- Quarterly Report (10-Q)

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2012

¨	Transition report under Section 13 or l5(d) of the Exchange Act

For the transition period from to

Commission file number 000-49736

First Community Financial Corporation

(Exact name of registrant as specified in its charter)

Pennsylvania

23-2321079

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2 N. Main St., Mifflintown, PA 17059

(Address of Principal Executive Offices)

(717) 436-2144

(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. x Yes ¨ No

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). x Yes ¨ No

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):

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act.) ¨ Yes x No

Indicate the number of shares outstanding of each class of issuer’s classes of common stock, as of the last practicable date:


Class		*Outstanding at October 31, 2012*
Common Stock, par value $5.00		1,410,743 Shares

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands, Except Share Data)


	September 30, 2012			December 31, 2011
	(unaudited)			(audited)
ASSETS
Cash & due from banks	$	10,153		$	9,129
Interest bearing deposits with banks		1,964			218
Federal funds sold		3,013			591

Cash & cash equivalents		15,130			9,938
Time certificates of deposit		198			198
Securities available for sale		88,388			73,804
Securities held to maturity, fair value 2012 $ 49,813; 2011 $ 36,639		47,273			34,972
Loans		255,131			251,012
Less: Allowance for loan losses		(2,790	)		(3,085	)
Less: Deferred loan fees and costs, net		(201	)		(224	)

Net loans		252,140			247,703
Premises and equipment, net		8,023			7,461
Restricted investment in bank stocks		1,787			2,121
Investment in life insurance		7,588			7,399
Other assets		4,764			4,287

TOTAL ASSETS	$	425,291		$	387,883

LIABILITIES
Deposits:
Non-interest bearing	$	39,197		$	35,994
Interest bearing		325,606			294,555

Total deposits		364,803			330,549
Short-term borrowings		3,064			2,685
Long-term borrowings		15,000			15,000
Junior subordinated debt		5,155			5,155
Other liabilities		2,902			3,056

TOTAL LIABILITIES		390,924			356,445

SHAREHOLDERS’ EQUITY
Preferred stock, without par value; 10,000,000 shares authorized and unissued		—			—
Common stock, $ 5.00 par value; 10,000,000 shares authorized Shares issued; 2012 -1,414,399; 2011 – 1,411,526 Shares outstanding; 2012- 1,410,743; 2011 – 1,407,870		7,072			7,058
Capital in excess of par value		622			522
Retained earnings		25,280			22,652
Treasury stock, at cost 2012 – 3,656 shares; 2011– 3,656 shares		(110	)		(110	)
Accumulated other comprehensive income		1,503			1,316

TOTAL SHAREHOLDERS’ EQUITY		34,367			31,438

TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY	$	425,291		$	387,883

See accompanying notes.

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars In Thousands, Except Per Share Data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
INTEREST INCOME
Interest & fees on loans	$	3,651		$	3,718		$	10,938		$	10,992
Interest on taxable securities		484			573			1,492			1,687
Interest on tax-exempt securities		403			353			1,144			1,032
Other interest & dividends		11			7			30			23

TOTAL INTEREST INCOME		4,549			4,651			13,604			13,734

INTEREST EXPENSE
Interest on deposits		1,158			1,186			3,529			3,807
Interest on short term borrowings		9			10			28			29
Interest on long term borrowings		199			197			594			595

TOTAL INTEREST EXPENSE		1,366			1,393			4,151			4,431

NET INTEREST INCOME		3,183			3,258			9,453			9,303
Provision for loan losses		96			303			207			454

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,087			2,955			9,246			8,849

NON-INTEREST INCOME
Service charges on deposits		189			202			583			570
Fiduciary activities		92			114			389			428
Earnings on investment in life insurance		74			88			227			260
ATM card fees		145			139			414			404
Realized gains on sales of securities		68			—			166			12
Realized gain (loss) on sale of foreclosed real estate		(13	)		—			1			6
Other income		233			195			672			475

TOTAL OTHER INCOME		788			738			2,452			2,155

NON-INTEREST EXPENSES
Employee compensation & benefits		1,373			1,270			4,000			3,738
Net occupancy & equipment		303			267			903			815
ATM expense		37			52			116			146
Professional fees		104			113			370			377
Director & advisory boards compensation		94			85			267			241
Supplies & postage		77			74			250			245
FDIC and OCC assessments		92			73			256			279
Other non-interest expenses		375			379			1,106			1,130

TOTAL NON-INTEREST EXPENSES		2,455			2,313			7,268			6,971

Income before income taxes		1,420			1,380			4,430			4,033
Income tax expense		284			290			935			861

NET INCOME	$	1,136		$	1,090		$	3,495		$	3,172

OTHER COMPREHENSIVE INCOME:
Unrealized gains or losses on investment securities, net of tax of $122 and $156 in 2012 and $(22) and $70 in 2011		228			(48	)		297			134
Reclassification adjustment: (gain) loss on sale of securities, net of tax of $23 and $56 in 2012 and $- and $4 in 2011		(45	)		—			(110	)		(8	)

TOTAL OTHER COMPREHENSIVE INCOME		183			(48	)		187			126

TOTAL COMPREHENSIVE INCOME	$	1,319		$	1,042		$	3,682		$	3,298

Basic earnings per share	$	0.81		$	0.78		$	2.48		$	2.26

See accompanying notes.

PART I – FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2012 and 2011

(Unaudited)

(Dollars In Thousands, Except Per Share Data)


	Common Stock		Capital In Excess of Par Value		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income		Total
Balance - January 1, 2011	$	7,037	$	415	$	19,560		$	(110	)	$	1,380	$	28,282

Comprehensive income:						3,172								3,172
Net income
Change in net unrealized losses on securities available for sale, net of deferred income taxes												126		126

Total comprehensive income														3,298

Issuance of stock in connection with dividend reinvestment plan 2,787 shares		14		70										84
Cash dividends, $0.555 per share						(780	)							(780	)

Balance, September 30, 2011	$	7,051	$	485	$	21,952		$	(110	)	$	1,506	$	30,884

Balance - January 1, 2012	$	7,058	$	522	$	22,652		$	(110	)	$	1,316	$	31,438

Comprehensive income:
Net income						3,495								3,495
Change in net unrealized gains on securities available for sale, net of deferred income taxes and reclassifications												187		187

Total comprehensive income														3,682
Issuance of stock in connection with dividend reinvestment plan 2,873 shares		14		100										114
Cash dividends, $0.615 per share						(867	)							(867	)

Balance, September 30, 2012	$	7,072	$	622	$	25,280		$	(110	)	$	1,503	$	34,367

See accompanying notes.

