GVFF Greenville Federal Financial Corp (PK)

 

 

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 ended March 31, 2010

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		(IRS Employer Identification No.)
incorporation or organization)

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

(937) 548-4158

N/A

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 web site, 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		Smaller reporting company þ
				(Do not check if a smaller reporting company)

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, 2010, 2,096,196 shares of the small business issuer’s common stock, $0.01 par value, were issued and 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)			6
Consolidated Statements of Cash Flows			7
Notes to Consolidated Financial Statements			9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures About Market Risk			24
Item 4. Controls and Procedures			24
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			25
Item 1A. Risk Factors			25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			25
Item 3. Defaults Upon Senior Securities			25
Item 4. Submission of Matters to a Vote of Security Holders			25
Item 5. Other Information			25
Item 6. Exhibits			26
SIGNATURES			27
Exhibit 4
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

ITEM 1. Financial Statements

Greenville Federal Financial Corporation

Consolidated Balance Sheets

(In thousands, except share data)

		March 31,				June 30,
		2010				2009
		(Unaudited)
ASSETS
Cash and due from banks		$	1,895			$	1,870
Interest-bearing deposits in other financial institutions			4,178				2,604
Cash and cash equivalents			6,073				4,474
Investment securities designated as available for sale — at fair value			11,554				11,888
Investment securities designated as held to maturity — at amortized cost (fair value: 3/31/10 — $3, 6/30/09 — $11)			3				11
Mortgage-backed securities designated as held to maturity — at amortized cost (fair value: 3/31/10 — $1,456, 6/30/09 — $1,893)			1,370				1,822
Loans receivable — net of allowance for loan losses of $750 and $577 at March 31, 2010 and June 30, 2009, respectively			92,882				91,663
Office premises and equipment — at depreciated cost			1,860				1,958
Real estate acquired through foreclosure			72				559
Stock in Federal Home Loan Bank — at cost			2,003				2,003
Cash surrender value of life insurance			4,261				4,151
Accrued interest receivable			471				511
Prepaid expenses and other assets			1,021				530
Total assets		$	121,570			$	119,570
LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits		$	78,336			$	72,918
Advances from the Federal Home Loan Bank			24,669				26,903
Advances by borrowers for taxes and insurance			291				406
Accrued interest payable			79				111
Other liabilities			584				618
Total liabilities			103,959				100,956
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 2,096,196 outstanding			23				23
Treasury Stock, at cost, 202,215 shares			(1,490	)			(4	)
Additional paid-in capital			9,092				9,051
Retained earnings — restricted			10,069				10,018
Shares acquired by Employee Stock Ownership Plan			(541	)			(541	)
Accumulated comprehensive income, net of related tax benefits			458				67
Total stockholders’ equity			17,611				18,614
Total liabilities and stockholders’ equity		$	121,570			$	119,570

See notes to consolidated financial statements.

Greenville Federal Financial Corporation

Consolidated Statements of Operations

(In thousands, except share data)

(Unaudited)

		Three months ended								Nine months ended
		March 31,								March 31,
		2010				2009				2010				2009
Interest income
Loans		$	1,416			$	1,518			$	4,292			$	4,505
Mortgage-backed securities			19				30				63				70
Investment securities			97				134				328				483
Interest-bearing deposits and other			23				23				71				96
Total interest income			1,555				1,705				4,754				5,154
Interest expense
Deposits			289				385				919				1,289
Borrowings			208				236				691				643
Total interest expense			497				621				1,610				1,932
Net interest income			1,058				1,084				3,144				3,222
Provision for losses on loans			70				35				222				85
Net interest income after provision for losses on loans			988				1,049				2,922				3,137
Other income
Customer service charges			115				126				416				429
Gain (loss) on redemption of investment securities			11				3				25				(5	)
Other operating			66				55				218				203
Total other income			192				184				659				627
General, administrative and other expense
Employee compensation and benefits			514				607				1,633				1,784
Occupancy and equipment			96				113				307				309
Franchise taxes			28				35				114				131
Data processing			85				82				248				322
Advertising			17				12				47				49
Impairment charge on investment securities			–				482				–				3,329
Loss (gain) on sale of real estate acquired through foreclosure			5				9				6				6
Provision for loss on real estate acquired through foreclosure			98				10				105				193
FDIC insurance expense			44				4				129				12
Other operating			144				228				662				665
Total general, administrative and other expense			1,031				1,582				3,251				6,800
Income (loss) before income taxes			149				(349	)			330				(3,036	)

See notes to consolidated financial statements.

Greenville Federal Financial Corporation
Consolidated Statements of Operations
(In thousands, except share data)
(Unaudited)

		Three months ended								Nine months ended
		March 31,								March 31,
		2010				2009				2010				2009
Federal income taxes
Current			39				22				76				39
Deferred			—				—				—				—
Total federal income taxes			39				22				76				39
NET INCOME (LOSS)		$	110			$	(371	)		$	254			$	(3,075	)
Earnings per share — basic and diluted		$	0.05			$	(0.17	)		$	0.12			$	(1.38	)
Dividends declared per share		$	0.07			$	0.07			$	0.21			$	0.21

See notes to consolidated financial statements.

