10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 2007
OR
o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from _______________ to ______________________

Commission File No. 000-33405

Cheviot Financial Corp.

(Exact name of registrant as specified in its charter)

Federal	56-2423720
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification Number)
3723 Glenmore Avenue, Cheviot, Ohio	45211
(Address of Principal Executive Offices)	Zip Code
(513) 661-0457
(Registrant’s telephone number)

Securities Registered Pursuant to Section 12(b) of the Act:	Common Stock, par value $.01 per share	The Nasdaq Stock Market, LLC
	(Title of Class)	(Name of Each Exchange on which Registered)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $0.01 par value	The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES o     NO x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES o     NO x

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 x     NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.          x

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 definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x
(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 Act).   YES o      NO x

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant, computed by reference to the last sale price on June 30, 2007, as reported by the Nasdaq Capital Market, was approximately $38.7 million.

As of March 1, 2008, there was issued and outstanding 8,925,058 shares of the Registrant’s Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE:

(1) Proxy Statement for the 2008 Annual Meeting of Stockholders of the Registrant (Part III).

(2) Annual Report to Stockholder (Part II and IV).

TABLE OF CONTENTS

ITEM 1.	BUSINESS	1
	REGULATION	20
	TAXATION	28
	MANAGEMENT	29
ITEM 1A.	RISK FACTORS	29
ITEM 1.B	UNRESOLVED STAFF COMMENTS	31
ITEM 2.	PROPERTIES	31
ITEM 3.	LEGAL PROCEEDINGS	31
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	31
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	32
ITEM 6.	SELECTED FINANCIAL DATA	33
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	33
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	33
ITEM 9A(T).	CONTROLS AND PROCEDURES	34
ITEM 9B.	OTHER INFORMATION	35
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	35
ITEM 11.	EXECUTIVE COMPENSATION	35
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	35
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	36
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	36
ITEM 15.	EXHIBITS AND FINANCIAL STATEMENT SCHEDULES	36

PART I

ITEM 1. BUSINESS

Forward Looking Statements

          This Annual Report contains certain “forward-looking statements” which may be identified by the use of words such as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated” and “potential.” Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates and most other statements that are not historical in nature. These factors include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage, commercial and other loans, real estate values, competition, changes in accounting principles, policies, or guidelines, changes in legislation or regulation, and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing products and services.

General

Cheviot Financial Corp.

          Following completion of our mutual holding company reorganization and stock offering on January 5, 2004, Cheviot Financial Corp. (the “Company”) became the mid-tier stock holding company for Cheviot Savings Bank. The business of Cheviot Financial Corp. consists of holding all of the outstanding common stock of Cheviot Savings Bank. Cheviot Financial Corp. is chartered under Federal law. As part of our reorganization, we issued a total of 9,918,751 shares of common stock. Our mutual holding company parent, Cheviot Mutual Holding Company, received 5,455,313 of our common shares, and we sold 4,388,438 shares to our depositors and a newly formed Employee Stock Ownership Plan. In addition, 75,000 shares were issued to a charitable foundation formed by Cheviot Savings Bank. Under federal regulations, so long as Cheviot Mutual Holding Company exists, it will own at least 50.1% of the voting stock of Cheviot Financial Corp. At December 31, 2007, Cheviot Financial Corp. had total consolidated assets of $319.1 million, total deposits of $219.5 million, and stockholders’ equity of $67.9 million. Our executive offices are located at 3723 Glenmore Avenue, Cheviot, Ohio 45211, and our telephone number is (513) 661-0457.

Cheviot Savings Bank

          Cheviot Savings Bank (the “Bank”) was established in 1911 as an Ohio-chartered savings and loan association. Following our reorganization we became an Ohio-chartered stock savings and loan. Our primary business activity is the origination of one- to four-family real estate loans. To a lesser extent, we originate construction, multi-family, commercial real estate and consumer loans. We also invest in securities, primarily United States Government Agency securities and mortgage-backed securities.

Market Area

          We conduct our operations from our executive office in Cheviot, Ohio and six full-service branches, all of which are located in the western section of Hamilton County, Ohio. Cheviot, Ohio is located in Hamilton County and is 10 miles west of downtown Cincinnati. Hamilton County, Ohio represents our primary geographic market area for loans and deposits with our remaining business operations conducted in the larger Cincinnati metropolitan area which includes Warren, Butler and Clermont Counties. We also conduct a moderate level of business in the southeastern Indiana region, primarily in Dearborn, Ripley, Franklin and Ohio Counties. We will also originate loans secured by properties in Northern Kentucky. The local economy is diversified into most economic sectors, with services, trade and manufacturing employment remaining the most prominent employment sectors in Hamilton County. Hamilton County is a primarily developed and urban county. The employment base is well diversified and there is no dependence on one area of the economy for continued employment. Our future growth opportunities will be influenced by the growth and stability of the regional, state and national economies, other demographic trends and the competitive environment.

          Hamilton County and Cincinnati have experienced a declining population since the 1990 census while the other counties in which we conduct business have experienced an increasing population. The population decline in both Hamilton County and the City of Cincinnati results from the other counties and Northern Kentucky being more successful in attracting new and existing businesses to locate within their areas through economic incentives, including less expensive real estate options for office facilities. Individuals are moving to these other areas to be closer to their place of employment, for newer, less expensive housing and more suburban neighborhoods. Median household and per capita income measures for Hamilton County are above comparable measures for both the United States and Ohio, which we believe indicates the relatively stable and diversified economy in the regional market served by Cheviot Savings Bank. Recent employment trends indicate lower levels of unemployment in Hamilton County compared to national and state-wide unemployment rates.

          We believe that we have developed products and services that will meet the financial needs of our current and future customer base; however, we plan, and believe it is necessary, to expand the range of products and services that we offer to be more competitive in-our market area. Marketing strategies focus on the strength of our knowledge of local consumer and small business markets, as well as expanding relationships with current customers and reaching out to develop new, profitable business relationships.

Competition.

          We face intense competition within our market both in making loans and attracting deposits. Hamilton County has a high concentration of financial institutions including large money center and regional banks, community banks and credit unions. Some of our competitors offer products and services that we currently do not offer, such as trust services and private banking. Our competition for loans and deposits comes principally from commercial banks, savings institutions, mortgage banking firms, consumer finance companies and credit unions. We face additional competition for deposits from short-term money market funds, brokerage firms, mutual funds and insurance companies. Our primary focus is to build and develop profitable customer relationships across all lines of business while maintaining our position as a community bank.

Lending Activities.

          General. Historically, our principal lending activity has been the origination, for retention in our portfolio, of fixed-rate and adjustable-rate mortgage loans collateralized by one- to four-family residential real estate located within our primary market area. We will sell a portion of our fixed-rate loans into the secondary market. We also originate commercial real estate loans, including multi-family residential real estate loans, construction loans, business lines of credit and consumer loans.

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          Loan Portfolio Composition. Set forth below is selected information concerning the composition of our loan portfolio in dollar amounts and in percentages as of the dates indicated.

	At December 31,
	2007					2006					2005					2004					2003
	Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Real estate loans:
One- to four-family residential(1)	$	216,958		84.39	%	$	209,996		84.06	%	$	195,059		84.97	%	$	182,016		86.86	%	$	166,998		86.11	%
Multi-family residential		10,638		4.14			11,250		4.50			11,144		4.86			9,944		4.75			7,714		3.98
Construction		19,421		7.55			19,022		7.61			12,360		5.38			10,718		5.11			13,770		7.10
Commercial(2)		10,018		3.90			9,466		3.80			10,883		4.74			6,750		3.22			5,278		2.72
Consumer(3)		66		0.02			82		0.03			110		0.05			133		0.06			169		0.09
Total loans		257,101		100.00	%		249,816		100.00	%		229,556		100.00	%		209,561		100.00	%		193,929		100.00	%
Less:
Undisbursed portion of loans in process		6,585					7,646					5,849					4,754					6,038
Deferred loan origination fees		88					159					188					233					270
Allowance for loan losses		596					833					808					732					768
Total loans, net	$	249,832				$	241,178				$	222,711				$	203,842				$	186,853

(1)	Includes home equity lines of credit, loans purchased and loans held for sale.
(2)	Includes land loans.
(3)	Loans secured by deposit accounts.

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          Loan Maturity Schedule. The following table sets forth certain information as of December 31, 2007, regarding the amount of loans maturing in our portfolio. Demand loans and loans with no stated maturity, are reported as due within one year.

	At December 31, 2007
	Within One Year		One Through Three Years		Three Through Five Years		Five Through Ten Years		Ten Through Twenty Years		Beyond Twenty Years		Total
	(In thousands)
Real estate loans:
One- to four-family real estate	$	5,055	$	11,050	$	12,436	$	38,335	$	120,654	$	29,428	$	216,958
Multi-family residential		173		385		446		1,447		5,091		3,096		10,638
Construction		382		854		986		3,197		11,208		2,794		19,421
Commercial		112		251		290		942		5,110		3,313		10,018
Consumer		66		—		—		—		—		—		66
Total loans	$	5,788	$	12,540	$	14,158	$	43,921	$	142,063	$	38,631	$	257,101

          Fixed and Adjustable-Rate Loan Schedule. The following table sets forth at December 31, 2007, the dollar amount of all fixed-rate and adjustable-rate mortgage loans and home equity lines of credit due after December 31, 2008.

	Due After December 31, 2008
	Fixed		Floating or Adjustable		Total
Real estate loans:
One- to four-family real estate	$	173,760	$	38,143	$	211,903
Multi-family residential		8,581		1,884		10,465
Construction		19,039		—		19,039
Commercial		8,123		1,783		9,906
Consumer		—		—		—
Total loans	$	209,503	$	41,810	$	251,313

          Residential Mortgage Loans. Cheviot Savings Bank originates mortgage loans secured by one- to four-family properties, most of which serve as the primary residence of the owner. As of December 31, 2007, one- to four-family residential mortgage loans totaled $217.0 million, or 84.4% of our total loan portfolio. At December 31, 2007, our one- to four-family residential loan portfolio consisted of 18% in adjustable-rate loans and 82% in fixed-rate loans. Most of our loan originations result from relationships with existing or past customers, members of our local community and referrals from realtors, attorneys and builders.

          Our mortgage loans generally, have terms from 15 to 30 years and amortize on a monthly basis with principal and interest due each month. As of December 31, 2007, we offered the following residential mortgage loan products:

• Fixed-rate loans of various terms;

• Adjustable-rate loans;

• Home equity lines of credit;

• Loans tailored for first time home buyers;

• Construction/permanent loans; and

• Short-term (bridge) loans.

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          Residential real estate loans may remain outstanding for significantly shorter periods than their contractual terms as borrowers refinance or prepay loans at their option without penalty. Our residential mortgage loans customarily contain “due on sale” clauses which permit us to accelerate the indebtedness of the loan upon transfer of ownership in the mortgage property.

          We currently sell a portion of our conforming fixed-rate loans in the secondary market and hold the remaining fixed-rate loans and adjustable-rate loans in our portfolio. We lend up to a maximum loan-to-value ratio of 100% on mortgage loans secured by owner-occupied properties, with the condition that private mortgage insurance is required on first mortgage loans with a loan-to-value ratio in excess of 85%. To a lesser extent, we originate non-conforming loans that are tailored to the needs of the local community.

          Our adjustable-rate mortgage loans are originated with a maximum term of 30 years. Adjustable-rate loans include loans that provide for an interest rate based on the interest paid on U.S. Treasury Securities of corresponding terms, plus a margin. Our adjustable-rate mortgages include limits on the increase or decrease in the interest rate. The interest rate may increase or decrease by a maximum of 2.0% per adjustment with a ceiling rate over the life of the loan, which generally is 5.0%. We currently offer adjustable-rate loans with initial rates below those which would prevail under the foregoing computations based upon our determination of market factors and competitive rates for adjustable-rate loans in our market. For one-year adjustable-rate loans, borrowers are qualified at the initial rate and at 2.0% over the initial rate. For all other adjustable-rate loans, borrowers are qualified at the initial rate.

          The retention of adjustable-rate loans in our portfolio helps reduce exposure to changes in interest rates. However, there are credit risks resulting from potential increased costs to the borrower as a result of rising interest rates. During periods of rising interest rates, the risk of default on adjustable-rate mortgages may increase due to the upward adjustment of interest cost to the borrower.

          During the year ended December 31, 2007, we originated $4.6 million in adjustable-rate loans and $43.1 million in fixed-rate loans.

          Home equity lines of credit are generally made for owner-occupied homes and are secured by first or second mortgages on residential properties. We are attempting to increase our originations of home equity lines of credit. We generally offer home equity lines of credit with a maximum loan to appraised value ratio of 95% including senior liens on the subject property. We currently offer these loans for terms of up to 10 years, and with adjustable rates that are tied to the prime rate. At December 31, 2007, home equity lines of credit represented $9.8 million of our one- to four-family residential loans.

          Construction Loans. Cheviot Savings Bank originates construction loans for owner-occupied residential real estate, and, to a lesser extent, for commercial builders of residential real estate, improvement to existing structures, new construction for commercial purposes and residential land development.

          At December 31, 2007, construction loans represented $19.4 million, or 7.6%, of Cheviot Savings Bank’s total loans. At December 31, 2007, the unadvanced portion of these constructions loans totaled $6.6 million.

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          Cheviot Savings Bank’s construction loans generally provide for the payment of interest only during the construction phase (12 months for single family residential and varying terms for commercial property and land development). At the end of the construction phase, the loan converts to a permanent mortgage loan. Before making a commitment to fund a construction loan, Cheviot Savings Bank requires detailed cost estimates to complete the project and an appraisal of the property by an independent licensed appraiser. Cheviot Savings Bank also reviews and inspects each property before disbursement of funds during the term of the construction loan. Loan proceeds are disbursed after inspection based on the percentage of completion method.

          Construction lending generally involves a greater degree of risk than other one- to four-family mortgage lending. The repayment of the construction loan is, to a great degree, dependent upon the successful and timely completion of construction. Various potential factors including construction delays or the financial viability of the builder may further impair the borrower’s ability to repay the loan.

          Multi-Family Loans. At December 31, 2007, $10.6 million, or 4.1%, of our total loan portfolio consisted of loans secured by multi-family real estate. We originate fixed-rate and adjustable rate multi-family real estate loans with amortization schedules of up to 25 years. We generally lend up to 80% of the property’s appraised value. Appraised values are determined by an outside independent appraiser that we designate. In deciding to originate a multi-family loan, we review the creditworthiness of the borrower, the expected cash flows from the property securing the loan, the cash flow requirements of the borrower, the value of the property and the quality of the management involved with the property. We generally obtain the personal guarantee of the principals when originating multi-family real estate loans.

          Multi-family real estate lending is generally considered to involve a higher degree of credit risk than one-to four-family residential lending. Such lending may involve large loan balances concentrated on a single borrower or group of related borrowers. In addition, the payment experience on loans secured by income producing properties typically depends on the successful operation of the related real estate project. Consequently, the repayment of the loan may be subject to adverse conditions in the real estate market or the economy generally.

          Commercial Real Estate Loans. We originate commercial real estate loans to finance the purchase of real property, which generally consists of land and/or developed real estate. In underwriting commercial real estate loans, consideration is given to the property’s historic and projected cash flow, current and projected occupancy, location, physical condition and credit worthiness of the borrower. At December 31, 2007, our commercial real estate portfolio totaled $10.0 million, or 3.9%, of total loans. A majority of our commercial real estate loans are secured by properties in Hamilton County. Our commercial real estate portfolio is diverse as to borrower and property type.

          Commercial real estate lending involves additional risks compared to one- to four-family residential lending because payments on loans secured by commercial real estate properties are often dependent on the successful operation or management of the properties, and/or the collateral value of the commercial real estate securing the loan. Repayment of such loans may be subject, to a greater extent than residential loans, to adverse conditions in the real estate market or the economy. Also, commercial real estate loans typically involve large loan balances to single borrowers or groups of related borrowers. Our policies limit the amount of loans to a single borrower or group of related borrowers to reduce this risk.

          Commercial real estate loans generally have a higher rate of interest and shorter term than residential mortgage loans because of increased risks associated with commercial real estate lending. Commercial real estate loans are generally offered at one year adjustable-rates and fixed-rates with a term generally not exceeding 25 years.

6

          Consumer Loans. On a limited basis, we make loans secured by deposit accounts up to 90% of the amount of the depositor’s collected deposit account balance. At December 31, 2007, these loans totaled $66,000, or 0.02%, of total loans. Consumer loans are payable upon demand.

          Loan Originations, Purchases, Sales and Servicing. While we originate both fixed-rate and adjustable-rate loans, our ability to generate each type of loan depends upon relative borrower demand and the pricing levels as set in the local marketplace by competing banks, thrifts, credit unions, and mortgage banking companies. Our volume of real estate loan originations is influenced significantly by market interest rates, and, accordingly, the volume of our real estate loan originations can vary from period to period. Our volume of commercial real estate lending has decreased in recent years due to our effort to improve asset quality and to emphasize relationship banking.

          The following table sets forth the loan origination, sales and repayment activities of Cheviot Savings Bank for the periods indicated.

	For the Year Ended December 31,		For the Year Ended December 31,			For the Year Ended December 31,		For the Year Ended December 31,			For the Nine Months Ended December 31,			For the Year Ended March 31,
	2007		2006			2005		2004			2003			2003
	(In thousands)
Balance outstanding at beginning or period	$	241,178	$	222,711		$	203,842	$	186,853		$	182,444		$	166,550
Originations, including purchased loans
Real estate loans:
One- to four-family residential(1)		36,136		46,924			53,174		47,736			42,667			54,106
Multi-family residential		200		2,791			2,974		2,406			998			3,936
Construction		9,259		8,406			7,023		8,886			9,023			11,784
Commercial(2)		2,018		1,472			1,310		1,541			926			2,922
Consumer(3)		92		448			111		39			30			192
Total loan originations		47,705		60,041			64,592		60,608			53,644			72,940
Less:
Principal repayments		34,565		39,175			43,884		40,605			46,669			56,260
Transfers to real estate acquired through foreclosure		773		—			201		293			46			157
Loans sold in the secondary market(4)		3,670		2,440			1,595		2,827			2,598			481
Other(5)		43		(41	)		43		(106	)		(78	)		148
Total deductions		39,051		41,574			45,723		43,619			49,235			57,046
Balance outstanding at end of period	$	249,832	$	241,178		$	222,711	$	203,842		$	186,853		$	182,444

(1)	Includes home equity lines of credit, loans purchased and loans held for sale.
(2)	Includes land loans.
(3)	Loans secured by deposit accounts.
(4)	Loans sold to the Federal Home Loan Bank of Cincinnati.
(5)	Other items consist of loans in process, deferred loan origination fees, unearned interest and the allowance for loan losses.

          Loan Approval Procedures and Authority. The lending activities of Cheviot Savings Bank are subject to the written underwriting standards and loan origination procedures established by the board of directors and management. Loan originations are obtained through a variety of sources, primarily consisting of existing customers and referrals from real estate brokers. Written loan applications are taken by one of Cheviot Savings Bank’s loan officers. The loan officer also supervises the procurement of reports, appraisals and other documentation involved with a loan. Cheviot Savings Bank obtains property appraisals from independent appraisers on substantially all of its loans.