PART I – FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars In Thousands)


	Nine Months Ended September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,495		$	3,172
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		207			454
Depreciation and amortization		398			322
Net amortization of securities premium		246			152
Net realized gains on sales of securities		(166	)		(12	)
Net gain on sale of other real estate		(1	)		(6	)
Earnings on life insurance		(227	)		(260	)
Increase in other assets		(710	)		(140	)
(Decrease) increase in other liabilities		(154	)		1

Net cash provided by operating activities		3,088			3,683

CASH FLOWS FROM INVESTING ACTIVITIES
Securities held to maturity:
Maturities, calls and principal repayments		290			1,335
Purchases		(12,331	)		(2,501	)
Securities available for sale:
Maturities, calls and principal repayments		15,136			16,023
Purchases		(32,446	)		(14,974	)
Proceeds from sales		2,673			213
Net increase in loans receivable		(4,669	)		(6,874	)
Net decrease in Federal Home Loan Bank stock		334			322
Purchases of premises and equipment		(960	)		(1,059	)
Proceeds from sale of foreclosed real estate		197			—
Net maturities of interest bearing time deposits		—			—

Net cash (used in) provided by investing activities		(31,776	)		(7,515	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in non-interest bearing demand and savings deposits		3,203			1,907
Net increase (decrease) in time deposits		31,051			5,884
Net increase (decrease) in short-term borrowings		379			(1,180	)
Repayment of long-term borrowings		—			(1,000	)
Proceeds from issuance of common stock		114			84
Acquisition of treasury stock		—			—
Dividends paid		(867	)		(780	)

Net cash provided by (used by) financing activities		33,880			4,915

Net increase (decrease) in cash and cash equivalents		5,192			1,083
Cash and cash equivalents:
Beginning of year		9,938			10,554

End of period	$	15,130		$	11,637

SUPPLEMENTAL DISCLOSURES:
Cash payments for interest	$	4,155		$	4,494

Cash payments for income taxes	$	841		$	963

NON CASH INVESTING :
Transfer of loans to foreclosed real estate	$	25		$	249

See accompanying notes .

PART I – FINANCIAL INFORMATION, CONTINUED

Item 1. Financial Statements, continued

FIRST COMMUNITY FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

September 30, 2012

Note A – Basis of Presentation

The consolidated financial statements include the accounts of First Community Financial Corporation (the “Corporation”) and its wholly-owned subsidiaries, The First National Bank of Mifflintown (the “Bank”) and First Community Financial Capital Trust I (the “Trust”). All material inter-company transactions have been eliminated. The Corporation was organized on November 13, 1984 and is subject to regulation by the Board of Governors of the Federal Reserve System.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and are presented in accordance with the instructions to Form 10-Q and Rule 10-01 of the Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

The consolidated financial statements presented in this report should be read in conjunction with the audited financial statements and the accompanying notes for the year ended December 31, 2011, included in the Corporation’s Form 10-K filed with the Securities and Exchange Commission on March 9, 2012.

Certain reclassifications have been made to prior period balances to conform to the current year’s presentation format.

The Corporation has evaluated events and transactions occurring subsequent to the balance sheet date of September 30, 2012, for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through November 13, 2012, the date these financial statements were issued.

Note B – Accounting Policies

The accounting policies of the Corporation as applied in the interim financial statements presented are substantially the same as those followed on an annual basis as presented in the Corporation’s Form 10-K.

Note C – Comprehensive Income

The only other comprehensive income item that the Corporation presently has is unrealized gains on securities available for sale. The components of the change in unrealized gains are as follows (in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
	(Dollars in Thousands)
Unrealized holding gains (losses) arising during the period	$	350		$	(70	)	$	453		$	204
Reclassification of gains realized in net income		(68	)		—			(166	)		(12	)

		282			(70	)		287			192
Income tax effect		(99	)		22			(100	)		(66	)

Change in accumulated other comprehensive income	$	183		$	(48	)	$	187		$	126

Note D - Earnings Per Share

The Corporation has a simple capital structure. Basic earnings per share represents net income divided by the weighted average number of common shares outstanding. The weighted average number of common shares outstanding was 1,409,000 for the nine months ended September 30, 2012 and 1,409,889 for the three months ended September 30, 2012. The weighted average number of shares outstanding was 1,404,838 for the nine months ended September 30, 2011 and 1,405,764 for the three months ended September 30, 2011.

Note E - Guarantees

The Corporation does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit written are conditional commitments issued by

the Corporation to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued, have expiration dates within one year. The credit risks involved in issuing letters of credit is essentially the same as those that are involved in extending loan facilities to customers. The Corporation, generally, holds collateral and/or personal guarantees supporting these commitments. The Corporation had $241,000 of standby letters of credit outstanding as of September 30, 2012. Management believes that the proceeds obtained through a liquidation of collateral and the enforcement of guarantees would be sufficient to cover the potential amount of future payment required under the corresponding guarantees. The current amount of the liability as of September 30, 2012 for guarantees under standby letters of credit issued is not material.

Note F - Securities

Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates such designation as of each balance sheet date. Securities available for sale are those securities that the Corporation intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell an available for sale security would be based on various factors. These securities are stated at fair value. Unrealized gains (losses) are reported as changes in other comprehensive income, a component of shareholders’ equity, net of the related deferred tax effect. Premiums and discounts are recognized as interest income over the estimated lives of the securities, using the interest method. Securities held to maturity are those securities that the Corporation has the intent and ability to hold to maturity. These securities are stated at cost adjusted for amortization of premiums and accretion of discounts, which is recognized as interest income over their estimated lives, using the interest method. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 320, Investments – Debt and Equity Securities , clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) for equity securities, the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

In instances when a determination is made that an other-than-temporary impairment exists, but the investor does not intend to sell the debt security and it is not more likely than not that it will be required to sell the debt security prior to its anticipated recovery, FASB Topic 320 changes the presentation and amount of the other-than-temporary impairment recognized in the income statement. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

Amortized cost and fair value at September 30, 2012 and December 31, 2011 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
S ECURITIES A VAILABLE FOR S ALE :
September 30, 2012:
U.S. agency securities	$	4,451	$	134	$	—		$	4,585
Mortgage-backed securities		78,987		1,806		(11	)		80,782
Corporate securities		1,990		—		(67	)		1,923
Equity securities		640		458		—			1,098

	$	86,068	$	2,398	$	(78	)	$	88,388

December 31, 2011:
U.S. agency securities	$	5,496	$	169	$	—		$	5,665
Mortgage-backed securities		63,647		1,680		(15	)		65,312
Corporate securities		1,989		—		(217	)		1,772
Equity securities		640		415		—			1,055

	$	71,772	$	2,264	$	(232	)	$	73,804


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
S ECURITIES H ELD TO M ATURITY :
September 30, 2012:
State and municipal securities	$	47,273	$	2,777	$	(237	)	$	49,813

	$	47,273	$	2,777	$	(237	)	$	49,813

December 31, 2011:
State and municipal securities	$	34,972	$	2,082	$	(415	)	$	36,639

	$	34,972	$	2,082	$	(415	)	$	36,639

The following table shows the Corporation’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012 and December 31, 2011:


	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
September 30, 2012

S ECURITIES A VAILABLE FOR S ALE :
Corporate securities	$	—	$	—	$	1,423	$	67	$	1,423	$	67
Mortgage-backed securities		3,559		11		—		—		3,559		11

		3,559		11		1,423		67		4,982		78

Securities Held to Maturity:
State and municipal securities		8,876		110		1,562		127		10,438		237

Total	$	12,435	$	121	$	2,985	$	194	$	15,420	$	315



	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In Thousands)
December 31, 2011

Securities Available for Sale:
Corporate securities	$	1,772	$	217	$	—	$	—	$	1,772	$	217
Mortgage-backed securities		6,698		15		—		—		6,698		15

		8,470		232		—		—		8,470		232

Securities Held to Maturity:
State and municipal securities		1,045		19		3,185		396		4,230		415

Total	$	9,515	$	251	$	3,185	$	396	$	12,700	$	647

At September 30, 2012, five mortgage-backed securities have unrealized losses. The aggregate depreciation from the Corporation’s amortized cost basis on these securities is 0.3%. In management’s opinion, these unrealized losses relate to changes in interest rates. The Corporation’s mortgage backed security portfolio consists of only government sponsored agencies, and contains no private label securities.