Greenville Federal Financial Corporation

Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

		Three Months Ended								Nine Months Ended
		March 31,								March 31,
		2010				2009				2010				2009
Net income (loss)		$	110			$	(371	)		$	254			$	(3,075	)
Other comprehensive income (losses), net of related tax benefits:
Unrealized holding gains (losses) on available for sale securities			17				3				416				(5	)
Reclassification adjustment for losses (gains) later recognized in income			(11	)			(3	)			(25	)			5
Unrealized holding gains (losses) on securities during the period, net of taxes (benefits) of $0, $0, $0 and $0 for the respective periods			6				—				391				—
Comprehensive income		$	116			$	(371	)		$	645			$	(3,075	)
Accumulated comprehensive gain, net of related tax benefits		$	458			$	—			$	458			$	—

See notes to consolidated financial statements.

Greenville Federal Financial Corporation

Consolidated Statements of Cash Flows

For the nine months ended March 31, 2010 and 2009

(In thousands)

(Unaudited)

		2010				2009
Cash flows from operating activities:
Net income (loss) for the period		$	254			$	(3,075	)
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization of premiums and discounts on investments and mortgage-backed securities — net			6				(2	)
Amortization of deferred loan origination fees			(117	)			(80	)
Depreciation and amortization			109				98
Amortization of mortgage servicing rights			13				23
Other-than-temporary impairment of investment securities designated as available for sale			—				3,329
Loss (gain) on redemption of investment security			(25	)			5
Provision for losses on loans			222				85
Provision for loss on real estate acquired through foreclosure			101				193
Loss (gain) on disposition of real estate acquired through foreclosure			11				6
Federal Home Loan Bank stock dividends			—				(27	)
Increase in cash surrender value of life insurance			(110	)			(113	)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans			27				57
Accrued interest receivable on mortgage-backed securities			3				(3	)
Accrued interest receivable on investment securities and other			10				29
Prepaid expenses and other assets			(504	)			(78	)
Accrued interest payable			(32	)			(73	)
Other liabilities			(85	)			(168	)
Stock option expense			11				17
Retention share expense			30				37
Federal income taxes
Current			51				(55	)
Net cash from operating activities			(25	)			205
Cash flows used in investing activities:
Purchases of mortgage-backed securities designated as held to maturity			—				(1,004	)
Sale/redemption of investment securities			750				750
Proceeds from maturity of investment securities designated as held to maturity			—				2,008
Proceeds from repayment of mortgage-backed securities			454				257
Loan principal repayments			9,319				9,693
Loan disbursements			(10,803	)			(11,964	)
Purchase of office equipment			(11	)			(179	)
Additions to real estate acquired through foreclosure			—				(14	)
Proceeds from sale of real estate acquired through foreclosure			535				224
Net cash from investing activities			244				(229	)

See notes to consolidated financial statements.

Greenville Federal Financial Corporation
Consolidated Statements of Cash Flows (Continued)
For the nine months ended March 31, 2010 and 2009
(In thousands)
(Unaudited)

		2010				2009
(net balance brought forward)		$	219			$	(24	)
Cash flows provided by financing activities:
Net increase (decrease) in deposit accounts			5,418				(7,468	)
Proceeds from Federal Home Loan Bank advances			5,000				9,500
Repayments of Federal Home Loan Bank advances			(7,234	)			(3,007	)
Advances by borrowers for taxes and insurance			(115	)			(92	)
Repurchase of treasury stock			(1,486	)			(4	)
Dividends on common stock			(203	)			(217	)
Net cash from financing activities			1,380				(1,288	)
Net increase (decrease) in cash and cash equivalents			1,599				(1,312	)
Cash and cash equivalents at beginning of period			4,474				7,220
Cash and cash equivalents at end of period		$	6,073			$	5,908
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowings		$	1,572			$	2,005
Federal income taxes		$	—			$	92
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure		$	160			$	394
Unrealized gains on securities designated as available for sale, net of related tax effects		$	391			$	—

See notes to consolidated financial statements.

Greenville Federal Financial Corporation

Notes to Consolidated Financial Statements

For the nine- and three-month periods ended March 31, 2009 and 2010

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, 2009. 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, 2010, 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 49,533 and 58,543 weighted-average shares for the three months ended March 31, 2010 and 2009 respectively, and less 51,800 and 60,810 weighted-average shares for the nine months ended March 31, 2010 and 2009 respectively, in the Corporation’s ESOP that are unallocated and not committed to be released.

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

Weighted-average common shares deemed outstanding totaled 2,034,633 and 2,224,471 for the three months ended March 31, 2010 and 2009 respectively. Weighted-average common shares deemed outstanding totaled 2,138,655 and 2,222,371 for the nine months ended March 31, 2010 and 2009, 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 2,034,633 and 2,138,655 for the three-month and nine-month periods ended March 31, 2010, respectively. Options to purchase 52,400 shares of common stock at $9.45 per share and 28,000 shares at $4.13 per share were outstanding at March 31, 2010, but were excluded from the computation of diluted earnings per share because their exercise price was greater than the average fair value. There were 74,800 option shares that were excluded from the computation of diluted earnings per share for the three-month and nine-month periods ended March 31, 2010, because their exercise price was greater than the average fair value.

