions that, in accordance with generally
accepted accounting principles, are not recorded in our financial statements.
These transactions involve, to varying degrees, elements of credit, interest
rate and liquidity risk. Such transactions are used primarily to manage
customers’ requests for funding and take the form of loan commitments and lines
of credit.




For
thethreemonths
endedMarch
31, 2009,
we engaged in no off-balance sheet transactions reasonably likely to have a
material effect on our financial condition, results of operations or cash
flows.




Item 3.  Quantitative and Qualitative Disclosures About
Market Risk.




Not applicable
as the registrant is a smaller reporting company.




Item 4.  Controls and Procedures.




FedFirst
Financial’s management, including FedFirst Financial’s principal executive
officer and principal financial officer, have evaluated the effectiveness of
FedFirst Financial’s “disclosure controls and procedures,” as such term is
defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). Based upon their evaluation, the principal
executive officer and principal financial officer concluded that, as of the end
of the period covered by this report, FedFirst Financial’s disclosure controls
and procedures were effective for the purpose of ensuring that the information
required to be disclosed in the reports that FedFirst Financial files or submits
under the Exchange Act with the Securities and Exchange Commission (the “SEC”)
(1) is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms, and (2) is accumulated and communicated
to FedFirst Financial’s management, including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding
required disclosure.




There
has been no change in FedFirst Financial’s internal control over financial
reporting during the quarter ended March 31, 2009, that has materially affected,
or is reasonably likely to materially affect, FedFirst Financial’s internal
control over financial reporting.




22







PART
II – OTHER INFORMATION




Item 1.  Legal Proceedings.




Periodically,
there have been various claims and lawsuits against us, such as claims to
enforce liens, condemnation proceedings on properties in which we hold security
interests, claims involving the making and servicing of real property loans and
other issues incident to our business. We are not a party to any pending legal
proceedings that we believe would have a material adverse effect on our
financial condition, results of operations or cash
flows.




Item 1A.  Risk Factors.




In
addition to the other information set forth in this report, you should carefully
consider the factors discussed in “Part I, Item 1A. Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2008, which could materially
affect our business, financial condition or future results.  The risks
described in our Annual Report on Form 10-K are not the only risks that we
face.  Additional risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may materially affect our business,
financial condition and/or operating results.




Item 2.  Unregistered Sales of Equity Securities and Use of
Proceeds.




The
Company made the following purchases of its common stock during the three months
ended March 31, 2009.




Total Number
      of Shares
            
            
            Maximum
      NumberofAverage
            
            
            Purchased as
      Part of the
            
            
            Shares that
      May Yet BeTotal Number
      of
            
            
            Price
      Paid
            
            
            Publicly
      Announced
            
            
            Purchased
      Under thePeriod
            
            Shares
      Purchased
            
            
            per
      Share
            
            
            Program(1)
            
            
            Program(1)January
      2009
            
            
            15,000
            
            
            $
            4.49
            
            
            
            15,000
            
            
            
            -




(1)
            On
      May 23, 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 was scheduled to expire on November 30, 2008, but was
      extended to May 31, 2009. On February 6, 2009, the Company announced the
      cancellation of this program.  At the time of cancellation, the
      Company had purchased 85,250 shares of common stock under the program at
      an average price of $5.76.





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.




23







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)




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
  2002




32.2
            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 10-K filed on March 16, 2009.




24







SIGNATURES




In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.






FEDFIRST
      FINANCIAL CORPORATION(Registrant)Date:
                    May
      13, 2009
                    
                    /s/
      John G. RobinsonJohn
      G. RobinsonPresident
      and Chief Executive OfficerDate:
                    May
      13, 2009
                    
                    /s/
      Robert C. Barry Jr.Robert
      C. Barry Jr.Chief
      Financial Officer and Senior Vice President(Principal
      Financial Officer and Chief Accounting Officer)




25