At September 30, 2012, thirty state and municipal securities have unrealized losses with aggregate depreciation of 2.2% from the Corporation’s amortized cost basis. In management’s opinion, these unrealized losses relate primarily to changes in interest rates. In analyzing the issuer’s financial condition, management considers the issuer’s bond rating as well as the financial performance of the respective municipality.

At September 30, 2012, three corporate securities have unrealized losses with aggregate depreciation of 4.5% from the Corporation’s amortized cost basis. In management’s opinion, these unrealized losses relate primarily to changes in interest rates. In analyzing the issuer’s financial condition, management considers the issuer’s bond rating as well as the financial performance of the respective company.

Gross realized gains and losses for the nine months ending September 30, 2012 and September 30, 2011 were as follows (in thousands):


	Gross Realized Gains		Gross Realized Losses		Net Gains (Losses)
September 30, 2012:
Mortgage-backed securities	$	166	$	—	$	166

	$	166	$	—	$	166

September 30, 2011:
Mortgage-backed securities	$	4	$	—	$	4
Equity Securities		8		—		8

	$	12	$	—	$	12

Amortized cost and fair value at September 30, 2012 by contractual maturity are shown below. Municipal securities with prerefunded issues are included in the category in which payment is expected to occur. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay with or without penalties.

Available for Sale

Held to Maturity

Amortized
Cost

Fair
Value

Amortized
Cost

Fair
Value

(In Thousands)

1 year or less

1,000

2,326

2,341

Over 1 year through 5 years

4,440

4,568

14,247

14,906

Over 5 years through 10 years

1,001

940

21,341

22,592

Over 10 years

—

9,359

9,974

Mortgage-backed securities

78,987

80,782

—

Equity securities

640

1,098

—

86,068

88,388

47,273

49,813

Note G - Loans

Allowance for loan losses and loans receivable at September 30, 2012 and December 31, 2011 are as follows:

Allowance for Loan Losses:


	Commercial		Commercial Real Estate			Agricultural		Consumer			Residential Real Estate			Total
	(in Thousands)
December 31, 2011 Total Allowance for loan losses	$	808	$	1,082		$	382	$	86		$	727		$	3,085
Provision		101		41			47		16			2			207
Charge-offs		—		(530	)		—		(24	)		(9	)		(563	)
Recoveries		—		55			—		6			—			61

September 30, 2012 Total Allowance for loan losses	$	909	$	648		$	429	$	84		$	720		$	2,790

Ending balance for loans individually evaluated for impairment	$	274	$	157		$	25	$	—		$	—		$	456

Ending balance for loans collectively evaluated for impairment	$	635	$	491		$	404	$	84		$	720		$	2,334

Loans Receivable:


	Commercial			Commercial Real Estate		Agricultural			Consumer			Residential			Total
	(in Thousands)
September 30, 2012
Individually evaluated for impairment	$	274		$	5,689	$	433		$	—		$	508		$	6,904

Collectively evaluated for impairment		51,014			38,255		35,657			5,961			117,340			248,227

Total loans	$	51,288		$	43,944	$	36,090		$	5,961		$	117,848		$	255,131


	Commercial			Commercial Real Estate		Agricultural			Consumer			Residential Real Estate			Total
	(in Thousands)
December 31, 2010 Total Allowance for loan losses	$	730		$	630	$	—		$	92		$	702		$	2,154

Provision		96			452		398			(5	)		41			982
Charge-offs		(18	)		—		(27	)		(4	)		(24	)		(73	)
Recoveries		—			—		11			3			8			22

December 31, 2011 Total Allowance for loan losses	$	808		$	1,082	$	382		$	86		$	727		$	3,085

Ending balance for loans individually evaluated for impairment	$	296		$	670	$	—		$	—		$	—		$	966

Ending balance for loans collectively evaluated for impairment	$	512		$	412	$	382		$	86		$	727		$	2,119


	Commercial			Commercial Real Estate		Agricultural			Consumer			Residential			Total
	(in Thousands)
December 31, 2011
Individually evaluated for impairment	$	296		$	4,477	$	469		$	—		$	—		$	5,242

Collectively evaluated for impairment		45,956			39,234		37,191			6,036			117,353			245,770

Total loans	$	46,252		$	43,711	$	37,660		$	6,036		$	117,353		$	251,012

Analysis of credit quality indicators is as follows:


	Commercial		Commercial Real Estate		Agricultural		Consumer		Residential		Total
	(in Thousands)
September 30, 2012
Pass	$	49,545	$	42,149	$	29,776	$	5,913	$	115,509	$	242,892
Special Mention		1,015		58		4,484		—		—		5,557
Substandard		429		1,737		1,830		48		2,339		6,383
Doubtful		299		—		—		—		—		299
Loss		—		—		—		—		—		—

Total	$	51,288	$	43,944	$	36,090	$	5,961	$	117,848	$	255,131


	Commercial		Commercial Real Estate		Agricultural		Consumer		Residential		Total
	(in Thousands)
December 31, 2011
Pass	$	45,330	$	41,008	$	34,865	$	6023	$	115,838	$	243,064
Special Mention		553		780		2,326		11		509		4,179
Substandard		73		1,285		469		2		1,006		2,835
Doubtful		296		638		—		—		—		934
Loss		—		—		—		—		—		—

Total	$	46,252	$	43,711	$	37,660	$	6,036	$	117,353	$	251,012

The following is a summary of impaired loans:



	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
September 30, 2012
With no specific allowance needed
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial real estate		4,442		4,442		—		4,438		197
Agricultural		408		408		—		455		24
Residential		508		508		—		508		—

With an allowance recorded
Commercial		274		274		274		286		9
Commercial real estate		1,247		1,247		157		1,262		45
Agricultural		25		25		25		25		—

Total
Commercial		274		274		274		286		9
Commercial real estate		5,689		5,689		157		5,700		242
Agricultural		433		433		25		480		24
Residential		508		508		—		508		—

Total	$	6,904	$	6,904	$	456	$	6,974	$	275


	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In Thousands)
December 31, 2011
With no specific allowance needed
Commercial	$	—	$	—	$	—	$	—	$	—
Commercial real estate		—		—		—		—		—
Agricultural		469		469		—		472		31

With an allowance recorded
Commercial		296		296		296		267		11
Commercial real estate		4,477		4,477		670		4,492		212

Total
Commercial		296		296		296		267		11
Commercial real estate		4,477		4,477		670		4,492		212
Agricultural		469		469		—		472		31

Total	$	5,242	$	5,242	$	966	$	5,231	$	254

Age analysis of past-due loans is as follows:


	30 – 59 Days Past Due		60 - 89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Loans		Allowance For Collectively Impaired Loans		>90 Days And Still Accruing		Nonaccruals
	(In Thousands)
September 30, 2012
Commercial	$	96	$	—	$	25	$	121	$	51,167	$	51,288	$	—	$	—	$	613
Commercial Real Estate		—		—		—		—		43,944		43,944		—		—		3,055
Agricultural		—		—		11		11		36,079		36,090		—		—		169
Residential		416		74		1,021		1,511		116,337		117,848		—		—		1,506
Consumer		62		3		57		122		5,839		5,961		—		—		58

