Greenville Federal Financial (GVFF) 10-Q 2009 Q3 Quarterly report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period endedMarch 31, 2009

OR

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

For the transition period from                    to                    

Commission File Number:000-51668

GREENVILLE FEDERAL FINANCIAL CORPORATION

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

Ohio	20-3742295
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

690 Wagner Avenue, Greenville, Ohio 45331(Address of principal executive offices)

(937) 548-4158
(Issuer’s telephone number)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes þ          No o 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website , if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this Chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

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

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

Yes o          No þ 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 12, 2009, 2,297,851 shares of the registrant’s common stock, $0.01 par value, were outstanding.

Greenville Federal Financial Corporation

Index

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Consolidated Balance Sheets		3
	Consolidated Statements of Operations		4
	Consolidated Statements of Comprehensive Income (Loss)		5
	Consolidated Statements of Cash Flows		6
	Notes to Consolidated Financial Statements		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		19
Item 4T.	Controls and Procedures		19
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings		19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3.	Defaults Upon Senior Securities		20
Item 4.	Submission of Matters to a Vote of Security Holders		20
Item 5.	Other Information		20
Item 6.	Exhibits		20
SIGNATURES			22
EX-4
EX-31.1
EX-31.2
EX-32.1
EX-32.2

2

ITEM 1. Financial Statements

Greenville Federal Financial Corporation
Consolidated Balance Sheets
(In thousands, except share data)

	March 31,			June 30,
	2009			2008
	(Unaudited)
ASSETS
Cash and due from banks	$	2,128		$	1,601
Interest-bearing deposits in other financial institutions		3,780			5,619
Cash and cash equivalents		5,908			7,220
Investment securities designated as available for sale — at market		12,073			16,157
Investment securities designated as held to maturity — at amortized cost		13			2,021
Mortgage-backed securities designated as held to maturity — at amortized cost		2,029			1,280
Loans receivable — net of allowance for loan losses of $575 and $583 at March 31, 2009 and June 30, 2008, respectively		91,723			89,851
Office premises and equipment — at depreciated cost		1,988			1,907
Real estate acquired through foreclosure		672			687
Stock in Federal Home Loan Bank — at cost		2,003			1,976
Cash surrender value of life insurance		4,115			4,002
Accrued interest receivable		466			549
Deferred federal income taxes		137			157
Prepaid expenses and other assets		394			319
Total assets	$	121,521		$	126,126
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits	$	76,229		$	83,697
Advances from the Federal Home Loan Bank		25,707			19,214
Advances by borrowers for taxes and insurance		306			398
Accrued interest payable		142			215
Other liabilities		523			691
Accrued federal income taxes		—			55
Total liabilities		102,907			104,270
Commitments and contingencies		—			—
Stockholders’ equity
Preferred stock — authorized 1,000,000 shares, $.01 par value; no shares issued		—			—
Common stock — authorized 8,000,000 shares of $.01 par value; 2,298,411 shares issued and 2,297,851 outstanding		23			23
Additional paid-in capital		9,108			9,021
Treasury Stock, at cost, 560 shares		(4	)		—
Retained earnings — restricted		10,118			13,443
Shares acquired by Employee Stock Ownership Plan		(631	)		(631	)
Total stockholders’ equity		18,614			21,856
Total liabilities and stockholders’ equity	$	121,521		$	126,126

See notes to consolidated financial statements.

3

Greenville Federal Financial Corporation
Consolidated Statements of Operations
(In thousands)
(Unaudited)

	Three months ended						Nine months ended
	March 31,						March 31,
	2009			2008			2009			2008
Interest income
Loans	$	1,518		$	1,500		$	4,505		$	4,541
Mortgage-backed securities		30			22			70			69
Investment securities		134			254			483			898
Interest-bearing deposits and other		23			45			96			149
Total interest income		1,705			1,821			5,154			5,657
Interest expense
Deposits		385			572			1,289			1,811
Borrowings		236			256			643			885
Total interest expense		621			828			1,932			2,696
Net interest income		1,084			993			3,222			2,961
Provision for losses on loans		35			—			85			—
Net interest income after provision for losses on loans		1,049			993			3,137			2,961
Other income
Customer service charges		126			142			429			457
Gain on sale of real estate acquired through foreclosure		—			1			4			1
Other operating		55			63			203			193
Total other income		181			206			636			651
General, administrative and other expense
Employee compensation and benefits		607			517			1,784			1,558
Occupancy and equipment		113			96			309			282
Franchise taxes		35			50			131			167
Data processing		82			141			322			396
Advertising		12			19			49			52
Loss (gain) on redemption of investment securities		(3	)		—			5			—
Impairment charge on investment securities		482			—			3,329			—
Loss on sale of real estate acquired through foreclosure		10			—			10			—
Provision for loss on real estate acquired through foreclosure		10			22			193			22
Other operating		231			167			677			489
Total general, administrative and other expense		1,579			1,012			6,809			2,966
Income (loss) before income taxes		(349	)		187			(3,036	)		646
Federal incomes taxes
Current		22			(19	)		39			148
Deferred		—			70			—			33
Total federal income taxes		22			51			39			181
NET INCOME (LOSS)	$	(371	)	$	136		$	(3,075	)	$	465
Earnings (loss) per share — basic and diluted	$	(.17	)	$	0.06		$	(1.38	)	$	0.21
Dividends declared per share	$	0.07		$	0.07		$	0.21		$	0.21

See notes to consolidated financial statements.