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          Cheviot Savings Bank’s loan approval process is intended to provide direction to management on all phases of real estate lending activity since such real estate mortgage lending is the single most important revenue producing investment of Cheviot Savings Bank. Therefore, Cheviot Savings Bank believes that the underwriting of mortgage loans should be consistent with safe and sound practices to ensure the financial viability of the Bank. The loan underwriting policy is also established to provide appropriate limits and standards for all extensions of credit in real estate or for the purpose of financing the construction of a building or other improvement. Cheviot Savings Bank’s loan committee has the authority to approve or deny loan applications on one- to four-family owner occupied properties up to $500,000. This committee also has the authority for approving or denying loan applications on non-owner occupied properties up to $200,000. The loan committee reviews all loan applications submitted to Cheviot Savings Bank and lists such applications on a review sheet that is submitted to the board of directors. The board of directors ratifies all loans approved by the loan committee and approves all other loans other than those specifically set forth above.

          Loans to One Borrower. State savings and loan institutions are subject to the same loans to one borrower limits as those applicable to national banks, which under current regulations restrict loans to one borrower to an amount equal to 15% of unimpaired equity on an unsecured basis, and an additional amount equal to 10% of unimpaired equity if the loan is secured by readily marketable collateral (generally, financial instruments and bullion, but not real estate). Our loans to one borrower limit under this regulation at December 31, 2007 was $8.0 million. Our policy generally provides that loans to one borrower (or related borrowers) should not exceed $4.0 million (excluding the borrower’s principal residence). However, the board of directors may approve loans in greater amounts and may amend this limitation annually based on the asset growth and capital position of Cheviot Savings Bank.

          At December 31, 2007, the largest aggregate credit exposure to one borrower consisted of one loan totaling $5.4 million. This loan was performing in accordance with contractual terms. There were thirteen additional credit relationships, including committed amounts, in excess of $1.0 million at December 31, 2007. All of the loans extended under these credit relationships were performing as of December 31, 2007.

Asset Quality.

          General. One of our key operating objectives has been, and continues to be, to maintain a high asset quality. Our high proportion of one- to four-family mortgage loans, our maintenance of sound credit standards for new loan originations and our loan administration procedures have resulted in our impaired and non-performing loans totaling to $660,000, or 0.26% of net loans at December 31, 2007.

          Collection Procedures. When a borrower fails to make required payments on a loan, we take a number of steps to induce the borrower to cure the delinquency and restore the loan to a current status. Cheviot Savings Bank has implemented certain loan tracking policies and collection procedures to ensure effective management of classified assets. Cheviot Savings Bank generally sends a written notice of non-payment to its borrower after a loan is first past due. If payment has not been received within a reasonable time period, personal contact efforts are attempted by telephone or by letter. If no payment is received the following month, a letter stating that the borrower is two months behind is mailed indicating that the borrower needs to contact our collections department, and make payment arrangements. If the borrower has missed two consecutive payments, a demand letter will be sent by certified mail. On all accounts that are not current ten days after the completion of the last step set forth above our collection manager or staff member contacts the borrower by phone at their home and if necessary, at their place of employment in order to establish communications with the borrower concerning the delinquency and to try to establish a meeting with the borrower to determine what steps are needed to bring the borrower to a current status. If contact with the borrower by telephone is unsuccessful and the loan becomes 60 days delinquent Cheviot Savings Bank sends a letter stating its intention to begin foreclosure procedures. If no satisfactory agreement has been reached with the borrower within 15 days after the foreclosure intention letter, the Board of Directors will consider the status of the delinquency and may authorize Cheviot Savings Bank’s attorney to send a letter to the borrower advising the borrower that foreclosure proceedings will be initiated and setting forth the conditions which could forestall the foreclosure. In selected cases, Cheviot Savings Bank may make an economic decision to forego foreclosure and work with the borrower to^-bring the loan current. Repayment schedules may be entered into with chronically delinquent borrowers if management determines this resolution is more advantageous to Cheviot Savings Bank.

8

          In connection with home equity lines of credit, when payment is first past due the collection manager or staff member attempts to contact the borrower by phone at their home. If phone contact is unsuccessful, the collection manager or staff member will mail a late notice to the borrower at the beginning of the following month indicating the need to contact the collections personnel and bring the loan current. If the preceding steps are unsuccessful then the collection manager will implement the steps described above leading to foreclosure.

          Cheviot Savings Bank has implemented several credit risk measures in the loan origination process that have served to reduce potential losses. Cheviot Savings Bank also seeks to limit loan portfolio credit risk by originating in the local market generally one- to four-family permanent mortgage loans with a loan-to-value of 85% or less, and one and two family owner-occupied residential mortgage loans with a loan-to-value of 85%, with private mortgage insurance, required on first mortgage loans with loan-to-value of greater than 85%. Cheviot Savings Bank has implemented conservative loan underwriting guidelines and makes exceptions in originating such loans only if there are sound reasons for such exceptions.

          Credit risk on commercial real estate loans is managed by generally limiting such lending to local markets and emphasizing sound underwriting and monitoring the financial status of the borrower. In originating such loans Cheviot Savings Bank seeks debt service coverage ratios in excess of 1.00x.

          To limit the impact of loan losses in any given quarter, Cheviot Savings Bank seeks to maintain an adequate level of valuation allowances. Its management and board of director’s review the level of general valuation allowances on a quarterly basis to ensure that adequate coverage against known and inherent losses is maintained, based on the level of non-performing and classified assets, our loss history and industry trends and economic trends.

          Cheviot Savings Bank has established detailed asset review policies and procedures which are consistent with generally accepted accounting principles. Quarterly reviews of the valuation allowance are conducted by the board of directors. Pursuant to these procedures, when needed, additional valuation allowances are established to cover anticipated losses in the portfolio.

          We hold foreclosed property as real estate acquired through foreclosure. We carry foreclosed real estate at lower of cost or fair value less estimated selling costs. If a foreclosure action is commenced and the loan is not brought current, paid in full, or refinanced before the foreclosure sale, we either sell the real property securing the loan at the foreclosure sale or sell the property as soon thereafter as practical.

          Marketing real estate owned generally involves listing the property for sale. Cheviot Savings Bank maintains the real estate acquired through foreclosure in good condition to enhance its marketability. As of December 31, 2007, there were eleven loans classified as real estate owned totaling $625,000.

          Delinquent Loans and Non-performing Loans and Assets. Our policies require that the collection manager monitor the status of the loan portfolios and report to the Board on a monthly basis. These reports include information on delinquent loans, criticized and classified assets, foreclosed real estate and our plans to cure the delinquent status of the loans.

9

           It is Cheviot Savings Bank’s policy to underwrite single-family residential loans up to an 95% loan-to-value ratio and all other loans (multi-family, construction, commercial and consumer) on no more than an 80% loan-to-value ratio. It has been the Bank’s experience that interest on delinquent loans is generally recovered in ultimate settlement of the loan due to this conservative underwriting policy. We generally stop accruing interest on our one-to four-family residential, construction and commercial loans when interest or principal payments are 150 days in arrears. Consumer loans are comprised exclusively of loans secured by deposits with Cheviot Savings Bank. Such loans are placed on non-accrual status should they become 90 days delinquent. The Bank will stop accruing interest earlier when the timely collectibility of such interest or principal is doubtful.

          We designate loans on which we stop accruing interest as non-accrual loans and we reverse outstanding interest that we previously credited. We may recognize income in the period that we collect it, when the ultimate collectibility of principal is no longer in doubt. We return a non-accrual loan to accrual status when factors indicating doubtful collection no longer exist and the loan has been brought current. In accordance with industry standards and regulatory requirements, it is Cheviot Savings Bank’s policy to charge-off a loan when it becomes apparent that recovery of amounts due is not probable, either from expected payments from the borrower or from settlement of the collateral.

          The following table sets forth certain information regarding delinquencies in our loan portfolio as of December 31, 2007.

	At December 31, 2007
	30-59 Days Delinquent					60-89 Days Delinquent					90 or More Days Delinquent
	Amount		Percent of Net Loans			Amount		Percent of Net Loans			Amount		Percent of Net Loans
	(Dollars in thousands)
Real Estate Loans:
One- to four-family residential(1)	$	171		0.07	%	$	130		0.05	%	$	1,601		0.64	%
Multi-family residential		—		—			—		—			—		—
Construction		—		—			—		—			—		—
Commercial(2)		—		—			—		—			—		—
Consumer(3)		—		—			—		—			—		—
Total delinquent loans	$	171		0.07	%	$	130		0.05	%	$	1,601		0.64	%

	At December 31, 2006
	30-59 Days Delinquent					60-89 Days Delinquent					90 or More Days Delinquent
	Amount		Percent of Net Loans			Amount		Percent of Net Loans			Amount		Percent of Net Loans
	(Dollars in thousands)
Real Estate Loans:
One- to four-family residential(1)	$	506		0.21	%	$	265		0.11	%	$	468		0.19	%
Multi-family residential		—		—			—		—			—		—
Construction		—		—			—		—			—		—
Commercial(2)		—		—			—		—			—		—
Consumer(3)		—		—			—		—			—		—
Total delinquent loans	$	506		0.21	%	$	265		0.11	%	$	468		0.19	%

(footnotes on next page)

10

	At December 31, 2005
	30-59 Days Delinquent					60-89 Days Delinquent					90 or More Days Delinquent
	Amount		Percent of Net Loans			Amount		Percent of Net Loans			Amount		Percent of Net Loans
	(Dollars in thousands)
Real Estate Loans:
One- to four-family residential(1)	$	367		0.16	%	$	299		0.13	%	$	15		0.01	%
Multi-family residential		—		—			—		—			134		0.06
Construction		—		—			—		—			—		—
Commercial(2)		—		—			—		—			—		—
Consumer(3)		—		—			—		—			—		—
Total delinquent loans	$	367		0.16	%	$	299		0.13	%	$	149		0.07	%

	At December 31, 2004
	30-59 Days Delinquent					60-89 Days Delinquent					90 or More Days Delinquent
	Amount		Percent of Net Loans			Amount		Percent of Net Loans			Amount		Percent of Net Loans
	(Dollars in thousands)
Real Estate Loans:
One- to four-family residential(1)	$	109		0.05	%	$	29		0.01	%	$	141		0.07	%
Multi-family residential		—		—			—		—			—		—
Construction		—		—			—		—			—		—
Commercial(2)		—		—			—		—			94		0.05
Consumer(3)		—		—			—		—			—		—
Total delinquent loans	$	109		0.05	%	$	29		0.01	%	$	235		0.12	%

(1)       Includes home equity lines of credit, loans purchased and loans held for sale.

(2)       Includes loans secured by land.

(3)       Loans secured by deposit accounts.

11

          The following table sets forth information regarding impaired and non-performing loans and assets.

	At December 31,
	2007			2006			2005			2004			2003
	(Dollars in thousands)
Non-accrual real estate loans:
One- to four-family residential(1)	$	660		$	269		$	—		$	96		$	4
Multi-family residential		—			—			134			—			—
Construction		—			—			—			—			—
Commercial(2)		—			—			—			94			226
Consumer(3)		—			—			—			—			—
Total non-accruing loans(4)		660			269			134			190			230
Impaired loans		—			12			15			33			38
Accruing loans delinquent 90 days or more		—			—			—			28			194
Total non-performing loans		660			281			149			251			462
Real estate acquired through foreclosure		625			—			89			90			46
Total non-performing assets	$	1,285		$	281		$	238		$	341		$	508
Non-performing assets to total assets		0.40	%		0.09	%		0.08	%		0.12	%		0.16	%
Non-performing loans to net loans		0.26	%		0.12	%		0.07	%		0.12	%		0.25	%

(1)	Includes home equity lines of credit, loans purchased and loans held for sale.
(2)	Includes loans secured by land.
(3)	Loans secured by deposit accounts.
(4)	For the year ended December 31, 2007, gross interest income which would have been recorded had the non-accruing loans been current in accordance with their original terms amounted to $51,000. $9,000 in interest income was recorded on such loans during the year ended December 31, 2007.

          Non-performing and impaired loans totaled $660,000 at December 31, 2007.

          Our loan review procedures are performed quarterly. With respect to multi-family and commercial loans, we consider a loan impaired when, based on current information and events, it is probable, that we will be unable to collect all amounts due according to the loan’s contractual terms.

          We review all multi-family and commercial loans for impairment. These loans are individually assessed to determine whether the loan’s carrying value is in excess of the fair value of the collateral or the present value of the loan’s expected cash flows. Smaller balance homogenous loans that are collectively evaluated for impairment, such as residential mortgage loans and consumer loans, are specifically excluded from individual impairment review.

          Classified Assets. Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a higher possibility of loss. An asset classified as a loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “special mention” also may be established and maintained for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. If a classified asset is deemed to be impaired with measurement of loss, Cheviot Savings Bank will establish a charge-off of the loan pursuant to SFAS No. 114. The following table sets forth information regarding classified assets as of December 31, 2007 and 2006.

12

	At December 31,
	2007		2006		2005
	(In thousands)
Classification of Assets:
Special Mention	$	—	$	—	$	—
Substandard		1,964		1,192		627
Doubtful		—		—		—
Loss		—		—		—
Total	$	1,964	$	1,192	$	627

          General loss allowances established to cover inherent, but unconfirmed losses in the portfolio may be included in determining an institution’s regulatory capital. Federal examiners may disagree with an insured institution’s classifications and amounts reserved.

          Allowance for Loan Losses. We maintain the allowance through provisions for loan losses that we charge to income. We charge losses on loans against the allowance for loan losses when we believe the collection of loan principal is unlikely. Recoveries on loans charged-off are restored to the allowance for loan losses. The allowance for loan losses is maintained at a level believed, to the best of management’s knowledge, to cover all known and inherent losses in the portfolio both probable and reasonable to estimate at each reporting date. The level of allowance for loan losses is based on management’s periodic review of the collectibility of the loans principally in light of our historical experience, augmented by the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and current and anticipated economic conditions in the primary lending area.

          In addition, the regulatory agencies, as an integral part of their examination and review process, periodically review our loan portfolios and the related allowance for loan losses. Regulatory agencies may require us to increase the allowance for loan losses based on their judgments of information available to them at the time of their examination, thereby adversely affecting our results of operations.

          At December 31, 2007 and 2006, our allowance for loan losses was $596,000 and $833,000, respectively. Our ratio of the allowance for loan losses as a percentage of net loans receivable was 0.24% and 0.35% at December 31, 2007 and 2006.

13

          The following table sets forth the analysis of the activity in the allowance for loan losses for the periods indicated:

	At or For the Year Ended December 31,			At or For the Year Ended December 31,			At or For the Year Ended December 31,			At or For the Year Ended December 31,			At or For the Nine Months Ended December 31,			At and For the Year Ended March 31,
	2007			2006			2005			2004			2003			2003
	(Dollars in thousands)
Balance at beginning of year	$	833		$	808		$	732		$	768		$	735		$	483
Charge offs:
One- to four-family residential(1)		(353	)		—			(21	)		—			(12	)	$	—
Multi-family residential		—			—			—			(36	)		—			—
Construction		—			—			—			—			—			—
Commercial(2)		—			—			—			—			—			—
Consumer(3)		—			—			—			—			—			—
Total charge-offs		(353	)		—			(21	)		(36	)		(12	)		—
Recoveries:
One- to four-family residential(1)		—			—			—			—			—			—
Multi-family residential		—			—			—			—			—			—
Construction		—			—			—			—			—			—
Commercial(2)		—			—			—			—			—			2
Consumer(3)		—			—			—			—			—			—
Total recoveries		—			—			—			—			—			2
Net recoveries (charge offs)		(353	)		—			(21	)		(36	)		(12	)		2
Provision for losses on loans		116			25			97			—			45			250
Balance at end of year	$	596		$	833		$	808		$	732		$	768		$	735
Total loans receivable, net (1)	$	249,832		$	241,178		$	222,771		$	203,842		$	186,853		$	182,444
Average loans receivable outstanding (1)	$	246,335		$	233,331		$	211,736		$	197,000		$	185,149		$	176,728
Allowance for loan losses as a percent of net loans receivable		0.24	%		0.35	%		0.36	%		0.36	%		0.41	%		0.40	%
Net loans charged off as a percent of average loans outstanding		0.14	%		0.00	%		0.01	%		0.02	%		0.01	%		0.00	%

(1)	Includes home equity lines of credit, loans purchased and loans held for sale.
(2)	Includes loans secured by land.
(3)	Loans secured by deposit.

14

          The following table sets forth the allocation of the allowance for loan losses by loan category for the years indicated. This allocation is based on management’s assessment, as of a given point in time, of the risk characteristics of each of the component parts of the total loan portfolio and is subject to changes as and when the risk factors of each such component part change. The allocation is neither indicative of the specific amounts or the loan categories in which future charge-offs may be taken nor is it an indicator of future loss trends. The allocation of the allowance to each category does not restrict the use of the allowance to absorb losses in any category.

	At December 31,
	2007						2006
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Loan Category
Allocated:
Real estate - mortgage
One-to four-family residential(1)	$	320	$	216,958	84.39	%	$	318	$	209,996	84.06	%
Multi-family residential		20		10,638	4.14			236		11,250	4.50
Construction		7		19,421	7.55			4		19,022	7.61
Commercial(2)		249		10,018	3.90			275		9,466	3.80
Consumer(3)		—		66	0.02			—		82	0.03
Total	$	596	$	257,101	100.00	%	$	833	$	249,816	100.00	%

	At December 31,
	2005						2004
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans		Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Loan Category
Allocated:
Real estate - mortgage
One-to four-family residential(1)	$	200	$	195,059	84.97	%	$	353	$	182,016	86.86	%
Multi-family residential		275		11,144	4.86			166		9,944	4.75
Construction		5		12,360	5.38			22		10,718	5.11
Commercial(2)		328		10,883	4.74			191		6,750	3.22
Consumer(3)		—		110	0.05			—		133	0.06
Total	$	808	$	229,556	100.00	%	$	732	$	209,561	100.00	%

	At December 31,
	2003
	Allowance for Loan Losses		Loan Balances by Category		Percent of Loans in Each Category to Total Loans
	(Dollars in thousands)
Loan Category
Allocated:
Real estate - mortgage
One-to four-family residential(1)	$	308	$	166,998	86.11	%
Multi-family residential		213		7,714	3.98
Construction		5		13,770	7.10
Commercial(2)		242		5,278	2.72
Consumer(3)		—		169	0.09
Total	$	768	$	193,929	100.00	%

(1)	Includes home equity lines of credit, loans purchased and loans held for sale.
(2)	Includes loans secured by land.
(3)	Loans secured by deposit accounts.

15

Securities Activities.

          General. Our investment policy is established by the board of directors. This policy dictates that investment decisions will be made based on the safety of the investment, liquidity requirements, potential returns, cash flow targets, and consistency with our interest rate risk management. The board of directors, as a whole, acts in the capacity of an investment committee and is responsible for overseeing our investment program and evaluating on an ongoing basis our investment policy and objectives. Our president and chief financial officer have the authority to purchase securities within specific guidelines established by the investment policy. All transactions are reviewed by the board of directors at its regular meeting.

          We account for investment and mortgage-backed securities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 115 requires that investments be categorized as held-to maturity, trading, or available for sale. Securities classified as held to maturity are carried at cost only if we have the positive intent and ability to hold these securities to maturity. Trading securities and securities available for sale are carried at fair value with resulting unrealized gains or losses recorded to operations or shareholders’ equity, respectively. During 2007, we purchased six investment securities that were designated as available for sale. During 2006, we purchased ten investment securities that were designated as available for sale. During 2005, we purchased three investment securities that were designated as held to maturity. All other investment and mortgage-backed securities purchases have been designated as held-to-maturity. Realized gains or losses on sales of securities are recognized using the specific identification method.