Total	$	574	$	77	$	1,114	$	1,765	$	253,366	$	255,131	$	—	$	—	$	5,401


	30 – 59 Days Past Due		60 - 89 Days Past Due		> 90 Days Past Due		Total Past Due		Current		Total Loans		Allowance For Collectively Impaired Loans		>90 Days And Still Accruing		Nonaccruals
	(In Thousands)
December, 31, 2011
Commercial	$	121	$	230	$	7	$	358	$	45,894	$	46,252	$	—	$	—	$	7
Commercial Real Estate		133		130		34		297		43,414		43,711		—		—		100
Agricultural		177		—		—		177		37,483		37,660		—		—		—
Residential		831		249		101		1,181		116,172		117,353		—		—		528
Consumer		58		7		1		66		5,970		6,036		—		—		9

Total	$	1,320	$	616	$	143	$	2,079	$	248,933	$	251,012	$	—	$	—	$	644

The following is a summary of Troubled Debt Restructurings:


	Three Months Ended September 30, 2012						Nine Months Ended September 30, 2012
	Number of contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of contracts		Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Troubled Debt Restructurings
Commercial - Mortgage		4	$	1,528	$	1,528		8	$	6,244	$	6,244
Troubled Debt Restructurings that Subsequently Defaulted		0	$	0	$	0		0	$	0	$	0

No additional funds are committed to be advanced in connection with any loans whose terms have been modified in troubled debt restructurings.

N OTE H - F AIR V ALUE OF F INANCIAL I NSTRUMENTS

Management uses its best judgment in estimating the fair value of the Corporation’s consolidated financial instruments; however, there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Bank could have realized in a sales transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective period-ends and have not been re-evaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period-end.

ASC Topic 820, Fair Value Measurements and Disclosure , which defines fair value, establishes a framework for measuring fair value under GAAP, expands disclosures about fair value measurements, and applies to other accounting pronouncements that require or permit fair value measurements. The Bank adopted Fair Value Measurements effective for its fiscal year beginning January 1, 2008.

Fair value measurement and disclosure guidance defines fair value as the price that would be received to sell the asset or transfer the liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. Additional guidance is provided on determining when the volume and level of activity for the asset or liability has significantly decreased. The Topic also includes guidance on identifying circumstances when a transaction may not be considered orderly.

Fair value measurement and disclosure provides a list of factors that a reporting entity should evaluate to determine whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. When the reporting entity concludes there has been a significant decrease in the volume and level of activity for the asset or liability, further analysis of the information from that market is needed and significant adjustments to the related prices may be necessary to estimate fair value in accordance with fair value measurement and disclosure guidance.

ASC Topic 820 clarifies that when there has been a significant decrease in the volume and level of activity for the asset or liability, some transactions may not be orderly. In those situations, the entity must evaluate the weight of the evidence to determine whether the transaction is orderly. This Topic provides a list of circumstances that may indicate that a transaction is not orderly. A transaction price that is not associated with an orderly transaction is given little, if any, weight when estimating fair value.

Fair value measurement and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

Level 1 : Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

An asset’s or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following describes the valuation techniques used by the Corporation to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements:

Securities available for sale: Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). For certain securities which are not traded in active markets or are subject to transfer restrictions, valuations are adjusted to reflect illiquidity and/or transferability, and such adjustments are generally based on available market evidence (Level 3). The value of restricted Federal Reserve Bank stock, FHLB stock and Atlantic Central Bankers Bank stock approximates fair value based on the redemption provisions of each entity and is therefore excluded from the following table.

For financial assets measured at fair value on a recurring basis, the fair value measurements by level within the fair value hierarchy used at September 30, 2012 and December 31, 2011 are as follows (in thousands):


Description	September 30, 2012		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
U. S. agency securities	$	4,585	$	—	$	4,585	$	—

Mortgage-backed securities		80,782		—		80,782		—
Corporate securities		1,923		—		1,923		—
Equity securities		1,098		467		—		631

Securities available for sale	$	88,388	$	467	$	87,290	$	631


Description	December 31, 2011		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
U. S. agency securities	$	5,665	$	—	$	5,665	$	—

Mortgage-backed securities		65,312		—		65,312		—
Corporate securities		1,772		—		1,772		—
Equity securities		1,055		460		—		595

Securities available for sale	$	73,804	$	460	$	72,749	$	595

The table below presents a reconciliation and income statement of gains and losses for available for sale securities measured at fair value on a recurring basis using significant unobservable inputs (level 3) for the periods ending September 30, 2012 and December 31, 2011 (in thousands).


	2012		2011
Fair Value, beginning of period	$	595	$	589
Total gains (losses) included in other comprehensive income		36		6
Purchases		0		—

Fair Value, end of period	$	631	$	595

The following describes the valuation techniques used by the Corporation to measure certain financial assets recorded at fair value on a nonrecurring basis in the financial statements:

Impaired Loans: Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Fair value is measured based on the value of the collateral securing the loans. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Corporation using observable market data (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the real estate property is over two years old, then the fair value is considered Level 3. The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Impaired loans allocated to the Allowance for Loan Losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Consolidated Statements of Income.

Certain assets such as real estate owned are measured at fair value less the cost to sell. Management believes that the fair value component in its valuation follows the provisions of ASC 820.

Assets measured at fair value on a non-recurring basis at September 30, 2012 and December 31, 2011 are summarized below: (in thousands)


Description	September 30, 2012		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans, net	$	6,448	$	—	$	—	$	6,448
Foreclosed real estate		187		—		—		187

Description	December 31, 2011		(Level 1) Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans, net	$	4,276	$	—	$	—	$	4,276
Foreclosed real estate		358		—		—		358

Total impaired loans had a carrying amount of $6,904,000 and $5,242,000, net of the valuation allowances of $456,000 and $966,000, as of September 30, 2012 and December 31, 2011, respectively. This resulted in additional provision for loan losses of $46,000 for the period ending September 30, 2012 and $803,000 for the period ending December 31, 2011.

The following table displays quantitative information about Level 3 Fair Value Measurements for September 30, 2012.


	Quantitative information about Level 3 fair value measurements for September 30, 2012
	Fair Value		Valuation Techniques	Unobservable Input
Securities available for sale	$	631	Last sale price	—
Impaired loans	$	6,448	Discounted cash flow Discounted appraised value	Constant prepayment rate, selling cost and discount for lack of marketability
Other real estate owned	$	187	Discounted appraised value	Selling cost and discount for lack of marketability

ASC Topic 825, Financial Instruments , requires disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies, as well as in annual financial statements.

The following information should not be interpreted as an estimate of the fair value of the entire Corporation since a fair value calculation is only provided for a limited portion of the Corporation’s assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Corporation’s disclosures and those of other companies may not be meaningful. The following methods and assumptions were used to estimate the fair values of the Corporation’s financial instruments at September 30, 2012 and December 31, 2011.

Cash and cash equivalents:

The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets’ fair values.

Time certificates of deposit:

The carrying amount of time certificates of deposit approximate their fair value.