4

Greenville Federal Financial Corporation
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2009			2008			2009			2008
Net income (loss)	$	(371	)	$	136		$	(3,075	)	$	465
Other comprehensive income (losses), net of related tax benefits:
Unrealized holding gains (losses) on securities during the period, net of taxes (benefits) of $0,$(62), $0 and $(62) for the respective periods		—			(120	)		—			(120	)
Comprehensive income (loss)	$	(371	)	$	16		$	(3075	)	$	345
Accumulated comprehensive loss	$	—		$	(459	)	$	—		$	(459	)

See notes to consolidated financial statements.

5

Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows
For the nine months ended March 31, 2009 and 2008
(In thousands)
(Unaudited)

	2009			2008
Cash flows from operating activities:
Net income (loss) for the period	$	(3,075	)	$	465
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Accretion and amortization of premiums and discounts on investments and mortgage-backed securities — net		(2	)		(2	)
Amortization of deferred loan origination fees		(80	)		(33	)
Depreciation and amortization		98			94
Amortization of expense related to stock benefit plans		54			17
Amortization of mortgage servicing rights		23			22
Provision for losses on loans		85			—
Other-than-temporary impairment of investment securities designated as available for sale		3,329			—
Loss on redemption of investment securities		5			—
Provision for losses on real estate acquired through foreclosure		193			22
Loss on sale of real estate acquired through foreclosure		10			—
Gain on sale of real estate acquired through foreclosure		(4	)		(1	)
Federal Home Loan Bank stock dividends		(27	)		(25	)
Increase in cash surrender value of life insurance		(113	)		(114	)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans		57			11
Accrued interest receivable on mortgage-backed securities		(3	)		1
Accrued interest receivable on investment securities and other		29			11
Prepaid expenses and other assets		(78	)		24
Accrued interest payable		(73	)		(164	)
Other liabilities		(168	)		538
Federal income taxes
Current		(55	)		—
Deferred		—			33
Net cash provided by operating activities		205			899
Cash flows provided by (used in) investing activities:
Purchases of investment securities designated as available for sale		—			(450	)
Proceeds from maturity of investment securities designated as held to maturity		2,008			9,007
Sale/redemption of investment securities		750			—
Purchases of mortgage-backed securities designated as held to maturity		(1,004	)		—
Proceeds from repayment of mortgage-backed securities		257			284
Loan principal repayments		9,693			9,675
Loan disbursements		(11,964	)		(11,999	)
Purchase of office equipment		(179	)		(7	)
Additions to real estate acquired through foreclosure		(14	)		—
Proceeds from sale of real estate acquired through foreclosure		224			85
Net cash provided by (used in) investing activities		(229	)		6,595
Net cash provided by (used in) operating and investing activities (balance carried forward)		(24	)		7,494

See notes to consolidated financial statements.

6

Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows (Continued)
For the nine months ended March 31, 2009 and 2008
(In thousands)
(Unaudited)

	2009			2008
Net cash provided by (used in) operating and investing activities (balance brought forward)	$	(24	)	$	7,494
Cash flows used in financing activities:
Net increase (decrease) in deposit accounts		(7,468	)		677
Proceeds from Federal Home Loan Bank advances		9,500			30,000
Repayments of Federal Home Loan Bank advances		(3,007	)		(35,146	)
Advances by borrowers for taxes and insurance		(92	)		(85	)
Shares acquired by 2006 Equity Plan		—			(183	)
Purchase of treasury shares		(4	)		—
Dividends on common stock		(217	)		(217	)
Net cash used in financing activities		(1,288	)		(4,954	)
Net increase (decrease) in cash and cash equivalents		(1,312	)		2,540
Cash and cash equivalents at beginning of period		7,220			3,527
Cash and cash equivalents at end of period	$	5,908		$	6,067
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowings	$	2,005		$	2,860
Federal income taxes	$	92		$	83
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure	$	394		$	—
Unrealized gains (losses) on securities designated as available for sale, net of related tax effects	$	—		$	(120	)

See notes to consolidated financial statements.

