**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**







**FORM
      10-QSB**




(Mark
      One)





x
            QUARTERLY
                REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                OF
                1934





For
      the
      quarterly period ended September 30, 2007




OR





o
            TRANSITION
                REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT





For
      the
      transition period from ______________ to ______________




Commission
      file number: 0-52532





**SUGAR
      CREEK FINANCIAL
      CORP.**


(Exact
      name of small business issuer as specified in its charter)


**United
                  States**
              **74-3210459**(State
                  or other jurisdiction of incorporation or organization)
              (I.R.S.
                  Employer Identification No.)





**28
      West Broadway, Trenton, Illinois 62293-1304**


(Address
      of principal executive offices)





**(618)
      224-9228**


(Issuer’s
      telephone number)




**Not
      Applicable**


(Former
      name, former address and former fiscal year, if changed since last
      report)





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 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
x No
o




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


Yes o No
x





As
      of
      November 8, 2007 there were 906,879 of the registrant’s common stock
      outstanding, $.01 par value per share.





Transitional
      Small Business Disclosure Format (Check one): Yes
o No
x








**SUGAR
      CREEK FINANCIAL CORP.**





**FORM
      10-QSB**





**Index**





***Page
                No.*****PART
                I.FINANCIAL
                INFORMATION**Item
                1.
            
            Financial
                Statements
            
            1Consolidated
                Balance Sheets at September 30, 2007 and March 31, 2007
                (Unaudited)
            
            1Consolidated
                Statements of Earnings for the three and six months ended September
                30,
                2007 and 2006 (Unaudited)
            
            2Consolidated
                Statements of Cash Flows for the six months ended September 30, 2007
                and
                2006 (Unaudited)
            
            3Notes
                to Unaudited Consolidated Financial Statements
            
            4Item
                2.
            
            Management’s
                Discussion and Analysis or Plan of Operation
            
            4Item
                3.
            
            Controls
                and Procedures
            
            11**PART
                II.OTHER
                INFORMATION**Item
                1.
            
            Legal
                Proceedings
            
            12Item
                2.
            
            Unregistered
                Sales of Equity Securities and Use of Proceeds
            
            12Item
                3.
            
            Defaults
                upon Senior Securities
            
            12Item
                4.
            
            Submission
                of Matters to a Vote of Security Holders
            
            12Item
                5.
            
            Other
                Information
            
            12Item
                6.
            
            Exhibits
            
            12**Signatures**





i


**Part
      I. Financial Information**





**Item
      1. Financial Statements** **.**





Sugar
      Creek Financial Corp. (the “Company”) was organized April 3, 2007 following the
      completion of the mutual holding company reorganization of Tempo Bank (the
      “Bank”). After the reorganization and initial public offering, the Company
      became a federally chartered mid-tier stock holding company of the Bank and
      owns
      all of the Bank’s capital stock. The information presented in this report is on
      a consolidated basis for the Company at and for the three and six months ended
      September 30, 2007 and for the unconverted Bank at March 31, 2007 and for the
      three and six months ended September 30, 2006. See note 2 to the unaudited
      consolidated financial statements.





**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Consolidated** **Balance
      Sheets** ***(Unaudited)***


**September
                  30,**
              
              **March
                  31,****Assets**
              
              **2007**
              
              **2007**Cash
                  and due from banks
              
              $
              626,823
              
              
              469,454Federal
                  funds sold
              
              
              2,019,979
              
              
              1,680,880FHLB
                  daily investment
              
              
              1,095,327
              
              
              4,808,373Cash
                  and cash equivalents
              
              
              3,742,129
              
              
              6,958,707Stock
                  in Federal Home Loan Bank of Chicago
              
              
              1,660,145
              
              
              1,660,145Loans
                  receivable, net of allowance for loan lossesof
                  $130,000 and $130,000
              
              
              81,153,521
              
              
              79,920,973Premises
                  and equipment, net
              
              
              971,784
              
              
              866,898Accrued
                  interest receivable:Securities
              
              
              -
              
              
              10,000Loans
              
              
              324,881
              
              
              307,241Other
                  assets
              
              
              90,263
              
              
              617,405Total
                  assets
              
              $
              87,942,723
              
              
              90,341,369**Liabilities
                  and Stockholders' Equity**Deposits
              
              $
              55,819,781
              
              
              64,170,227Accrued
                  interest on deposits
              
              
              220,550
              
              
              244,647Advances
                  from FHLB of Chicago
              
              
              22,000,000
              
              
              19,000,000Advances
                  from borrowers for taxes and insurance
              
              
              122,558
              
              
              275,521Other
                  liabilities
              
              
              195,568
              
              
              161,303Income
                  taxes
              
              
              442,765
              
              
              420,865Total
                  liabilities
              
              
              78,801,222
              
              
              84,272,563Commitments
                  and contingenciesStockholders'
                  equity:Common
                  stock, 906,879 shares $.01 par value per share
              
              
              9,069
              
              
              -Additional
                  paid-in capital
              
              
              3,342,804
              
              
              -Common
                  stock acquired by employee stock ownership plan
              
              
              (339,690
              )
              
              -Retained
                  earnings - substantially restricted
              
              
              6,129,318
              
              
              6,068,806Total
                  stockholders' equity
              
              
              9,141,501
              
              
              6,068,806Total
                  liabilities and stockholders' equity
              
              $
              87,942,723
              
              
              90,341,369




See
        accompanying notes to consolidated financial statements.