Securities:

For securities and marketable equity securities held for investment purposes, fair values are based on quoted market prices or dealer quotes. For other securities held as investments, fair value equals quoted market price, if available. If a quoted market price is not available, fair values are based on quoted market prices for similar securities. For securities which are not traded in active markets or are subject to transfer restrictions, valuations are generally based on available market evidence.

Loans receivable:

For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values. The fair values of fixed rate loans are estimated using discounted cash flow analyses, using interest rates currently being offered in the market for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

Restricted investment in bank stock:

The carrying amount of restricted investment in bank stock approximates fair value.

Accrued interest receivable and payable:

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Life insurance:

The carrying amount of life insurance contracts is assumed to be a reasonable fair value. Life insurance contracts are carried on the balance sheet at their redemption value. This redemption value is based on existing market conditions and therefore represents the fair value of the contract.

Deposit liabilities:

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-term borrowings:

The carrying amounts of short-term borrowings approximate their fair values.

Long-term debt:

Fair values of long-term debt are estimated using discounted cash flow analysis, based on rates currently available to the Corporation for advances from the FHLB with similar terms and remaining maturities.

Junior Subordinated debt:

Fair values of junior subordinated debt are estimated using discounted cash flow analysis, based on rates currently offered on such debt, with similar terms and remaining maturities. As the Corporation has the ability to redeem the junior subordinated debt at any time, the fair value approximates its carrying value.

Off-balance sheet financial instruments:

Fair values for the Corporation’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged to enter into similar agreements taking into account the remaining terms of the agreements and the counterparties’ credit standing.

The estimated fair values of the Corporation’s financial instruments were as follows at September 30, 2012 and December 31, 2011.

September 30, 2012

Carrying
Amount

Fair
Value

Level 1

Level 2

Level 3

(In Thousands)

Financial assets:

Cash and cash equivalents

15,130

—

Time certificates of deposit

198

—

Investment securities:

Available for sale

88,388

467

87,290

631

Held to maturity

47,273

49,813

—

49,813

—

Loans, net

252,140

253,624

—

253,624

Accrued interest receivable

1,504

—

Investment in life insurance

7,588

—

7,588

—

Restricted investment in bank stocks

1,787

—

1,787

—

Mortgage servicing rights

503

—

503

—

Total financial assets

414,511

418,535

17,299

146,981

254,255

Financial liabilities:

Deposits

364,803

370,467

—

370,467

—

Short-term borrowings

3,064

—

3,064

—

Long-term debt

15,000

16,731

—

16,731

—

Junior subordinated debt

5,155

—

5,155

Accrued interest payable

294

—

Total financial liabilities

388,316

395,711

294

390,262

5,155

Off-balance sheet financial instruments

—


	December 31, 2011
	Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	9,938	$	9,938
Time certificates of deposit		198		198
Investment securities:
Available for sale		73,804		73,804
Held to maturity		34,972		36,639
Loans, net		247,703		250,707
Accrued interest receivable		1,417		1,417
Investment in life insurance		7,399		7,399
Restricted investment in bank stocks		2,121		2,121
Mortgage servicing rights		355		355

Total financial assets	$	377,907	$	382,578

Financial liabilities:
Deposits	$	330,549	$	335,041
Short-term borrowings		2,685		2,685
Long-term debt		15,000		16,799
Junior subordinated debt		5,155		5,155
Accrued interest payable		298		298

Total financial liabilities	$	353,687	$	359,978

Off-balance sheet financial instruments	$	—	$	—

Note H – New and Recently Adopted Accounting Pronouncements

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860) – Reconsideration of Effective Control for Repurchase Agreements.” The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and (2) the collateral maintenance implementation guidance related to that criterion. The amendments in this ASU are effective for the first interim or annual period beginning on or after December 15, 2011. The guidance should be applied prospectively to transactions or modifications of existing transactions that occur on or after the effective date. Early adoption was not permitted. The adoption of the new guidance did not have a material impact on the Corporation’s consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU is the result of joint efforts by the FASB and International Accounting Standards Board (IASB)

to develop a single, converged fair value framework on how (not when) to measure fair value and what disclosures to provide about fair value measurements. The ASU is largely consistent with existing fair value measurement principles in U.S. GAAP (Topic 820), with many of the amendments made to eliminate unnecessary wording differences between U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are effective for interim and annual periods beginning after December 15, 2011 with prospective application. Early application was not permitted. The Corporation has included the required disclosures in its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.” The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single statement of comprehensive income should include the components of net income, a total for net income, the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present all the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The amendments do not change the items that must be reported in other comprehensive income, the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects, or the calculation or reporting of earnings per share. The amendments in this ASU should be applied retrospectively. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2011. Early adoption was permitted because compliance with the amendments was already permitted. The amendments do not require transition disclosures. The Corporation has included the required disclosures in its consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, “Intangible – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment.” The amendments in this ASU permit an entity to first assess qualitative factors related to goodwill to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this ASU, an entity is not

required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption was permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period had not yet been issued. The adoption of the new guidance did not have a material impact on the Corporation’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities.” This ASU requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Corporation does not expect the adoption of ASU 2011-11 to have a material impact on its consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” The amendments are being made to allow the Board time to re-deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the Board is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Corporation has included the required disclosures in its consolidated financial statements.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment.” The objective of this amendment is to reduce the cost and complexity of performing an impairment test for indefinite-lived intangible assets by simplifying how

an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long-lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived tangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles – Goodwill and Other – General Intangibles Other than Goodwill. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Previous guidance in Subtopic 350-30 required an entity to test indefinite-lived intangible assets for impairment, on at least an annual basis, by comparing the fair value of the asset with its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. In accordance with the amendments in this ASU, an entity will have an option not to calculate annually the fair value of an indefinite-lived intangible asset if the entity determines that it is not more likely than not that an asset is impaired. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU 2011-08. The amendments in this ASU are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued. The Corporation does not expect the adoption of ASU 2012-02 to have a material impact on its consolidated financial statements.

In October 2012, the FASB issued ASU 2012-06, “Business Combinations (Topic 805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution.” The amendments in this ASU clarify the applicable guidance for subsequently measuring an indemnification asset recognized as a result of a government-assisted acquisition of a financial institution. In addition, the amendments should resolve current diversity in practice on the subsequent measurement of these types of indemnification assets. The amendments are effective for fiscal years, and interim periods within those years, beginning on or after December 15, 2012. Early adoption is permitted. The amendments should be applied prospectively to any new indemnification assets acquired after the date of adoption and to indemnification assets existing as of the date of adoption arising from a government-assisted acquisition of a financial institution. The Corporation does not expect the adoption of ASU 2012-06 to have a material impact on its consolidated financial statements.

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Except for historical information, this report may be deemed to contain “forward-looking” statements regarding the Corporation. Examples of forward-looking statements include, but are not limited to, (a) projections or statements regarding future earnings, expenses, net interest income, other income, earnings or loss per share, asset mix and quality, growth prospects, capital structure and other financial terms, (b) statements of plans and objectives of management or the board of directors, and (c) statements of assumptions, such as economic conditions in the Corporation’s market areas. Such forward-looking statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “intends”, “will”, “should”, “anticipates”, or the negative of any of the foregoing or other variations thereon or comparable terminology, or by discussion of strategy.

