**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      D.C. 20549**










**FORM
      10-Q**


(Mark
      One)





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





For
      the
      quarterly period ended June 30, 2008





OR





o
            TRANSITION
                REPORTPURSUANT
                TOSECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934





For
      the
      transition period from ______________ to _____________




Commission
      file number: 0-52532





**SUGAR
      CREEK FINANCIAL CORP.**


(Exact
      name of registrant 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**


(Registrant’s
      telephone number)





**Not
      Applicable**


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





Indicate
      by checkmark 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 x  No
o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large
      Accelerated Filer o 
Accelerated Filer o 
      Non-accelerated Filer o 
Smaller Reporting Company x





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
      June 30, 2008 there were 906,879 shares of the registrant’s common stock
      outstanding, $.01 par value per share.








**SUGAR
      CREEK FINANCIAL CORP.**





**FORM
      10-Q**





**Index**




***Page
                No.*****PART
                I. FINANCIAL INFORMATION**Item
                1.
            Financial
                Statements
            1Consolidated
                Balance Sheets at June 30, 2008 andMarch
                31, 2008 (Unaudited)
            1Consolidated
                Statements of Earnings for the three monthsended
                June 30, 2008 and 2007 (Unaudited)
            2Consolidated
                Statements of Cash Flows for the three months endedJune
                30, 2008 and 2007 (Unaudited)
            3Notes
                to Unaudited Consolidated Financial Statements
            4Item
                2.
            Management’s
                Discussion and Analysis of Financial Condition andResults
                of Operations
            5Item
                3.
            Quantitative
                and Qualitative Disclosure About Market Risk
            10Item
                4.
            Controls
                and Procedures
            11**PART
                II. OTHER INFORMATION**Item
                1.
            Legal
                Proceedings
            12Item
                1A.
            Risk
                Factors
            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. AND SUBSIDIARY**


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





**June
                30,**
            
            **March
                31,******
            
            **2008**
            
            **2008****Assets**Cash
                and due from banks
            
            $
            521,385
            
            
            607,687Federal
                funds sold
            
            
            1,963,229
            
            
            929,733FHLB
                daily investment
            
            
            674,541
            
            
            1,629,805Cash
                and cash equivalents
            
            
            3,159,155
            
            
            3,167,225Stock
                in Federal Home Loan Bank of Chicago
            
            
            1,660,145
            
            
            1,660,145Loans
                receivable, net of allowance for loan lossesof
                $124,287 and $124,287
            
            
            82,461,306
            
            
            79,803,742Premises
                and equipment, net
            
            
            1,201,186
            
            
            1,036,555Foreclosed
                real estate
            
            
            385,847
            
            
            385,847Accrued
                interest receivable:Securities
            
            
            -
            
            
            -Loans
            
            
            332,149
            
            
            329,079Other
                assets
            
            
            133,909
            
            
            223,594Total
                assets
            
            $
            89,333,697
            
            
            86,606,187**Liabilities
                and Stockholders' Equity**Deposits
            
            $
            59,299,464
            
            
            59,181,449Accrued
                interest on deposits
            
            
            218,264
            
            
            233,399Advances
                from FHLB of Chicago
            
            
            19,500,000
            
            
            17,000,000Advances
                from borrowers for taxes and insurance
            
            
            469,820
            
            
            342,017Other
                liabilities
            
            
            167,112
            
            
            247,438Income
                taxes
            
            
            449,055
            
            
            436,865Total
                liabilities
            
            
            80,103,715
            
            
            77,441,168Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, $.01 par value, 1,000,000 sharesauthorized;
                none issued or outstandingCommon
                stock, $.01 par value, 14,000,000 sharesauthorized;
                906,879 shares issued and outstanding
            
            
            9,069
            
            
            9,069Additional
                paid-in capital
            
            
            3,341,158
            
            
            3,341,901Common
                stock acquired by employee stock ownership plan
            
            
            (319,941
            )
            
            (325,866
            )Retained
                earnings - substantially restricted
            
            
            6,199,696
            
            
            6,139,915Total
                stockholders' equity
            
            
            9,229,982
            
            
            9,165,019Total
                liabilities and stockholders' equity
            
            $
            89,333,697
            
            
            86,606,187





See
      accompanying notes to consolidated financial statements.