7

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008

Note 1: Basis of Presentation

Greenville Federal Financial Corporation (the “Corporation” or “GFFC”) is the federally chartered savings and loan holding company of Greenville Federal and was formed upon the completion of the conversion of Greenville Federal into the stock form of organization and its reorganization into the mutual holding company structure (the “Reorganization”) pursuant to Greenville Federal’s Third Amended Plan of Reorganization and Stock Issuance Plan (the “Plan”). Pursuant to the Plan, on January 4, 2006, Greenville Federal converted into the stock form of ownership and issued all of its outstanding stock to the Corporation, and the Corporation sold 45% of its outstanding common stock, at $10.00 per share, to Greenville Federal’s depositors and others, including a newly formed employee stock ownership plan (“ESOP”), and 55% of its outstanding common stock to Greenville Federal MHC, a federally chartered mutual holding company.

Greenville Federal, located in Greenville, Ohio, conducts a general banking business in west-central Ohio, which consists of attracting deposits from the general public and applying those funds to the origination of loans for residential, consumer and nonresidential purposes. Greenville Federal’s profitability is significantly dependent on net interest income, which is the difference between interest income generated from interest-earning assets (i.e. loans and investments) and interest expense paid on interest-bearing liabilities (i.e. customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and the interest received or paid on these balances. The level of interest rates paid or received by Greenville Federal can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management’s control.

The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto of GFFC included in the Form 10-K as of and for the year ended June 30, 2008. However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the financial statements have been included. The results of operations for the nine-month and three-month periods ended March 31, 2009, are not necessarily indicative of the results which may be expected for the entire fiscal year.

Note 2: Principles of Consolidation

The consolidated financial statements include the accounts of GFFC and Greenville Federal. All significant intercompany balances and transactions have been eliminated in consolidation.

Note 3: Earnings Per Share

Basic earnings per common share is computed based upon the weighted-average number of common shares outstanding during the period, less 58,543 and 67,553 weighted-average shares as of March 31, 2009 and 2008, respectively, in the Corporation’s Employee Stock Ownership Plan (“ESOP”) that are unallocated and not committed to be released.

8

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008

Weighted-average common shares deemed outstanding totaled 2,224,471 and 2,214,602 for the three months ended March 31, 2009 and 2008, respectively. Weighted-average common shares deemed outstanding totaled 2,222,371 and 2,218,787 for the nine months ended March 31, 2009 and 2008, respectively.

Diluted earnings per common share include the dilutive effect of all additional potential common shares issuable. Weighted-average common shares deemed outstanding for purposes of computing diluted earnings per share totaled 2,224,471 and 2,222,371 for the three-month and nine-month periods ended March 31, 2009, respectively. There were 74,800 options that were excluded from the computation of diluted earnings per share for the three-month and nine-month periods ended March 31, 2009, because their exercise price was greater than the average fair value.

Note 4: Recent Accounting Developments

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 emphasizes that fair value is a market-based measurement and should be determined based on assumptions that a market participant would use when pricing an asset or liability. SFAS No. 157 clarifies that market participant assumptions should include assumptions about risk as well as the effect of a restriction on the sale or use of an asset. Additionally, SFAS No. 157 establishes a fair value hierarchy that provides the highest priority to quoted prices in active markets and the lowest priority to unobservable data. As discussed in Note 6, the Corporation adopted SFAS No. 157, effective July 1, 2008, as required, without material effect on the Corporation’s statements of financial condition or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115.” SFAS No. 159 allows companies the choice to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 is expected to expand the use of fair value measurement, which is consistent with the FASB’s long-term measurement objectives for accounting for financial instruments. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007, or July 1, 2008 as to the Corporation, and interim periods within that fiscal year. The Corporation adopted SFAS No. 159 effective July 1, 2008, as required. The Corporation did not elect the fair value option for any of its financial assets and liabilities; therefore, the adoption had no effect on the financial statements.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”, which replaces SFAS No. 141. The Statement applies to all transactions or other events in which one entity obtains control of one or more businesses. It requires all assets acquired, liabilities assumed and any noncontrolling interest to be measured at fair value at the acquisition date. The Statement requires certain costs such as acquisition-related costs that were previously recognized as a component of the purchase price, and expected restructuring costs that were previously recognized as an assumed liability, to be recognized separately from the acquisition as an expense when incurred.

9

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008

SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008 and may not be applied before that date. Concurrent with SFAS No. 141 (revised 2007), the FASB recently issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an Amendment of ARB 51”. SFAS No. 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest (formerly known as minority interest) in a subsidiary and for the deconsolidation of a subsidiary. A subsidiary, as defined by SFAS No. 160, includes a variable interest entity that is consolidated by a primary beneficiary. A noncontrolling interest in a subsidiary, previously reported in the statement of financial position as a liability or in the mezzanine section outside of permanent equity, will be included within consolidated equity as a separate line item upon the adoption of SFAS No. 160. Further, consolidated net income will be reported at amounts that include both the parent (or primary beneficiary) and the noncontrolling interest with separate disclosure on the face of the consolidated statement of income of the amounts attributable to the parent and to the noncontrolling interest. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008.