          Our current policies generally limit securities investments to U.S. Government, agency and sponsored entity securities and municipal bonds. The policy also permits investments in mortgage-backed securities guaranteed by the Federal National Mortgage Association, (FNMA) the Federal Home Loan Mortgage Corporation (FHLMC) and the Government National Mortgage Corporation (GNMA). Our investment in municipal obligations mature in more than five years. The majority of our investment in U.S. Government and agency obligations were scheduled to mature within fifteen years, or step up in rate within one year at December 31, 2007.

          Our current investment strategy uses a risk management approach of diversified investing in fixed-rate securities with short- to intermediate-term maturities, as well as adjustable-rate securities, which may have a longer term to maturity. The emphasis of this approach is to increase overall securities yields while managing interest rate risk. To accomplish these objectives, we focus on investments in mortgage-backed securities and short-term investments. As a result of the short duration of our investment portfolio, all unrealized losses on securities are viewed by management to be temporary, as the fair value will increase towards par as the securities approach maturity.

16

          Amortized Cost and Estimated Fair Value of Securities. The following tables sets forth certain information regarding the amortized cost and estimated fair values of our securities as of the dates indicated.

	At December 31,
	2007				2006				2005
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In thousands)
Investment securities held to maturity:
U.S. Government and agency securities	$	23,000	$	23,086	$	24,999	$	24,637	$	26,984	$	26,405
Municipal obligations		—		—		100		102		100		104
Total investment securities held to maturity		23,000		23,086		25,099		24,739		27,084		26,509
Mortgage-backed securities held to maturity:
FHLMC		802		809		924		923		1,088		1,077
FNMA		930		934		1,097		1,103		1,369		1,376
GNMA		7,768		7,834		12,216		12,225		17,828		17,740
Total mortgage-backed securities held to Maturity		9,500		9,577		14,237		14,251		20,285		20,193
Total investments and mortgage-backed securities held to maturity		32,500		32,663		39,336		38,990		47,369		46,702
Investment securities available for sale:
U.S. Government and agency securities	$	10,001	$	10,088	$	6,998	$	6,982		—		—
Municipal obligations		2,110		2,090		2,094		2,103		—		—
Total investment securities available for sale		12,111		12,178		9,092		9,085		—		—
Mortgage-backed securities available for sale:
GNMA		811		814		1,048		1,042		1,282		1,269
Total investment and mortgage-backed securities available for sale		12,922		12,992		10,140		10,127		1,282		1,269
Total investment and mortgage-backed securities	$	45,422	$	45,655	$	49,476	$	49,117	$	48,651	$	47,971

17

          The following table sets forth certain information regarding the carrying value, weighted average yields and contractual maturities of our securities portfolio as of December 31, 2007. Adjustable-rate mortgage-backed securities are included in the period in which interest rates are next scheduled to adjust.

	At December 31, 2007
	One Year or Less				More Than One Year through Five Years				More Than Five Years through Ten Years				More Than Ten Years				Total Securities
	Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Weighted Average Yield		Amortized Cost		Estimated Fair Value		Weighted Average Yield
	(Dollars in thousands)
Investment securities held to maturity:
U.S. Government and agency obligations	$	21,000	4.38	%	$	2,000	3.25	%	$	—	—	%	$	—	—	%	$	23,000	$	23,086	4.29	%
Municipal obligations		—	—			—	—			—	—			—	—			—		—	—
Total investment securities held to maturity		21,000	4.38			2,000	3.25				—			—	—			23,000		23,086	4.29
Mortgage-backed securities held to maturity:
FHLMA		802	5.52			—	—			—	—			—	—			802		809	5.52
FNMA		930	5.98			—	—			—	—			—	—			930		934	5.98
GNMA		7,768	5.96			—	—			—	—			—	—			7,768		7,834	5.96
Total mortgage backed securities held to maturity		9,500	5.92			—	—			—	—			—	—			9,500		9,577	5.92
Investment securities available for sale:
U.S. Government and agency obligations		—	—			1,000	5.45			—	—			9,001	6.06			10,001		10,088	6.04
Municipal obligations		—	—			—	—			565	4.40			1,545	4.16			2,110		2,090	4.23
Total investment securities available for sale		—	—			1,000	5.45			565	4.40			10,546	5.78			12,111		12,178	5.63
Mortgage-backed securities available for sale:
GNMA		811	5.63			—	—			—	—			—	—			811		814	5.63
Total investment and mortgage-backed securities	$	31,311	4.88	%	$	3,000	3.98	%	$	565	4.40	%	$	10,546	5.78	%	$	45,422	$	45,655	5.04	%

18

Sources of Funds.

          General. Deposits, FHLB advances, scheduled amortization and prepayments of loan principal, maturities and calls of securities and funds provided by operations are our primary sources of funds for use in lending, investing and for other general purposes.

          Deposits. We offer deposit products having a range of interest rates and terms. We currently offer passbook and statement savings accounts, interest-bearing demand accounts, non-interest-bearing demand accounts, money market accounts and certificates of deposit.

          Deposit flows are significantly influenced by general and local economic conditions, changes in prevailing interest rates, internal pricing decisions and competition. Our deposits are primarily obtained from areas surrounding our branch offices. In order to attract and retain deposits we rely on paying competitive interest rates and providing quality service.

          Savings, NOW and money market rates are generally determined monthly by the board of directors. Certificates of deposit rates are generally determined weekly by the Savings Bank’s President. When we determine our deposit rates, we consider liquidity needs, local competition, FHLB advance rates and rates charged on other sources of funds. Core deposits, defined as savings accounts, money market accounts and demand deposit accounts, represented 29.1% and 32.1% of total deposits at December 31, 2007 and 2006. At December 31, 2007 and 2006, certificates of deposit with remaining terms to maturity of less than one year amounted to $129.0 million and $117.0 million, respectively.

          The following tables set forth the various types of deposit accounts offered by us at the dates indicated.

	At December 31,
	2007						2006						2005
	Amount		Percent		Weighted Average Rate		Amount		Percent		Weighted Average Rate		Amount		Percent		Weighted Average Rate
	(Dollars in thousands)
NOW accounts	$	15,830	7.21	%	0.67	%	$	13,993	6.81	%	0.56	%	$	13,691	7.55	%	0.37	%
Passbook accounts		14,938	6.80		0.99			16,970	8.26		1.02			18,707	10.32		0.94
Money market demand deposits		33,069	15.06		2.23			34,952	17.01		2.15			38,782	21.40		1.81
Total demand, transaction and Passbook deposits		63,837	29.07		1.55			65,915	32.08		1.40			71,180	39.27		1.30
Certificates of deposit
Due within one year		128,962	58.75		4.72			116,963	56.93		4.86			75,438	41.63		3.07
Over 1 year through 3 years		26,559	12.10		4.81			22,054	10.74		4.25			34,224	18.88		3.35
Over 3 years		168	0.08		4.31			518	0.25		4.14			396	0.22		4.10
Total certificates of deposit		155,689	70.93		4.73			139,535	67.92		3.43			110,058	60.73		3.43
Total	$	219,526	100.00	%	3.81	%	$	205,450	100.00	%	3.72	%	$	181,238	100.00	%	2.59	%

          The following table presents our deposit activity for the years indicated.

	For the Year Ended December 31,		For the Year Ended December 31,		For the Year Ended December 31,
	2007		2006		2005
	(In thousands)
Net deposits (withdrawals)	$	6,010	$	17,907	$	(2,780	)
Interest credited on deposit account		8,066		6,305		4,029
Total increase (decrease) in deposit accounts	$	14,076	$	24,212	$	1,249

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          Maturities of Certificates of Deposit Accounts. The following table sets forth the amount and maturities of certificates of deposit accounts at the dates indicated.

	At December 31, 2007
	Less than Six Months		Six Months to One Year		Over One Year to Three Years		Over Three Years		Total		Percent of Total
	(Dollars in thousands)
2.00% and below	$	—	$	—	$	—	$	—	$	—		—	%
2.01% to 3.00%		148		—		—		—		148		0.10
3.01% to 4.00%		2,110		1,430		726		—		4,266		2.74
4.01% to 5.00%		60,998		27,528		22,591		128		111,245		71.45
5.01% to 6.00%		20,240		16,508		3,242		40		40,030		25.71
6.01% to 7.00%		—		—		—		—		—		—
Total	$	83,496	$	45,466	$	26,559	$	168	$	155,689		100.00	%

          As of December 31, 2007, the aggregate amount of outstanding certificates of deposit at Cheviot Savings Bank in amounts greater than or equal to $100,000, was approximately $31.0 million. The following table presents the maturity of these certificates of deposit at such date.

	At December 31, 2007
Maturity Period	Amount
	(In thousands)
Less than three months	$	9,906
Three to six months		6,409
Six months to one year		10,848
Over one year to three years		3,285
Over three years		563
Total	$	31,011

          Borrowed Funds. As a member of the FHLB of Cincinnati, Cheviot Savings Bank is eligible to obtain advances upon the security of the FHLB common stock owned and certain residential mortgage loans, provided certain standards related to credit-worthiness have been met. FHLB advances are available pursuant to several credit programs, each of which has its own interest rate and range of maturities.

	For the Year Ended December 31,			For the Year Ended December 31,			For the Year Ended December 31,
	2007			2006			2005
	(Dollars in thousands)
FHLB Advances:
Maximum month end-end balance	$	34,088		$	35,128		$	33,209
Balance at the end of year	$	28,665		$	29,236		$	33,209
Average balance	$	29,630		$	30,848		$	24,375
Weighted average interest rate at the end of year		4.83	%		4.77	%		4.70	%
Weighted average interest rate during year		4.84	%		4.79	%		4.51	%

REGULATION

Regulation

          Loans-to-One-Borrower. Federal savings banks generally may not make a loan or extend credit to a single or related group of borrowers in excess of 15% of unimpaired capital and unimpaired surplus. An additional amount may be lent, equal to 10% of unimpaired capital and unimpaired surplus, if the loan is secured by readily marketable collateral, which is defined to include certain securities and bullion, but generally does not include real estate. As of December 31, 2007, we were in compliance with our loans-to-one-borrower limitations.

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          Qualified Thrift Lender Test. As a federal savings bank, we are required to satisfy a qualified thrift lender test whereby we must maintain at least 65% of our “portfolio assets” in “qualified thrift investments.” These consist primarily of residential mortgages and related investments, including mortgage-backed and related securities. “Portfolio assets” generally means total assets less specified liquid assets up to 20% of total assets, goodwill and other intangible assets, and the value of property used to conduct business. A savings bank that fails the qualified thrift lender test must either convert to a commercial bank charter or operate under specified restrictions. As of December 31, 2007, we maintained 91% of our portfolio assets in qualified thrift investments and, therefore, we met the qualified thrift lender test.

          Capital Distributions. Office of Thrift Supervision regulations govern capital distributions by savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution. A savings institution must file an application for Office of Thrift Supervision approval of the capital distribution if either (1) the total capital distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years that is still available for dividend, (2) the institution would not be at least adequately capitalized following the distribution, (3) the distribution would violate any applicable statute, regulation, agreement or Office of Thrift Supervision-imposed condition, or (4) the institution is not eligible for expedited review of its filings. If an application is not required to be filed, savings institutions which are a subsidiary of a holding company, as well as certain other institutions, must file a notice with the Office of Thrift Supervision at least 30 days before the board of directors declares a dividend or approves a capital distribution.

          Any additional capital distributions would require prior regulatory approval. In the event our capital falls below our adequately capitalized requirement or the Office of Thrift Supervision notifies us that we are in need of more than normal supervision, our ability to make capital distributions could be restricted. In addition, the Office of Thrift Supervision could prohibit a proposed capital distribution by any institution, which would otherwise be permitted by the regulation, if it determines that the distribution would constitute an unsafe or unsound practice.

          Community Reinvestment Act and Fair Lending Laws. Savings banks have a responsibility under the Community Reinvestment Act and related regulations of the Office of Thrift Supervision to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. In addition, the Equal Credit Opportunity Act and the Fair Housing Act prohibit lenders from discriminating in their lending practices on the basis of characteristics specified in those statutes. An institution’s failure to comply with the provisions of the Community Reinvestment Act could, at a minimum, result in regulatory restrictions on its activities, and failure to comply with the Equal Credit Opportunity Act and the Fair Housing Act could result in enforcement actions by the Office of Thrift Supervision, as well as other federal regulatory agencies and the Department of Justice. We received a “Satisfactory” Community Reinvestment Act rating in our most recent examination by the Office of Thrift Supervision.

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          Transactions with Related Parties. Our authority to engage in transactions with related parties or “affiliates” is limited by Sections 23A and 23B of the Federal Reserve Act and its implementing regulation, Regulation W. The term “affiliate” for these purposes generally means any company that controls or is under common control with an institution, including Cheviot Financial Corp. and its non-savings institution subsidiaries. Regulation W limits the aggregate amount of certain “covered” transactions with any individual affiliate to 10% of the capital and surplus of the savings institution and also limits the aggregate amount of covered transactions with all affiliates to 20% of the savings institution’s capital and surplus. Covered transactions with affiliates are required to be secured by collateral in an amount and of a type described in Regulation W, and purchasing low quality assets from affiliates is generally prohibited. Regulation W also provides that covered transactions with affiliates, including loans and asset purchases, must be on terms and under circumstances, including credit standards, that are substantially the same or at least as favorable to the institution as those prevailing at the time for comparable transactions with non-affiliated companies. In addition, savings institutions are prohibited by Office of Thrift Supervision regulations from lending to any affiliate that is engaged in activities that are not permissible for bank holding companies and no savings institution may purchase the securities of any affiliate other than a subsidiary.

          Our authority to extend credit to executive officers, directors and 10% or greater stockholders, as well as entities controlled by these persons, is governed by Sections 22(g) and 22(h) of the Federal Reserve Act and its implementing regulation, Regulation O. Among other things, these regulations generally require these loans to be made on terms substantially the same as those offered to unaffiliated individuals and do not involve more than the normal risk of repayment. However, executive officers and directors may receive beneficial treatment available on a bank-wide basis to all participating employees. Regulation O also places individual and aggregate limits on the amount of loans we may make to these persons based, in part, on our capital position, and requires that prior approval procedures be followed. At December 31, 2006, we were in compliance with these regulations.

          Enforcement. The Office of Thrift Supervision has primary enforcement responsibility over savings institutions and has the authority to bring enforcement action against all “institution-related parties,” including stockholders, and attorneys, appraisers and accountants who knowingly or recklessly participate in wrongful action likely to have an adverse effect on an insured institution. Formal enforcement action may range from the issuance of a capital directive or cease and desist order to removal of officers and/or directors of the institution, receivership, conservatorship or the termination of deposit insurance. Civil penalties cover a wide range of violations and actions, and range up to $25,000 per day, unless a finding of reckless disregard is made, in which case penalties may be as high as $1.0 million per day. The Federal Deposit Insurance Corporation also has the authority to recommend to the Director of the Office of Thrift Supervision that enforcement action be taken with respect to a particular savings institution. If action is not taken by the Director, the Federal Deposit Insurance Corporation has authority to take action under specified circumstances.

          Standards for Safety and Soundness. Federal law requires each federal banking agency to prescribe for all insured depository institutions standards relating to, among other things, internal controls, information systems and audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, compensation, and other operational and managerial standards as the agency deems appropriate. The federal banking agencies adopted Interagency Guidelines Prescribing Standards for Safety and Soundness to implement the safety and soundness standards required under the Federal law. The guidelines set forth the safety and soundness standards that the federal banking agencies use to identify and address problems at insured depository institutions before capital becomes impaired. The guidelines address internal controls and information systems; internal audit systems; credit underwriting; loan documentation; interest rate risk exposure; asset growth; and compensation, fees and benefits. If the appropriate federal banking agency determines that an institution fails to meet any standard prescribed by the guidelines, the agency may require the institution to submit to the agency an acceptable plan to achieve compliance with the standard. If an institution fails to meet these standards, the appropriate federal banking agency may require the institution to submit a compliance plan.

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Capital Requirements

          Office of Thrift Supervision capital regulations require savings institutions to meet three minimum capital standards: a 1.5% tangible capital ratio, a 4% leverage ratio (3% for institutions receiving the highest rating on the CAMELS rating system) and an 8% risk-based capital ratio. In addition, the prompt corrective action standards discussed below also establish, in effect, a minimum 2% tangible capital standard, a 4% leverage ratio (3% for institutions receiving the highest rating on the CAMELS financial institution rating system), and, together with the risk-based capital standard itself, a 4% Tier 1 risk-based capital standard. Office of Thrift Supervision regulations also require that in meeting the tangible, leverage and risk-based capital standards, institutions must generally deduct investments in and loans to subsidiaries engaged in activities as principal that are not permissible for a national bank.

          The risk-based capital standard for savings institutions requires the maintenance of Tier 1 (core) and total capital (which is defined as core capital and supplementary capital) to risk-weighted assets of at least 4% and 8%, respectively. In determining the amount of risk-weighted assets, all assets, including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0% to 100%, assigned by the Office of Thrift Supervision capital regulation based on the risks believed inherent in the type of asset. Core capital is defined as common stockholders’ equity (including retained earnings), certain noncumulative perpetual preferred stock and related surplus and minority interests in equity accounts of consolidated subsidiaries, less intangibles other than certain mortgage servicing rights and credit card relationships. The components of supplementary capital currently include cumulative preferred stock, long-term perpetual preferred stock, mandatory convertible securities, subordinated debt and intermediate preferred stock, the allowance for loan and lease losses limited to a maximum of 1.25% of risk-weighted assets, and up to 45% of unrealized gains on available-for-sale equity securities with readily determinable fair market values. Overall, the amount of supplementary capital included as part of total capital cannot exceed 100% of core capital.

          The capital regulations also incorporate an interest rate risk component. Savings institutions with “above normal” interest rate risk exposure are subject to a deduction from total capital for purposes of calculating their risk-based capital requirements. For the present time, the Office of Thrift Supervision has deferred implementation of the interest rate risk capital charge. At December 31, 2007, Cheviot Savings Bank met each of its capital requirements.

Prompt Corrective Regulatory Action

          Under the Office of Thrift Supervision Prompt Corrective Action regulations, the Office of Thrift Supervision is required to take supervisory actions against undercapitalized institutions, the severity of which depends upon the institution’s level of capital. Generally, a savings institution that has total risk-based capital of less than 8.0% or a leverage ratio or a Tier 1 core capital ratio that is less than 4.0% is considered to be undercapitalized. A savings institution that has total risk-based capital less than 6.0%, a Tier 1 core risk-based capital ratio of less than 3.0% or a leverage ratio that is less than 3.0% is considered to be “significantly undercapitalized.” A savings institution that has a tangible capital to assets ratio equal to or less than 2.0% is deemed to be “critically undercapitalized.” Generally, the banking regulator is required to appoint a receiver or conservator for an institution that is “critically undercapitalized.” The regulation also provides that a capital restoration plan must be filed with the Office of Thrift Supervision within 45 days of the date an institution receives notice that it is “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” In addition, numerous mandatory supervisory actions become immediately applicable to the institution, including, but not limited to, restrictions on growth, investment activities, capital distributions, and affiliate transactions. The Office of Thrift Supervision may also take any one of a number of discretionary supervisory actions against undercapitalized institutions, including the issuance of a capital directive and the replacement of senior executive officers and directors.