1




**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Consolidated
      Statements of Earnings**


**Three
                  Months Ended**
                **September
                  30,**
              
              **Six
                  Months Ended**
                **September
                  30,****2007**
              
              **2006**
              
              **2007**
              
              **2006**Interest
                  income:
              
              *(Unaudited)*
              
              *(Unaudited)*Loans
                  receivable
              
              $
              1,205,816
              
              
              1,097,453
              
              $
              2,397,652
              
              
              2,103,540Securities
              
              
              4,551
              
              
              21,122
              
              
              13,051
              
              
              33,099Other
                  interest-earning assets
              
              
              27,216
              
              
              47,999
              
              
              64,077
              
              
              79,894Total
                  interest income
              
              
              1,237,583
              
              
              1,166,574
              
              
              2,474,780
              
              
              2,216,533Interest
                  expense:Deposits
              
              
              496,674
              
              
              496,229
              
              
              1,012,799
              
              
              962,479Advances
                  from FHLB
              
              
              248,651
              
              
              175,366
              
              
              465,695
              
              
              294,729Total
                  interest expense
              
              
              745,325
              
              
              671,595
              
              
              1,478,494
              
              
              1,257,208Net
                  interest income
              
              
              492,258
              
              
              494,979
              
              
              996,286
              
              
              959,325Provision
                  (credit) for loan losses
              
              
              -
              
              
              10,548
              
              
              -
              
              
              (4,452
              )Net
                  interest income after provision (credit)for
                  loan losses
              
              
              492,258
              
              
              484,431
              
              
              996,286
              
              
              963,777Noninterest
                  income:Loan
                  service charges
              
              
              7,243
              
              
              3,777
              
              
              11,376
              
              
              8,042Service
                  charges on deposit accounts
              
              
              33,411
              
              
              24,154
              
              
              63,306
              
              
              41,563Gain
                  on sale of investment in service bureau
              
              
              -
              
              
              -
              
              
              -
              
              
              18,492Other
              
              
              3,953
              
              
              2,984
              
              
              7,309
              
              
              5,375Total
                  noninterest income
              
              
              44,607
              
              
              30,915
              
              
              81,991
              
              
              73,472Noninterest
                  expense:Compensation
                  and benefits
              
              
              274,834
              
              
              240,018
              
              
              592,824
              
              
              529,119Occupancy
                  expense
              
              
              25,467
              
              
              23,641
              
              
              44,857
              
              
              43,071Equipment
                  and data processing
              
              
              82,096
              
              
              72,951
              
              
              158,397
              
              
              141,887Federal
                  deposit insurance premiums
              
              
              1,851
              
              
              1,862
              
              
              3,684
              
              
              3,632Advertising
              
              
              9,498
              
              
              15,202
              
              
              16,569
              
              
              27,661Supplies
                  expense
              
              
              5,958
              
              
              9,065
              
              
              19,789
              
              
              22,584Other
              
              
              70,019
              
              
              56,848
              
              
              141,973
              
              
              111,193Total
                  noninterest expense
              
              
              469,723
              
              
              419,587
              
              
              978,093
              
              
              879,147Earnings
                  before income taxes
              
              
              67,142
              
              
              95,759
              
              
              100,184
              
              
              158,102Income
                  taxes
              
              
              26,479
              
              
              37,790
              
              
              39,672
              
              
              62,843Net
                  earnings
              
              $
              40,663
              
              
              57,969
              
              $
              60,512
              
              
              95,259Earnings
                  per share
              
              $
              0.05
              
              
              N/A
              
              $
              0.07
              
              
              N/ADividends
                  per share
              
              $
              0.00
              
              
              N/A
              
              $
              0.00
              
              
              N/A




See
        accompanying notes to consolidated financial statements.
  2


**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Consolidated** **Statements
      of Cash Flows**


**(Unaudited)**


**Six
                  Months Ended****September
                  30,****2007**
              
              **2006**Cash
                  flows from operating activities:Net
                  earnings
              
              $
              60,512
              
              
              95,259Adjustments
                  to reconcile net earnings to netcash
                  provided by (used for) operating activities:Depreciation
              