On April 9, 2009, the FASB finalized three FASB Staff Positions (“FSPs”) regarding the accounting treatment for investments including mortgage-backed securities. These FSP’s changed the method for determining if an Other-than temporary impairment (“OTTI”) exists and the amount of OTTI to be recorded through an entity’s income statement. The changes brought about by the FSPs provide greater clarity and reflect a more accurate representation of the credit and noncredit components of an OTTI event. The three FSPs are as follows:

• FAS “SFAS 157-4 Determining Fair Value When the Volume and Level of Activity for the Assets or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”addresses the criteria to be used in the determination of an active market in determining whether observable transactions are Level 1 or Level 2 under the framework established by SFAS 157,“Fair Value Measurements.”The FSP reiterates that fair value is based on the notion of exit price in an orderly transaction between willing market participants at the valuation date.

• FSP “SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-than-Temporary Impairments”provide additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on debt securities.

• FSP“SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments”enhances consistency in financial reporting by increasing the frequency of fair value disclosures.

These staff positions are effective for financial statements issued for periods ending after June 15, 2009, with early application possible for the quarter ended March 31, 2009. The Corporation elected not to adopt any of the above positions early. Adoption of these staff positions is not expected to have material effect on the Corporation’s financial position or results of operations.

Note 5: Commitments

At March 31, 2009, the Corporation had outstanding commitments to extend credit of $3.7 million. Standby letters of credit as of March 31, 2009 totaled $52,000.

10

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008

Note 6: Disclosures About Fair Value of Assets and Liabilities

Effective July 1, 2008, the Company adopted Statement of Financial Accounting Standards No. 157,Fair Value Measurements(FAS 157). FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. FAS 157 has been applied prospectively as of the beginning of the period.

FAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FAS 157 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

11

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements
For the nine- and three-month periods ended March 31, 2009 and 2008

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include the AMF Ultra Short Mortgage Fund (the “Fund”) based on the net asset value of the fund.

The following table presents the fair value measurements of assets measured at fair value on a recurring basis and the level within the FAS 157 fair value hierarchy in which the fair value measurements fall at March 31, 2009:

			Fair Value Measurements Using
			Quoted Prices in
			Active Markets for	Significant Other		Significant
			Identical Assets	Observable Inputs		Unobservable Inputs
	Fair Value		(Level 1)	(Level 2)		(Level 3)
Available-for-sale securities	$	12,073,000		$	12,073,000

As of March 31, 2009, the Company does not have any financial assets or liabilities for which fair value is measured on a non-recurring basis.

12

Greenville Federal Financial Corporation
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

Forward Looking Statements

Certain statements contained in this report that are not historical facts are forward-looking statements that are subject to certain risks and uncertainties. When used herein, the terms “anticipates,” “plans,” “expects,” “believes,” “intends” and similar expressions as they relate to the Corporation or its management are intended to identify such forward looking statements. The Corporation’s actual results, performance or achievements may materially differ from those expressed or implied in the forward-looking statements. Risks and uncertainties that could cause or contribute to such material differences include, but are not limited to, general and local economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services.

Critical Accounting Policies

There were no material changes to the Corporation’s critical accounting policies which were disclosed in the Corporation’s Form 10-K filing as of June 30, 2008.

Discussion of Financial Condition Changes from June 30, 2008 to March 31, 2009

The Corporation’s assets totaled $121.5 million at March 31, 2009, a decrease of $4.6 million, or 3.7%, from the $126.1 million total at June 30, 2008. The decrease in assets resulted primarily from a decrease in investment securities and cash and cash equivalents, partially offset by an increase in mortgage-backed securities and loans receivable.

Investment securities totaled $12.1 million at March 31, 2009, a decrease of $6.1 million, or 33.5%, from the total at June 30, 2008. The decrease in investment securities was due primarily to a $3.3 million non-cash other-than-temporary impairment charge on equity securities and $2.0 million in maturing U.S. Government sponsored entity obligations. Cash and cash equivalents, consisting of cash and due from banks and interest-bearing deposits in other financial institutions, decreased by $1.3 million, or 18.2%, over the nine-month period ended March 31, 2009.

Loans receivable totaled $91.7 million at March 31, 2009, compared to $89.9 million at June 30, 2008, an increase of $1.9 million, or 2.1%. The increase was primarily attributable to a $2.4 million growth in one- to four-family residential real estate loans, partially offset by a $354,000 decrease in commercial loans and a $214,000 decrease in consumer loans. Loan disbursements during the period totaling $12.0 million were partially offset by principal repayments of $9.7 million and loans transferred into real estate owned of $406,000.