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Insurance of Deposit Accounts

          Deposit accounts in Cheviot Savings Bank are insured by the Federal Deposit Insurance Corporation generally up to a maximum of $100,000 per separately insured depositor and up to a maximum of $250,000 for self-directed retirement accounts. Cheviot Savings Bank’s deposits, therefore, are subject to Federal Deposit Insurance Corporation deposit insurance assessments.

          The Federal Deposit Insurance Corporation regulations assess insurance premiums based on an institution’s risk. Under this assessment system, the Federal Deposit Insurance Corporation evaluates the risk of each financial institution based on its supervisory rating, financial ratios, and long-term debt issuer rating. The rates for nearly all of the financial institutions industry vary between five and seven cents for every $100 of domestic deposits. The assessment to be paid during the year ending December 31, 2007 will be offset by a credit from the Federal Deposit Insurance Corporation to Cheviot Savings Bank of $261,000. Federal law requires the Federal Deposit Insurance Corporation to establish a deposit reserve ratio for the deposit insurance fund of between 1.15% and 1.50% of estimated deposits. The Federal Deposit Insurance Corporation has designated the reserve ratio for the deposit insurance fund through the first quarter of 2008 at 1.25% of estimated insured deposits.

          Effective March 31, 2006, the Federal Deposit Insurance Corporation merged the Bank Insurance Fund and the Savings Association Insurance Fund into a single fund called the Deposit Insurance Fund. In addition to the Federal Deposit Insurance Corporation assessments, the Financing Corporation (“FICO”) is authorized to impose and collect, with the approval of the Federal Deposit Insurance Corporation, assessments for anticipated payments, issuance costs and custodial fees on bonds issued by the FICO in the 1980s to recapitalize the Federal Savings and Loan Insurance Corporation. The bonds issued by the FICO are due to mature in 2017 through 2019. For the quarter ended December 31, 2007, the annualized FICO assessment was equal to 1.14 basis points for all domestic deposits maintained at an institution.

Federal Home Loan Bank System

          We are a member of the Federal Home Loan Bank System, which consists of 12 regional Federal Home Loan Banks. The Federal Home Loan Bank System provides a central credit facility primarily for member institutions. As a member of the Federal Home Loan Bank of Cincinnati we are required to acquire and hold shares of capital stock in the Federal Home Loan Bank in an amount equal to at least 1% of the aggregate principal amount of our unpaid residential mortgage loans and similar obligations at the beginning of each year, or 1/20 of our borrowings from the Federal Home Loan Bank, whichever is greater. As of December 31, 2007, we were in compliance with this requirement. The Federal Home Loan Banks are required to provide funds for the resolution of insolvent thrifts and to contribute funds for affordable housing programs. These requirements could reduce the amount of dividends that the Federal Home Loan Banks pay to their members and could also result in the Federal Home Loan Banks imposing a higher rate of interest on advances to their members.

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Ohio Savings and Loan Law

           The Ohio Division of Financial Institutions is responsible for the regulation and supervision of Ohio savings institutions in accordance with the laws of the State of Ohio. Ohio law prescribes the permissible investments and activities of Ohio savings and loan associations, including the types of lending that such associations may engage in and the investments in real estate, subsidiaries, and corporate or government securities that such associations may make.

          The Ohio Division of Financial Institutions also has approval authority over the payment of dividends and any mergers involving or acquisitions of control of Ohio savings institutions. The Ohio Division of Financial Institutions may initiate certain supervisory measures or formal enforcement actions against Ohio associations. Ultimately, if the grounds provided by law exist, the Ohio Division of Financial Institutions may place an Ohio association in conservatorship or receivership.

          The Ohio Division of Financial Institutions conducts regular examinations of Cheviot Savings Bank approximately once every eighteen months. Such examinations are usually conducted jointly with one or both federal regulators. The Ohio Division of Financial Institutions imposes assessments on Ohio associations based on their asset size to cover the cost of supervision and examination.

Holding Company Regulation

          General. Cheviot Mutual Holding Company and Cheviot Financial Corp. are nondiversified mutual savings and loan holding companies within the meaning of the Home Owners’ Loan Act. As such, Cheviot Mutual Holding Company and Cheviot Financial Corp. are registered with the Office of Thrift Supervision and are subject to Office of Thrift Supervision regulations, examinations, supervision and reporting requirements. In addition, the Office of Thrift Supervision has enforcement authority over Cheviot Financial Corp. and Cheviot Mutual Holding Company and their subsidiaries. Among other things, this authority permits the Office of Thrift Supervision to restrict or prohibit activities that are determined to be a serious risk to the subsidiary savings institution. As federal corporations, Cheviot Financial Corp. and Cheviot Mutual Holding Company are generally not subject to state business organization laws.

          Permitted Activities. Pursuant to Section 10(o) of the Home Owners’ Loan Act and Office of Thrift Supervision regulations and policy, a mutual holding company, such as Cheviot Mutual Holding Company, and a federally chartered mid-tier holding company such as Cheviot Financial Corp. may engage in the following activities: (i) investing in the stock of a savings association; (ii) acquiring a mutual association through the merger of such association into a savings association subsidiary of such holding company or an interim savings association subsidiary of such holding company; (iii) merging with or acquiring another holding company, one of whose subsidiaries is a savings association; (iv) investing in a corporation, the capital stock of which is available for purchase by a savings association under federal law or under the law of any state where the subsidiary savings association or associations share their home offices; (v) furnishing or performing management services for a savings association subsidiary of such company; (vi) holding, managing or liquidating assets owned or acquired from a savings subsidiary of such company; (vii) holding or managing properties used or occupied by a savings association subsidiary of such company; (viii) acting as trustee under deeds of trust; (ix) any other activity (A) that the Federal Reserve Board, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Director, by regulation, prohibits or limits any such activity for savings and loan holding companies; or (B) in which multiple savings and loan holding companies were authorized (by regulation) to directly engage on March 5, 1987; (x) any activity permissible for financial holding companies under Section 4(k) of the Bank Holding Company Act, including securities and insurance underwriting; and (xi) purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such savings and loan holding company is approved by the Director. If a mutual holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in activities listed in (i) through (xi) above, and has a period of two years to cease any nonconforming activities and divest of any nonconforming investments.

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          The Home Owners’ Loan Act prohibits a savings and loan holding company, including Cheviot Financial Corp. and Cheviot Mutual Holding Company, directly or indirectly, or through one or more subsidiaries, from acquiring another savings institution or holding company thereof, without prior written approval of the Office of Thrift Supervision. It also prohibits the acquisition or retention of, with certain exceptions, more than 5% of a nonsubsidiary savings institution, a nonsubsidiary holding company, or a nonsubsidiary company engaged in activities other than those permitted by the Home Owners’ Loan Act; or acquiring or retaining control of an institution that is not federally insured. In evaluating applications by holding companies to acquire savings institutions, the Office of Thrift Supervision must consider the financial and managerial resources, future prospects of the company and institution involved, the effect of the acquisition on the risk to the insurance fund, the convenience and needs of the community and competitive factors.

          The Office of Thrift Supervision is prohibited from approving any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the approval of interstate supervisory acquisitions by savings and loan holding companies, and (ii) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

          Waivers of Dividends by Cheviot Mutual Holding Company. Office of Thrift Supervision regulations require Cheviot Mutual Holding Company to notify the Office of Thrift Supervision of any proposed waiver of its receipt of dividends from Cheviot Financial Corp. The Office of Thrift Supervision reviews dividend waiver notices on a case-by-case basis, and, in general, does not object to any such waiver if: (i) the mutual holding company’s board of directors determines that such waiver is consistent with such directors’ fiduciary duties to the mutual holding company’s members; (ii) for as long as the savings association subsidiary is controlled by the mutual holding company, the dollar amount of dividends waived by the mutual holding company are considered as a restriction on the retained earnings of the savings association, which restriction, if material, is disclosed in the public financial statements of the savings association as a note to the financial statements; (iii) the amount of any dividend waived by the mutual holding company is available for declaration as a dividend solely to the mutual holding company, and, in accordance with SFAS 5, where the savings association determines that the payment of such dividend to the mutual holding company is probable, an appropriate dollar amount is recorded as a liability; and (iv) the amount of any waived dividend is considered as having been paid by the savings association in evaluating any proposed dividend under Office of Thrift Supervision capital distribution regulations. Cheviot Mutual Holding Company may waive dividends paid by Cheviot Financial Corp. Under Office of Thrift Supervision regulations, our public stockholders would not be diluted because of any dividends waived by Cheviot Mutual Holding Company (and waived dividends would not be considered in determining an appropriate exchange ratio) in the event Cheviot Mutual Holding Company converts to stock form.

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          Conversion of Cheviot Mutual Holding Company to Stock Form. Office of Thrift Supervision regulations permit Cheviot Mutual Holding Company to convert from the mutual form of organization to the capital stock form of organization (a “Conversion Transaction”). There can be no assurance when, if ever, a Conversion Transaction will occur, and the Board of Directors has no current intention or plan to undertake a Conversion Transaction. In a Conversion Transaction a new holding company would be formed as the successor to Cheviot Financial Corp. (the “New Holding Company”), Cheviot Mutual Holding Company’s corporate existence would end, and certain depositors of Cheviot Savings Bank would receive the right to subscribe for additional shares of the New Holding Company. In a Conversion Transaction, each share of common stock held by stockholders other than Cheviot Mutual Holding Company (“Minority Stockholders”) would be automatically converted into a number of shares of common stock of the New Holding Company determined pursuant an exchange ratio that ensures that Minority Stockholders own the same percentage of common stock in the New Holding Company as they owned in Cheviot Financial Corp. immediately prior to the Conversion Transaction. Under Office of Thrift Supervision regulations, Minority Stockholders would not be diluted because of any dividends waived by Cheviot Mutual Holding Company (and waived dividends would not be considered in determining an appropriate exchange ratio), in the event Cheviot Mutual Holding Company converts to stock form. The total number of shares held by Minority Stockholders after a Conversion Transaction also would be increased by any purchases by Minority Stockholders in the stock offering conducted as part of the Conversion Transaction.

The USA PATRIOT Act

          In response to the events of September 11, 2001, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, or the USA PATRIOT Act, was signed into law on October 26, 2001. The USA PATRIOT Act gives the Federal Government new powers to address terrorist threats through enhanced domestic security measures, expanded surveillance powers, increased information sharing and broadened anti-money laundering requirements.

Sarbanes-Oxley Act of 2002

          The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns regarding corporate accountability in connection with a number of accounting scandals. The stated goals of the Sarbanes-Oxley Act were to increase corporate responsibility, to provide for enhanced penalties for accounting and auditing improprieties at publicly traded companies, and to protect investors by improving the accuracy and reliability of corporate disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally applies to all companies that file or are required to file periodic reports with the SEC, under the Securities Exchange Act of 1934.

          The Sarbanes-Oxley Act includes very specific additional disclosure requirements and new corporate governance rules requiring the SEC and securities exchanges to adopt extensive additional disclosure, corporate governance and other related rules, and mandates further studies of certain issues by the SEC. The Sarbanes-Oxley Act represents significant federal involvement in matters traditionally left to state regulatory systems, such as the regulation of the accounting profession, and to state corporate law, such as the relationship between a board of directors and management and between a board of directors and its committees.

          Although we anticipate that we will incur additional expense in complying with the provisions of the Sarbanes-Oxley Act and the regulations that have been promulgated to implement the Sarbanes-Oxley Act, management does not expect that such compliance will have a material impact on our results of operations or financial condition.

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TAXATION

Federal Taxation

          For federal income tax purposes, Cheviot Financial Corp. and Cheviot Savings Bank file a consolidated federal income tax returns on a calendar year basis using the accrual method of accounting.

          As a result of the enactment of the Small Business Job Protection Act of 1996, all savings banks and savings associations may convert to a commercial bank charter, diversify their lending, or merge into a commercial bank without having to recapture any of their pre-1988 tax bad debt reserve accumulations. However, transactions which would require recapture of the pre-1988 tax bad debt reserve include redemption of Cheviot Savings Bank’s stock, payment of dividends or distributions in excess of earnings and profits, or failure by the institution to qualify as a bank for federal income tax purposes. At December 31, 2007, Cheviot Savings Bank had pre-1988 bad debt reserves totaling approximately $3.0 million. A deferred tax liability has not been provided on this amount as management does not intend to make distributions, redeem stock or fail certain bank tests that would result in recapture of the reserve.

          Deferred income taxes arise from the recognition of items of income and expense for tax purposes in years different from those in which they are recognized in the consolidated financial statements. Cheviot Financial Corp. will account for deferred income taxes by the asset and liability method, applying the enacted statutory rates in effect at the balance sheet date to differences between the book basis and the tax basis of assets and liabilities. The resulting deferred tax liabilities and assets will be adjusted to reflect changes in the tax laws.

          Cheviot Financial Corp. is subject to the corporate alternative minimum tax to the extent it exceeds Cheviot Financial Corp.’s regular income tax for the year. The alternative minimum tax will be imposed at the rate of 20% of a specially computed tax base. Included in this base are a number of preference items, including interest on certain tax-exempt bonds issued after August 7, 1986, and an “adjusted current earnings” computation which is similar to a tax earnings and profits computation. In addition, for purposes of the alternative minimum tax, the amount of alternative minimum taxable income that may be offset by net operating losses is limited to 90% of alternative minimum taxable income.

          Cheviot Savings Bank’s income tax returns have not been audited by the Internal Revenue Service within the past five years.

State Taxation

          Cheviot Financial Corp. and Cheviot Savings Bank are subject to Ohio taxation in the same general manner as other corporations. In particular, Cheviot Financial Corp. and Cheviot Savings Bank are subject to the Ohio corporation franchise tax, which is an excise tax imposed on corporations for the privilege of doing business in Ohio, owning capital or property in Ohio, holding a charter or certificate of compliance authorizing the corporation to do business in Ohio, or otherwise having nexus with Ohio during a calendar year. The franchise tax is imposed on the value of a corporation’s issued and outstanding shares of stock. Financial institutions determine the value of their issued and outstanding shares based upon the net worth of the shares. For Ohio franchise tax purposes, savings institutions are currently taxed at a rate equal to 1.3% of taxable net worth. Cheviot Savings Bank is currently under audit with respect to its 2005 Ohio franchise tax returns.

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MANAGEMENT

Executive Officers of Cheviot Financial Corp.

          The following individuals hold the following executive officer positions with Cheviot Financial Corp.

Name	Age	Position
Thomas J. Linneman	54	President and Chief Executive Officer
Scott T. Smith	38	Chief Financial Officer

Availability of Annual Report on Form 10-K

          Our Annual Report on Form 10-K may be accessed on our website at www.cheviotsavings.com.

ITEM 1A. RISK FACTORS

Changing Interest Rates May Cause Net Earnings to Decline.

          In the event that interest rates rise, our net interest margin and interest rate spread will be adversely affected by the high level of assets with fixed rates of interest which we retain in our portfolio. As market interest rates rise, we will have competitive pressures to increase the rates we pay on deposits, which will result in a decrease of our net interest income. Furthermore, the value of our loans will be less should we choose to sell such loans in the secondary market. Since as a general matter our interest-bearing liabilities reprice or mature more quickly than our interest-earning assets, an increase in interest rates generally would result in a decrease in our average interest rate spread and net interest income.

If Our Allowance for Loan Losses is Not Sufficient to Cover Actual Loan Losses, Our Earnings Could Decrease.

          Our loan customers may not repay their loans according to their terms, and the collateral securing the payment of these loans may be insufficient to pay any remaining loan balance. We may experience significant loan losses, which could have a material adverse effect on our operating results. We make various assumptions and judgments about the collectibility of our portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans.

          In determining the amount of the allowance for loan losses, we review individual delinquent multi-family and commercial real estate loans for potential impairments in their carrying value. Additionally, we apply a factor to the loan portfolio principally based on historical loss experience as applied to the composition of the one- to-four family loan portfolio and integrated with our perception of risk in the economy related to past experience. Since we must use assumptions regarding individual loans and the economy, our current allowance for loan losses may not be sufficient to cover actual loan losses, and increases in the allowance may be necessary. Consequently, we may need to significantly increase our provision for losses on loans, particularly if one or more of our larger loans or credit relationships becomes delinquent of if we expand our non-residential, multi-family or commercial business lending. In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our provision for loan losses or recognize loan charge-offs.

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If Economic Conditions Deteriorate, Our Earnings Could be Adversely Impacted as Borrowers’ Ability to Repay Loans Declines and the Value of the Collateral Securing Our Loans Decreases.

          Our financial results may be adversely affected by changes in prevailing economic conditions, including decreases in real estate values, changes in interest rates which may cause a decrease in interest rate spreads, adverse employment conditions, the monetary and fiscal policies of the federal government and other significant external events. Since we have a significant amount of real estate loans, decreases in real estate values could adversely affect the value of property used as collateral. Advance changes in the economy may also have a negative effect on the ability of our borrowers to make timely repayments of their loans, which would have an adverse impact on our earnings.

          In addition, substantially all of our loans are to individuals and businesses in Hamilton County, Ohio. Consequently, any decline in the economy of this market area could have an adverse impact on our earnings.

Our Public Shareholders Do Not Exercise Voting Control Over Cheviot Financial Corp.

          A majority of the voting stock of Cheviot Financial Corp. is owned by Cheviot Mutual Holding Company. Cheviot Mutual Holding Company is controlled by its board of directors, who consist of those persons who are members of the board of directors of Cheviot Financial Corp. and Cheviot Savings Bank. Cheviot Mutual Holding Company elects all members of the board of directors of Cheviot Financial Corp., and, as a general matter, controls the outcome of all matters presented to the stockholders of Cheviot Financial Corp. for resolution by vote, except for matters that require a vote greater than a majority vote. Consequently, Cheviot Mutual Holding Company, acting through its board of directors, is able to control the business and operations of Cheviot Financial Corp. and may be able to prevent any challenge to the ownership or control of Cheviot Financial Corp. by stockholders other than Cheviot Mutual Holding Company. There is no assurance that Cheviot Mutual Holding Company will not take actions that the public stockholders believe are against their interests.

Strong Competition Within Our Market Area May Limit Our Growth and Profitability.

          Competition in the banking and financial services industry is intense. In our market area, we compete with commercial banks, savings institutions, mortgage brokerage firms, credit unions, finance companies, mutual funds, insurance companies, and brokerage and investment banking firms operating locally and elsewhere. Many of these competitors have substantially greater resources and lending limits than we do and may offer certain services that we do not or cannot provide. Our profitability depends upon our continued ability to successfully compete in our market area.

We Operate in a Highly Regulated Environment and May be Adversely Affected by Changes in Laws and Regulations.

          We are subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, our chartering authority, and by the Federal Deposit Insurance Corporation, as insurer of deposits. As federally chartered holding companies, Cheviot Financial Corp. and Cheviot Mutual Holding Company also will be subject to regulation and oversight by the Office of Thrift Supervision. Such regulation and supervision govern the activities in which an institution and its holding companies may engage and are intended primarily for the protection of the insurance fund and depositors. Regulatory authorities have extensive discretion in connection with their supervisory and enforcement activities, including the imposition of restrictions on the operation of an institution, the classification of assets by the institution and the adequacy of an institution’s allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, or legislation, including changes in the regulations governing mutual holding companies, could have a material impact on Cheviot Savings Bank, Cheviot Financial Corp., and our operations.

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ITEM 1.B UNRESOLVED STAFF COMMENTS

          Not applicable.