              
              38,063
              
              
              44,122ESOP
                  expense
              
              
              16,095
              
              
              -Amortization
                  of deferred loan fees, net
              
              
              (10,849
              )
              
              (10,722
              )Provision
                  (credit) for loan losses
              
              
              -
              
              
              (4,452
              )Decrease
                  (increase) in accrued interest receivable
              
              
              (7,640
              )
              
              (7,858
              )Decrease
                  in other assets
              
              
              527,142
              
              
              94,226Increase
                  (decrease) in:Accrued
                  interest on deposits
              
              
              (24,097
              )
              
              41,301Other
                  liabilities
              
              
              34,265
              
              
              (6,100
              )Income
                  taxes
              
              
              21,900
              
              
              6,910Net
                  cash provided by (used for) operating activities
              
              
              655,391
              
              
              252,686Cash
                  flows from investing activities:Net
                  change in loans receivable
              
              
              (1,221,699
              )
              
              (7,399,564
              )Redemption
                  of FHLB stock
              
              
              -
              
              
              815,355Purchase
                  of premises and equipment
              
              
              (142,949
              )
              
              (2,000
              )Net
                  cash provided by (used for) investing activities
              
              
              (1,364,648
              )
              
              (6,586,209
              )Cash
                  flows from financing activities:Net
                  increase (decrease) in deposits
              
              
              (8,350,446
              )
              
              814,467Increase
                  (decrease) in advances fromborrowers
                  for taxes and insurance
              
              
              (152,963
              )
              
              (187,532
              )Proceeds
                  from advances from FHLB
              
              
              19,000,000
              
              
              5,000,000Repayment
                  of advances from FHLB
              
              
              (16,000,000
              )
              
              -Proceeds
                  from sale of common stock, net
              
              
              2,996,088
              
              
              -Net
                  cash provided by (used for) financing activities
              
              
              (2,507,321
              )
              
              5,626,935Net
                  increase (decrease) in cash and cash equivalents
              
              
              (3,216,578
              )
              
              (706,588
              )Cash
                  and cash equivalents at beginning of period
              
              
              6,958,707
              
              
              5,110,683Cash
                  and cash equivalents at end of period
              
              $
              3,742,129
              
              
              4,404,095Supplemental
                  disclosures-cash paid during the period for:Interest
                  on deposits and advances from FHLB
              
              $
              1,478,495
              
              
              1,320,184Federal
                  and state income taxes
              
              
              39,672
              
              
              19,000Real
                  estate and repossessions acquired in settlement of loans
              
              $
              -
              
              
              -




See
        accompanying notes to consolidated financial statements.


3




**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Notes
      to the Unaudited Consolidated Financial Statements**


**September
      30, 2007**





**(1)**  **Basis
      of Presentation**





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with instructions for Form 10-QSB and, therefore, do not include
      all
      disclosures necessary for a complete presentation of the financial statements
      in
      conformity with U.S. generally accepted accounting principles. However, all
      adjustments that are, in the opinion of management, necessary for the fair
      presentation of the interim financial statements have been included. Such
      adjustments were of a normal recurring nature. The results of operations for
      the
      three and six month periods ended September 30, 2007 are not necessarily
      indicative of the results that may be expected for the entire year or any other
      interim period.





In
      preparing financial statements in conformity with U.S. generally accepted
      accounting principles, 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.





**(2)**  **Mutual
      Holding Company Reorganization and Minority Stock Issuance**





Sugar
      Creek Financial Corp. was organized as a federal corporation at the direction
      of
      the Bank in connection with the mutual holding company reorganization of the
      Bank. The reorganization was completed on April 3, 2007. In the reorganization,
      the Company sold 45% of its outstanding shares of common stock (408,095 shares)
      to the public, and issued 55% of its outstanding shares of common stock (498,784
      shares) to Sugar Creek MHC, the mutual holding company of the Bank. The Company
      loaned $355,490 to a trust for the Employee Stock Ownership Plan (“the ESOP”)
      enabling the ESOP to purchase 35,549 shares of common stock in the offering
      for
      the benefit of the Bank’s employees. In addition, a contribution of $50,000 was
      made to capitalize Sugar Creek MHC. Costs incurred in connection with the common
      stock offering were recorded as a reduction of the proceeds from the offering
      and totaled $679,371.





**** **(3)**  **Earnings
      Per Share**





When
      presented, basic earnings per share are computed by dividing income available
      to
      common stockholders by the weighted average number of common shares outstanding
      for the period. Diluted earnings per share reflect the potential dilution that
      could occur if securities or other contracts to issue common stock were
      exercised or converted into common stock or resulted in the issuance of common
      stock that then shared in the earnings of the entity. Because the Company did
      not exist as of September 30, 2006 or for the period April 1, 2007 through
      April
      2, 2007, per share earnings data is not meaningful for such periods and is
      therefore not presented.