Nonresidential real estate, multi-family residential real estate and commercial lending generally involves a higher degree of risk than one- to four-family residential real estate lending due to the relatively larger loan amounts and the effects of general economic conditions on the successful operation of income-producing properties and businesses. Greenville Federal endeavors to reduce such risk by evaluating the credit history and past performance of the borrower, the location of the real estate, the quality of the management operating the property or business, the debt service ratio, the quality and characteristics of the income stream generated by the property

13

Greenville Federal Financial Corporation
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

or business and appraisals supporting the real estate or collateral valuation. The majority of these loans have been made to existing customers. Consumer lending also may entail greater risk than residential lending. The risk of default on consumer lending increases during periods of recession, high unemployment and other adverse economic conditions. Management intends to pursue a limited rate of growth in nonresidential, consumer and commercial loans over the next year, but Greenville Federal is committed to retaining its historical focus on one- to four-family residential lending.

The allowance for loan losses totaled $575,000 at March 31, 2009, a decrease of $8,000, or 1.3%, from the June 30, 2008 balance of $583,000, and represented 0.62% and 0.64% of total loans at those respective dates. Greenville Federal’s nonperforming loans totaled $331,000 and $747,000 at March 31, 2009 and June 30, 2008, respectively. In determining the allowance for loan losses at any point in time, management and the board of directors apply a systematic process focusing on the risk of loss in the portfolio. First, the loan portfolio is segregated by loan types to be evaluated collectively and loan types to be evaluated individually. Delinquent multi-family and nonresidential loans are evaluated individually for potential impairment. Second, the allowance for loan losses is evaluated using Greenville Federal’s historic loss experience, adjusted for changes in economic trends in Greenville Federal’s lending area, by applying these adjusted loss percentages to the loan types to be evaluated collectively in the portfolio. To the best of management’s knowledge, all known and inherent losses that are probable and that can be reasonably estimated have been recorded at March 31, 2009. Although management believes that the allowance for loan losses at March 31, 2009, was adequate based upon the available facts and circumstances, there can be no assurance that additions to the allowance will not be necessary in future periods, which could adversely affect Greenville Federal’s results of operations.

Deposits totaled $76.2 million at March 31, 2009, a decrease of $7.5 million, or 8.9%, from June 30, 2008. Greenville Federal participates in a bidding process for short-term public deposits through the Bid Ohio program. On the first and third Tuesday of each month, the Ohio Treasurer’s office sponsors an online auction for eligible Ohio state depository banks to bid on interim State funds. Such short-term deposits from the State of Ohio totaled $6.0 million at March 31, 2009, down from $13.0 million at June 30, 2008. The decrease is a result of a management decision not to re-bid on the maturing certificates, as more competitive alternatives for funding cash needs have been available elsewhere.

Advances from the Federal Home Loan Bank totaled $25.7 million at March 31, 2009, an increase of $6.5 million, or 33.8%, compared to June 30, 2008. These borrowings have increased due to management’s desire to lock in interest rates in a lower rate environment.

Shareholders’ equity totaled $18.6 million at March 31, 2009, a decrease of $3.2 million, or 14.8%, from June 30, 2008. The decrease resulted from a net loss of $3.1 million for the nine months ended March 31, 2009, and from dividends paid on common stock of $217,000.

Greenville Federal is required to maintain minimum regulatory capital pursuant to federal regulations. At March 31, 2009, Greenville Federal’s regulatory capital continued to substantially exceed all minimum regulatory capital requirements.

14

Greenville Federal Financial Corporation
Management’s Discussion and Analysis of Financial Condition
and Results of Operations

The following table summarizes Greenville Federal’s regulatory capital requirements and actual capital at March 31, 2009:

								March 31, 2009
											Minimum Required To Be
											Well Capitalized Under
						Minimum Required For					Prompt Corrective Action
	Actual					Capital Adequacy Purposes					Regulations
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
Tangible capital	$	10,251		8.4	%	$	1,822		1.5	%	$	6,075		5.0	%
Core capital	$	10,251		8.4	%	$	4,860		4.0	%	$	7,290		6.0	%
Risk-based capital	$	10,708		15.3	%	$	5,605		8.0	%	$	7,007		10.0	%

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2009 and 2008

General

The Corporation recorded a net loss of $371,000 for the three months ended March 31, 2009, compared to net income of $136,000 for the same period in 2008. The loss was due primarily to a $482,000 non-cash impairment charge on investment securities, an increase in other components of general, administrative, and other expense of $85,000, a $35,000 increase in the provision for losses on loans and a $25,000 decrease in other income, which were partially offset by a $91,000 increase in net interest income and a $29,000 decrease in federal income taxes.