Note 4: Recent Accounting Developments

Recently Issued but not yet Effective Accounting Pronouncements:

Accounting for Transfers of Financial Assets: In June 2009, FASB issued SFAS No. 166 “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140.” This removes the concept of a qualifying special-purpose entity from existing GAAP and removes the exception from applying FASB ASC 810-10, Consolidation (FASB Interpretation No. 46 (revised December 2003) Consolidation of Variable Interest Entities) to qualifying special purpose entities. The objective of this new guidance is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. The new guidance shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Management is still evaluating the impact of this accounting standard.

Amendments to FASB Interpretation No. 46(R): In June 2009, FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R) (ASC 810).” The objective of this new guidance is to amend certain requirements of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. The new guidance shall be effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Management is still evaluating the impact of this accounting standard.

Note 5: Commitments

At March 31, 2010 and 2009, the Corporation had outstanding commitments to extend credit of $3.5 million and $3.7 million, respectively. Standby letters of credit as of March 31, 2010 and 2009, totaled $20,000 and $52,000, respectively.

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

Note 6: Disclosures About Fair Value of Assets and Liabilities

Fair value is 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. The measure of fair value under GAAP uses a 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 active 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

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 fair value hierarchy in which the fair value measurements fall at March 31, 2010:

Fair Value Measurements Using

Quoted Prices in

Significant

Active Markets

Other

Significant

for Identical

Observable

Unobservable

Assets

Inputs

Inputs

Fair Value

(Level 1)

(Level 2)

(Level 3)

March 31, 2010

Asset Management Fund

$

11,554,000

$

11,554,000

June 30, 2009

Asset Management Fund

$

11,888,000

$

11,888,000

As of March 31, 2010, the Company does not have any financial assets or liabilities for which fair value is measured on a non-recurring basis.

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

Fair Value of Financial Instruments

The following table presents the fair values of financial assets and liabilities carried on the Corporation’s consolidated balance sheet at March 31, 2010, including those financial assets and liabilities that are not measured and reported at fair value on a recurring or non-recurring basis. The methods used are greatly affected by the assumptions applied, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in an exchange for certain financial instruments.

The following methods and assumptions were used by the Corporation in estimating its fair value disclosures for financial instruments at March 31, 2010 and June 30, 2009:

Cash and cash equivalents : The carrying amounts presented in the consolidated balance sheets for cash and cash equivalents are deemed to approximate fair value.

Investment and mortgage-backed securities : For investment and mortgage-backed securities, fair value is deemed to equal the quoted market price.

Loans receivable : The loan portfolio has been segregated into categories with similar characteristics, such as one-to four-family residential, multi-family residential, nonresidential real estate, commercial and consumer loans. These loan categories were further delineated into fixed-rate and adjustable-rate loans. The fair values for the resultant loan categories were computed via discounted cash flow analysis, using current interest rates offered for loans with similar terms to borrowers of similar credit quality.

Federal Home Loan Bank stock : It was not practicable to determine the fair value of the FHLB stock due to restrictions placed on its transferability.

Accrued interest receivable : The carrying amount presented in the consolidated balance sheets is deemed to approximate fair value.

Deposits : The fair value of checking and NOW accounts, savings accounts, and money market deposits is deemed to approximate the amount payable on demand at March 31, 2010 and June 30, 2009. Fair values for fixed-rate certificates of deposit have been estimated using a discounted cash flow calculation using the interest rates currently offered for deposits of similar remaining maturities.

Federal Home Loan Bank advances : The fair value of Federal Home Loan Bank advances has been estimated using discounted cash flow analysis, based on the interest rates currently offered for advances of similar remaining maturities.

Accrued interest payable : The carrying amount presented in the consolidated balance sheets is deemed to approximate fair value.

Commitments to extend credit : For fixed-rate and adjustable-rate loan commitments, the fair value estimate considers the difference between current levels of interest rates and committed rates. At March 31, 2010 and 2009, the fair value of loan commitments was not material.

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

Based on the foregoing methods and assumptions, the carrying value and fair value of the Corporation’s financial instruments are as follows at March 31, 2010 and June 30, 2009:

		March 31, 2010								June 30, 2009
		Carrying				Fair				Carrying				Fair
		Value				Value				Value				Value
		(In thousands)
Financial Assets
Cash and cash equivalents		$	6,073			$	6,073			$	4,474			$	4,474
Investment securities available for sale			11,554				11,554				11,888				11,888
Investment securities held to maturity			3				3				11				11
Mortgage-backed securities			1,370				1,456				1,822				1,893
Loans receivable			92,882				99,208				91,663				96,002
Accrued interest receivable			471				471				511				511
		$	112,353			$	118,765			$	110,369			$	114,779
Financial Liabilities
Deposits		$	78,336			$	79,301			$	72,918			$	73,859
Advances from the Federal Home Loan Bank			24,669				24,324				26,903				26,192
Advances by borrowers for taxes and insurance			291				291				406				406
Accrued interest payable			79				79				111				111
		$	103,375			$	103,995			$	100,338			$	100,568

Note 7: Investment and Mortgage-backed Securities

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of investment securities at March 31, 2010 and June 30, 2009 are shown below.