Earnings
      per share for the three months ended September 30, 2007 is based on total shares
      outstanding of 906,879 less unallocated ESOP shares of 34,364, or 872,515
      shares. Earnings per share for the period April 3, 2007 through September 30,
      2007 is based on total shares outstanding of 906,879 less unallocated ESOP
      shares of 34,759, or 872,120 shares.





**Item
      2. Management’s Discussion and Analysis or Plan of
      Operation**





Management’s
      discussion and analysis of the financial condition and results of operations
      at
      and for the three and six months ended September 30, 2007 and 2006 is intended
      to assist in understanding our financial condition and results of operations.
      The information contained in this section should be read in conjunction with
      the
      Unaudited Financial Statements and the notes thereto, appearing in Part I,
      Item
      1 of this report.




4




**Forward-Looking
      Statements**





This
      quarterly report contains forward-looking statements that are based on
      assumptions and may describe our future plans, strategies and expectations.
      These forward-looking statements are generally identified by use of the words
      “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar
      expressions.





Our
      ability to predict results or the actual effect of future plans or strategies
      is
      inherently uncertain. Factors which could have a material adverse effect on
      our
      operations include, but are not limited to, changes in interest rates, national
      and regional economic conditions, legislative and regulatory changes, monetary
      and fiscal policies of the U.S. government, including policies of the U.S.
      Treasury and the Federal Reserve Board, the quality and composition of our
      loan
      or investment portfolios, demand for loan products, deposit flows, competition,
      demand for financial services in our market area, changes in real estate market
      values in our area, and changes in relevant accounting principles and
      guidelines.





These
      risks and uncertainties should be considered in evaluating forward-looking
      statements and undue reliance should not be placed on such statements. Except
      as
      required by applicable law or regulation, we do not undertake, and specifically
      disclaim any obligation, to release publicly the result of any revisions that
      may be made to any forward-looking statements to reflect events or circumstances
      after the date of the statements or to reflect the occurrence of anticipated
      or
      unanticipated events.





**General**





Sugar
      Creek Financial Corp. is the holding company for Tempo Bank. Tempo Bank operates
      from two offices in Trenton and Breese, Illinois. Tempo Bank is engaged
      primarily in the business of attracting deposits from the general public and
      using such funds to originate a variety of consumer and business loans.





**Critical
      Accounting Policy**





**Allowance
      for Loan Losses.** We
      consider the allowance for loan losses to be a critical accounting policy.
      The
      allowance for loan losses is the amount estimated by management as necessary
      to
      cover probable losses inherent in the loan portfolio at the balance sheet date.
      The allowance is established through the provision for loan losses, which is
      charged to income. Determining the amount of the allowance for loan losses
      necessarily involves a high degree of judgment. Among the material estimates
      required to establish the allowance are: loss exposure at default; the amount
      and timing of future cash flows on impacted loans; value of collateral; and
      determination of loss factors to be applied to the various elements of the
      portfolio. All of these estimates are susceptible to significant change.
      Management reviews the level of the allowance at least monthly and establishes
      the provision for loan losses based upon an evaluation of the portfolio, past
      loss experience, current economic conditions and other factors related to the
      collectibility of the loan portfolio. Although we believe that we use the best
      information available to establish the allowance for loan losses, future
      adjustments to the allowance may be necessary if economic conditions differ
      substantially from the assumptions used in making the evaluation. In addition,
      the Office of Thrift Supervision, as an integral part of its examination
      process, periodically reviews our allowance for loan losses. Such agency may
      require us to recognize adjustments to the allowance based on its judgments
      about information available to it at the time of its examination. A large loss
      could deplete the allowance and require increased provisions to replenish the
      allowance, which would adversely affect earnings.




5


**Balance
      Sheet Analysis**





**Overview.** Total
      assets at September 30, 2007 were $87.9 million compared to $90.3 million at
      March 31, 2007, a decrease of $2.4 million or 2.7%. The decrease in cash and
      cash equivalents of $3.2 million was used to fund a portion of deposit account
      withdrawals.





**Loans.** Loans,
      net of allowance for loan losses, increased by $1.2 million to $81.2 million
      at
      September 30, 2007 from $79.9 million at March 31, 2007. Nonaccrual loans at
      September 30, 2007 amounted to $1.054 million compared to $728,000 at March
      31,
      2007. Nonaccrual loans at September 30, 2007 were made up of $1.024 million
      single family loans and $30,000 of consumer loans. The composition at March
      31,
      2007 was $698,000 of single family loans and $30,000 of consumer loans. There
      were no loans 90 days or more past due and still accruing or other nonperforming
      assets at either date.