1


**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Consolidated
      Statements of Earnings** ***(Unaudited)***





**Three
                Months Ended**
              **June
                30,****2008**
            
            **2007**Interest
                income:Loans
                receivable
            
            $
            1,217,877
            
            
            1,191,836Securities
            
            
            -
            
            
            8,500Other
                interest-earning assets
            
            
            9,191
            
            
            36,861Total
                interest income
            
            
            1,227,068
            
            
            1,237,197Interest
                expense:Deposits
            
            
            490,702
            
            
            516,125Advances
                from FHLB
            
            
            206,493
            
            
            217,044Total
                interest expense
            
            
            697,195
            
            
            733,169Net
                interest income
            
            
            529,873
            
            
            504,028Provision
                for loan losses
            
            
            -
            
            
            -Net
                interest income after provisionfor
                loan losses
            
            
            529,873
            
            
            504,028Noninterest
                income:Loan
                service charges
            
            
            4,556
            
            
            4,133Service
                charges on deposit accounts
            
            
            35,116
            
            
            29,895Other
            
            
            4,898
            
            
            3,356Total
                noninterest income
            
            
            44,570
            
            
            37,384Noninterest
                expense:Compensation
                and benefits
            
            
            263,567
            
            
            317,990Occupancy
                expense
            
            
            22,203
            
            
            19,390Equipment
                and data processing
            
            
            95,051
            
            
            76,301Federal
                deposit insurance premiums
            
            
            1,628
            
            
            1,833Advertising
            
            
            8,997
            
            
            7,071Supplies
                expense
            
            
            13,439
            
            
            13,831Other
            
            
            76,941
            
            
            71,954Total
                noninterest expense
            
            
            481,826
            
            
            508,370Earnings
                before income taxes
            
            
            92,617
            
            
            33,042Income
                taxes
            
            
            32,836
            
            
            13,193Net
                earnings
            
            $
            59,781
            
            
            19,849Basic
                and diluted earnings per share
            
            
            0.07
            
            
            0.02Dividends
                per share
            
            
            0.00
            
            
            0.00





See
      accompanying notes to consolidated financial statements.





2




**SUGAR
      CREEK FINANCIAL CORP. AND SUBSIDIARY**


**Consolidated
      Statements of Cash Flows** ***(Unaudited)***





**Three
                Months Ended****June
                30,****2008**
            
            **2007**Cash
                flows from operating activities:Net
                earnings
            
            $
            59,781
            
            
            19,849Adjustments
                to reconcile net earnings to netcash
                provided by (used for) operating activities:Depreciation
            
            
            26,498
            
            
            19,032ESOP
                expense
            
            
            5,182
            
            
            8,392Amortization
                of deferred loan fees, net
            
            
            (6,447
            )
            
            (4,820
            )Provision
                for loan losses
            
            
            -
            
            
            -Increase
                in accrued interest receivable
            
            
            (3,070
            )
            
            (9,166
            )Decrease
                in other assets
            
            
            89,685
            
            
            491,061Increase
                (decrease) in:Accrued
                interest on deposits
            
            
            (15,135
            )
            
            (21,852
            )Other
                liabilities
            
            
            (80,326
            )
            
            63,631Income
                taxes
            
            
            12,190
            
            
            13,193Net
                cash provided by (used for) operating activities
            
            
            88,358
            
            
            579,320Cash
                flows from investing activities:Net
                change in loans receivable
            
            
            (2,651,117
            )
            
            (908,142
            )Purchase
                of premises and equipment
            
            
            (191,129
            )
            
            (39,235
            )Net
                cash provided by (used for) investing activities
            
            
            (2,842,246
            )
            
            (947,377
            )Cash
                flows from financing activities:Net
                increase (decrease) in deposits
            
            
            118,015
            
            
            (7,300,130
            )Increase
                (decrease) in advances fromborrowers
                for taxes and insurance
            