						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
		(In thousands)
March 31, 2010
Available for Sale:
Asset management fund		$	11,096			$	458			$	—			$	11,554
Held to Maturity:
Municipal obligations		$	3			$	—			$	—			$	3
June 30, 2009
Available for Sale:
Asset management fund		$	11,821			$	67			$	––			$	11,888
Held to Maturity:
Municipal obligations		$	11			$	––			$	––			$	11

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

The amortized cost and estimated fair value of U.S. Government agency, government sponsored entities and municipal obligations held to maturity, by term to maturity at March 31, 2010 and June 30, 2009, are shown below.

		March 31, 2010								June 30, 2009
						Estimated								Estimated
		Amortized				Fair				Amortized				Fair
		Cost				Value				Cost				Value
Held to Maturity:
Due within one year		$	3			$	3			$	11			$	11
Total held to maturity		$	3			$	3			$	11			$	11

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair value of mortgage-backed securities held to maturity at March 31, 2010 and June 30, 2009 are shown below.

						Gross				Gross				Estimated
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value
		(In thousands)
March 31, 2010
Federal Home Loan Mortgage Corporation participation certificates		$	140			$	2			$	—			$	142
Federal National Mortgage Association participation certificates			699				50				—				749
Government National Mortgage Association participation certificates			531				34				—				565
Total mortgage-backed securities		$	1,370			$	86			$	—			$	1,456
June 30, 2009
Federal Home Loan Mortgage Corporation participation certificates		$	155			$	—			$	––			$	155
Federal National Mortgage Association participation certificates			881				42				––				923
Government National Mortgage Association participation certificates			786				29				––				815
Total mortgage-backed securities		$	1,822			$	71			$	––			$	1,893

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

The amortized cost and estimated fair values of mortgage-backed securities at March 31, 2010 and June 30, 2009, by contractual term to maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may generally prepay obligations without prepayment penalties.

		March 31, 2010								June 30, 2009
		Amortized				Estimated				Amortized				Estimated
		Cost				Fair Value				Cost				Fair Value
Due in one year or less		$	—			$	—			$	—			$	—
Due after one year through five years			2				2				1				1
Due after five years through ten years			120				122				135				135
Due after ten years			1,248				1,332				1,686				1,757
		$	1,370			$	1,456			$	1,822			$	1,893

The Corporation had no securities in an unrealized loss position at March 31, 2010 or June 30, 2009.

The Corporation’s investments are generally limited to issuances of U. S. Government, government agencies, government sponsored entities and other high quality debt instruments. The Fund represents an open-ended adjustable-rate mortgage fund. The Fund invests primarily in high quality adjustable-rate mortgage-related investments, with a target duration generally no shorter than a six-month U. S. Treasury Bill and no longer than a one-year U.S. Treasury Bill. The Fund may also invest in U.S. Government and agency securities, government sponsored entities’ securities, certificates of deposit, repurchase agreements and bankers’ acceptances.

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 took the $250,000 redemption option once each quarter during fiscal 2009 as well as the first three quarters of fiscal 2010. Currently, Greenville Federal’s investment in the Fund has an unrealized gain of $458,000.

Note 8: Loans Receivable

The composition of the loan portfolio at March 31, 2010 and June 30, 2009 is as follows:

		March 31,				June 30,
		2010				2009
		(In thousands)
Residential real estate
One- to four-family		$	79,942			$	77,866
Multi-family			3,758				3,825
Construction			1,041				686
Nonresidential real estate			5,425				5,793
Commercial			1,935				2,270
Consumer and other			2,372				2,710
Total loans			94,473				93,150
Less
Unearned interest			7				10
Deferred loan origination fees, net			307				338
Allowance for loan losses			750				577
Undisbursed portion of loans in process			527				562
Net loans		$	92,882			$	91,663

Greenville Federal Financial Corporation
Notes to Consolidated Financial Statements

Note 9: Allowance for Loan Losses

Following is an analysis of changes in the allowance for loan losses for the nine-month periods ended March 31:

		2010				2009
		(In thousands)
Balance, July 1		$	577			$	583
Provision for loan losses			222				85
Charge-offs of loans, net of recoveries			(49	)			(93	)
Balance, March 31, 2010		$	750			$	575

At March 31, 2010 and 2009, the Corporation had accruing loans delinquent 90 days or more totaling $821,000 and $51,000, respectively. At March 31, 2010 and 2009, the Corporation had non-accruing loans totaling $523,000 and $280,000, respectively. Interest income that would have been recognized had such nonperforming loans performed pursuant to contractual terms totaled approximately $38,000 and $17,000 for the nine-months ended March 31, 2010 and 2009, respectively.