**Nonperforming
                Assets****September
                30,**
            
            **March
                31,**(Dollars
                in thousands)
            
            **2007**
            
            **2007**Nonaccrual
                loans:Residential
                real estate
            
            $
            1,024
            
            $
            698Commercial
                real estate
            
            
            —
            
            
            —Commercial
            
            
            —
            
            
            —Consumer
            
            
            30
            
            
            30Total
            
            
            1,054
            
            
            728Total
                nonperforming assets
            
            
            1,054
            
            
            728Total
                nonperforming loans to total loans
            
            
            1.30
            %
            
            0.91
            %Total
                nonperforming loans to total assets
            
            
            1.20
            %
            
            0.83
            %Total
                nonperforming assets and troubled debt restructurings to total
                assets
            
            
            1.20
            %
            
            0.83
            %




**Investments.** The Bank
      is a member of the Federal Home Loan Bank of Chicago (FHLBC), from which we
      borrow to fund our operations. As a member, we are required to own stock in
      the
      FHLBC. In addition, we maintain excess or voluntary stock, which is stock held
      in excess of the amount required as a condition of membership or for borrowings.
      On October 10, 2007, the FHLBC entered into a consensual cease and desist order
      with the Federal Housing Finance Board Office of Supervision which limits the
      ability of the FHLBC to redeem excess or voluntary stock or to pay dividends.
      On
      October 30, 2007, the board of directors of the FHLBC determined that it would
      not declare a dividend for the third quarter of 2007. As of September 30,
      2007, we owned $1.66 million of FHLBC stock, of which $560,100 was considered
      excess or voluntary stock. Based on the liquidity needs of Tempo Bank and
      subject to the stock redemption guidelines of the FHLBC, Tempo Bank expects
      to
      request redemption of the majority of its excess or voluntary stock. For the
      six
      months ended September 30, 2007 and 2006, the Bank recognized $13,051 and
      $33,099, respectively, in dividend income from the FHLBC.




**Deposits** .
      Deposit
      balances decreased $8.4 million or 13.0% to $55.8 million at September 30,
      2007
      from $64.2 million at March 31, 2007. Deposits decreased, in part, due to
      completion of the reorganization and transfer of proceeds held as deposits
      at
      March 31, 2007 to stockholders’ equity effective April 3, 2007. The remainder of
      the decrease in deposits reflects the competitive market from banks and other
      financial services firms. During the period, depositors reinvested rate
      sensitive money from core deposits as well as from maturing certificates into
      higher-yielding, shorter term certificates.




**Borrowings** .
      We use
      short-term, cash equivalent FHLB advances as an additional source of liquidity.
      FHLB advances increased $3.0 million, or 15.8%, to $22.0 million at September
      30, 2007 from $19.0 million at March 31, 2007. ****





6


**Results
      of Operations for the Three Months Ended September 30, 2007 and
      2006.**





**General.** **** Net
      earnings for the three months ended September 30, 2007 were $40,700, a decrease
      of $17,300 from the three months ended September 30, 2006. The decrease in
      net
      earnings was primarily caused by higher noninterest expense, partially offset
      by
      higher noninterest income and lower provision for loan losses.





**Total
      Interest Income.** **** Total
      interest income increased $71,000 to $1.2 million for the three months ended
      September 30, 2007 from $1.1 million for the same period ended September 30,
      2006. Interest income on loans increased $108,400 as a result of a higher
      average balance of loans and a higher average yield on loans, partially offset
      by lower dividends on FHLB stock and lower earnings on other interest-earning
      assets.





**Total
      Interest Expense** ***.*** ****** Total
      interest expense increased by $73,700 to $745,300 for the three months ended
      September 30, 2007 from $671,600 for the three months ended September 30, 2006.
      The increase resulted primarily from an increase in interest on FHLB advances
      due to a higher average balance.





**Net
      Interest Income** ***.*** Net
      interest income decreased $2,700 to $492,300 for the three months ended
      September 30, 2007 from $495,000 for the three months ended September 30, 2006.




**Provision
      for Loan Losses.** We did
      not record a provision for loan losses in the three months ended September 30,
      2007. We establish provisions for loan losses which are charged to operations
      at
      a level we believe to be appropriate to our risk profile. These provisions
      represent management’s best estimate of probable loan losses in the portfolio.
      In evaluating the allowance for loan losses, management considers historical
      loss experience, the composition of the loan portfolio, adverse situations
      that
      might impact a borrower’s ability to repay the loan, the value of the underlying
      collateral, and other information.




**Noninterest
      Income.** Noninterest income includes service charges on deposit accounts, loan service
      charges, and other income. Total noninterest income increased for the three
      month period ended September 30, 2007 to $44,600 from $30,900 for the three
      months ended September 30, 2006. The Bank instituted a new overdraft privilege
      program for its transaction account customers. As the program is just starting
      to gain acceptance and use, the income generated from this program is expected
      to gradually improve in the future.