            
            127,803
            
            
            120,202Proceeds
                from advances from FHLB
            
            
            2,500,000
            
            
            4,000,000Repayment
                of advances from FHLB
            
            
            -
            
            
            (3,000,000
            )Proceeds
                from sale of common stock, net
            
            
            -
            
            
            2,996,089Net
                cash provided by (used for) financing activities
            
            
            2,745,818
            
            
            (3,183,839
            )Net
                increase (decrease) in cash and cash equivalents
            
            
            (8,070
            )
            
            (3,551,896
            )Cash
                and cash equivalents at beginning of period
            
            
            3,167,225
            
            
            6,958,707Cash
                and cash equivalents at end of period
            
            $
            3,159,155
            
            
            3,406,811Supplemental
                disclosures-cash paid during the period for:Interest
                on deposits and advances from FHLB
            
            $
            713,410
            
            
            749,589Federal
                and state income taxes
            
            
            -
            
            
            13,193Real
                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**


**June
      30, 2008**





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





The
      accompanying unaudited consolidated financial statements have been prepared
      in
      accordance with instructions for Form 10-Q 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 month periods ended June 30, 2008 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. (the “Company”) was organized as a federal corporation at
      the direction of Tempo Bank (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 $679,000. The Company
      owns all of the Bank’s capital stock.





**** **(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.





Basic
      and
      diluted earnings per share for the three months ended June 30, 2008 is based
      on
      total shares outstanding of 906,879 less unallocated ESOP shares of 32,290,
      or
      874,589 shares. Basic and diluted earnings per share for the period April 3,
      2007 through June 30, 2007 is based on total shares outstanding of 906,879
      less
      unallocated ESOP shares of 34,759, or 872,120 shares.




4




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





Management’s
      discussion and analysis of the financial condition and results of operations
      at
      and for the three months ended June 30, 2008 and 2007 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
      Consolidated Financial Statements and the notes thereto, appearing in Part
      I,
      Item 1 of this report.





**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 single-family residential mortgages,
      consumer and business loans.





**Overview
      – Financial Highlights**





**Financial
      Condition.** Total
      assets at June 30, 2008 were $89.3 million compared to $86.6 million at March
      31, 2008. A $2.7 million increase in loans was funded primarily by FHLB of
      Chicago borrowings.




**Operating
      Results** **.** **** Net
      earnings for the three months ended June 30, 2008 were $60,000 compared to
      net
      earnings of $20,000 for the comparable 2007 period. The increase in net earnings
      for the quarter was primarily due to decreases in interest expense on deposits
      and borrowings, as well as a decrease in noninterest expense.





**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**





**Loans
      Receivable, Net.** Loans
      receivable, net of allowance for loan losses, increased to $82.5 million at
      June
      30, 2008 from $79.8 million at March 31, 2008. The increase consisted primarily
      of one-to four-family residential real estate loans.





Nonaccrual
      loans at June 30, 2008 increased to $528,000 compared to $64,000 at March 31,
      2008. Nonaccrual loans at June 30, 2008 consisted of three single-family loans
      aggregating $410,000 and six consumer loans of $118,000. At March 31, 2008,
      there were three consumer loans of $64,000 classified as nonaccrual. Nonaccrual
      loans increased during the quarter ended June 30, 2008 as result of a slowing
      local and regional economy, job layoffs and health issues for one of our
      borrowers. There were no troubled debt restructurings or loans 90 days or more
      past due and still accruing at either date.





**Nonperforming
      Assets**




**June
                30,**
            
            **March
                31,**(Dollars
                in thousands)
            
            **2008**
            
            **2008**Nonaccrual
                loans:Residential
                real estate
            
            $
            410
            
            $
            —Commercial
                real estate
            
            
            —
            
            
            —Commercial
            
            
            —
            
            
            —Consumer
            
            
            118
            
            
            64Total
            
            
            528
            
            
            64Foreclosed
                real estate - residential (1)
            
            
            386
            
            
            386Total
                nonperforming assets
            
            $
            914
            
            $
            450Total
                nonperforming loans to total loans
            
            
            0.64
            %
            
            0.08
            %Total
                nonperforming loans to total assets
            
            
            0.59
            %
            
            0.07
            %Total
                nonperforming assets to total assets
            
            
            1.02
            %
            
            0.52
            %





(1)
      Foreclosed real estate consists of one single-family residence located in
      O’Fallon, Illinois.