Net Interest Income

Interest income totaled $1.7 million for the three months ended March 31, 2009, a decrease of $116,000, or 6.4%, compared to the three months ended March 31, 2008. Interest income on loans increased by $18,000, or 1.2%, due primarily to a $2.5 million increase in the average balance of loans outstanding, partially offset by a decrease in the weighted-average yield on loans from 6.75% in the 2008 three-month period to 6.64% in the 2009 three-month period. Interest income on investment securities decreased by $120,000, or 47.2%, due primarily to a $10.4 million decrease in the average balance outstanding and a decrease in the weighted-average yield on such securities from 4.46% in the 2008 three-month period to 4.35% in the 2009 three-month period. The increase in loans receivable was due primarily to growth in one- to four-family construction and residential real estate loans. The decrease in yield on loans and securities reflects the declining interest rate environment.

Interest expense totaled $621,000 for the three months ended March 31, 2009, a decrease of $207,000, or 25.0%, compared to the three months ended March 31, 2008. This decrease was a result of a decrease in the weighted-average cost of funds to 2.54% for the three months ended March 31, 2009, from 3.39% for the three months ended March 31, 2008.

15

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $91,000, or 9.2%, compared to the same period in 2008. The interest rate spread increased to 3.46% for the three months ended March 31, 2009, compared to 2.78% for the three months ended March 31, 2008. The net interest margin increased to 3.82% for the three months ended March 31, 2009, from 3.37% for the three months ended March 31, 2008, partially offset by an $837,000 increase in the average balance of interest-bearing liabilities outstanding year to year.

Provision for Losses on Loans

A provision for losses on loans is charged to earnings to maintain the total allowance for loan losses at a level calculated by management based on historical experience, the volume and type of lending conducted by Greenville Federal, the status of past due principal and interest payments and management’s assessment of economic factors in Greenville Federal’s lending area that may affect the collectibility of Greenville Federal’s loan portfolio. Management recorded a provision for losses on loans of $35,000 for the three months ended March 31, 2009. There was no provision recorded for the three months ended March 31, 2008. The allowance for loan losses totaled $575,000 at March 31, 2009, compared to $583,000 at June 30, 2008. Greenville Federal’s nonperforming loans, consisting of loans 90 days or more past due and nonaccrual loans, totaled $331,000 at March 31, 2009, a decrease of $416,000 compared to June 30, 2008. The decrease was primarily due to customers bringing their loans current, along with two loans being taken into real estate acquired through foreclosure or deed in lieu of foreclosure. Management believes all nonperforming loans are adequately collateralized; however, there can be no assurance that the allowance for loan losses will be adequate to absorb losses on known nonperforming assets or that the allowance will be adequate to cover losses on nonperforming assets in the future.

Other Income

Other income totaled $181,000 for the three months ended March 31, 2009, a decrease of $25,000, or 12.1%, compared to the same quarter in 2008. This decrease was due primarily to a decrease in customer service charges of $16,000, or 11.3%.

General, Administrative and Other Expense

General, administrative and other expense, net of the $482,000 non-cash impairment charge on investment securities, totaled $1.1 million for the three months ended March 31, 2009, an increase of $85,000, or 8.4%, compared to the same quarter in 2008. The increase in general, administrative and other expense was due primarily to a $90,000, or 17.4%, increase in employee compensation and benefits, a $64,000, or 38.3%, increase in other operating expense, and a $17,000, or 17.7%, increase in occupancy and equipment expense, which were partially offset by a $59,000, or 41.8%, decrease in data processing expense, a $15,000, or 30.0%, decrease in franchise taxes, and a $12,000, or 54.5%, decrease in provision for loss on real estate acquired through foreclosure or deed in lieu of foreclosure. The increase in employee compensation and benefits was due primarily to increased employee compensation, an increase in education expense as a result of seminars attended and an increase in medical insurance expense. The increase in other operating expense was due primarily to an increase in professional fees expense of $44,000 and an increase of $10,000 for expenses related to real estate acquired through foreclosure or deed in lieu of foreclosure. The decrease in data processing expense was due primarily to contract renewal discounts. The decrease in franchise taxes was due primarily to a decrease in shareholder’s equity from year to year.

The non-cash impairment charge on investment securities resulted from an investment by the Corporation’s subsidiary, Greenville Federal, in the AMF Ultra Short Mortgage Fund (the “Fund”). Rating agency

16

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

downgrades of the underlying mortgage-related securities held in the Fund had significantly decreased the net asset value of the Fund. In May 2008, the manager of the Fund informed Greenville Federal that the “redemption in kind” feature of the Fund had been activated, meaning that any investor in the Fund wanting to redeem its investment in the Fund would receive payment mostly in the form of the securities held in the Fund’s portfolio in the amount of its representative interest in the securities held by the Fund, rather than in the form of cash. It is the policy of the Fund to pay cash in an amount not to exceed $250,000 over a ninety-day period to each investor requesting redemption. Greenville Federal recorded a non-cash impairment charge of $1.4 million and withdrew $250,000 in cash during the quarter ended September 30, 2008. Greenville Federal recorded a non-cash impairment charge of $1.5 million and withdrew $250,000 in cash during the quarter ended December 31, 2008. Greenville Federal recorded a non-cash impairment charge of $482,000 and withdrew $250,000 in cash during the quarter ended March 31, 2009. At March 31, 2009, after the non-cash impairment charges and the cash withdrawals, GFFC recorded the value of Greenville Federal’s investment in the Fund as $12.1 million. The Corporation can provide no assurance with respect to the future net asset value of the Fund nor whether Greenville Federal will record further non-cash impairment charges if management determines that any declines in the net asset value of the Fund after March 31, 2009, are other-than-temporary.