No assurance can be given that the future results covered by forward-looking statements will be achieved. Such statements are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could impact the Corporation’s operating results include, but are not limited to, (i) the effects of changing economic conditions in the Corporation’s market areas and nationally, (ii) credit risks of commercial, real estate, consumer and other lending activities, (iii) significant changes in interest rates, (iv) changes in federal and state banking laws and regulations which could impact the Corporation’s operations, (v) funding costs, and (vi) other external developments which could materially affect the Corporation’s business and operations.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the Corporation to make estimates and assumptions (see footnote 1 to the consolidated financial statements included in Form 10-K for the year ended December 31, 2011). The Corporation believes that of its significant accounting estimates, the allowance for loan losses and valuation of its securities may involve a higher degree of judgement and complexity.

The allowance for loan losses is established through a charge to the provision for loan losses. In determining the balance in the allowance for loan losses, consideration is given to a variety of factors in establishing this estimate. In estimating the allowance for loan losses, management considers current economic conditions, diversification of the loan portfolio, delinquency statistics, results of internal loan reviews, borrowers’ perceived financial and managerial strengths, the adequacy of the underlying collateral, if collateral dependent, or present value of future cash flows and other relevant factors. The use of different estimates or assumptions could produce different provisions for loan losses. Additional information is provided in the discussion below about the provision for loan losses under “Results of Operations”.

Declines in the fair value of securities held to maturity and available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses if the impairment is due to credit concerns; if the impairment is due to other conditions the losses are recognized through other comprehensive income. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. No securities were deemed to be other than temporarily impaired as of September 30, 2012.

Financial Condition

Total assets of the Corporation increased $37,408,000, or 9.6%, during the first nine months of 2012. Net loans increased $4,437,000, or 1.8%, cash and cash equivalents increased $5,192,000, or 52.2%, and securities increased $26,885,000, or 24.7%, from December 31, 2011 to September 30, 2012.

Total deposits increased by $34,254,000, or 10.4%, since year-end 2011. Short-term borrowings increased by $379,000, or 14.1%.

Non-Performing Assets

Non-performing assets include loans on a non-accrual basis, loans past due more than ninety days and still accruing, troubled debt restructurings and foreclosed real estate. These groups of assets represent the asset categories posing the greatest risk of loss to the Corporation. Non-accruing loans are loans no longer accruing interest due to apparent financial difficulties of the borrower. The Corporation generally discontinues accrual of interest when principal or interest becomes doubtful based on prevailing economic conditions and collection efforts. Loans are returned to accrual status only when all factors indicating doubtful collectibility cease to exist. Foreclosed real estate is acquired through foreclosure or in lieu of foreclosure and is recorded at fair value less costs to dispose at the date of foreclosure establishing a new cost basis. Gains on the sale of foreclosed real estate are included in other income, while losses and writedowns resulting from periodic revaluations are included in other expenses.

The following table sets forth the Corporation’s non-performing assets as of the dates indicated:

Non-Performing Assets

(Dollars in Thousands)


	9/30/2012			12/31/2011
Non-accrual loans	$	5,401		$	644
Accruing loans 90 days past due		—			—

Total Non-Performing Loans		5,401			644
Foreclosed real estate		187			358

Total Non-Performing Assets	$	5,588		$	1,002

Troubled debt restructurings still accruing	$	2,775		$	4,477

Other impaired loans still accruing	$	—		$	765

Ratios:
Non-performing loans to total loans		2.12	%		0.26	%
Non-performing assets to total loans and foreclosed real estate		2.19	%		0.40	%
Non-performing loans to allowance for loan losses		193.58	%		20.88	%

Total non-performing assets at September 30, 2012 increased $4,586,000 since December 31, 2011 as a result of the increase in loans in non-accrual status and the decrease in foreclosed real estate. Non-accrual loans increased $4,757,000, primarily due to the addition of three commercial real estate and one residential real estate loan relationship, of which $2,554,000 are guaranteed by a U.S. government agency.

Results of Operations

Net income for the nine months ending September 30, 2012 was $3,495,000, or $2.48 per share, compared to $3,172,000, or $2.26 per share, for the same period in 2011. Annualized return on average equity was 14.22% for the first nine months of 2012 and 14.35% for the same period in 2011. Annualized return on average assets was 1.15% for the first nine months of 2012 and 1.13% for the same period in 2011.

Net income for the quarter ending September 30, 2012 was $1,136,000, or $0.81 per share, compared to $1,090,000, or $0.78 per share, for the same period in 2011. Annualized return on average equity was 13.39% for the third quarter of 2012 and 14.15% for the same period in 2011. Annualized return on average assets was 1.08% for the third quarter of 2012 and 1.15% for the same period in 2011.

The following tables include average balances for the nine months ended September 30, 2012 and September 30, 2011 and quarters ending September 30, 2012 and September 30, 2011, rates and interest income and expense adjusted to an FTE basis, the interest rate spread, the net interest margin and the cost of funds:

Average Balances, Rates and Interest Income and Expense

(Dollars in Thousands)

(Nine Months ended September 30)


	2012							2011
	Average Balance		Interest		Yield/ Rate			Average Balance		Interest		Yield/ Rate
A SSETS
I NTEREST E ARNING A SSETS
Securities:
Taxable	$	78,166	$	1,492		2.55	%	$	71,268	$	1,687		3.16	%
Tax-exempt		39,803		1,733		5.82	%		32,578		1,564		6.42	%

Total Securities		117,969		3,225		3.65	%		103,846		3,251		4.19	%

Other		8,554		30		0.47	%		5,357		23		0.57	%
Loans:
Taxable		234,650		10,487		5.97	%		227,763		10,629		6.24	%
Tax-exempt		15,523		683		5.88	%		11,696		550		6.29	%

Total Loans		250,173		11,170		5.96	%		239,459		11,179		6.24	%

Total Interest Earning Assets		376,696		14,425		5.12	%		348,662		14,453		5.54	%

Non-interest earnings assets		29,906							26,368

Total Assets	$	406,602						$	375,030

L IABILITIES AND S HAREHOLDERS ’ E QUITY
I NTEREST B EARING L IABILITIES
Demand deposits, interest bearing	$	33,122	$	60		0.24	%	$	27,562	$	33		0.16	%
Savings deposits		117,911		694		0.79	%		103,043		687		0.89	%
Time deposits		160,494		2,775		2.31	%		156,669		3,087		2.63	%

Total Interest Bearing Deposits		311,527		3,529		1.51	%		287,274		3,807		1.77	%
Short-term borrowings		2,869		28		1.30	%		3,260		29		1.19	%
Long-term debt		20,155		594		3.94	%		20,452		595		3.89	%

Total Interest Bearing Liabilities		334,551		4,151		1.66	%		310,986		4,431		1.90	%

Demand deposits, non-interest bearing		36,368							31,671
Other liabilities		2,857							2,811
Shareholders’ equity		32,826							29,562

Total Liabilities and Shareholders’ Equity	$	406,602						$	375,030

N ET I NTEREST I NCOME			$	10,274						$	10,022

I NTEREST R ATE S PREAD						3.46	%						3.64	%

N ET I NTEREST M ARGIN						3.64	%						3.84	%

C OST OF F UNDS						1.48	%						1.70	%

Rate / Volume Analysis

Nine Months Ended September 30

2012 versus 2011


	Change Due to
	Rate			Volume			Total
Interest Earning Assets
Securities
Taxable	$	(327	)	$	132		$	(195	)
Tax exempt		(145	)		314			169
Other		4			3			7
Total loans		(485	)		476			(9	)