At
      June
      30, 2008, we had no loans which were not currently classified as nonaccrual,
      90
      days past due or impaired but where known information about possible credit
      problems of borrowers caused management to have serious concerns as to the
      ability of the borrowers to comply with present loan repayment terms and which
      may result in disclosure in nonaccrual, 90 days past due or
      impaired.




**Investments.** The Bank
      is a member of the Federal Home Loan Bank of Chicago (the “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. The FHLBC has not paid a dividend during the last four quarters
      citing continuing pressure on net interest income, projected earnings levels,
      market conditions and regulatory requirements.




6




At
      June
      30, 2008, we owned $1.7 million of FHLBC stock, of which $685,000 was considered
      excess or voluntary stock. For the three months ended June 30, 2008 and 2007,
      the Bank recognized $0 and $8,500, respectively, in dividend income from the
      FHLBC.




**Premises
      and Equipment, Net.** Premises
      and equipment, net increased $165,000 to $1.2 million at June 30, 2008 primarily
      as a result of the purchase of a tract of land for possible future
      use.




**Other
      Assets.** Other
      assets decreased $90,000 to $134,000 at June 30, 2008 due primarily to the
      timing of payment of certain prepaid items. ****





**Deposits** .
      Deposit
      balances increased slightly to $59.3 million at June 30, 2008 from $59.2 million
      at March 31, 2008. Deposits increased, in part, due to interest credited to
      accounts less withdrawal activity during the period.




**Borrowings** .
      We use
      short-term, cash equivalent FHLB advances as an additional source of liquidity.
      FHLB advances increased $2.5 million from $17.0 million at March 31, 2008 to
      $19.5 million at June 30, 2008. ****





**Other
      Liabilities.** Advances
      from borrowers for taxes and insurance increased $128,000 to $470,000 at June
      30, 2008 due to deposits made by borrowers for real estate taxes and insurance.
      Other liabilities decreased $80,000 to $167,000 at June 30, 2008 as a result
      of
      timing of payment of certain accrual items.





**Results
      of Operations for the Three Months Ended June 30, 2008 and
      2007.**





**Total
      Interest Income.** **** Total
      interest income decreased $10,000 to $1.2 million for the three months ended
      June 30, 2008. Although interest income on loans increased $26,000 as a result
      of a higher average balance on loans with higher average yields, the cessation
      of dividends by the FHLB Chicago on FHLB Stock and a decrease in interest income
      on other interest-earning assets for the quarter ended June 30, 2008 contributed
      to the overall decline in interest income. The Bank does not expect to receive
      cash or stock dividends on the FHLB stock in the near future.





**Total
      Interest Expense** ***.*** ****** Total
      interest expense decreased by $36,000 to $697,000 for the three months ended
      June 30, 2008 from $733,000 for the three months ended June 30, 2007. The
      decrease resulted primarily from lower average rates on deposits and borrowings.
      .





**Net
      Interest Income** ***.*** Net
      interest income increased $26,000 to $530,000 for the three months ended June
      30, 2008 from $504,000 for the three months ended June 30, 2007. The increase
      is
      due primarily to an improved interest rate spread. The interest rate spread
      increased 18 basis points from the comparable period in 2007 to 2.07% primarily
      as a result of a lower cost of funds.




7




The
      following table summarizes average balances and annualized average yields and
      costs for the three months ended June 30, 2008 and 2007.





**Three
                Months Ended June 30,****2008**
            
            **2007****(Dollars
                in thousands)**
            
            **Average**
              **Balance**
            
            **Interest**
              **and**
              **Dividends**
            
            **Yield/**
              **Cost**
            
            **Average**
              **Balance**
            
            **Interest**
              **and**
              **Dividends**
            
            **Yield/**
              **Cost****Assets:**Interest-earning
                assets:Loans
            
            $
            81,156
            
            $
            1,218
            
            
            6.00
            %
            $
            80,574
            
            $
            1,192
            
            
            5.92
            %Stock
                in FHLB of Chicago
            
            
            1,660
            
            
            -
            
            
            0.00
            
            
            1,660
            
            
            8
            
            
            1.93Other
                interest-earning assets
            
            
            1,828
            
            
            9
            
            
            1.97
            
            
            3,273
            
            
            37
            
            
            4.52Total
                interest-earning assets
            
            
            84,644
            
            
            1,227
            
            
            5.80
            
            
            85,507
            
            
            1,237
            
            
            5.79Noninterest-earning
                assets
            
            
            3,164
            
            
            