ITEM 2. PROPERTIES

          We conduct our business through our main banking office located in Cheviot, Ohio, and other full-service branch offices located in Hamilton County, Ohio. The aggregate net book value of our premises and equipment was $5.1 million at December 31, 2007. The following table sets forth certain information with respect to our offices at December 31, 2007.

Location	Leased or Owned	Year Opened/ Acquired		Net Book Value
				(In thousands)
Main Office
3723 Glenmore Avenue
Cheviot, Ohio 45211	Owned		1915	$	780
Branches
5550 Cheviot Road
Cincinnati, Ohio 45247	Owned		1982		390
6060 Bridgetown Road
Cincinnati, Ohio 45248	Owned		1991		518
1194 Stone Road
Harrison, Ohio 45030	Owned		1997		609
585 Anderson Ferry Road
Cincinnati, Ohio 45238	Owned		2006		1,224
7072 Harrison Avenue
Cincinnati, Ohio 45247	Owned		2006		1,587
Total Net Book Value				$	5,108

ITEM 3. LEGAL PROCEEDINGS

          Cheviot Savings Bank is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business which, in the aggregate, involve amounts which are believed by management to be immaterial to its financial condition or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

          The Company’s common stock is traded on the Nasdaq Capital Market under the symbol “CHEV.” The common stock began trading on January 5, 2004.

          The following table sets forth the range of the high and low sales prices of the Company’s Common Stock for the prior eight calendar quarters and is based upon information provided by Nasdaq.

	Prices of Common Stock
	High		Low		Dividends Paid
Calendar Quarter Ended
March 31, 2007	$	13.42	$	12.93	$	0.08
June 30, 2007		13.75		13.22		0.08
September 30, 2007		13.50		11.99		0.08
December 31, 2007		12.63		9.40		0.08

	Prices of Common Stock
	High		Low		Dividends Paid
Calendar Quarter Ended
March 31, 2006	$	11.99	$	11.34	$	0.07
June 30, 2006		12.20		11.71		0.07
September 30, 2006		12.55		11.57		0.07
December 31, 2006		13.30		12.31		0.07

          As of December 31, 2007, the Company had 842 stockholders of record. Please see “Item 1. Business— Regulation—Capital Distributions” for a discussion of restrictions on the ability of the Bank to pay the Company dividends.

          Set forth below is information relating to the Company’s common stock repurchase activity during the fourth quarter of 2007.

Month	Total Number of Shares Purchased	Average Price Paid per share			Total shares purchased as part of a publicly announced program or plan	Maximum number of shares that may yet be purchased under the program or plan
October	8,200		$	12.11	412,634	58,506
November	40,000			12.04	452,634	18,506
December	18,506			10.69	471,140	—

          Set forth below is information as of December 31, 2007 regarding equity compensation plans. Other than the ESOP, the Company does not have any equity compensation plans that were not approved by its stockholders.

Plan	Number of securities to be issued upon exercise of outstanding options and rights	Weighted average exercise price			Number of securities remaining available for issuance under plan
Equity compensation plans approved by stockholders	611,206		$	11.21	110,446
Equity compensation plans not approved by stockholders	—			—	—
Total	611,206		$	11.21	110,446

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ITEM 6. SELECTED FINANCIAL DATA

          The Selected Financial Data is incorporated by reference to the Annual Report to Shareholders included as Exhibit 13 to this Form 10-K.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          Incorporated by reference to the Annual Report to Shareholders included as Exhibit 13 to the Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

          Incorporated by reference to the Annual Report to Shareholders included as Exhibit 13 to the Form 10-K.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          The financial statements identified in Item 15(a)(1) hereof are incorporated by reference to the Annual Report to Shareholders included as Exhibit 13 to the Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

          On July 10, 2007, the Company engaged Clark, Schaefer, Hackett & Co. as its independent audit firm, replacing Grant Thornton LLP. The Company’s engagement of Clark, Schaefer, Hackett & Co. has been approved by the Company’s Audit Committee. On July 10, 2007, the Company’s Audit Committee elected to terminate the engagement of Grant Thornton LLP as its independent auditor.

          The reports of Grant Thornton LLP on the consolidated financial statements of the Company as of and for the fiscal years ended December 31, 2006, and December 31, 2005, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.

          During the years ended December 31, 2006 and 2005, and in connection with the audit of the Company’s financial statements for such periods, as well as the interim period subsequent to the most recent fiscal year end and through July 10, 2007, there were no disagreements between the Company and Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Grant Thornton LLP, would have caused Grant Thornton LLP to make reference to such matter in connection with its audit reports on the Company’s financial statements.

          During the two most recent fiscal years and subsequent interim periods prior to engaging Clark, Schaefer, Hackett & Co. neither the Company nor anyone on the Company’s behalf consulted Clark, Schaefer, Hackett & Co. regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements. No written report or oral advice was provided that Clark, Schaefer, Hackett & Co. concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement as defined in Item 304(a)(l)(iv) of Regulation S-K or a reportable event as described in Item 304(a)(l)(v) of Regulation S-K.

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ITEM 9A(T). CONTROLS AND PROCEDURES

          (a) Evaluation of Disclosure Controls and Procedures

          Under the supervision, and with the participation, of our Chief Executive Officer and Chief Financial Officer, our management evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rule 13a-15(b), as adopted by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

          Disclosure controls and procedures are the controls and other procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

          (b) Management’s Report on Internal Control Over Financial Reporting

          Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our system of internal control is designed under the supervision of management, including our Chief Executive Officer and Chief Financial Officer, to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of the Company’s financial statements for external reporting purposes in accordance with U.S. generally accepted accounting principles (“GAAP”).

          Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures are made only in accordance with the authorization of management and the Boards of Directors of the Company and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.

          Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions or that the degree of compliance with policies and procedures may deteriorate.

          As of December 31, 2007, management assessed the effectiveness of the Company’s internal control over financial reporting based upon the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based upon its assessment, management believes that the Company’s internal control over financial reporting as of December 31, 2007 is effective using these criteria.

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          This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

          (c) Changes in Internal Control over Financial Reporting

          There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

          See the Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

ITEM 9B. OTHER INFORMATION

          None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

          Information concerning Directors of the Company is incorporated herein by reference from the Company’s definitive Proxy Statement (the “Proxy Statement”), specifically the section captioned “Proposal I—Election of Directors.” In addition, see “Executive Officers of Cheviot Financial Corp.” in Item 1 for information concerning the Company’s executive officers. Information concerning corporate governance matters is incorporated by reference from the Company’s Proxy Statement.

          The Board of Directors has adopted a Code of Ethics, applicable to the Chief Executive Officer and Chief Financial Officer. The Code of Ethics may be accessed through our website at www.cheviotsavings.com and is filed as Exhibit 14 hereto.

ITEM 11. EXECUTIVE COMPENSATION

          Information concerning executive compensation is incorporated herein by reference from the Company’s Proxy Statement, specifically the section captioned “Executive Compensation.”

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

          Information concerning security ownership of certain owners and management is incorporated herein by reference from the Company’s Proxy Statement, specifically the section captioned “Voting Securities and Principal Holder Thereof.”

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

          Information concerning relationships and transactions, and director independence, is incorporated herein by reference from the Company’s Proxy Statement, specifically the sections captioned “Transactions with Certain Related Persons” and “Proposal I-Election of Directors.”

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

          Information concerning principal accountant fees and services is incorporated herein by reference from the Company’s Proxy Statement under the caption “Proposal II-Ratification of Independent Registered Public Accountants.”

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

          The exhibits and financial statement schedules filed as a part of this Form 10-K are as follows:

(a)(1)	Financial Statements
	•	Report of Independent Registered Public Accounting Firm.
	•	Consolidated Statements of Financial Condition at December 31, 2007 and 2006.
	•	Consolidated Statements of Earnings for the Years Ended December 31, 2007, 2006 and 2005.
	•	Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2007, 2006 and 2005.
	•	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2007, 2006 and 2005.
	•	Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005.
	•	Notes to Consolidated Financial Statements.
(a)(2)	Financial Statement Schedules
	No financial statement schedules are filed because the required information is not applicable or is included in the consolidated financial statements or related notes.

36

(a)(3)	Exhibits
	3.1	Charter of Cheviot Financial Corp.(1)
	3.2	Bylaws of Cheviot Financial Corp.
	4	Stock Certificate of Cheviot Financial Corp. (2)
	10.1	Employment Agreement with Thomas J. Linneman(3)
	10.2	Change in Control Severance Agreement with Kevin Kappa(4)
	10.3	Change in Control Severance Agreement with Jeffrey Lenzer(5)
	10.4	Directors Deferred Compensation Plan(6)
	10.5	Tax Allocation Agreement(7)
	10.6	Expense Allocation Agreement(8)
	10.7	2005 Stock Based Incentive Plan(9)
	10.8	Supplemental Insurance Plan(10)
	13	Annual Report to Shareholders
	14	Code of Ethics(11)
	21	Subsidiaries of the Registrant(12)
	23.1	Consent of Grant Thornton LLP
	23.2	Consent of Clark, Schaefer, Hackett & Co.
	31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 30, 2003.
(2)	Incorporated by reference to Exhibit 4 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
(3)	Incorporated by reference to Exhibit 10.1 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
(4)	Incorporated by reference to Exhibit 10.2 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
(5)	Incorporated by reference to Exhibit 10.3 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
(6)	Incorporated by reference to Exhibit 10.4 of the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on June 30, 2003.

37

	(7)	Incorporated by reference to Exhibit 10.5 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
	(8)	Incorporated by reference to Exhibit 10.6 of the Pre-Effective Amendment No.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on September 2, 2003.
	(9)	Incorporated by reference to Exhibit A of the Definitive Proxy Statement filed with the Securities and Exchange Commission on March 25, 2005.
	(10)	Incorporated by reference to Exhibit 99 of the Form 8-K filed with the Securities and Exchange Commission on July 7, 2005.
	(11)	Incorporated by reference to Exhibit 14 of the Form 10-K filed with the Securities and Exchange Commission on March 25, 2004.
	(12)	Incorporated by reference to Exhibit 21 of the Form 10-K filed with the Securities and Exchange Commission on March 30, 2007.
(b)	The exhibits listed under (a)(3) above are filed herewith.
(c)	Not applicable.

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SIGNATURES

          Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		CHEVIOT FINANCIAL CORP.
Date:	March 25, 2008	By:	/s/ Thomas J. Linneman
			Thomas J. Linneman,
			President and Chief Executive Officer and Director

          Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

By:	/s/ Thomas J. Linneman	By:	/s/ Scott T. Smith
	Thomas J. Linneman, President and Chief Executive Officer		Scott T. Smith, Chief Financial Officer (principal financial officer and principal accounting officer)
Date:	March 25, 2008	Date:	March 25, 2008
By:	/s/ Edward L. Kleemeier	By:	/s/ John T. Smith
	Edward L. Kleemeier, Director		John T. Smith, Director
Date:	March 25, 2008	Date:	March 25, 2008
By:	/s/ Robert Thomas	By:	/s/ James E. Williamson
	Robert Thomas, Director		James E. Williamson, Director
Date:	March 25, 2008	Date:	March 25, 2008
By:	/s/ Steven R. Hausfeld
	Steven R. Hausfeld, Director
Date:	March 25, 2008

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EX-3.2

EXHIBIT 3.2

BYLAWS OF CHEVIOT FINANCIAL CORP., AS AMENDED

Amended and Restated Bylaws

Cheviot Financial Corp.

Article I — Home Office

        The home office of Cheviot Financial Corp. (the “Company”) shall be at 3723 Glenmore Avenue, Cheviot, Ohio 45211-4744 in the County of Hamilton, in the State of Ohio.

Article II — Shareholders

        Section 1.   Place of Meetings. All annual and special meetings of shareholders shall be held at the home office of the Company or at such other convenient place as the board of directors may determine.

        Section 2.   Annual Meeting. A meeting of the shareholders of the Company for the election of directors and for the transaction of any other business of the Company shall be held annually within 150 days after the end of the Company’s fiscal year on the fourth Tuesday of April if not a legal holiday, and if a legal holiday, then on the next day following which is not a legal holiday, at 3:00 p.m., Eastern Time, or at such other date and time within such 150-day period as the board of directors may determine.

        Section 3.   Special Meetings. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by the regulations of the Office of Thrift Supervision (“OTS”), may be called at any time by the chairman of the board, the president, or a majority of the board of directors, and shall be called by the chairman of the board, the president, or the secretary upon the written request of the holders of not less than one-tenth of all of the outstanding capital stock of the Company entitled to vote at the meeting. Such written request shall state the purpose or purposes of the meeting and shall be delivered to the home office of the Company addressed to the chairman of the board, the president, or the secretary.

        Section 4.   Conduct of Meetings. Annual and special meetings shall be conducted in accordance with the most current edition of Robert’s Rules of Order unless otherwise prescribed by regulations of the OTS or these bylaws or the board of directors adopts another written procedure for the conduct of meetings. The board of directors shall designate, when present, either the chairman of the board or president to preside at such meetings.

        Section 5.   Voting Lists. At least 20 days before each meeting of the shareholders, the officer or agent having charge of the stock transfer books for shares of the Company shall make a complete list of the shareholders of record entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address and the number of shares held by each.

        This list of shareholders shall be kept on file at the home office of the Company and shall be subject to inspection by any shareholder of record or the shareholder’s agent at any time during usual business hours for a period of 20 days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any shareholder of record or any shareholders agent during the entire time of the meeting. The original stock transfer book shall constitute prima facie evidence of the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders. In lieu of making the shareholder list available for inspection by shareholders as provided in the preceding paragraph, the board of directors may elect to follow the procedures prescribed in § 552.6(d) of the OTS’s regulations as now or hereafter in effect.

        Section 6.   Notice of Meetings. Written notice stating the place, day, and hour of the meeting and the purpose(s) for which the meeting is called shall be delivered not fewer than 20 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, or the secretary, or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the mail, addressed to the shareholder at the address as it appears on the stock transfer books or records of the Company as of the record date prescribed in Section 6 of this Article II with postage prepaid. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted at the meeting, other than an announcement at the meeting at which such adjournment is taken.

        Section 7.   Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than 60 days and, in case of a meeting of shareholders, not fewer than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment.

        Section 8.   Quorum. A majority of the outstanding shares of the Company entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares is represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to constitute less than a quorum. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders, unless the vote of a greater number of shareholders voting together or voting by classes is required by law or the charter. Directors, however, are elected by a plurality of the votes cast at an election of directors.

        Section 9.   Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his or her duly authorized attorney in fact. Proxies may be given telephonically or electronically as long as the holder uses a procedure for verifying the identity of the shareholder. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid more than eleven months from the date of its execution except for a proxy coupled with an interest.

2

        Section 10.   Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Company to the contrary, at any meeting of the shareholders of the Company any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

        Section 11.   Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent, or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian, or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name. Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name. Shares held in trust in an IRA or Keogh Account, however, may be voted by the Company if no other instructions are received. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer into his or her name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed.

        A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. Neither treasury shares of its own stock held by the Company nor shams held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Company, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

        Section 12.   Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any person other than nominees for office as inspectors of election to act at such meeting or any adjournment. The number of inspectors shall be either one or three. Any such appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, or on the request of not fewer than ten percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the chairman of the board or the president. Unless otherwise prescribed by regulations of the OTS, the duties of such inspectors shall include: (i) determining the number of shares and the voting power of each share, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; (ii) receiving votes, ballots, or consents; (iii) hearing and determining all challenges and questions in any way arising in connection with the rights to vote; (iv) counting and tabulating all votes or consents; (v) determining the result; and (vi) such other acts as may be proper to conduct the election or vote with fairness to all shareholders.

3

        Section 13.   Nominating Committee. The board of directors shall act as a nominating committee for selecting the management nominees for election as directors. Except in the case of a nominee substituted as a result of the death or other incapacity of a management nominee, the nominating committee shall deliver written nominations to the secretary at least 20 days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Company. No nominations for directors except those made by the nominating committee shall be voted upon at the annual meeting unless other nominations by shareholders are made in writing and delivered to the secretary of the Company at least five days prior to the date of the annual meeting. Upon delivery, such nominations shall be posted in a conspicuous place in each office of the Company. Ballots bearing the names of all persons nominated by the nominating committee and by shareholders shall be provided for use at the annual meeting. However, if the nominating committee shall fail or refuse to act at least 20 days prior to the annual meeting, nominations for directors may be made at the annual meeting by any shareholder entitled to vote and shall be voted upon.

        Section 14.   New Business. Proposals for any new business or nominations for director to be taken up at any annual or special meeting of shareholders may be made by the board of directors of the Company or by any shareholder of the Company entitled to vote generally in the election of directors. In order for a shareholder of the Company to make any such proposals, he or she shall give notice thereof in writing, delivered or mailed by first class United States mail, postage prepaid, to the secretary of the Company not less than 30 days nor more than 60 days prior to any such meeting; provided, however, that if less than 30 days’ notice of the meeting is given to shareholders, such written notice shall be delivered or mailed, as prescribed, to the secretary of the Company not later than the close of the tenth day following the day on which notice of the meeting was mailed to shareholders.

        Each such notice given by a shareholder to the secretary of the Company with respect to a proposal to be brought before a meeting shall set forth in writing as to each matter: (i) a brief description of such proposal desired to be brought before the meeting and the reasons for considering such proposal at the meeting; (ii) the name and address, as they appear on the subsidiary holding company’s books, of the shareholder proposing such proposal; (iii) the class and number of shares of the Company which are beneficially owned by the shareholder; and (iv) any material interest of the shareholder in such proposal. Notwithstanding anything in these Articles to the contrary, no proposal shall be considered at the meeting except in accordance with the procedures set forth in this Section 14 of Article II.

        The chairman of the annual or special meeting of shareholders may, if the facts warrant, determine and declare to such meeting that a proposal was not made in accordance with the foregoing procedure, and, if he should so determine, he shall so declare to the meeting and the defective proposal shall be disregarded and laid over for action at the next succeeding adjourned, special or annual meeting of the shareholders taking place thirty days or more thereafter. This provision shall not require the holding of any adjourned or special meeting of shareholders for the purpose of considering such defective proposal.

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        Section 15.   Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action that may be taken at a meeting of shareholders, may be taken without a meeting if consent in writing, setting forth the action so taken, shall be given by all of the shareholders entitled to vote with respect to the subject matter.

Article III — Board of Directors

        Section 1.   General Powers. The business and affairs of the Company shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board and a president from among its members and shall designate, when present, either the chairman of the board or the president to preside at its meetings.

        Section 2.   Number and Term. The board of directors shall consist of six members, and shall be divided into three classes as nearly equal in number as possible. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

        Section 3.   Regular Meetings. A regular meeting of the board of directors shall be held without other notice than this bylaw following the annual meeting of shareholders. The board of directors may provide, by resolution, the time and place, for the holding of additional regular meetings without other notice than such resolution. Directors may participate in a meeting by means of a conference telephone or similar communications device through which all persons participating can hear each other at the same time. Participation by such means shall constitute presence in person for all purposes.

        Section 4.   Qualification. Each director shall at all times be the beneficial owner of not less than 100 shares of capital stock of the Company unless the Company is a wholly owned subsidiary of a holding company.

        Section 5.   Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president, or one-third of the directors. The persons authorized to call special meetings of the board of directors may fix any place, within the Company’s normal lending territory, as the place for holding any special meeting of the board of directors called by such persons. Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person for all purposes.

        Section 6.   Notice. Written notice of any special meeting shall be given to each director at least 24 hours prior thereto when delivered personally or by telegram or at least five days prior thereto when delivered by mail at the address at which the director is most likely to be reached.