**Noninterest
      Expense** ***.*** Noninterest expense includes salaries and employee benefits, equipment and
      data
      processing, occupancy and other expenses. Total noninterest expense increased
      by
      $50,100 to $469,700 for the three months ended September 30, 2007 from $419,600
      for the three months ended September 30, 2006. Compensation and benefits
      increased due to higher salary levels, ESOP expenses and health care cost.
      Equipment and data processing expense increased to $82,100 for the three months
      ended September 30, 2007 from $73,000 for the three months ended September
      30,
      2006 due to higher outside service bureau costs. Other noninterest expense
      increased primarily as a result of higher professional fees and costs associated
      with the Company’s status as a public entity.




**Income
      Taxes.** Income
      taxes declined $11,300 to $26,500 for the three months ended September 30,
      2007
      from $37,800 for the three months ended September 30, 2006. The decrease in
      tax
      expense is directly attributable lower earnings before income taxes.




7




**Results
      of Operations for the Six Months Ended September 30, 2007 and
      2006.**





**General.** Net
      earnings for the six months ended September 30, 2007 were $60,500, a decrease
      of
      $34,700 from the six months ended September 30, 2006. The decrease in net
      earnings was primarily the result of an increase in noninterest expense that
      was
      offset by an increase in net interest income, an increase in noninterest income
      and a decrease in income tax expense.





The
      following table summarizes average balances and average yields and costs for
      the
      six months ended September 30, 2007 and 2006.





**Six
                Months Ended September 30,****2007**
            
            **2006****(Dollars
                in thousands)**
            
            **Average**
              **Balance**
            
            **Interest**
              **and**
              **Dividends**
            
            **Yield/**
              **Cost**
            
            **Average**
              **Balance**
            
            **Interest**
              **and**
              **Dividends**
            
            **Yield/**
              **Cost****Assets:**Interest-earning
                assets:Loans
            
            $
            80,830
            
            $
            2,398
            
            
            5.93
            %
            $
            72,223
            
            $
            2,103
            
            
            5.83
            %Stock
                in FHLB of Chicago
            
            
            1,660
            
            
            13
            
            
            1.57
            
            
            2,366
            
            
            33
            
            
            2.80Other
                interest-earning assets
            
            
            2,536
            
            
            64
            
            
            5.05
            
            
            2,766
            
            
            80
            
            
            5.78Total
                interest-earning assets
            
            
            85,026
            
            
            2,475
            
            
            5.82
            
            
            77,355
            
            
            2,216
            
            
            5.73Noninterest-earning
                assets
            
            
            2,259
            
            
            
            
            
            
            
            
            2,118Total
                assets
            
            
            87,285
            
            
            
            
            
            
            
            
            79,473**Liabilities
                and Stockholders’ Equity**Total
                interest-bearing deposits
            
            
            54,657
            
            
            1,013
            
            
            3.71
            
            
            57,982
            
            
            962
            
            
            3.32FHLB
                advances
            
            
            20,167
            
            
            466
            
            
            4.62
            
            
            12,571
            
            
            295
            
            
            4.69Other
                borrowings
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —
            
            
            —Total
                interest-bearing liabilities
            
            
            74,824
            
            
            1,479
            
            
            3.95
            
            
            70,553
            
            
            1,257
            
            
            3.56Noninterest-bearing
                deposit accounts
            
            
            2,326
            
            
            
            
            
            
            
            
            2,138Other
                noninterest-bearing liabilities
            
            
            1,039
            
            
            
            
            
            
            
            
            785Total
                liabilities
            
            
            78,189
            
            
            
            
            
            
            
            
            73,476Stockholders’
                equity
            
            
            9,096
            
            
            
            
            
            
            
            
            5,997Total
                liabilities and stockholders’equity
            
            $
            87,285
            
            
            
            
            
            
            
            $
            79,473Net
                interest income
            
            
            
            
            $
            996
            
            
            
            
            
            
            
            $
            959




**Total
      Interest Income.** Total
      interest income increased $258,200 to $2.5 million for the six months ended
      September 30, 2007 from $2.2 million for the same period ended September 30,
      2006. Interest income on loans increased $294,100 due to a higher average
      balance of loans and a higher average yield on loans, partially offset by lower
      dividends on securities and interest on other interest-earning assets.





**Total
      Interest Expense** ***.*** Total
      interest expense increased by $221,300 to $1.5 million for the six months ended
      September 30, 2007 from $1.3 million for the six months ended September 30,
      2006. The increase resulted primarily from an increase in interest expense
      on
      deposits of $50,300 and an increase in interest on FHLB advances of $171,000
      for
      the six months ended September 30, 2007 due to higher average rates on deposits
      and advances.





**Net
      Interest Income** ***.*** Net
      interest income increased $37,000 to $996,300 for the six months ended September
      30, 2007 from $959,300 for the six months ended September 30, 2006.