            
            
            
            
            
            1,878Total
                assets
            
            
            87,808
            
            
            
            
            
            
            
            
            87,385**Liabilities
                and Stockholders’ Equity**Total
                interest-bearing deposits
            
            
            56,498
            
            
            491
            
            
            3.48
            
            
            55,949
            
            
            516
            
            
            3.69FHLB
                advances
            
            
            18,167
            
            
            206
            
            
            4.54
            
            
            18,345
            
            
            217
            
            
            4.73Other
                borrowings
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -Total
                interest-bearing liabilities
            
            
            74,665
            
            
            697
            
            
            3.73
            
            
            74,294
            
            
            733
            
            
            3.90Noninterest-bearing
                deposit accounts
            
            
            2,632
            
            
            
            
            
            
            
            
            3,014Other
                noninterest-bearing liabilities
            
            
            1,305
            
            
            
            
            
            
            
            
            1,078Total
                liabilities
            
            
            78,602
            
            
            
            
            
            
            
            
            78,386Stockholders’
                equity
            
            
            9,206
            
            
            
            
            
            
            
            
            8,999Total
                liabilities and stockholders’ equity
            
            $
            87,808
            
            
            
            
            
            
            
            $
            87,385Net
                interest income
            
            
            
            
            $
            530
            
            
            
            
            
            
            
            $
            504Interest
                rate spread
            
            
            
            
            
            
            
            
            2.07
            %
            
            
            
            
            
            
            
            1.89
            %Net
                interest margin
            
            
            
            
            
            
            
            
            2.50
            %
            
            
            
            
            
            
            
            2.36
            %




**Provision
      for Loan Losses.** 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, including level of nonaccrual loans. During
      the quarters ended June 30, 2008 and 2007, the Bank did not record a provision
      for loan losses.




**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 June 30, 2008 to $45,000 from $37,000 for the three months
      ended June 30, 2007 due primarily to the Bank’s new overdraft privilege program
      for transaction account customers. The noninterest income generated from this
      program is expected to continue to improve in the future.




**Noninterest
      Expense** ***.*** Noninterest expense includes salaries and employee benefits, equipment and
      data
      processing, occupancy and other expenses. Total noninterest expense decreased
      by
      $26,000 to $482,000 for the three months ended June 30, 2008 from $508,000
      for
      the three months ended June 30, 2007. Reductions in compensation, health care
      and retirement benefit costs were the largest contributors to the decrease,
      while equipment and data processing expenses increased in cost. Compensation
      expense decreased due to the retirement of one employee. Health care costs
      declined as a result of our decision to change providers. Retirement benefit
      expenses decreased due to lower plan contributions required as a result of
      higher investment returns. Equipment and data processing increased due to higher
      depreciation expense on computer equipment and data processing costs as a result
      of a new internet banking system, implementation of the Check 21 program and
      upgrades to data lines. Other noninterest expense increased primarily as a
      result of higher professional fees and costs associated with the Company’s
      status as a public entity.




8




**Income
      Taxes.** Income
      tax expense was $33,000 for the three months ended June 30, 2008 compared to
      an
      expense of $13,000 for the three months ended June 30, 2007. The increase in
      tax
      expense is primarily attributable to the higher pre-tax income for the current
      period quarter.




**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 June 30, 2008, cash and cash equivalents totaled $3.2 million and
      the
      Bank was eligible for additional advances of up to $33.2 million from the FHLBC.
      At June 30, 2008, we had $19.5 million of advances outstanding.





A
      significant use of our liquidity is the funding of loan originations. At June
      30, 2008, we had $218,000 in two outstanding loan commitments. 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 June 30, 2008 totaled $32.4
      million, or 79.3% of certificates of deposit. Although the percentage of
      certificates of deposit that mature within one year is slightly larger than
      last
      quarter, it continues to reflect consumers’ hesitancy to invest their funds for
      longer periods given 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. The local deposit market is extremely
      competitive with both regional and national banking institutions “buying the
      market” for liquidity. This has resulted in a very rate sensitive time deposit
      base. We have the ability to attract and retain these 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 rates paid and
      products offered by us and our local competitors and several 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.