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        Such notice shall be deemed to be delivered when deposited in the mail so addressed, with postage prepaid if mailed, when delivered to the telegraph company if sent by telegram, or when the Company receives notice of delivery if electronically transmitted. Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice of waiver of notice of such meeting.

        Section 7.   Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the board of directors; but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed by Section 5 of this Article III.

        Section 8.   Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by regulation of the OTS or by these bylaws.

        Section 9.   Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors.

        Section 10.   Resignation. Any director may resign at any time by sending a written notice of such resignation to the home office of the Company addressed to the chairman of the board or the president. Unless otherwise specified, such resignation shall take effect upon receipt by the chairman of the board or the president. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors.

        Section 11.   Vacancies. Any vacancy occurring on the board of directors may be filled by the affirmative vote of a majority of the remaining directors although less than a quorum of the board of directors. A director elected to fill a vacancy shall be elected to serve only until the next election of directors by the shareholders. Any directorship to be filled by reason of an increase in the number of directors may be filled by election by the board of directors for a term of office continuing only until the next election of directors by the shareholders.

        Section 12.   Compensation. Directors, as such, may receive a stated salary for their services. By resolution of the board of directors, a reasonable fixed sum, and reasonable expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for attendance at committee meetings as the board of directors may determine.

        Section 13.   Presumption of Assent. A director of the Company who is present at a meeting of the board of directors at which action on any Company matter is taken shall be presumed to have assented to the action taken unless his or her dissent or abstention shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Company within five days after the date a copy of the minutes of the meeting is received. Such right to dissent shall not apply to a director who voted in favor of such action.

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        Section 14.   Removal of Directors. At a meeting of shareholders called expressly for that purpose, any director may be removed only for cause by a vote of the holders of a majority of the shares then entitled to vote at an election of directors. Whenever the holders of the shares of any class are entitled to elect one or more directors by the provisions of the charter or supplemental sections thereto, the provisions of this Section shall apply, in respect to the removal of a director or directors so elected, to the vote of the holders of the outstanding shares of that class and not to the vote of the outstanding shares as a whole.

Article IV — Executive and Other Committees

        Section 1.   Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article IV and the delegation of authority shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation.

        Section 2.    Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors except to the extent, if any, that such authority shall be limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to: (i) the declaration of dividends; (ii) the amendment of the charter or bylaws of the Company, or recommending to the shareholders a plan of merger, consolidation, or conversion; (iii) the sale, lease, or other disposition of all or substantially all of the property and assets of the Company otherwise than in the usual and regular course of its business; (iv) a voluntary dissolution of the Company; (v) a revocation of any of the foregoing; or (vi) the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

        Section 3.   Tenure. Subject to the provisions of Section 8 of this Article IV, each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his or her designation and until a successor is designated as a member of the executive committee.

        Section 4.   Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date, and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

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        Section 5.   Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

        Section 6.   Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

        Section 7.   Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

        Section 8.   Resignations and Removal. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any member of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Company. Unless otherwise specified, such resignation shall take effect upon its receipt; the acceptance of such resignation shall not be necessary to make it effective.

        Section 9.   Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting held next after the proceedings shall have occurred.

        Section 10.   Other Committees. The board of directors may by resolution establish an audit, loan, or other committee composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the Company and may prescribe the duties, constitution, and procedures thereof.

Article V — Officers

        Section 1.   Positions. The officers of the Company shall be a president and chief executive officer, one or more vice presidents, a secretary, and a chief financial officer, each of whom shall be elected by the board of directors. The board of directors may also designate the chairman of the board as an officer. The offices of the secretary and chief financial officer or comptroller may be held by the same person and a vice president may also be either the secretary or the treasurer or comptroller. The board of directors may designate one or more vice presidents as executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the Company may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.

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        Section 2.   Election and Term of Office. The officers of the Company shall be elected annually at the first meeting of the board of directors held after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until a successor has been duly elected and qualified or until the officer’s death, resignation, or removal in the manner hereinafter provided. Election or appointment of an officer, employee, or agent shall not of itself create contractual rights. The board of directors may authorize the Company to enter into an employment contract with any officer in accordance with regulations of the OTS; but no such contract shall impair the right of the board of directors to remove any officer at any time in accordance with Section 3 of this Article V.

        Section 3.   Removal. Any officer may be removed by the board of directors whenever in its judgment the best interests of the Company will be served thereby, but such removal, other than for cause, shall be without prejudice to the contractual rights, if any, of the person so removed.

        Section 4.   Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the board of directors for the unexpired portion of the term.

        Section 5.   Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors.

Article VI — Indemnification, Expenses and Insurance

        Section 1.   Indemnification. The Company shall indemnify its officers and directors to the full extent permitted by the regulations of the OTS. The Company may, to such extent and in such manner as is determined by the Board of Directors, but in no event to an extent greater than is permitted by the regulations of the OTS, indemnify any employees or agents of the corporation permitted to be indemnified by provisions of the regulations of the OTS.

        Section 2.   Expenses. The right to indemnification conferred herein shall include the right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its final disposition, to the fullest extent authorized by the regulations of the OTS. The rights to indemnification and to the advancement of expenses conferred herein shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or employee and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

        Section 3.  Insurance. The Company may maintain insurance to the full extent permitted by the regulations of the OTS, at its expense, to protect itself and any director, officer, employee or agent of the Company or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss.

Article VII — Contracts, Loans, Checks, and Deposits

        Section 1.  Contracts. To the extent permitted by regulations of the OTS, and except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee, or agent of the Company to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Company. Such authority may be general or confined to specific instances.

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        Section 2.  Loans. No loans shall be contracted on behalf of the Company and no evidence of indebtedness shall be issued in its name unless authorized by the board of directors. Such authority may be general or confined to specific instances.

        Section 3.  Checks; Drafts; etc. All checks, drafts, or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Company shall be signed by one or more officers, employees or agents of the Company in such manner as shall from time to time be determined by the board of directors.

        Section 4.   Deposits. All funds of the Company not otherwise employed shall be deposited from time to time to the credit of the Company in any duly authorized depositories as the board of directors may select.

Article VIII — Evidence of Share Ownership and The Transfer of Shares

         Section 1.   Evidence of Share Ownership. Shares of capital stock of the Company may be certificated or uncertificated. Shares that are certificated shall be in such form as shall be determined by the board of directors and approved by the OTS. Such certificates shall be signed by the chief executive officer or by any other officer of the Company authorized by the board of directors, attested by the secretary or an assistant secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar other than the Company itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. Uncertificated shares shall be evidenced by means of book entry. The name and address of the person to whom the shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Company. All certificates surrendered to the Company for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares has been surrendered and canceled, except that in the case of a lost of destroyed certificate, a new certificate may be issued upon such terms and indemnity to the Company as the board of directors may prescribe.

         Section 2.   Transfer of Shares. Transfer of shares of capital stock of the Company shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record or by his or her legal representative, who shall furnish proper evidence of such authority, or by his or her attorney authorized by a duly executed power of attorney and filed with the Company. Such transfer shall be made only on surrender for cancellation of the certificate for such shares or appropriate book entry. The person in whose name shares of capital stock stand on the books of the Company shall be deemed by the Company to be the owner for all purposes.

Article IX — Fiscal Year

        The fiscal year of the Company shall end on December 31 of each year. The appointment of accountants shall be subject to annual ratification by the shareholders.

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Article X — Dividends

        Subject to the terms of the Company’s charter and the regulations and orders of the OTS. The board of directors may, from time to time, declare, and the Company may pay, dividends on its outstanding shares of capital stock.

Article XI — Corporate Seal

        The board of directors shall provide a Company seal that shall be two concentric circles between which shall be the name of the Company. The year of incorporation or an emblem may appear in the center.

Article XII — Amendments

        These bylaws may be amended in a manner consistent with regulations of the OTS and shall be effective after: (i) approval of the amendment by a majority vote of the authorized board of directors, or by a majority vote of the votes cast by the shareholders of the Company at any legal meeting, and (ii) receipt of any applicable regulatory approval. When the Company fails to meet its quorum requirements, solely due to vacancies on the board, then the affirmative vote of a majority of the sitting board will be required to amend the bylaws.

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EX-13

EXHIBIT 13

ANNUAL REPORT TO SHAREHOLDERS

TABLE OF CONTENTS

	Page
President’s Letter to Shareholders and Customers	1
Business of Cheviot Financial Corp.	2
Financial Highlights	3
Management’s Discussion and Analysis of Financial Condition and Results of Operations	5
Financial Statements:
Managements Annual Report on Internal Control Over Financial Reporting	21
Report of Independent Registered Public Accounting Firm	22 - 23
Consolidated Statements of Financial Condition	24
Consolidated Statements of Earnings	25
Consolidated Statements of Comprehensive Income	26
Consolidated Statements of Shareholders’ Equity	27
Consolidated Statements of Cash Flows	28
Notes to Consolidated Financial Statements	30
Directors and Officers	56
Investor and Corporate Information	57
Office Locations	58

LETTER FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

To Our Shareholders and Customers:

          We are pleased to present the Annual Report to Shareholders of Cheviot Financial Corp. (the “Company”), the holding company which owns 100% of the outstanding stock of Cheviot Savings Bank (the “Bank”). This is the fourth annual report to reflect the consolidated results of operations and financial condition of the Company and Bank.

          The Company reported net earnings of $926,000 for 2007 and ended the year with assets of $319.1 million.

          For 2007, the new branches in Delhi and Taylor Creek were open for the full year. At year end the loan production office in West Chester was closed to reduce cost. Directors and Management continue to explore expansion through internal growth or acquisitions.

          The mission of Cheviot Savings Bank has always been to offer the best financial services and products with the expertise and friendliness a customer wants. During these difficult economic times, Cheviot Savings Bank continues to offer superior financial services, coupled with the superior financial strength necessary to prosper in this market.

          The Directors, Management and employees of Cheviot Savings Bank are committed to the community. Through our Charitable Foundation, numerous contributions have been awarded in the past four years. During this time, the Foundation has awarded over $405,000 in support of the local community. The contribution we are most proud of is the college tuition grants which have totaled over $160,000 to 10 different high schools.

          I want to personally thank you for your support as a shareholder and pledge to continue to advance the interests of the Company, the Bank, the community, our customers and shareholders.

Sincerely,
Cheviot Financial Corp.
By
	Thomas J. Linneman
	President and Chief Executive Officer

– 1 –

Cheviot Financial Corp.

BUSINESS OF CHEVIOT FINANCIAL CORP.

Cheviot Savings Bank (the “Savings Bank”) was established in 1911 as an Ohio chartered mutual savings and loan association. As an Ohio-chartered savings association, the Savings Bank is subject to the regulation and supervision of the Ohio Department of Financial Institutions and the Office of Thrift Supervision.

In 2004, the Savings Bank reorganized into a two-tier mutual holding company structure (the “Reorganization”) and established Cheviot Financial Corp. (“Cheviot Financial” or the “Corporation”) as the parent of the Savings Bank. Pursuant to the Plan, Cheviot Financial issued 9,918,751 common shares, of which approximately 55.0% was issued to Cheviot Mutual Holding Company, a federally chartered mutual holding company. Cheviot Financial sold 4,388,438 common shares, representing approximately 44.0% of the outstanding common stock to the Savings Bank’s depositors and a newly formed Employee Stock Ownership Plan (“ESOP”) at an initial issuance price of $10.00 per share. In addition, 75,000 shares, or approximately one percent of the outstanding shares, were issued to a charitable foundation established by the Savings Bank. Cheviot Financial’s issuance of common shares resulted in proceeds, net of offering costs and shares issued to the ESOP, totaling $39.3 million. At December 31, 2007, Cheviot Financial had 3,496,361 shares issued and outstanding to persons other than Cheviot Mutual Holding Company.

The Savings Bank is a community and customer oriented savings and loan operating six full-service offices, all of which are located in Hamilton County, Ohio, which we consider our primary market area. We emphasize personal service and customer convenience in serving the financial needs of the individuals, families and businesses residing in our markets.

Cheviot Financial’s executive offices are located at 3723 Glenmore Avenue, Cheviot, Ohio 45211-4744, and our telephone number is (513) 661-0457.

The following are highlights of Cheviot Savings Bank’s operations:

• a 96-year history of providing financial products and services to individuals, families and small business customers in southwestern Ohio;

• a commitment to single family residential mortgage lending;

• maintaining capital strength and exceeding regulatory “well capitalized” capital requirements; and

• a business strategy designed to expand our banking relationships with existing and future customers.

– 2 –

Cheviot Financial Corp.

SELECTED FINANCIAL AND OTHER DATA

The following tables set forth selected financial and other data of Cheviot Financial Corp. at the dates and for the periods presented.

				At December 31,
		2007		2006			2005		2004		2003
					(In thousands)
Selected Financial Condition Data:
Total assets	$	319,060	$	309,780		$	291,791	$	276,587	$	317,399
Cash and cash equivalents		9,450		5,490			9,103		7,725		83,776
Investment securities available for sale		12,178		9,085			—		—		—
Investment securities held to maturity – at cost		23,000		25,099			27,084		27,102		17,135
Mortgage-backed securities available for sale		814		1,042			1,269		1,483		—
Mortgage-backed securities held to maturity – at cost		9,500		14,237			20,285		29,204		21,804
Loans receivable, net (1)		249,832		241,178			222,711		203,842		186,853
Deposits		219,526		205,450			181,238		179,989		267,927
Advances from the Federal Home Loan Bank		28,665		29,236			33,209		16,199		9,206
Shareholders’ equity (2)		67,920		72,200			74,810		77,940		37,867

				For the Year Ended December 31,					For the Nine Months Ended December 31,		For the Year Ended March 31,
		2007		2006		2005		2004		2003	2003
		(In thousands, except per share data)
Selected Operating Data:
Total interest income	$	17,791	$	16,509	$	14,408	$	12,983	$	9,427	$	14,068
Total interest expense		9,499		7,782		5,129		3,881		3,278		5,926
Net interest income		8,292		8,727		9,279		9,102		6,149		8,142
Provision for losses on loans		116		25		97		—		45		250
Net interest income after provision for losses on loans		8,176		8,702		9,182		9,102		6,104		7,892
Total other income		545		538		445		270		191		263
Total general, administrative and other expense		7,367		6,770		6,418		6,968		3,365		4,530
Earnings before income taxes		1,354		2,470		3,209		2,404		2,930		3,625
Federal income taxes		428		774		1,056		1,076		995		1,236
Net earnings	$	926	$	1,696	$	2,153	$	1,328	$	1,935	$	2,389
Earnings per share – basic and diluted	$	0.10	$	0.18	$	0.22	$	0.14		N/A		N/A

(1)	Includes loans held for sale.
(2)	Consists of retained earnings only for periods prior to December 31, 2004.

– 3 –

Cheviot Financial Corp.

SELECTED FINANCIAL AND OTHER DATA (CONTINUED)

			At or For the Year Ended December 31,						At or For the Nine Months Ended December 31,			At or For the Year Ended March 31,
	2007		2006		2005		2004			2003			2003
Selected Financial Ratios and Other Data:(1)
Performance Ratios:
Return on average assets	0.29	%	0.56	%	0.76	%	0.48	%		1.02	%		0.99	%
Return on average equity	1.33		2.32		2.79		1.72			6.97			6.83
Average equity to average assets	22.16		24.21		27.17		27.91			14.64			14.56
Equity to total assets at end of period	21.29		23.31		25.64		28.18			11.93			14.74
Interest rate spread (2)	2.00		2.27		2.72		2.85			3.06			3.09
Net interest margin (2)	2.78		3.03		3.39		3.39			3.39			3.50
Average interest-bearing asset to average interest-bearing liabilities	124.51		128.42		135.63		137.59			118.48			115.76
Total general, administrative and other expenses to average total assets	2.34		2.24		2.26		2.53			1.77			1.89
Efficiency ratio (3)	83.37		73.07		66.00		74.35			70.77			53.90
Asset Quality Ratios:
Nonperforming loans as a percent of total loans (4)	0.26		0.12		0.07		0.12			0.25			0.13
Nonperforming assets as a percent of total assets	0.40		0.09		0.08		0.12			0.16			0.15
Allowance for loan losses as a percent of total loans	0.24		0.35		0.36		0.36			0.41			0.40
Allowance for loan losses as a percent of nonperforming assets	46.39		296.44		339.50		214.66			151.18			195.48
Regulatory Capital Ratios:
Tangible capital	16.75		16.60		16.70		21.07			11.93			14.74
Core capital	16.75		16.60		16.70		21.07			11.93			14.74
Risk-based capital	32.67		33.29		34.90		47.08			30.05			32.52
Number of:
Banking offices	6		6		4		4			4			4

(1)	With the exception of end of period ratios, all ratios are based on average monthly balances during the periods, and have been annualized where appropriate.
(2)	Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities. Net interest margin represents net interest income as a percentage of average interest-earning assets.
(3)	Efficiency ratio represents the ratio of general, administrative and other expenses divided by the sum of net interest income and total other income.
(4)	Nonperforming loans consist of non-accrual loans and accruing loans greater than 150 days delinquent, while nonperforming assets consist of nonperforming loans and real estate acquired through foreclosure.

– 4 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis reflects Cheviot Financial’s financial statements and other relevant statistical data and is intended to enhance your understanding of our consolidated financial condition and results of operations. You should read the information in this section in conjunction with Cheviot Financial’s consolidated financial statements and the related notes included in this Annual Report. The preparation of financial statements involves the application of accounting policies relevant to the business of Cheviot Financial. Certain of Cheviot Financial’s accounting policies are important to the portrayal of Cheviot Financial’s financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but without limitation, changes in interest rates, in the performance of the economy or in the financial condition of borrowers.

General

Our results of operations are dependent primarily on net interest income, which is the difference between the interest income earned on our loans and securities and our cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by the provision for losses on loans, loan sales and servicing activities, and service charges and fees collected on our loan and deposit accounts. Our general, administrative and other expense primarily consists of employee compensation and benefits, advertising expense, data processing expense, other operating expenses and federal income taxes. Results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. We consider the accounting method used for the allowance for loan losses to be a critical accounting policy.

The allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for losses on loans which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of the most critical for Cheviot Financial.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlining collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

– 5 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Critical Accounting Policies (continued)

The analysis has two components, specific and general allocations. Specific percentage allocations can be made for unconfirmed losses related to loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan is less than the loan’s carrying value, a charge-off is recorded for the difference. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general reserve. Actual loan losses may be significantly more than the allowances we have established which could result in a material negative effect on our financial results.

Forward Looking Statements

This Annual Report contains forward-looking statements, which can be identified by the use of such words as estimate, project, believe, intend, anticipate, plan, seek, expect and similar expressions. These forward-looking statements include:

• statements of our goals, intentions and expectations;

• statements regarding our business plans and prospects and growth and operating strategies;

• statements regarding the asset quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the following important factors that could affect the actual outcome of future events:

• significantly increased competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

• general economic conditions, either nationally or in our market areas, which are worse than expected;

• adverse changes in the securities markets;

• legislative or regulatory changes that adversely affect our business;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board and the Public Company Accounting Oversight Board; and

• changes in our organization, compensation and benefit plans.

Because of these and other uncertainties, our actual future results may be materially different from the results anticipated by these forward-looking statements.

– 6 –

Cheviot Financial Corp.