Impaired loans totaled $504,000 at March 31, 2010. There were impaired loans totaling $1.0 million as of June 30, 2009. Interest of $26,000 was recognized on impaired loans of $504,000 for the nine-months ended March 31, 2010. Interest of $6,000 was recognized on impaired loans on a cash basis during the nine-months ended March 31, 2010. The portion of allowance for loan losses allocated to the impaired loan balance was zero at March 31, 2010.

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 March 31, 2010.

Discussion of Financial Condition Changes from June 30, 2009 to March 31, 2010

The Corporation’s assets totaled $121.6 million at March 31, 2010, an increase of $2.0 million, or 1.7%, from the $119.6 million total at June 30, 2009. The increase in assets resulted primarily from an increase in cash and cash equivalents and loans receivable, partially offset by a decrease in real estate acquired through foreclosure.

Cash and cash equivalents, consisting of cash and due from banks and interest-bearing deposits in other financial institutions, increased by $1.6 million, or 35.7%, over the nine-month period ended March 31, 2010. The primary reason for the increase in cash and cash equivalents was the acceptance of deposits of public funds from the City of Greenville during the quarter. These deposits are a lower cost of funding source than FHLB advances. Investment securities available-for-sale totaled $11.6 million at March 31, 2010, a decrease of $334,000, or 2.8%, from the total at June 30, 2009.

Loans receivable totaled $92.9 million at March 31, 2010, compared to $91.7 million at June 30, 2009, an increase of $1.2 million, or 1.3%. The increase was primarily attributable to a $2.1 million growth in one- to four-family residential real estate loans, coupled with a $355,000 increase in one- to four-family construction loans, partially offset by a $368,000 decrease in non-residential real estate, a $335,000 decrease in commercial loans, and a $338,000 decrease in consumer loans. Loan disbursements during the period totaling $10.8 million were partially offset by principal repayments of $9.3 million and loans transferred into real estate owned of $160,000.

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 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.

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

The allowance for loan losses totaled $750,000 at March 31, 2010, an increase of $173,000, or 29.9%, from the June 30, 2009 balance of $577,000, and represented 0.79% and 0.62% of total loans at those respective dates. Greenville Federal’s nonperforming loans, the majority of which are one- to four-family residential properties, totaled $1.3 million and $834,000 at March 31, 2010 and June 30, 2009, 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, 2010. Although management believes that the allowance for loan losses at March 31, 2010, 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 $78.3 million at March 31, 2010, an increase of $5.4 million, or 7.4%, from June 30, 2009. Greenville Federal participates in a bidding process for local short-term public deposits. Such short-term deposits from the City of Greenville totaled $2.9 million at March 31, 2010, up from $500,000 at June 30, 2009. These deposits are a lower cost of funding source than FHLB advances.

Advances from the Federal Home Loan Bank totaled $24.7 million at March 31, 2010, a decrease of $2.2 million, or 8.3%, compared to June 30, 2009. The decrease in advances was primarily the result of repayments, coupled with not taking any new advances during the quarter.

Shareholders’ equity totaled $17.6 million at March 31, 2010, a decrease of $1.0 million, or 5.4%, from June 30, 2009. The decrease resulted from Greenville Federal purchasing 200,510 outstanding common shares at a purchase price of $6.50 per share, through a modified “dutch auction” tender offer, for a total cost of $1.3 million, partially offset by the recording of a $391,000 unrealized gain on securities designated as available for sale during the period.

Greenville Federal is required to maintain minimum regulatory capital pursuant to federal regulations. At March 31, 2010, Greenville Federal’s regulatory capital continued to substantially exceed all minimum regulatory capital requirements.

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

The following tables summarize Greenville Federal’s regulatory capital requirements and actual capital at March 31, 2010 and June 30, 2009:

																		Minimum Required To
										Minimum Required For								Be Well Capitalized
										Capital Adequacy								Under Prompt Corrective
		Actual								Purposes								Action Regulations
		Amount				Ratio				Amount				Ratio				Amount				Ratio
		(Dollars in thousands)
March 31, 2010
Tangible capital		$	10,652				8.80	%		$	1,815				1.50	%		$	6,051				5.00	%
Core capital		$	10,652				8.80	%		$	4,841				4.00	%		$	7,261				6.00	%
Risk-based capital		$	11,286				14.47	%		$	6,240				8.00	%		$	7,800				10.00	%
June 30, 2009
Tangible capital		$	10,288				8.62	%		$	1,791				1.50	%		$	5,970				5.00	%
Core capital		$	10,288				8.62	%		$	4,776				4.00	%		$	7,164				6.00	%
Risk-based capital		$	10,813				13.83	%		$	6,257				8.00	%		$	11,939				10.00	%

Comparison of Operating Results for the Three-Month Periods Ended March 31, 2010 and 2009

General

The Corporation recorded net income of $110,000 for the three months ended March 31, 2010, compared to a net loss of $371,000 for the same period in 2009. The increase in net income was due primarily to the lack of a non-cash impairment charge on investment securities in the 2010 quarter as the Fund ended the quarter in an unrealized gain position. General, administrative, and other expense, net of the non-cash impairment charge recorded in 2009, decreased $69,000 and other income increased $8,000.Such improvements were partially offset by an increase of $35,000 in provision for losses on loans, a $26,000 decrease in net interest income and a $17,000 increase in federal income tax expense.