8




**Provision
      for Loan Losses.** We did
      not record a provision for loan losses in the six months ended September 30,
      2007. We establish provisions for loan losses which are charged to operations
      at
      a level we believe to be appropriate to our risk profile. These provisions
      represent management’s best estimate of probable loan losses in the portfolio.
      In evaluating the allowance for loan losses, management considers historical
      loss experience, the composition of the loan portfolio, adverse situations
      that
      might impact a borrower’s ability to repay the loan, the value of the underlying
      collateral, and peer group information and industry loss
      statistics.





**Analysis
                of Loan Loss Experience****Six
                Months Ended**
              **September
                30,**(Dollars
                in thousands)
            
            **2007**
            
            **2006**Allowance
                at beginning of period
            
            $
            130
            
            $
            130Provision
                (recovery of) for loan losses
            
            
            —
            
            
            (4
            )Charge-offs
            
            
            —
            
            
            (11
            )Recoveries
            
            
            —
            
            
            15Net
                recovery (charge-offs)
            
            
            —
            
            
            4Allowance
                at end of period
            
            $
            130
            
            $
            130Allowance
                to nonperforming loans
            
            
            12.33
            %
            
            11.13
            %Allowance
                to total loans outstanding at the end of the period
            
            
            0.16
            
            
            0.18Net
                charge-offs (recoveries) to average loans outstanding
              during
                the period
            
            
            —
            
            
            —




**Noninterest
      Income** ***.*** Noninterest income includes service charges on deposit accounts, loan servicing
      charges, and other income. Total noninterest income increased $8,500 for the
      six
      month period ended September 30, 2007 to $82,000 from $73,500 for the six months
      ended September 30, 2006. The six months ended September 30, 2006 included
      a
      non-recurring gain on sale of stock in a service bureau of $18,500. During
      the
      six month period ended September 30, 2007 the Bank instituted a new overdraft
      privilege program for its transaction accounts. As a result, service charges
      on
      deposit accounts increased to $63,300 for the six months ended September 30,
      2007 from $41,600 for the six months ended September 30, 2006. As the program
      is
      still in the beginning stages, we anticipate wider acceptance and use as the
      product matures. Income generated from this program is expected to gradually
      improve in the future.




**Noninterest
      Expense** ***.*** Noninterest expense includes salaries and employee benefits, equipment and
      data
      processing, occupancy and other expenses. Total noninterest expense increased
      to
      $985,000 for the six months ended September 30, 2007 from $879,000 for the
      six
      months ended September 30, 2006. This increase was due to increases in
      compensation, ESOP expenses, employee health care, corporate insurance, higher
      equipment and data processing costs, and higher professional fees.




**Income
      Taxes** ***.*** Income
      taxes decreased $23,200 to $39,700 for the six months ended September 30, 2007
      from $62,800 for the six months ended September 30, 2006. The reduction in
      tax
      expense is directly attributable to lower earnings before income taxes for
      the
      six months ended September 30, 2007 of $100,200 versus $158,100 for the six
      months ended September 30, 2006.




9





**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 of and payments on investment securities and borrowings
      from the FHLBC. 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. The levels of these assets depend
      on our operating, financing, lending and investing activities during any given
      period. At September 30, 2007, cash and cash equivalents totaled $3.7 million.
      In addition, at September 30, 2007, we had arrangements to borrow up to $30.5
      million from the FHLBC. On September 30, 2007, we had $22.0 million of advances
      outstanding.





A
      significant use of our liquidity is the funding of loan originations. At
      September 30, 2007, we had no loan commitments outstanding. Historically, many
      of the commitments expire without being fully drawn; therefore, the total
      commitment amounts do not necessarily represent future cash requirements.
      Another significant use of our liquidity is the funding of deposit withdrawals.
      Certificates of deposit due within one year of September 30, 2007 totaled $29.8
      million, or 76.8% of certificates of deposit. Although this is a smaller
      percentage of certificates of deposit that mature within one year than last
      quarter, it continues to reflect customers’ hesitancy to invest their funds for
      longer periods given current uncertainties about the interest rate environment.
      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.
      With the recent action taken by the Federal Reserve’s Federal Open Market
      Committee to lower the Fed funds and Discount Window rates, we believe we can
      attract new money deposits with targeted pricing and begin to reverse a
      significant portion of our certificates of deposit outflows of recent periods.
      The local deposit market is extremely competitive with both regional and
      national banking institutions resulting in a very rate sensitive time deposit
      base. We have the ability to attract and retain deposits by adjusting the
      interest rates offered.





Our
      primary investing activity is the origination of loans. Our primary financing
      activities consist of activity in deposit accounts and FHLB advances. Deposit
      flows are affected by the overall level of interest rates, the interest rates
      and products offered by us and our local competitors and other factors. We
      generally manage the pricing of our deposits to be competitive. Occasionally,
      we
      offer promotional rates on certain deposit products to attract
      deposits.