AVERAGE BALANCES, NET INTEREST INCOME AND YIELDS EARNED AND RATES PAID

Net interest income represents the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. Net interest income also depends on the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rate earned or paid on them, respectively.

The following tables set forth certain information for the years ended December 31, 2007, 2006 and 2005. For the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, is expressed both in dollars and rates. No tax equivalent adjustments were deemed necessary based on materiality. Average balances are based on monthly averages. In the opinion of management, monthly averages do not differ materially from daily averages.

													For the Years Ended December 31,
	2007						2006						2005
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
							(Dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable, net (1)	$	246,335	$	15,007	6.09	%	$	233,331	$	14,014	6.01	%	$	211,736	$	12,311	5.81	%
Mortgage-backed securities		12,444		693	5.57			18,173		838	4.61			25,877		889	3.44
Investment securities		35,148		1,865	5.31			31,053		1,395	4.49			29,321		981	3.35
Interest-earning deposits and other (2)		4,427		226	5.11			5,070		262	5.17			7,033		227	3.23
Total interest-earning assets		298,354		17,791	5.96			287,627		16,509	5.74			273,967		14,408	5.26
Total non-interest-earning assets		17,054						14,882						10,481
Total assets	$	315,408					$	302,509					$	284,448
Liabilities and Shareholders’ Equity:
Interest-bearing liabilities:
Deposits	$	209,989		8,066	3.84		$	193,130		6,305	3.26		$	177,614		4,029	2.27
FHLB advances		29,630		1,433	4.84			30,848		1,477	4.79			24,375		1,100	4.51
Total interest-bearing liabilities		239,619		9,499	3.96			223,978		7,782	3.47			201,989		5,129	2.54
Total non-interest-bearing liabilities		5,904						5,300						5,171
Total liabilities		245,523						229,278						207,160
Shareholders’ equity		69,885						73,231						77,288
Total liabilities and shareholders’ equity	$	315,408					$	302,509					$	284,448
Net interest income			$	8,292					$	8,727					$	9,279
Interest rate spread (3)					2.00	%					2.27	%					2.72	%
Net interest margin (4)					2.78	%					3.03	%					3.39	%
Average interest-earning assets to average interest-bearing liabilities					124.51	%					128.42	%					135.63	%

(1)	Includes nonaccruing loans. Interest income on loans receivable, net includes amortized loan origination fees.
(2)	Includes interest-earning demand deposits, other interest-earning deposits and FHLB stock.
(3)	Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities.
(4)	Net interest margin is net interest income divided by average interest-earning assets.

– 7 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Rate/Volume Analysis.

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to: (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rate (changes in rate multiplied by prior volume); and (iii) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	Year ended December 31,
	2007 vs. 2006									2006 vs. 2005
	Increase (decrease) due to									Increase (decrease) due to
	Volume			Rate			Total			Volume			Rate			Total
	(In thousands)
Interest earnings assets:
Loans receivable, net	$	801		$	192		$	993		$	1,273		$	430		$	1,703
Mortgage-backed securities		(283	)		138			(145	)		(307	)		256			(51	)
Investment securities		167			303			470			61			353			414
Interest-earning assets		(33	)		(3	)		(36	)		(75	)		110			35
Total interest-earning assets		652			630			1,282			952			1,149			2,101
Interest-bearing liabilities:
Deposits		581			1,180			1,761			380			1,896			2,276
FHLB advances		(58	)		14			(44	)		306			71			377
Total interest-bearing liabilities		523			1,194			1,717			686			1,967			2,653
Increase (decrease) in net interest income	$	129		$	(564	)	$	(435	)	$	266		$	(818	)	$	(552	)

– 8 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Financial Condition at December 31, 2007 and December 31, 2006

At December 31, 2007, Cheviot Financial had total assets of $319.1 million, an increase of $9.3 million, or 3.0%, from the $309.8 million total at December 31, 2006. The increase in total assets reflects the increase in deposits which funded growth in the loan portfolio totaling $8.7 million.

Cash, federal funds sold and interest-earning deposits in other financial institutions totaled $9.5 million at December 31, 2007, an increase of $4.0 million, or 72.1%, from the $5.5 million total at December 31, 2006. Investment securities totaled $35.2 million at December 31, 2007, an increase of $994,000, or 2.9%, from $34.2 million at December 31, 2006. During the year ended December 31, 2007, investment securities purchases consisted of $11.0 million of U.S. Government agency obligations, which were partially offset by $10.1 million of maturities in the portfolio.

Mortgage-backed securities totaled $10.3 million at December 31, 2007, a decrease of $5.0 million, or 32.5%, from $15.3 million at December 31, 2006. The decrease in mortgage-backed securities was due to $5.0 million of principal repayments.

Loans receivable, including loans held for sale, totaled $249.8 million at December 31, 2007, an increase of $8.7 million, or 3.6%, from December 31, 2006. The increase resulted from loan originations of $47.7 million, which were partially offset by loan repayments of $34.6 million and loans sales of $3.7 million. Growth in the loan portfolio consisted primarily of a $7.0 million increase in loans secured by one- to four-family residential real estate. During 2003, Cheviot Savings Bank initiated a program of selling selected one- to four-family residential fixed-rate loans to the Federal Home Loan Bank of Cincinnati. Loans sold and serviced under this program totaled $8.9 million at December 31, 2007. There were no loans held for sale at December 31, 2007.

At December 31, 2007, the allowance for loan losses totaled $596,000, or 0.24% of net loans, compared to $833,000, or 0.35% of net loans at December 31, 2006. In determining the appropriate level of our 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. All delinquent loans are evaluated individually for potential impairments in their carrying value.

Second, an evaluation of the level of our allowance for loan losses includes a review of our historic loss experience by applying such loss percentage to the loan types to be collectively evaluated in the portfolio. This segment of the loss analysis resulted in our decision to provide an additional $116,000 provision for losses on loans for the year ended December 31, 2007. To the best of management’s knowledge, all known and inherent losses that are probable and that can be reasonably estimated have been provided for at December 31, 2007.

– 9 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Financial Condition at December 31, 2007 and December 31, 2006 (continued)

Nonperforming and impaired loans totaled $660,000 at December 31, 2007, compared to $281,000 at December 31, 2006. At December 31, 2007, nonperforming loans were comprised of loans secured by one- to four-family residential real estate. The allowance for loan losses totaled 90.3% and 296.4% of nonperforming loans at December 31, 2007 and 2006, respectively. Although management believes that the allowance for loan losses conforms with generally accepted accounting principles 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 would adversely affect our results of operations.

Deposits totaled $219.5 million at December 31, 2007, an increase of $14.1 million, or 6.9%, from $205.5 million at December 31, 2006. Our deposit growth consisted of a $16.2 million increase in certificates of deposits, which was partially offset by a decrease in demand transaction and passbook accounts of $2.1 million.

Advances from the Federal Home Loan Bank of Cincinnati decreased by $571,000, or 2.0%, to a total of $28.7 million at December 31, 2007. The decrease in advances was due primarily to repayments on Federal Home Loan Bank advances of $13.6 million, which was offset by proceeds of $13.0 million.

Shareholders’ equity totaled $67.9 million at December 31, 2007, a $4.3 million, or 5.9% decrease from December 31, 2006. The decrease in shareholders’ equity resulted primarily from the purchase of our common stock totaling $5.2 million under our stock repurchase plan and the payment of dividends of $1.1 million paid during 2007, which were partially offset by net earnings of $926,000.

Cheviot Savings Bank is required to maintain minimum regulatory capital pursuant to federal regulations. At December 31, 2007, Cheviot Savings Bank’s regulatory capital substantially exceeded all minimum regulatory capital requirements.

Comparison of Results of Operations for the Years Ended December 31, 2007 and December 31, 2006

General

Cheviot Financial’s net earnings totaled $926,000 for the year ended December 31, 2007, a decrease of $770,000, or 45.4%, compared to the net earnings recorded for the year ended December 31, 2006. The decrease in net earnings reflects a $435,000 decrease in net interest income and a $597,000 increase in general, administrative and other expenses which was partially offset by a $7,000 increase in other income and a decrease in the provision for federal income taxes of $346,000.

– 10 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Results of Operations for the Year ended December 31, 2007 and December 31, 2006 (continued)

Interest Income

Total interest income for the year ended December 31, 2007, totaled $17.8 million, an increase of $1.3 million, or 7.8%, compared to the year ended December 31, 2006. The increase in interest income reflects the impact of an increase of $10.7 million, or 3.7%, in the average balance of interest-earning assets outstanding during the year ended December 31, 2007 as compared to the year ended December 31, 2006, and an increase of 22 basis points in the average yield, to 5.96% from 5.74%.

Interest income on loans increased by $993,000, or 7.1%, for the year ended December 31, 2007. The increase in interest income on loans reflects a $13.0 million, or 5.6%, increase in the average balance outstanding during 2007 and an increase of 8 basis points in the average yield to 6.09%. Interest income on mortgage-backed securities decreased by $145,000, or 17.3%, during the year ended December 31, 2007, due primarily to a decrease in the average balance outstanding of $5.7 million, partially offset by an increase in the average yield of 96 basis points from the 2006 period. Interest income on investment securities increased by $470,000, or 33.7%, during the year ended December 31, 2007, due to an increase in the average yield of 82 basis points from the 2006 period and a $4.1 million, or 13.2%, increase in the average balance outstanding. Interest income on other interest-earning assets decreased by $36,000, or 13.7%, during the year ended December 31, 2007. The decrease was due to a 6 basis point decrease in the average yield and a $643,000 decrease in the average balance outstanding.

Interest Expense

Interest expense totaled $9.5 million for the year ended December 31, 2007, an increase of $1.7 million, or 22.1%, compared to the year ended December 31, 2006. The average balance of interest-bearing liabilities outstanding increased by $15.6 million during 2007 and the average cost of liabilities increased by 49 basis points to 3.96% for the year ended December 31, 2007. Interest expense on deposits totaled $8.1 million for the year ended December 31, 2007, an increase of $1.8 million, or 27.9%, from the year ended December 31, 2006. This increase was a result of an increase in the average cost of deposits of 58 basis points to 3.84% for 2007, as well as an increase in the average balance outstanding of $16.9 million, or 8.7%, for 2007. During 2007 our customers showed a preference for higher cost certificate of deposit accounts as compared to lower cost demand, transaction and passbook deposits. Consequently, the composition of our deposits is more significantly comprised of time deposits in 2007 as compared to 2006. Interest expense on borrowings totaled $1.4 million for the year ended December 31, 2007, a decrease of $44,000, or 3.0%, from the 2006 period. This decrease resulted from a decrease in the average balance of borrowings outstanding of $1.2 million, or 3.9%, which was partially offset by a 5 basis point increase in the average cost of borrowings for the year ended December 31, 2007 from the 2006 period.

– 11 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Results of Operations for the Year ended December 31, 2007 and December 31, 2006 (continued)

Net Interest Income

As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $435,000, or 5.0%, during the year ended December 31, 2007 from the year ended December 31, 2006. The average interest rate spread decreased to 2.00% for the year ended December 31, 2007 from 2.27% for the year ended December 31, 2006. The net interest margin decreased to 2.78% for the year ended December 31, 2007 from 3.03% for the year ended December 31, 2006.

Provision for Losses on Loans

As a result of an analysis of historical experience, the volume and type of lending conducted by the Savings Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Savings Bank’s market area, and other factors related to the collectibility of the Savings Bank’s loan portfolio, management recorded a $116,000 provision for losses on loans for the year ended December 31, 2007. Management’s analysis of the allowance resulted in a $25,000 provision for losses on loans for the year ended December 31, 2006. There can be no assurance that the loan loss allowance will be sufficient to cover losses on nonperforming loans in the future. At December 31, 2007, the allowance for loan losses totaled $596,000, or 0.24% of net loans, compared to $833,000, or 0.35% of net loans at December 31, 2006. Management believes all nonperforming loans are adequately collateralized; however, there can be no assurance that the loan loss allowance will be adequate to absorb losses on known nonperforming loans or that the allowance will be adequate to cover losses on nonperforming loans in the future.

Other Income

Other income totaled $545,000 for the year ended December 31, 2007, an increase of $7,000, or 1.3%, compared to the year ended December 31, 2006. This increase is due primarily to an increase in other operating income of $21,000, or 7.1%, to $315,000 for the year ended December 31, 2007 from $294,000 for the prior period, an increase in the gain on sale of loans of $15,000 and a decrease in the loss on sale of real estate acquired through foreclosure of $16,000, which were partially offset by a decrease in the gain on sale of office premises and equipment of $44,000.

General, Administrative and Other Expense

General, administrative and other expense totaled $7.4 million for the year ended December 31, 2007, an increase of $597,000, or 8.8%, compared to the year ended December 31, 2006. This increase is a result of a $140,000, or 3.3% increase in employee compensation and benefits expenses, an increase of $127,000, or 16.3% in property, payroll, and other taxes and an increase of $116,000 or 26.1% in occupancy and equipment expenses. The increase in employee compensation and benefits is due primarily to an increase in the number of employees reflecting a full year of operation of two additional branches during 2007 as compared to two quarters of operation in 2006. The increase in property, payroll and other taxes is due primarily to an increase in the Ohio franchise tax. The increase in occupancy and equipment expense was due primarily to expense incurred for the operation of the two new branches opened in the latter quarters of 2006.

– 12 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Results of Operations for the Year ended December 31, 2007 and December 31, 2006 (continued)

Federal Income Taxes

The provision for federal income taxes totaled $428,000 for the year ended December 31, 2007, a decrease of $346,000, or 44.7%, compared to the provision recorded for the 2006 period. The decrease resulted primarily from the decrease in earnings before taxes of $1.1 million, or 45.2%. The effective tax rates were 31.6% and 31.3% for the years ended December 31, 2007 and 2006, respectively.

Comparison of Results of Operations for the Years Ended December 31, 2006 and December 31, 2005

General

Cheviot Financial’s net earnings totaled $1.7 million for the year ended December 31, 2006, a decrease of $457,000 or 21.2%, compared to the net earnings recorded for the year ended December 31, 2005. The decrease in net earnings reflects a $552,000 decrease in net interest income and a $352,000 increase in general, administrative and other expenses which was partially offset by a $93,000 increase in other income and a decrease in the provision for federal income taxes of $282,000.

Interest Income

Total interest income for the year ended December 31, 2006, totaled $16.5 million, an increase of $2.1 million, or 14.6%, compared to the year ended December 31, 2005. The increase in interest income reflects the impact of an increase of $13.7 million, or 5.0%, in the average balance of interest-earning assets outstanding during the year ended December 31, 2006 as compared to the year ended December 31, 2005, and an increase of 48 basis points in the average yield, to 5.74% from 5.26%.

Interest income on loans increased by $1.7 million, or 13.8%, for the year ended December 31, 2006. The increase in interest income on loans reflects the impact of a $21.6 million, or 10.2%, increase in the average balance outstanding during 2006 and an increase of 20 basis points in the average yield on loans to 6.01%. Interest income on mortgage-backed securities decreased by $51,000 or 5.7%, during the year ended December 31, 2006, due primarily to a decrease in the average balance outstanding of $7.7 million, partially offset by an increase in the average yield of 117 basis points from the 2005 period. Interest income on investment securities increased by $414,000, or 42.2%, during the year ended December 31, 2006, due primarily to an increase in the average yield of 114 basis points from the 2005 period and a $1.7 million, or 5.9%, increase in the average balance outstanding. Interest income on other interest-earning assets increased by $35,000, or 15.4%, during the year ended December 31, 2006. The increase was due primarily to a 194 basis point increase in the average yield, which was partially offset by a decrease of $2.0 million in the average balance outstanding.

– 13 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Results of Operations for the Year ended December 31, 2006 and December 31, 2005 (continued)

Interest Expense

Interest expense totaled $7.8 million for the year ended December 31, 2006, an increase of $2.7 million, or 51.7%, compared to the year ended December 31, 2005. The average balance of interest-bearing liabilities outstanding increased by $22.0 million during 2006 and the average cost of funds increased by 93 basis points to 3.47% for the year ended December 31, 2006. Interest expense on deposits totaled $6.3 million for the year ended December 31, 2006, an increase of $2.3 million, or 56.5%, from the year ended December 31, 2005. This increase was a result of an increase in the average cost of deposits of 99 basis points to 3.26% for 2006, and the average balance outstanding increased by $15.5 million, or 8.7%, for 2006. During 2006 our customers showed a preference for higher cost certificate of deposit accounts as compared to lower cost demand, transaction and passbook deposits. If the yield curve remains inverted, we expect our cost of funds to increase as maturing certificates of deposit are renewed at higher rates of interest. Interest expense on borrowings totaled $1.5 million for the year ended December 31, 2006, an increase of $377,000, or 34.3%, from the 2005 period. This increase resulted from an increase in the average balance of borrowings outstanding of $6.5 million, or 26.6%, and a 28 basis point increase in the average cost of borrowings for the year ended December 31, 2006 from the 2005 period. Increases in the average cost of interest-bearing liabilities were due primarily to the overall increase in short term interest rates during 2006. Such increases reflect the Federal Reserve’s increases in interbank rates during the period.

Net Interest Income

As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $552,000, or 5.9%, during the year ended December 31, 2006 from the year ended December 31, 2005. The average interest rate spread decreased to 2.27% for the year ended December 31, 2006 from 2.72% for the year ended December 31, 2005. The net interest margin decreased to 3.03% for the year ended December 31, 2005 from 3.39% for the year ended December 31, 2005.

Provision for Losses on Loans

As a result of an analysis of historical experience, the volume and type of lending conducted by the Savings Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to the Savings Bank’s market area, and other factors related to the collectibility of the Savings Bank’s loan portfolio, management recorded a $25,000 provision for losses on loans for the year ended December 31, 2006. Management’s analysis of the allowance resulted in a $97,000 provision for losses on loans for the year ended December 31, 2005. There can be no assurance that the loan loss allowance will be sufficient to cover losses on nonperforming loans in the future. At December 31, 2006, the allowance for loan losses totaled $833,000, or 0.35% of net loans, compared to $808,000, or 0.36% of net loans at December 31, 2005. Management believes all nonperforming loans are adequately collateralized; however, there can be no assurance that the loan loss allowance will be adequate to absorb losses on known nonperforming loans or that the allowance will be adequate to cover losses on nonperforming loans in the future.

– 14 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Comparison of Results of Operations for the Year ended December 31, 2006 and December 31, 2005 (continued)

Other Income

Other income totaled $538,000 for the year ended December 31, 2006, an increase of $93,000, or 20.9%, compared to the year ended December 31, 2005, due primarily to an increase in other operating income of $16,000, or 5.8%, to $294,000 for the year ended December 31, 2006 from $278,000 for the prior period, an increase of $12,000 in earnings of bank-owned life insurance, an increase in the gain on sale of office premises and equipment of $44,000 and an increase in the gain on sale of loans of $32,000, which were partially offset by an increase in the loss on sale of real estate acquired through foreclosure of $12,000.

General, Administrative and Other Expense

General, administrative and other expense totaled $6.8 million for the year ended December 31, 2006, an increase of $352,000, or 5.5%, compared to the year ended December 31, 2005. This increase is a result of a $627,000, or 17.5% increase in employee compensation and benefits expenses which was partially offset by a decrease of $158,000, or 16.9% in property, payroll, and other taxes and a decrease of $99,000 or 20.6% in legal and professional expenses. The increase in employee compensation and benefits is due primarily to an increase in expense related to stock benefit plans, an increase in contributions to the retirement plan and an increase in the number of employees as a result of our growth. The decrease in property, payroll and other taxes is due primarily to a decrease in the Ohio franchise tax. The decrease in legal and professional expense was due primarily to the amount of professional services provided during the 2006 period.