Net Interest Income

Interest income totaled $1.6 million for the three months ended March 31, 2010, a decrease of 150,000, or 8.8%, compared to the three months ended March 31, 2009. Interest income on loans decreased by $102,000, or 6.7%, due primarily to a decrease in the weighted-average yield on loans from 6.64% to 6.11%, partially offset by a $1.3 million increase in the average balance of loans outstanding. Interest income on investment securities decreased by $37,000, or 27.6%, due primarily to a $752,000 decrease in the average balance outstanding, coupled with a decrease in the weighted-average yield on such securities from 4.35% in the 2009 three-month period to 3.35% in the 2010 three-month period. All decreases in weighted average yields are primarily due to decreases in rates in the current rate environment. The decrease in interest income on loans can be attributed to higher rate loans being refinanced at lower rates, older loans with higher rates paying off, and new originations paying lower rates.

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

Interest expense totaled $497,000 for the three months ended March 31, 2010, a decrease of $124,000, or 20.0%, compared to the three months ended March 31, 2009. This decrease was a result of a decrease in the weighted-average cost of funds to 2.08% for the three months ended March 31, 2010, from 2.54% for the three months ended March 31, 2009, coupled with a $2.0 million decrease in the average balance of interest-bearing liabilities outstanding year to year. The decrease in the cost of funds is attributable to paying lower rates on deposits.

As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $26,000, or 2.4%, compared to the same period in 2009. The interest rate spread increased to 3.53% for the three months ended March 31, 2010, compared to 3.46% for the three months ended March 31, 2009. The net interest margin was 3.82% for the three months ended March 31, 2010 and March 31, 2009.

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 $70,000 and $35,000 for the three months ended March 31, 2010 and 2009, respectively. The allowance for loan losses totaled $750,000 at March 31, 2010, compared to $577,000 at June 30, 2009. Greenville Federal’s nonperforming loans, consisting of loans 90 days or more past due and nonaccrual loans, totaled $1.3 million at March 31, 2010, an increase of $509,000 compared to June 30, 2009. Due to the increase in nonperforming loans, additional provision for losses on loans was charged to earnings. Of Greenville Federal’s $1.3 million in nonperforming loans, 96.3% are single-family residential mortgage loans and 3.7% are consumer loans. 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.

General, Administrative and Other Expense

General, administrative and other expense, net of the $482,000 non-cash impairment charge on investment securities recorded for the three months ended March 31, 2009, decreased $69,000, or 6.3%, for the three months ended March 31, 2010, compared to the same quarter in 2009. Employee compensation and benefits decreased $93,000, or 15.3%; other operating expense decreased $84,000, or 36.8%; and occupancy and equipment decreased $17,000, or 15.0%. Such decreases were partially offset by an $88,000, or 880.0%, increase in provision for losses on real estate acquired through foreclosure and a $40,000, or 1,000.0%, increase in FDIC insurance premiums. The decrease in employee compensation and benefits resulted from a decrease in the number of employees. The decrease in other operating expense was due primarily to a $29,000 decrease in legal expenses, a $29,000 decrease in consulting expenses, and a $26,000 decrease in audit and accounting services, due to the non-repetitive nature of services provided in 2009 in connection with the Corporation’s share repurchase. The increase in FDIC premiums was due primarily to increases imposed by the FDIC on all insured financial institutions.

The non-cash impairment charge of $482,000 on investment securities recorded during the quarter ended March 31, 2009, resulted from an investment by the Corporation’s subsidiary, Greenville Federal, in the AMF Ultra Short Mortgage Fund (the “Fund”). For the quarter ended March 31, 2010, the Fund ended in an unrealized gain position of $458,000; therefore, no non-cash impairment charge was recorded in the 2010 quarter.

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

Federal Income Taxes

The provision for federal income taxes totaled $39,000 for the three months ended March 31, 2010, an increase of $17,000, or 77.3%, compared to the same quarter in 2009. The increase resulted primarily from a $16,000 increase in pre-tax earnings, net of the $482,000 other-than-temporary impairment charge, year to year. For the three months ended March 31, 2010, the effective tax rate was 26.2%, compared to 16.5% for the three months ended March 31, 2009, which was adjusted for the other-than-temporary impairment.

Comparison of Operating Results for the Nine-Month Periods Ended March 31, 2010 and 2009

General

The Corporation recorded net income of $254,000 for the nine months ended March 31, 2010, compared to a net loss of $3.1 million for the same period in 2009. The increase in net income was due to the lack of a non-cash impairment charge on investment securities in the 2010 nine-month period as the Fund ended the period in an unrealized gain position. Excluding the $3.3 million non-cash impairment charge on investment securities recorded during the nine-month period ended March 31, 2010, the Corporation would have recorded net income of $254,000.

