FFDF F F D Financial (MM)

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

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," and similar expressions as they relate to FFD or its management are intended to identify such forward looking statements. FFD'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, changes in the interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulations, and rapidly changing technology affecting financial services.

There have been no material changes to the critical accounting policies as disclosed in the Corporation's Form 10-KSB for the year ended June 30, 2007.

The Corporation's total assets at December 31, 2007, were $176.2 million, a $3.2 million, or 1.9%, increase from the total at June 30, 2007.

Cash and cash equivalents totaled $8.9 million at December 31, 2007, a decrease of $153,000, or 1.7%, from the total at June 30, 2007. Investment securities totaled $3.5 million at December 31, 2007, a $50,000, or 1.5%, increase from the total at June 30, 2007, which resulted primarily from mark-to-market adjustments under SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." Mortgage-backed securities totaled $340,000 at December 31, 2007, a $24,000, or 6.6%, decrease compared to the total at June 30, 2007, which resulted from principal repayments and a $2,000 mark-to-market adjustment under SFAS No. 115.

Loans receivable totaled $156.9 million at December 31, 2007, an increase of $3.6 million, or 2.4%, from the June 30, 2007 total. Loan originations during the period totaling $41.7 million were substantially offset by principal repayments of $28.2 million, loans sold in the secondary market of $5.8 million and loans sold to other financial institutions of $4.3 million. During the six-month period ended December 31, 2007, loan originations were comprised of $20.1 million of one- to four-family residential real estate loans, $15.2 million of nonresidential real estate loans, $3.2 million of commercial loans, $2.3 million of consumer loans, and $900,000 of multifamily loans. Nonresidential real estate and commercial lending generally involve 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. The Corporation endeavors to reduce this 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 or business and appraisals supporting the real estate or collateral valuation.

The allowance for loan losses totaled $1.1 million at December 31, 2007, an increase of $149,000, or 16.1%, from the June 30, 2007 balance of $930,000, and represented .68% and .60% of total loans at each of those respective dates. The increase resulted from a provision of $199,000, which was partially offset by charge-offs of $50,000. Although management believes that the allowance for loan losses at December 31, 2007, is 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 the Corporation's results of operations.

FFD Financial Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED)

Deposits totaled $138.6 million at December 31, 2007, a $1.3 million, or 1.0%, decrease from total deposits at June 30, 2007. The decrease was primarily in interest bearing deposits. FHLB advances totaled $17.3 million at December 31, 2007, a $4.3 million, or 32.6%, increase from the June 30, 2007 total. The FHLB advances were used to fund loan growth and provide liquidity in light of the deposit decline.

Shareholders' equity totaled $18.4 million at December 31, 2007, an increase of $257,000, or 1.4%, over June 30, 2007. The increase was due primarily to period net earnings of $770,000, proceeds from the exercise of stock options totaling $36,000, and a decrease in the unrealized losses on securities designated as available for sale of $31,000, which were partially offset by dividends paid of $337,000 and the purchase of treasury shares totaling $243,000. The Bank is required to meet minimum capital standards promulgated by the Office of Thrift Supervision, and at December 31, 2007, the Bank's regulatory capital exceeded the minimum capital requirements.

The Corporation's net earnings totaled $770,000 for the six months ended December 31, 2007, a decrease of $71,000, or 8.4%, from the net earnings of $841,000 recorded in the comparable period in 2006. The $71,000, or 8.4%, decrease in net earnings resulted from increases of $97,000, or 95.1%, in the provision for losses on loans and $84,000, or 3.8%, in general, administrative and other expenses and a decrease of $20,000, or 6.1%, in other income, which were partially offset by an increase of $94,000, or 2.9%, in net interest income and a decrease of $36,000, or 8.3%, in income tax expense.