**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 September 30, 2007, we
      exceeded all of our regulatory capital requirements. We are considered “well
      capitalized” under regulatory guidelines.




10




We
      may
      use capital management tools such as cash dividends and common share
      repurchases. However, under Office of Thrift Supervision regulations, we are
      not
      allowed to repurchase any shares during the first year following the offering,
      except: (1) in extraordinary circumstances, we may make open market repurchases
      of up to 5% of our outstanding stock if we receive the prior non-objection
      of
      the OTS of such repurchases; (2) repurchases of qualifying shares of a director
      or if we conduct an OTS-approved offer to repurchase made to all shareholders;
      (3) if we repurchase to fund a restricted stock award plan that has been
      approved by shareholders; or (4) if we repurchase stock to fund a tax-qualified
      employee stock benefit plan. All repurchases are prohibited, however, if the
      repurchase would reduce Tempo Bank’s regulatory capital below regulatory
      required levels. The Bank’s actual and required capital amounts and ratios at
      September 30, 2007 are as follows:


Minimum
              
              Requiredfor
                  Capital
              
              to
                  be "WellActual
              
              Adequacy
              
              Capitalized"Amount
              
              Ratio
              
              Amount
              
              Ratio
              
              Amount
              
              Ratio(Dollars
                  in Thousands)Stockholder's
                  equity of the Bank
              
              $
              8,720
              
              
              9.9
              %
              $
              1,319
              
              
              1.5
              %General
                  valuation allowance
              
              
              130Total
                  capital to risk-weighted assets
              
              $
              8,850
              
              
              18.7
              %
              $
              3,796
              
              
              8.0
              %
              $
              4,744
              
              
              10.0
              %Tier
                  1 capital to risk-weighted assets
              
              $
              8,720
              
              
              18.4
              %
              $
              1,898
              
              
              4.0
              %
              $
              2,847
              
              
              6.0
              %Tier
                  1 capital to total assets
              
              $
              8,720
              
              
              9.9
              %
              $
              3,517
              
              
              4.0
              %
              $
              4,396
              
              
              5.0
              %




**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
      the
      three and six months ended September 30, 2007, we did not engage in any
      off-balance sheet transactions reasonably likely to have a material effect
      on
      our financial condition, results of operations or cash flows.





**Item
      3. Controls and Procedures**





The
      Company’s management, including the Company’s principal executive officer and
      principal financial officer, have evaluated the effectiveness of the Company’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, the Company’s disclosure controls and procedures were effective
      for the purpose of ensuring that the information required to be disclosed in
      the
      reports that the Company 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 the Company’s management,
      including its principal executive and principal financial officers, as
      appropriate to allow timely decisions regarding required disclosure. During
      the
      quarterly period ended September 30, 2007, there were no changes in the
      Company’s internal control over financial reporting which materially affected,
      or are reasonably likely to materially affect, the Company’s internal controls
      over financial reporting.




11




**PART
      II. OTHER INFORMATION**





**Item
      1.**  **Legal Proceedings**





Sugar
      Creek Financial Corp. is not involved in any pending legal proceedings. Tempo
      Bank is not involved in any pending legal proceedings other than routine legal
      proceedings occurring in the ordinary course of business. Such routine legal
      proceedings, in the aggregate, are believed by management to be immaterial
      to
      its financial condition and results of operations.





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





None.





**Item
      3.**  **Defaults upon Senior Securities**





Not
      Applicable.





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





Not
      Applicable.





**Item
      5.**  **Other Information**





None.





**Item
      6.**  **Exhibits**




3.1
            Charter
                of Sugar Creek Financial Corp. (2)




3.2
            Bylaws
                of Sugar Creek Financial Corp. (2)




4.0
              Stock
                  certificate of Sugar Creek Financial Corp.
                  (1)




31.1
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive Officer and
                Chief
                Financial Officer




31.2
            Rule
                13a-14(a)/15d-14(a) Certification of President and Chief Operating
                Officer




32.0
            Section
                1350 Certification







(1)
            Incorporated
                by reference into this document from the Exhibits filed with the
                Securities and Exchange Commission on the Registration Statement
                on Form
                SB-2, and any amendments thereto, Registration No.
                333-139332.




(2)
              Incorporated
                  by reference into this document from the exhibits filed with the
                  Securities and Exchange Commission on the Form 10-KSB, File No.
                  000-52532.




12




**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.


SUGAR
              CREEK
              FINANCIAL CORP.Dated:
              November
              9, 2007
            By:
            /s/ Robert J. Stroh, Jr.Robert
              J. Stroh, Jr.Chairman, Chief Executive Officer
              andChief
                Financial Officer(principal
                executive, financial and
              accounting
                officer)


Dated:
              November
              9, 2007
            By:
            /s/ Francis J. EversmanFrancis
              J. EversmanPresident
                and Chief Operating Officer
              (principal
                executive officer)