Federal Income Taxes

The provision for federal income taxes totaled $22,000 for the three months ended March 31, 2009, a decrease of $29,000, or 56.9%, compared to the same quarter in 2008. The decrease resulted primarily from a $536,000 decrease in pre-tax earnings year to year.

Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2009 and 2008

General

The Corporation recorded a net loss of $3.1 million for the nine months ended March 31, 2009, compared to net income of $465,000 for the same period in 2008. The decline in net income was due primarily to a $3.3 million non-cash impairment charge on investment securities, an increase in other components of general, administrative, and other expense of $514,000, and a $85,000 increase in provision for losses on loans, which were partially offset by a $261,000 increase in net interest income and a $142,000 decrease in federal income taxes.

Excluding the $3.3 million non-cash impairment charge on investment securities, the Corporation would have recorded net income of $254,000.

Net Interest Income

Interest income totaled $5.2 million for the nine months ended March 31, 2009, a decrease of $503,000, or 8.9%, compared to the nine months ended March 31, 2008. Interest income on loans decreased by $36,000, or 0.8%, due primarily to a decrease in the weighted-average yield on loans to 6.63% in the 2009 nine-month period from 6.82% in the 2008 nine-month period, partially offset by a $2.1 million increase in the average balance of loans outstanding. Interest income on investment securities decreased by $415,000, or 46.2%, due primarily to a $11.3 million decrease in the average balance outstanding, coupled with a decrease in the weighted-average yield on such securities from 4.63% in the 2008 nine-month period to 4.47% in the 2009 nine-month period.

Interest expense totaled $1.9 million for the nine months ended March 31, 2009, a decrease of $764,000, or 28.3%, compared to the nine months ended March 31, 2008. This decrease was a result of a decrease in the weighted-average cost of funds to 2.61% for the nine months ended March 31, 2009, from 3.59% for the

17

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

nine months ended March 31, 2008, coupled with a $1.1 million decrease in the average balance of interest-bearing liabilities outstanding year to year.

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $261,000, or 8.8%, compared to the same period in 2008. The interest rate spread increased to 3.47% for the nine months ended March 31, 2009, compared to 2.69% for the nine months ended March 31, 2008. The net interest margin increased to 3.80% for the nine months ended March 31, 2009, from 3.29% for the nine months ended March 31, 2008.

Provision for Losses on Loans

A provision for losses on loans is charged to earnings to maintain the total allowance for loan losses at a level calculated by management based on historical experience, the volume and type of lending conducted by Greenville Federal, the status of past due principal and interest payments and management’s assessment of economic factors in Greenville Federal’s lending area that may affect the collectibility of Greenville Federal’s loan portfolio. The allowance for loan losses totaled $575,000 at March 31, 2009, compared to $583,000 at June 30, 2008. Greenville Federal’s nonperforming loans, consisting of loans 90 days or more past due and nonaccrual loans, totaled $331,000 at March 31, 2009, a decrease of $416,000 compared to June 30, 2008.

Other Income

Other income totaled $636,000 for the nine months ended March 31, 2009, a decrease of $15,000, or 2.3%, compared to the same period in 2008. This decrease was due primarily to a decrease in customer service charges of $28,000, or 6.1%, partially offset by an increase in other operating income of $10,000, or 5.2%.

General, Administrative and Other Expense

General, administrative and other expense, net of the $3.3 million non-cash impairment charge on investment securities, totaled $3.5 million for the nine months ended March 31, 2009, an increase of $514,000, or 17.3%, compared to the same quarter in 2008. The increase in general, administrative and other expense was due primarily to a $226,000, or 14.5%, increase in employee compensation and benefits, a $188,000, or 38.4%, increase in other operating expense, and a $171,000, or 777.3%, increase in write downs to updated net realizable values on real estate acquired through foreclosure or deed in lieu of foreclosure, which were partially offset by a $74,000, or 18.7%, decrease in data processing expense, and a $36,000, or 21.6%, decrease in franchise taxes. The increase in employee compensation and benefits was due primarily to increased employee compensation, an increase in education expense as a result of seminars attended, and an increase in medical insurance expense. The increase in other operating expense was due primarily to an increase in professional fees expense of $115,000 and an increase of $43,000 for expenses related to real estate acquired through foreclosure or deed in lieu of foreclosure. The decrease in data processing expense was due primarily to contract renewal discounts. The decrease in franchise taxes was due primarily to a decrease in shareholder’s equity from year to year for the Corporation’s subsidiary, Greenville Federal, which pays a higher tax rate than the Corporation.