Total		(953	)		925			(28	)

Interest Bearing Liabilities
Demand deposits interest		17			10			27
Savings deposits		(80	)		87			7
Time deposits		(378	)		66			312
Short – term borrowings		3			(4	)		(1	)
Long – term debt		8			(9	)		(1	)

Total		(430	)		150			(280	)

Net Interest Income	$	(523	)	$	775		$	252

Net interest income for the first nine months of 2012 increased by $ 150,000, or 1.6%, compared to the same period in 2011. The reasons for the increase in net interest income were an increase in interest earning assets partially offset by a decrease in net interest margin. For the first nine months of 2012, the net interest margin on a fully tax equivalent (FTE) basis was 3.64% compared to 3.84% for the same period in 2011. The FTE basis is calculated by grossing up the yield on tax-exempt securities and loans by the federal tax rate of 34%, in order that the yield on tax-exempt assets may be comparable to interest earned on taxable assets. The primary driver of the decrease in the net interest margin was the decrease in the cost of funds of 0.22% from 1.70% during the first nine months of 2011 to 1.48% during the same period in 2012, which was more than offset by a decrease in the yield on earning assets of 0.42% from 5.54% in 2011 to 5.12% in 2012.

Average Balances, Rates and Interest Income and Expense

(Dollars in Thousands)

(Three Months ended September 30)


	2012							2011
	Average Balance		Interest		Yield/ Rate			Average Balance		Interest		Yield/ Rate
A SSETS
I NTEREST E ARNING A SSETS
Securities:
Taxable	$	83,418	$	484		2.31	%	$	70,971	$	573		3.20	%
Tax-exempt		44,135		610		5.5	%		33,480		535		6.34	%

Total Securities		127,553		1,094		3.41	%		104,451		1,108		4.21	%

Other		10,308		12		0.46	%		4,420		7		0.63	%
Loans:
Taxable		235,199		3,499		5.92	%		228,828		3,585		6.22	%
Tax-exempt		15,773		230		5.80	%		12,764		202		6.28	%

Total Loans		250,972		3,729		5.91	%		241,592		3,787		6.22	%

Total Interest Earning Assets		388,833		4,835		4.95	%		350,463		4,902		5.55	%

Non-interest earnings assets		30,544							26,997

Total Assets	$	419,377						$	377,460

L IABILITIES AND S HAREHOLDERS ’ E QUITY
I NTEREST B EARING L IABILITIES
Demand deposits, interest bearing	$	39,376	$	31		0.31	%	$	28,199	$	11		0.15	%
Savings deposits		119,725		197		0.65	%		107,394		241		0.89	%
Time deposits		161,911		930		2.29	%		152,633		934		2.43	%

Total Interest Bearing Deposits		321,012		1,158		1.44	%		288,226		1,186		1.63	%
Short-term borrowings		2,995		9		1.20	%		3,065		10		1.29	%
Long-term debt		20,155		199		3.93	%		20,155		197		3.88	%

Total Interest Bearing Liabilities		344,162		1,366		1.58	%		311,446		1,393		1.77	%

Demand deposits, non-interest bearing		38,537							32,494
Other liabilities		2,936							2,962
Shareholders’ equity		33,742							30,558

Total Liabilities and Shareholders’ Equity	$	419,377						$	377,460

N ET I NTEREST I NCOME			$	3,469						$	3,509

I NTEREST R ATE S PREAD						3.37	%						3.77	%

N ET I NTEREST M ARGIN						3.55	%						3.97	%

C OST OF F UNDS						1.40	%						1.58	%

Rate / Volume Analysis

Three Months ended September 30

2012 versus 2011


	Change Due to
	Rate			Volume		Total
Interest Earning Assets
Securities
Taxable	$	(161	)	$	72	$	(89	)
Tax exempt		(72	)		147		75
Other		4			1		5
Total loans		(197	)		139		(58	)

Total		(426	)		359		(67	)

Interest Bearing Liabilities
Demand deposits interest		12			8		20
Savings deposits		(65	)		21		(44	)
Time deposits		(58	)		54		(4	)
Short – term borrowings		(1	)		—		(1	)
Long – term debt		2			—		2

Total		(110	)		83		(27	)

Net Interest Income	$	(316	)	$	276	$	(40	)

Net interest income for the quarter ended September 30, 2012 decreased by $75,000 compared to the same period in 2011. Net interest margin for the quarter ended September 30, 2012 was 3.55% compared to 3.97% during the same period in 2011. The decrease in the yield on earning assets from 5.55% for the three months ending September 30, 2011 to 4.95% for the same period in 2012 was offset by the decrease in the cost of funds from 1.58% during 2011 to 1.40% during 2012.

Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. The Corporation recorded a provision for loan losses of $207,000 for the first nine months of 2012 compared to $454,000 for the same time period in 2011. As a percentage of loans, the allowance for loan losses was 1.09% at September 30, 2012, compared to 1.23% at year-end 2011 and 1.04% at September 30, 2011. Impaired loans were $6,904,000 at September 30, 2012 compared to $5,242,000 at December 31, 2011. The increase in impaired loans is due to the addition of other commercial real estate loans partially offset by the charge-off of $507,000. At this time, no losses in excess of valuation allowance are anticipated. The Corporation’s evaluation of the adequacy of the allowance for loan losses includes a review of all loans on at least a quarterly basis. For residential mortgage loans and consumer loans, the primary factors used to determine the adequacy of the allowance are delinquency, collateral value, general economic conditions and, where applicable, individual borrower information that is known to the Bank. For commercial loans and commercial real estate loans, the review includes financial performance of the borrower, payment history, collateral value, general economic conditions and more specific economic conditions affecting specific industries or business activities of the borrowers within the portfolio agreements. Management believes the allowance is presently adequate to cover the inherent risks associated with the Corporation’s loan portfolio.

Non-interest income in the first nine months of 2012 increased by $297,000 or 13.8% compared to the same period in 2011. Securities gains increased by $154,000 and other income increased by $197,000, primarily due to an increase in mortgage servicing fees. These increases were offset by a decrease in income from fiduciary activities of $39,000, and a decrease in earnings on investment life insurance of $33,000 during the first nine months of 2012 compared to the same period in 2011.

Non-interest income for the quarter ending September 30, 2012 was $788,000 compared to $738,000 in 2011. This increase is primarily related to the increase in securities gains of $68,000 and the increase in other income of $38,000 due to an increase in mortgage servicing fees, partially offset by a decrease in income from fiduciary activities of $22,000.

Total non-interest expense increased in the first nine months of 2012 by $297,000 compared to the first nine months of 2011. Employee compensation and benefits increased $262,000 in the first nine months of 2012 compared to 2011. The increase in salaries and wages is the result of merit increases as well as additional staff positions added decreased $23,000. The decrease in FDIC/OCC expense is due to the change in the to support recent loan and deposit growth. The FDIC/OCC expense assessment base in the second quarter of 2011. Net occupancy expense increased $88,000 primarily because of the opening of

our Newport office. As the Corporation continues to add new loan and deposit accounts, as well as new services, additional operating costs will be generated. Over time it is anticipated these costs will be offset by the additional income generated through the expansion of services to our customers and community and new business development.