Net Interest Income

Interest income totaled $4.8 million for the nine months ended March 31, 2010, a decrease of $400,000, or 7.8%, compared to the nine months ended March 31, 2009. Interest income on loans decreased by $213,000, or 4.7%, due primarily to a decrease in the weighted-average yield on loans from 6.63% to 6.17%, partially offset by a $2.2 million increase in the average balance of loans outstanding. Interest income on investment securities decreased by $155,000, or 32.1%, due primarily to a $2.6 million decrease in the average balance outstanding, coupled with a decrease in the weighted-average yield on such securities from 4.47% in the 2009 nine-month period to 3.71% in the 2010 nine-month period. All decreases in weighted average yields are primarily due to decreases in rates in the current rate environment. The decrease in interest income on loans can be attributed to higher rate loans being refinanced at lower rates, older loans with higher rates paying off, and new originations paying lower rates.

Interest expense totaled $1.6 million for the nine months ended March 31, 2010, a decrease of $322,000, or 16.7%, compared to the nine months ended March 31, 2009. This decrease was a result of a decrease in the weighted-average cost of funds to 2.22% for the nine months ended March 31, 2010, from 2.61% for the nine months ended March 31, 2009, coupled with a $2.0 million decrease in the average balance of interest-bearing liabilities outstanding year to year. The decrease in the cost of funds is attributable to paying lower rates on deposits.

As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $78,000, or 2.4%, compared to the same period in 2009. The interest rate spread decreased to 3.46% for the nine months ended March 31, 2010, compared to 3.47% for the nine months ended March 31, 2009. The net interest margin decreased to 3.76% for the nine months ended March 31, 2010, from 3.80% for the nine months ended March 31, 2009.

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

Provision for Losses on Loans

Management recorded a provision for losses on loans of $222,000 and $85,000 for the nine months ended March 31, 2010 and 2009, respectively. The allowance for loan losses totaled $750,000 at March 31, 2010, compared to $577,000 at June 30, 2009. Greenville Federal’s nonperforming loans, consisting of loans 90 days or more past due and nonaccrual loans, totaled $1.3 million at March 31, 2010, an increase of $509,000 compared to June 30, 2009.

Other Income

Other income totaled $659,000 for the nine months ended March 31, 2010, compared to $627,000 for the nine months ended March 31, 2009. The difference of $32,000, or 5.1%, resulted from a $30,000 increase in gain on sale of investments and a $15,000 increase in other operating income, which were partially offset by a $13,000 decrease in customer service charges.

General, Administrative and Other Expense

General, administrative and other expense, net of the $3.3 million non-cash impairment charge on investment securities recorded for the nine months ended March 31, 2009, decreased $220,000, or 6.3%, for the nine months ended March 31, 2010, compared to the same period in 2009. The provision for losses on real estate acquired through foreclosure decreased $88,000, or 45.6%; data processing expense decreased $74,000, or 23.0%; and employee compensation and benefits decreased $151,000, or 8.5%. Such decreases were partially offset by a $117,000, or 975.0%, increase in FDIC insurance premiums. The decrease in data processing expense was due primarily to a decrease in the rate structure from the previous year. The decrease in employee compensation and benefits was due primarily to a decrease in employees. The increase in FDIC premiums was due primarily to increases imposed by the FDIC on all insured financial institutions.

The non-cash impairment charge of $3.3 million on investment securities recorded during the nine months ended March 31, 2009, resulted from an investment by the Corporation’s subsidiary, Greenville Federal, in the Fund. For the nine months ended March 31, 2010, the Fund ended in an unrealized gain position of $458,000; therefore, no non-cash impairment charge was recorded in the 2010 period.

Federal Income Taxes

The provision for federal income taxes totaled $76,000 for the nine months ended March 31, 2010, an increase of $37,000, or 94.9%, compared to the same quarter in 2009. The increase resulted primarily from an increase in pre-tax earnings, net of the other-than-temporary impairment charge, year to year. For the nine months ended March 31, 2010, the effective tax rate was 23.0%, compared to 13.3% for the nine months ended March 31, 2009, which was adjusted for the other-than-temporary impairment.

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

Economic Trends and Uncertainties

Negative developments in the capital markets beginning in the latter half of 2007 and continuing into 2010 produced uncertainty in the financial markets and a related economic downturn. Dramatic declines in the housing market, which resulted in decreasing home prices and increasing delinquencies and foreclosures, negatively impacted the credit performance of mortgage and construction loans and resulted in significant write-downs of asset values by financial institutions, including government-sponsored entities and major commercial and investment banks. The values of real estate collateral supporting many loans have declined and may continue to decline, which may result in greater losses on loans that default. The declines in the performance and value of mortgage assets started in the sub-prime market but spread to all mortgage and real estate asset classes, leveraged bank loans and nearly all other asset classes, including equity securities. These write-downs have caused many financial institutions to seek additional capital, to merge with larger and stronger institutions and, in some cases, to fail.

Concerns over the stability of the financial markets and the economy have resulted in decreased lending by some financial institutions to their customers and to each other. This market turmoil and tightening of credit has led to increased commercial and consumer delinquencies, lack of customer confidence, increased market volatility and a widespread reduction in general business activity. Competition among depository institutions for deposits has increased significantly. Many financial institutions have experienced decreased access to deposits or borrowings. Also, our ability to assess the creditworthiness of customers and to estimate the losses inherent in our credit exposure is made more complex by these difficult market and economic conditions.