The non-cash impairment charge on investment securities resulted from the investment by Greenville Federal in the Fund.

Federal Income Taxes

18

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

The provision for federal income taxes totaled $39,000 for the nine months ended March 31, 2008, a decrease of $142,000, or 78.5%, compared to the same period in 2008. The decrease resulted primarily from a $3.7 million decrease in pre-tax earnings year to year. The effective tax rate was 13.3% for the nine months ended March 31, 2009, adjusted for other-than-temporary impairment, compared to 28.0% for the nine months ended March 31, 2008, which reflected the effects of non-taxable income.

Current Financial Market Turmoil

The financial market turmoil and tightening of credit within the industry have led to a lack of consumer confidence, increased volatility and widespread reduction of business activity. As a result, the Corporation could incur additional expenses that would adversely affect our net income. In December 2008, the FDIC issued a rule increasing deposit insurance assessment rates for insured institutions by an additional 7 basis points on an annual basis. On February 27, 2009, the FDIC announced adoption of an interim final rule imposing a one-time special assessment and a final rule adjusting the risk-based calculation used to determine the premiums to be paid by each insured institution. Although the amount of the special assessment was originally set at 20 basis points, to be paid in September 2009, the amount may be reduced. In addition, the FDIC has adopted the Temporary Liquidity Guarantee Program, pursuant to which it provides unlimited insurance on deposits in noninterest-bearing transaction accounts not otherwise covered by the existing deposit insurance limit of $250,000. The Corporation has chosen to participate. Such participation will increase our expenses and decrease net income. In addition, our credit risk may be increased when our loan collateral cannot be sold or is sold at prices not sufficient to recover the full amount of the loan balance. If loan collateral cannot be sold at a price sufficient to recover the full amount of the loan balance, this may adversely affect our profitability. With capital significantly in excess of regulatory requirements, the Corporation is positioned well to absorb any such losses.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4T. Controls and Procedures

The Chief Executive Officer and the Chief Financial Officer of the Registrant have evaluated the effectiveness of the Registrant’s disclosure controls and procedures as of March 31, 2009, and have concluded that the disclosure controls and procedures in place at March 31, 2009, were effective.

There were no changes in the Corporation’s internal control over financial reporting that occurred during the quarter ended March 31, 2009, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

ITEM 1. Legal Proceedings

Not applicable

ITEM 1A. Risk Factors

Not applicable

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

19

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

The following table sets forth information regarding the only purchase of the Corporation’s stock made by the Corporation during the quarter ended March 31, 2009:

							Maximum Number (or
					Total Number of		Approximate Dollar
					Shares (or Units)		Value) of Shares
					Purchased as Part		(or Units) That May
	Total Number of				of Publicly		Be Purchased Under
	Shares (or Units)		Average Price Paid		Announced Plans or		the Plans or
Period	Purchased(1)		Per Share (or Unit)		Programs		Programs
February 2009		560	$	8.00		—		—

(1) All of the 560 shares were repurchased pursuant to a put option under the Company’s employee stock ownership plan.

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

Not applicable

ITEM 6. Exhibits

3.1	Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Charter
3.2	Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Bylaws (as amended on April 21, 2009)
4	Agreement to Furnish Long-Term Debt Instruments and Agreements
10.1	Employment Agreement with Jeff D. Kniese
31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

20

Greenville Federal Financial Corporation
PART II — OTHER INFORMATION (CONTINUED)

32.1	Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

21

Greenville Federal Financial Corporation

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.

	GREENVILLE FEDERAL FINANCIAL CORPORATION
Date: May 14, 2009	By:	/s/ Jeff D. Kniese
		Jeff D. Kniese
		President and Chief Executive Officer
Date: May 14, 2009	By:	/s/ Susan J. Allread
		Susan J. Allread
		Chief Financial Officer

22

INDEX TO EXHIBITS

3.1	Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Charter (Incorporated by reference to Exhibit 2 to the Registration Statement on Form 8-A filed by the Registrant with the Securities and Exchange Commission on December 14, 2006)
3.2	Greenville Federal Financial Corporation Federal Stock Subsidiary Holding Company Bylaws (as Amended on April 21, 2009) (Incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed by the Registrant with the Securities and Exchange Commission on April 24, 2009)
4	Agreement to Furnish Long-Term Debt Instruments and Agreements
10.1	Employment Agreement with Jeff D. Kniese (Incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Registrant with the Securities and Exchange Commission on April 14, 2009)
31.1	Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002