Total interest income increased by $478,000, or 8.5%, to $6.1 million for the six months ended December 31, 2007, compared to the six months ended December 31, 2006. Interest income on loans increased by $513,000, or 9.7%, due to an increase of $12.3 million, or 8.5%, in the average loan portfolio balance outstanding and a 8 basis point increase in yield. The current period increase in yield generally reflects better yields in the first part of the six month period comparing year over year. Interest income on investment securities, interest-bearing deposits and other assets decreased by $33,000, or 11.8%, to a total of $247,000 for the six months ended December 31, 2007, due to a $1.3 million, or 11.5%, decrease in the average balance outstanding and a 3 basis point decrease in yield. Interest income on mortgage-backed securities decreased by $2,000, or 14.3%, due to a decrease of $114,000, or 24.6%, in the average balance outstanding.

Total interest expense increased by $384,000, or 16.4%, to $2.7 million for the six months ended December 31, 2007, compared to the six months ended December 31, 2006. Interest expense on deposits increased by $405,000, or 20.8%, due to a 35 basis point increase in the average cost of deposits, to 3.39%, for the 2007 period and a $10.9 million, or 8.5%, increase in the average balance of deposits outstanding period to period. Interest expense on borrowings decreased by $21,000, or 5.3%, due to a decrease of $903,000, or 6.0%, in the average balance of advances outstanding and a 57 basis point decrease in the average cost of borrowings.

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $94,000, or 2.9%, for the six months ended December 31, 2007, compared to the same period in 2006. The interest rate spreads were 3.74% and 3.88%, and the net interest margins were 4.00% and 4.16%, for the six-month periods ended December 31, 2007 and 2006, respectively.

FFD Financial Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED)

The Corporation recorded a $199,000 provision for losses on loans during the six months ended December 31, 2007, and a $102,000 provision for the comparable period in 2006. The increase in the provision for losses on loans was due to a combination of loan portfolio growth, net charge-offs, changes in the classifications of some loans, and management's assessment of current economic conditions applied to the portfolio. There can be no assurance that the loan loss allowance will be adequate to cover losses on nonperforming loans in the future, which can adversely affect the Corporation's results of operations.

Other income totaled $306,000 for the six months ended December 31, 2007, a decrease of $20,000, or 6.1%, from the 2006 total. The $20,000 decrease in other income resulted from a $28,000, or 30.4%, decrease in gain on sale of loans due to a continued soft residential mortgage market and a $3,000, or 2.3%, decrease in service charges on deposit accounts, which were partially offset by an $11,000, or 10.6%, increase in other operating income.

General, administrative and other expense totaled $2.3 million for the six months ended December 31, 2007, an increase of $84,000, or 3.8%, compared to the same period in 2006. The increase in general, administrative and other expense includes increases of $41,000, or 21.4%, in occupancy and equipment, $37,000, or 11.4%, in other operating expense, $13,000, or 12.7%, in checking account maintenance expense, $9,000, or 7.7%, in professional and consulting fees, $9,000, or 8.4%, in franchise tax, $6,000, or .6%, in employee and director compensation and benefits, and $5,000, or 3.1%, in data processing, which were partially offset by decreases of $24,000, or 20.9%, in advertising and $12,000, or 14.8% in postage and stationery supplies. The increase in occupancy and equipment was due to equipment purchases to convert the Sugarcreek office from a limited service office to a full service office. The increase in other operating expense was the result of increases in internet banking expense. The increase in employee compensation was due to normal merit increases and additional staffing from the conversion of the Sugarcreek office to a full service office, which were partially offset by decreases in advertising expense and office supplies. The increase in data processing expense was due to the Corporation's growth period to period.

The Corporation recorded a $400,000 income tax expense for the six months ended December 31, 2007, a decrease of $36,000, or 8.3%, over the same period in 2006. The decrease resulted from a $107,000, or 8.4%, decrease in earnings before taxes. The Corporation's effective tax rates were 34.2% and 34.1% for the six months ended December 31, 2007 and 2006, respectively.