In 2008 and continuing into 2009 and 2010, the Federal Reserve Board, Congress, the Treasury, the FDIC and others have taken numerous actions to address the current liquidity and credit crisis in the financial markets. These measures include homeowner relief that encourages loan restructuring and modification; the establishment of significant liquidity and credit facilities for financial institutions and investment banks; the lowering of the federal funds rate; and coordinated efforts to address liquidity and other weaknesses in the banking sector. There can be no assurance as to the actual impact that new legislation will have on the economy or financial markets. The failure of these programs to stabilize the financial markets could weaken public confidence in financial institutions and have a substantial and material adverse effect on our ability to attract and retain new customers.

Further, additional legislation or regulations may be adopted in the future that reduce the amount that our customers are required to pay under existing loan contracts or limit our ability to foreclose on collateral. For example, legislation has been proposed to give judges the ability to adjust the principal and interest payments on residential mortgages to allow homeowners to avoid foreclosure. There can be no assurance that future legislation will not significantly impact our ability to collect on our current loans or foreclose on collateral.

The economic turmoil of the last two years has resulted in higher levels of bank failures, which dramatically increased resolution costs of the FDIC and depleted the deposit insurance fund. The FDIC therefore increased assessment rates of insured institutions uniformly by 7 basis points (7 cents for every $100 of deposits), beginning with the first quarter of calendar year 2009. Additional changes, beginning April 1, 2009, were to require riskier institutions to pay a larger share of premiums by factoring in rate adjustments based on secured liabilities and unsecured debt levels.

The Emergency Economic Stabilization Act of 2008 (the “EESA”) instituted two temporary programs to further insure customer deposits at FDIC-member banks: deposit accounts are now insured up to $250,000 per customer (up from $100,000) and noninterest bearing transactional accounts are fully insured (unlimited coverage). The effectiveness of these temporary programs has been extended through December 31, 2013.

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

On May 22, 2009, the FDIC adopted a final rule that imposed a special assessment for the second quarter of 2009 of 5 basis points on each insured depositary institution’s assets minus its Tier 1 capital as of June 30, 2009, which was collected on September 30, 2009.

On November 12, 2009, the FDIC adopted a final rule requiring insured institutions to prepay their estimated quarterly risk-based assessments for the fourth quarter of 2009 and for all of 2010, 2011 and 2012. The prepaid assessments for these periods were collected on December 30, 2009, along with the regular quarterly risk-based deposit insurance assessment for the third quarter of 2009. For the fourth quarter of 2009 and for all of 2010, the prepaid assessment rate was based on each institution’s total base assessment rate in effect on September 30, 2009, modified to assume that the assessment rate in effect for the institution on September 30, 2009, was in effect for the entire third quarter of 2009. On September 29, 2009, the FDIC increased annual assessment rates uniformly by 3 basis points beginning in 2011. As a result, an institution’s total base assessment rate for purposes estimating an institution’s assessment for 2011 and 2012 was increased by 3 basis points. Each institution’s prepaid assessment base was calculated using its third quarter 2009 assessment base, adjusted quarterly for an estimated five percent annual growth rate in the assessment base through the end of 2012. The three-year prepayment for the Corporation was $542,000 for Greenville Federal, which will be expensed over three years.

In January 2010, the FDIC issued an advance notice of proposed rule-making asking for comments on how the FDIC’s risk-based deposit insurance assessment system could be changed to include the risks of certain employee compensation as criteria in the assessment system.

We are generally unable to control the amount of premiums that we are required to pay for FDIC insurance. We may be required to pay even higher FDIC premiums than the recently increased levels. Increases in FDIC insurance premiums may materially adversely affect our results of operations.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4. 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, 2010, and have concluded that the disclosure controls and procedures in place at March 31, 2010, were effective.

There were no changes in the Corporation’s internal control over financial reporting that occurred during the quarter ended March 31, 2010, that have materially affected, or are reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

Greenville Federal Financial Corporation

PART II — OTHER INFORMATION (CONTINUED)

ITEM 1. Legal Proceedings

Not applicable.

ITEM 1A. Risk Factors

Not applicable.

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

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, 2010:

Total Number of

Shares (or Units)

Maximum Number (or

Purchased as Part

Approximate Dollar Value)

Total Number of

Average Price

of Publicly

of Shares (or Units) That

Shares (or Units)

Paid Per Share

Announced Plans

May Be Purchased Under

Period

Purchased(1)

(or Unit)

or Programs

the Plans or Programs

March 2010

1,145

$

4.00

—

—

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.

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

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
	4			Agreement to Furnish Long-Term Debt Instruments and Agreements
	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

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.

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 (Incorporated by reference to Exhibit 3 to the Registration Statement on Form 8-A filed by the Registrant with the Securities and Exchange Commission on December 14, 2006)
	4			Agreement to Furnish Long-Term Debt Instruments and Agreements
	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

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