**Equity
      Incentive Plan.** On
      November 19, 2007 stockholders approved the Sugar Creek Financial Corp. 2007
      Equity Incentive Plan (the “Plan”). Under the Plan, the Company may grant to
      employees, officers and directors up to 62,211 shares of common stock, including
      44,437 shares for stock options and 17,774 shares of restricted stock. No shares
      were granted as of June 30, 2008.




9




On
      July
      21, 2008, the Board of Directors granted 17,774 shares of restricted stock
      to
      officers and directors of the Company. Shares of common stock will be purchased
      in the open market to fund the restricted stock awards.





**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 June 30, 2008, we exceeded
      all of our regulatory capital requirements. We are considered “well capitalized”
under regulatory guidelines.





The
      Bank
      may not declare or pay a cash dividend, if the effect of such dividends would
      be
      to cause the capital of the Bank to be reduced below the aggregate amount
      required by federal or state law. The Company may pay a dividend, if and when
      declared by its Board of Directors. Any dividends waived by the MHC, are subject
      to approval by the OTS. Any
      repurchases of the Company’s common stock will be conducted in accordance with
      applicable laws and regulations.




During
      the quarter ended June 30, 2008, the Bank paid a cash dividend of $200,000
      to
      the Company for the repurchase of common stock in the open market to fund
      restricted stock awards.





The
      Bank’s actual and required capital amounts and ratios at June 30, 2008 are as
      follows:




Minimum
              
              Requiredfor
                  Capital
              
              to
                  be "WellActual
              
              Adequacy
              
              Capitalized"Amount
              
              Ratio
              
              Amount
              
              Ratio
              
              Amount
              
              Ratio(Dollars
                  in Thousands)Stockholders'
                  equity of the Bank
              
              $
              8,642
              
              
              9.7
              %
              $
              1,340
              
              
              1.5
              %General
                  valuation allowance
              
              
              124Total
                  capital to risk-weighted assets
              
              $
              8,766
              
              
              18.0
              %
              $
              3,903
              
              
              8.0
              %
              $
              4,879
              
              
              10.0
              %Tier
                  1 capital to risk-weighted assets
              
              $
              8,642
              
              
              17.7
              %
              $
              1,952
              
              
              4.0
              %
              $
              2,928
              
              
              6.0
              %Tier
                  1 capital to total assets
              
              $
              8,642
              
              
              9.7
              %
              $
              3,572
              
              
              4.0
              %
              $
              4,466
              
              
              5.0
              %




**Off-Balance
      Sheet Arrangements**





In
      the
      normal course of operations, we engage in a variety of financial transactions
      that, in accordance with U.S. 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 months ended June 30, 2008, 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. Quantitative and Qualitative Disclosure About Market
      Risk**





Not
      applicable.




10




**Item
      4. 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 June 30, 2008, 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
      1A. Risk Factors**





Not
      applicable.





**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**





None.





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





None.





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




3.1
            
            Charter
                of Sugar Creek Financial (1)3.2
            
            Bylaws
                of Sugar Creek Financial (1)4.0
            
            Stock
                certificate of Sugar Creek Financial (2)31.0
            
            Rule
                13a-14(a)/15d-14(a) Certification of Chief Executive Officer and
                Chief
                Financial Officer32.0
            
            Section
                1350 Certification







(1)
            Incorporated
                by reference into this document from the Exhibits filed with the
                Securities and Exchange Commission on the Annual Report on Form 10-KSB
                (File No. 000-52532), filed on June 27,
                2007.




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




12




**SIGNATURES**





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned thereunto
      duly authorized.








SUGAR
              CREEK FINANCIAL CORP.Dated:
                August 12, 2008
            
            By:
            /s/
                Robert J. Stroh, Jr.Robert
                J. Stroh, Jr.Chairman,
                Chief Executive Officer andChief
                Financial Officer