FFD Financial Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED)

The Corporation's net earnings totaled $362,000 for the three months ended December 31, 2007, a decrease of $37,000, or 9.3%, from the net earnings of $399,000 recorded in the comparable period in 2006. The $37,000, or 9.3%, decrease in net earnings resulted from increases of $72,000, or 184.6%, in the provision for losses on loans and $6,000, or .5%, in general, administrative and other expenses and a decrease of $6,000, or 3.8%, in other income, which were partially offset by an increase of $29,000, or 1.8%, in net interest income and a decrease of $18,000, or 8.7%, in income tax expense.

Total interest income increased by $152,000, or 5.3%, to $3.0 million for the three months ended December 31, 2007, compared to the three months ended December 31, 2006. Interest income on loans increased by $177,000, or 6.6%, due to an increase of $11.8 million, or 8.10%, in the average loan portfolio balance outstanding which was partially offset by a 10 basis point decrease in yield. The current period decrease in yield generally reflects repricing of adjustable rate loans in the portfolio and the overall interest rate environment. Interest income on investment securities, interest-bearing deposits and other assets decreased by $24,000, or 15.8%, to a total of $128,000 for the three months ended December 31, 2007, due to a $1.8 million, or 14.8%, decrease in the average balance outstanding and a 9 basis point decrease in yield. Interest income on mortgage-backed securities decreased by $1,000, or 14.3%, due to a decrease of $56,000, or 14.1%, in the average balance outstanding and a 13 basis point decrease in yield.

Total interest expense increased by $123,000, or 10.1%, to $1.3 million for the three months ended December 31, 2007, compared to the three months ended December 31, 2006. Interest expense on deposits increased by $109,000, or 10.4%, due to a 15 basis point increase in the average cost of deposits, to 3.35%, and a $7.1 million, or 5.4%, increase in the average balance of deposits outstanding period to period. Interest expense on borrowings increased by $14,000, or 8.2%, due to an increase of $3.9 million, or 30.0%, in the average balance of advances outstanding, which was partially offset by a 9 basis point decrease in the average cost of borrowings.

As a result of the foregoing changes in interest income and interest expense, net interest income increased by $29,000, or 1.8%, for the three months ended December 31, 2007, compared to the same period in 2006. The interest rate spreads were 3.69% and 3.83%, and the net interest margins were 3.95% and 4.12%, for the three-month periods ended December 31, 2007 and 2006, respectively.

The Corporation recorded a $111,000 provision for losses on loans during the three months ended December 31, 2007, and a $39,000 provision for the comparable quarter in 2006. The increase in the provision for losses on loans was due to a combination of loan portfolio growth, net charge-offs, changes in the classifications of some loans, and management's assessment of current economic conditions applied to the portfolio. There can be no assurance that the loan loss allowance will be adequate to cover losses on nonperforming loans in the future, which can adversely affect the Corporation's results of operations.

Other income totaled $151,000 for the three months ended December 31, 2007, a decrease of $6,000, or 3.8%, from the 2006 total. The decrease was due to decreases of $14,000, or 35.0%, in gain on sale of loans and $2,000, or 3.1%, in service charges on deposit accounts, which were partially offset by an increase of $10,000, or 19.2%, in other operating income.

FFD Financial Corporation

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (CONTINUED)

General, administrative and other expense totaled $1.1 million for the three months ended December 31, 2007, an increase of $6,000, or .5%, compared to the same period in 2006. The increase in general, administrative and other expense includes increases of $8,000, or 14.8%, in checking account maintenance expense, $4,000, or 7.4%, in franchise tax, $4,000, or 5.0%, in data processing, $4,000, or 2.1%, in other expense, $2,000, or 2.1%, in occupancy and equipment, and $2,000, or 4.9%, in postage and stationery supplies, which were partially offset by decreases of $9,000, or 16.7, in advertising, $7,000, or 1.4%, in employee compensation and benefits, and $2,000, or 2.9%, in professional and consulting fees.

The Corporation recorded a $189,000 income tax expense for the three months ended December 31, 2007, a decrease of $18,000, or 8.7%, over the same period in 2006. The decrease resulted from a $55,000, or 9.1%, decrease in earnings before taxes. The Corporation's effective tax rates were 34.3% and 34.2% for the three months ended December 31, 2007 and 2006, respectively.