During the quarter ending September 30, 2012, total non-interest expense increased $142,000 compared to the third quarter of 2011. The primary reasons for this increase were the increase in salaries and wages of $103,000 and an increase in net occupancy and equipment of $36,000. These increases were offset by a decrease in professional fees of $9,000 and a decrease in ATM expense of $15,000.

Income tax expense was $935,000 for the nine month time period ending September 30, 2012 compared to $861,000 for the same time period in 2011. Income tax expense as a percentage of income before income taxes was 21.1% for the period compared to 21.3% for 2011. The reason for the decrease in the effective tax rate is tax-exempt income as a percentage of income before taxes was higher in 2012 than 2011. The decrease in the Corporation’s effective tax rate below the statutory rate of 34.0% is a result of tax-exempt income on loans, securities and bank-owned life insurance.

Income tax expense was $284,000 for the three month time period ending September 30, 2012 compared to $290,000 for the same time period in 2011. Income tax expense as a percentage of income before income taxes was 20.0% for the period compared to 21.0% for 2011. The reason for the decrease in the effective tax rate is tax-exempt income as a percentage of income before taxes was higher during the quarter in 2012 than 2011.

Liquidity

Liquidity represents the Corporation’s ability to efficiently manage cash flows to support customers’ loan demand, withdrawals by depositors, the payment of operating expenses, as well as the ability to take advantage of business and investment opportunities as they arise. One of the Corporation’s sources of liquidity is $364,803,000 in deposits at September 30, 2012, which increased $34,254,000 over total deposits of $330,549,000 at year-end 2011. Other sources of liquidity at September 30, 2012 are available from the following: (1) investments in interest-bearing deposits with banks and federal funds sold, which totaled $5,175,000, (2) securities maturing in one year or less, which totaled $3,326,000, and (3) investments in mortgage-backed securities, which supply income and principal cash flow streams on an ongoing basis. In addition, the Corporation has established federal funds lines of credit with Atlantic Central Bankers Bank and with the Federal Home Loan Bank of Pittsburgh, which can be drawn upon if needed as a source of liquidity. Management is of the opinion that the Corporation’s liquidity is sufficient to meet its anticipated needs.

Capital

Total shareholders’ equity was $34,367,000 as of September 30, 2012, representing a $2,929,000 increase from December 31, 2011. The growth in capital was a result of net earnings retention of $2,628,000, an increase in accumulated other comprehensive income of $187,000 and an increase in common stock and surplus of $114,000 as a result of the Corporation’s dividend reinvestment plan. The increase in other comprehensive income is due to the increase in value of the Corporation’s available for sale securities.

At September 30, 2012, the Bank had a Tier I leverage ratio of 8.88%, a Tier I capital to risk-based assets ratio of 17.99% and a total capital to risk-based assets ratio of 19.24%. These ratios indicate the Bank exceeds the federal regulatory minimum requirements for a “well capitalized bank”. The Corporation’s ratios are not materially different than those of the Bank.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

(Not required of a smaller reporting company)

Item 4.

Controls and Procedures

We maintain a system of controls and procedures designed to provide reasonable assurance as to the reliability of the financial statements and other disclosures included in this report, as well as to safeguard assets from unauthorized use or disposition. The Corporation’s President & CEO (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2012. Based upon that evaluation, our President & CEO and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting management to information required to be included in our periodic Securities and Exchange Commission filings. There was no significant change in our internal control over financial reporting that occurred during the quarter ended September 30, 2012 that materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

There are no pending or threatened legal proceedings to which the Corporation or its subsidiaries is a party or to which the property of either the Corporation or its subsidiaries is subject to that, in the opinion of management, may materially impact the financial condition of either the Corporation or its subsidiaries.

Item 1A.

Risk Factors

(Not required of a smaller reporting company)

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a)

On January 8, 2008, the Board of Directors of the Corporation authorized a stock repurchase program pursuant to which the Corporation is authorized to purchase up to 7.1% of its outstanding shares or 100,000 shares. Share repurchases will be made from time to time and may be effected through open market purchases, block trades, or in privately negotiated transactions.

(b)

The table below sets forth the information with respect to purchases made by or on behalf of the Corporation or any affiliated purchaser as defined in Rule 240-10b-18(a) (3) under Regulation S-K of common stock during the quarter ended September 30, 2012.


	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of a Publicly Announced Plan or Program		Maximum Number of Shares That May Yet be Purchased Under the Plan or Program
July 1 through July 31		0	$	0.00		0		96,344
August 1 through August 31		0	$	0.00		0		96,344
September 1 through September 30		0	$	0.00		0		96,344

Total for the period		0				0

Item 3.

Defaults Upon Senior Securities

None

Item 4.

Mine Safety Disclosures

Not Applicable

Item 5.

Other Information

None

Item 6.

Exhibits


Exhibit		Title

3.1		Articles of Incorporation of the Corporation. (Incorporated by reference to Exhibit 2(a) to the Corporation’s December 31, 2001 Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on April 17, 2002.)

3.2		Bylaws of the Corporation. (Incorporated by reference to Exhibit 2(b) to the Corporation’s Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on April 17, 2002.)

4.1		Certain instruments defining the rights of the holders of long-term debt of the Corporation and certain of its Subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Corporation and its Subsidiaries on a consolidated basis, have not been filed as Exhibits in accordance with Item 601(b)(4)(iii) of Regulation S-K. The Corporation hereby agrees to furnish a copy of any of these instruments to the Commission upon request.

31.1		Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).

31.2		Certification of Principal Financial Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).

32.1		Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data File - Furnished * herewith.

These interactive data files shall not be deemed filed for the purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange act of 1934, as amended, or otherwise subject to liability under these sections.

SIGNATURES

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


FIRST COMMUNITY FINANCIAL CORPORATION
		(Registrant)

Date: November 13, 2012		BY:	/s/ Scott E. Fritz
			Scott E. Fritz
			President & Chief Executive Officer
			(Principal Executive Officer)

Date: November 13, 2012	BY:	/s/ Richard R. Leitzel
		Richard R. Leitzel
		Vice President and
		Chief Financial Officer
		(Principal Financial and
		Accounting Officer)

Exhibit Index


Exhibit		Title

3.1		Articles of Incorporation of the Corporation. (Incorporated by reference to Exhibit 2(a) to the Corporation’s December 31, 2001 Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on April 17, 2002.)

3.2		Bylaws of the Corporation. (Incorporated by reference to Exhibit 2(b) to the Corporation’s Registration Statement on Form 10-SB, as filed with the Securities and Exchange Commission on April 17, 2002.)

4.1		Certain instruments defining the rights of the holders of long-term debt of the Corporation and certain of its Subsidiaries, none of which authorize a total amount of indebtedness in excess of 10% of the total assets of the Corporation and its Subsidiaries on a consolidated basis, have not been filed as Exhibits in accordance with Item 601(b)(4)(iii) of Regulation S-K. The Corporation hereby agrees to furnish a copy of any of these instruments to the Commission upon request.

31.1		Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).

31.2		Certification of Principal Financial Officer of First Community Financial Corporation Pursuant to Securities and Exchange Commission Rule 13a-14(a) / 15d-14(a).

32.1		Certification of Principal Executive Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Principal Financial Officer of First Community Financial Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data File - Furnished * herewith.