Federal Income Taxes

The provision for federal income taxes totaled $774,000 for the year ended December 31, 2006, a decrease of $282,000, or 26.7%, compared to the provision recorded for the 2005 period. The decrease resulted primarily from the decrease in earnings before taxes of $739,000, or 23.0%. The effective tax rates were 31.3% and 32.9% for the years ended December 31, 2006 and 2005, respectively.

– 15 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management of Market Risk

Qualitative Analysis

Our most significant form of market risk is interest rate risk. The primary objective of our interest rate risk policy is to manage the exposure of net interest income to changes in interest rates. Our board of directors and management evaluates the interest rate risk inherent in certain assets and liabilities, determines the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements and performance objectives and modifies lending, investing, deposit and borrowing strategies accordingly. Our board of directors reviews management’s activities and strategies, the effect of those strategies on the net portfolio value, and the effect that changes in market interest rates would have on net portfolio value. During 2007, the yield curve was substantially inverted with short term interest rates, which are used to price our deposit products and which are used in determining our cost of borrowings, higher than medium and long term interest rates, which are used to determine the pricing of our loan products. This has resulted in a compression of our interest rate spread and net interest margin. Consequently, our net interest income was lower in 2007 as compared to 2006.

We actively monitor interest rate risk in connection with our lending, investing, deposit and borrowing activities. We emphasize the origination of residential and multi-family fixed-rate mortgage loans, including 15, 20 and 30 year first mortgage loans, residential, multi-family and commercial real estate adjustable-rate loans, construction loans and consumer loans. Depending on market interest rates and our capital and liquidity position, we may sell our newly originated fixed-rate mortgage loans on a servicing-retained or servicing released basis. We also invest in short-term securities, which generally have lower yields compared to longer-term investments. During 2007 we invested in longer-term securities that will improve our net interest margin by leveraging these investments with borrowings from the Federal Home Loan Bank. Investment and borrowing terms were matched thereby reducing the exposure of our net interest income to changes in market interest rates.

Quantitative Analysis

As part of its monitoring procedures, the Asset and Liability Management Committee regularly reviews interest rate risk by analyzing the impact of alternative interest rate environments on the market value of portfolio equity, which is defined as the net present value of an institution’s existing assets, liabilities and off-balance sheet instruments, and evaluating such impacts against the maximum potential changes in market value of portfolio equity that are authorized by the Savings Bank’s board of directors.

The Office of Thrift Supervision provides the Savings Bank with the information presented in the following tables. They present the change in the Savings Bank’s net portfolio value (“NPV”) at December 31, 2007 and 2006, that would occur upon an immediate change in interest rate based on Office of Thrift Supervision assumptions, but without effect to any steps that management might take to counteract that change. The application of the methodology attempts to quantify interest rate risk as the change in NPV which would result from a theoretical change in market interest rates of 100, 200 and 300 basis points. Generally, NPV is the discounted present value of the difference between incoming cash flows on interest-earning assets and outgoing cash flows on interest-bearing liabilities.

– 16 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Quantitative Analysis (continued)

			December 31, 2007
Change in Interest Rates in Basis Points (“bp”)		Net Portfolio Value(3)								Net Portfolio Value as % of PV of Assets(4)
(Rate Shock
in Rates)(1)		$ Amount		$ Change			% Change			NPV Ratio(5)			Change
		(In thousands)
+300	bp	$	42,318	$	(18,076	)		(29.9	%)		13.96	%		(445	) bp
+200	bp		49,431		(10,963	)		(18.2	)		15.83			(259	)
+100	bp		55,784		(4,610	)		(7.6	)		17.38			(103	)
0	bp		60,394		—			—			18.42			—
-100	bp		62,790		2,396			4.0			18.86			44
-200	bp(2)		63,693		3,299			5.5			18.92			51
		December 31, 2006
Change in Interest Rates in Basis Points (“bp”)		Net Portfolio Value(3)								Net Portfolio Value as % of PV of Assets(4)
(Rate Shock
in Rates)(1)		$ Amount		$ Change			% Change			NPV Ratio(5)			Change
		(In thousands)
+300	bp	$	39,112	$	(21,772	)		(35.8	%)		13.46	%		(569	) bp
+200	bp		46,894		(13,990	)		(23.0	)		15.63			(352	)
+100	bp		54,265		(6,619	)		(10.9	)		17.54			(160	)
0	bp		60,884		—			—			19.15			—
-100	bp		64,716		3,832			6.3			19.97			82
-200	bp(2)		66,685		5,801			9.5			20.31			116

(1)	Assumes an instantaneous uniform change in interests rates at all maturities.
(2)	Not meaningful because some market rates would compute at a rate less than zero.
(3)	Net portfolio value represents the discounted present value of the difference between incoming cash flows on interest-earning and other assets and outgoing cash flows on interest-bearing liabilities.
(4)	Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets.
(5)	NPV Ratio represents the net portfolio value divided by the present value of assets.

The model reflects that the Savings Bank’s NPV is more sensitive to an increase in interest rates than a decrease in interest rates. The above table indicates that as of December 31, 2007, in the event of a 100 basis point increase in interest rates, we would experience an 7.6% or $4.6 million, decrease in net portfolio value. In the event of a 100 basis point decrease in interest rates, we would experience a 4.0%, or $2.4 million, increase in net portfolio value. However, given the current level of market interest rates and the low probability of further significant declines in absolute rates, we did not calculate net portfolio value for interest rate decreases of greater than 200 basis points.

– 17 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Quantitative Analysis (continued)

Certain shortcomings are inherent in the methodologies used in the above interest rate risk measurement. Modeling changes in net portfolio value requires the making of certain assumptions regarding prepayment and deposit decay rates, which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. While we believe such assumptions to be reasonable, there can be no assurance that assumed prepayment rates and decay rates will approximate actual future loan prepayment and deposit withdrawal activity. Moreover, the NPV table presented assumes that the composition of our interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV table provides an indication of our interest rate risk exposure at a particular point in time, such measurement is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on our net portfolio value and will differ from actual results.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities and calls of securities and funds provided by our operations. In addition, we may borrow from the Federal Home Loan Bank of Cincinnati. At December 31, 2007 and 2006, we had $28.7 million and $29.2 million, respectively, in outstanding borrowings from the Federal Home Loan Bank of Cincinnati and had the capacity to increase such borrowings at those dates by approximately $109.4 million.

Loan repayments and maturing securities are a relatively predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of these sources of funds.

Our primary investing activities are the origination of one- to four-family real estate loans, commercial real estate, construction and consumer loans, and, to a lesser extent, the purchase of securities. For the year ended December 31, 2007, loan originations totaled $47.7 million, compared to $60.0 million for the year ended December 31, 2006. Purchases of investment securities were $11.0 million for the year ended December 31, 2007 and $11.1 million for the year ended December 31, 2006.

Total deposits increased $ 14.1 million during the year ended December 31, 2007, while total deposits increased $24.2 million during the year ended December 31, 2006. Deposit flows are affected by the level of interest rates, the interest rates and products offered by competitors and other factors. At December 31, 2007, certificates of deposit scheduled to mature within one year totaled $129.0 million. Our ability to retain these deposits will be determined in part by the interest rates we are willing to pay on such deposits.

– 18 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Liquidity and Capital Resources (continued)

The following table sets forth information regarding the Corporation’s obligations and commitments to make future payments under contract as of December 31, 2007.

	Payments due by period
	Less than 1 year		More than 1-3 years		More than 3-5 years		More than 5 years		Total
	(In thousands)
Contractual obligations:
Advances from the Federal Home Loan Bank	$	—	$	2,000	$	3,905	$	22,760	$	28,665
Certificates of deposit		128,962		26,559		168		—		155,689
Amount of loan commitments and expiration per period:
Commitments to originate one- to four-family loans		1,339		—		—		—		1,339
Home equity lines of credit		11,321		—		—		—		11,321
Undisbursed loans in process		6,585		—		—		—		6,585
Lease obligations
Total contractual obligations	$	148,207	$	28,559	$	4,073	$	22,760	$	203,599

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At December 31, 2007 and 2006, we exceeded all of the applicable regulatory capital requirements. Our core (Tier 1) capital was $53.4 million and $51.5 million, or 16.8% and 16.6% of total assets at December 31, 2007 and 2006, respectively. In order to be classified as “well-capitalized” under federal banking regulations, we were required to have core capital of at least $19.1 million, or 6.0% of assets as of December 31, 2007. To be classified as a well-capitalized bank, we must also have a ratio of total risk-based capital to risk-weighted assets of at least 10.0%. At December 31, 2007 and 2006, we had a total risk-based capital ratio of 32.7% and 33.3%, respectively.

– 19 –

Cheviot Financial Corp.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Impact of Inflation and Changing Prices

The consolidated financial statements and related consolidated financial data presented herein regarding Cheviot Financial have been prepared in accordance with accounting principles generally accepted in the United States of America, which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of Cheviot Financial’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on Cheviot Financial’s performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, because such prices are affected by inflation to a larger extent than interest rates.

– 20 –

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Cheviot Financial Corp. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control system was designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.

The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, the Company’s management believes that as of December 31, 2007, the Company’s internal control over financial reporting was effective based on those criteria.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Thomas J. Linneman	Scott T. Smith
President and Chief Executive Officer	Chief Financial Officer
March 25, 2008

– 21 –

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Cheviot Financial Corp.

We have audited the accompanying consolidated statements of financial condition of Cheviot Financial Corp. as of December 31, 2007 and the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for the year ended December 31, 2007. The consolidated statements of financial condition of Cheviot Financial Corp. as of December 31, 2006 and the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for the years ended December 31, 2006 and 2005, were audited by other auditors whose report dated March 23, 2007, expressed an unqualified opinion on those financial statements. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Corporation is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cheviot Financial Corp. as of December 31, 2007, and the consolidated results of its operations and its cash flows for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

As more fully described in Note A-15, the Corporation changed its method of accounting for share based stock benefit compensation in accordance with Statement of Financial Accounting Standards SFAS No. 123(R) as of January 1, 2006.

Cincinnati, Ohio

March 25, 2008

– 22 –

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Cheviot Financial Corp.

We have audited the accompanying consolidated statement of financial condition of Cheviot Financial Corp. as of December 31, 2006 and the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the two years in the period ended December 31, 2006. These consolidated financial statements are the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Corporation is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cheviot Financial Corp. as of December 31, 2006 and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

As more fully described in Note A-15, the Corporation changed its method of accounting for share based stock benefit compensation in accordance with Statement of Financial Accounting Standards SFAS No. 123(R) as of January 1, 2006.

Cincinnati, Ohio

March 28, 2007

– 23 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

December 31, 2007 and 2006
(In thousands)

	2007			2006
ASSETS
Cash and due from banks	$	3,680		$	2,736
Federal funds sold		4,313			2,640
Interest-earning deposits in other financial institutions		1,457			114
Cash and cash equivalents		9,450			5,490
Investment securities available for sale – at fair value		12,178			9,085
Investment securities held to maturity - at cost, approximate market value of $23,086 and $24,739 at December 31, 2007 and 2006, respectively		23,000			25,099
Mortgage-backed securities available for sale - at fair value		814			1,042
Mortgage-backed securities held to maturity - at cost, approximate market value of $9,577 and $14,251 at December 31, 2007 and 2006, respectively		9,500			14,237
Loans receivable - net		249,832			241,013
Loans held for sale - at lower of cost or market		—			165
Real estate acquired through foreclosure - net		625			—
Office premises and equipment - at depreciated cost		5,131			5,397
Federal Home Loan Bank stock - at cost		3,238			3,238
Accrued interest receivable on loans		1,119			1,073
Accrued interest receivable on mortgage-backed securities		51			65
Accrued interest receivable on investments and interest-bearing deposits		418			439
Prepaid expenses and other assets		177			183
Bank-owned life insurance		3,383			3,254
Prepaid federal income taxes		144			—
Total assets	$	319,060		$	309,780
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits	$	219,526		$	205,450
Advances from the Federal Home Loan Bank		28,665			29,236
Advances by borrowers for taxes and insurance		1,253			1,203
Accrued interest payable		117			115
Accounts payable and other liabilities		939			1,039
Accrued federal income taxes		—			49
Deferred federal income taxes		640			488
Total liabilities		251,140			237,580
Shareholders’ equity
Preferred stock - authorized 5,000,000 shares, $.01 par value; none issued
Common stock - authorized 30,000,000 shares, $.01 par value; 9,918,751 shares issued at December 31, 2007 and 2006		99			99
Additional paid-in capital		43,418			43,113
Shares acquired by stock benefit plans		(3,582	)		(4,329	)
Treasury stock - at cost, 967,077 and 568,968 shares at December 31, 2007 and 2006		(12,074	)		(6,846	)
Retained earnings - restricted		40,013			40,171
Accumulated comprehensive income (loss), unrealized gains (losses) on securities available for sale, net of tax benefits		46			(8	)
Total shareholders’ equity		67,920			72,200
Total liabilities and shareholders’ equity	$	319,060		$	309,780

The accompanying notes are an integral part of these statements.

– 24 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF EARNINGS

For the years ended December 31, 2007, 2006 and 2005
(In thousands, except per share data)

	2007			2006			2005
Interest income
Loans	$	15,007		$	14,014		$	12,311
Mortgage-backed securities		693			838			889
Investment securities		1,865			1,395			981
Interest-earning deposits and other		226			262			227
Total interest income		17,791			16,509			14,408
Interest expense
Deposits		8,066			6,305			4,029
Borrowings		1,433			1,477			1,100
Total interest expense		9,499			7,782			5,129
Net interest income		8,292			8,727			9,279
Provision for losses on loans		116			25			97
Net interest income after provision for losses on loans		8,176			8,702			9,182
Other income
Rental		47			44			43
Loss on sale of real estate acquired through foreclosure		(5	)		(21	)		(9	)
Gain on sale of office premises and equipment		—			44			—
Gain on sale of loans		59			44			12
Earnings on bank-owned life insurance		129			133			121
Other operating		315			294			278
Total other income		545			538			445
General, administrative and other expense
Employee compensation and benefits		4,356			4,216			3,589
Occupancy and equipment		561			445			428
Property, payroll and other taxes		905			778			936
Data processing		306			281			264
Legal and professional		404			382			481
Advertising		174			164			171
Other operating		661			504			549
Total general, administrative and other expense		7,367			6,770			6,418
Earnings before income taxes		1,354			2,470			3,209
Federal income taxes
Current		304			667			989
Deferred		124			107			67
Total federal income taxes		428			774			1,056
NET EARNINGS	$	926		$	1,696		$	2,153
Earnings per share - basic and diluted	$	.10		$	.18		$	.22

The accompanying notes are an integral part of these statements.

– 25 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the years ended December 31, 2007, 2006 and 2005
(In thousands)

	2007		2006			2005
Net earnings	$	926	$	1,696		$	2,153
Other comprehensive income (loss), net of tax expense (benefits):
Unrealized holding gains (losses) on securities during the period, net of tax expense (benefits) of $28, $- and ($1) for the years ended December 31, 2007, 2006 and 2005, respectively		54		—			(2	)
Comprehensive income	$	980	$	1,696		$	2,151
Accumulated comprehensive income (loss)	$	46	$	(8	)	$	(8	)

The accompanying notes are an integral part of these statements.

– 26 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the years ended December 31, 2007, 2006 and 2005
(In thousands, except per share data)

	Common stock		Additional paid-in capital		Shares acquired by stock benefit plans			Treasury stock			Retained earnings			Unrealized gains (losses) on on securities available for sale			Total shareholders’ equity
Balance at December 31, 2004	$	99	$	42,746	$	(3,273	)	$	—		$	38,374		$	(6	)	$	77,940
Net earnings for the year ended December 31, 2005		—		—		—			—			2,153			—			2,153
Cash dividends of $.24 per share		—		—		—			—			(1,003	)		—			(1,003	)
Amortization expense of stock benefit plans		—		78		416			—			—			—			494
Shares acquired by stock benefit plans		—		—		(2,235	)		—			—			—			(2,235	)
Treasury stock repurchases		—		—		—			(2,537	)		—			—			(2,537	)
Unrealized losses on securities designated as available for sale, net of related tax benefits		—		—		—			—			—			(2	)		(2	)
Balance at December 31, 2005		99		42,824		(5,092	)		(2,537	)		39,524			(8	)		74,810
Net earnings for the year ended December 31, 2006		—		—		—			—			1,696			—			1,696
Cash dividends of $.28 per share		—		—		—			—			(1,049	)		—			(1,049	)
Amortization expense of stock benefit plans		—		50		763			—			—			—			813
Stock option expense		—		239		—			—			—			—			239
Treasury stock repurchases		—		—		—			(4,309	)		—			—			(4,309	)
Balance at December 31, 2006		99		43,113		(4,329	)		(6,846	)		40,171			(8	)		72,200
Net earnings for the year ended December 31, 2007		—		—		—			—			926			—			926
Cash dividends of $.32 per share		—		—		—			—			(1,084	)		—			(1,084	)
Amortization expense of stock benefit plans		—		63		747			—			—			—			810
Stock option expense		—		242		—			—			—			—			242
Treasury stock repurchases		—		—		—			(5,228	)		—			—			(5,228	)
Unrealized gains on securities designated as available for sale, net of related tax benefits		—		—		—			—			—			54			54
Balance at December 31, 2007	$	99	$	43,418	$	(3,582	)	$	(12,074	)	$	40,013		$	46		$	67,920

The accompanying notes are an integral part of these statements.

– 27 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006			2005
Cash flows from operating activities:
Net earnings for the period	$	926		$	1,696		$	2,153
Adjustments to reconcile net earnings to net cash provided by operating activities:
Amortization of premiums and discounts on investment and mortgage-backed securities, net		(11	)		(18	)		28
Depreciation		341			265			219
Amortization expense related to stock benefit plans		810			813			494
Amortization of deferred loan origination fees		(14	)		(22	)		(40	)
Proceeds from sale of loans in the secondary market		3,670			2,440			1,595
Loans originated for sale in the secondary market		(3,454	)		(2,417	)		(2,247	)
Gain on sale of loans		(59	)		(44	)		(12	)
Loss on sale of real estate acquired through foreclosure		5			21			9
Gain on sale of office premises and equipment		—			(44	)		—
Federal Home Loan Bank stock dividends		—			(181	)		(148	)
Earnings on bank-owned life insurance		(129	)		(133	)		(121	)
Provision for losses on loans		116			25			97
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans		(46	)		(200	)		(123	)
Accrued interest receivable on mortgage-backed securities		14			7			8
Accrued interest receivable on investments and interest-bearing deposits		21			(141	)		(79	)
Prepaid expenses and other assets		6			(38	)		90
Accrued interest payable		2			115			—
Accounts payable and other liabilities		(100	)		(51	)		87
Federal income taxes
Current		(193	)		105			(183	)
Deferred		124			107			67
Net cash flows provided by operating activities		2,029			2,305			1,894
Cash flows used in investing activities:
Principal repayments on loans		34,565			39,175			43,884
Loan disbursements		(44,251	)		(57,624	)		(62,345	)
Purchase of investment securities		(11,002	)		(8,998	)		(3,959	)
Proceeds from maturity of investment securities		10,000			4,000			4,000
Purchase of municipal obligations		—			(2,080	)		—
Proceeds from maturity of municipal obligations		100			—			—
Principal repayments on mortgage-backed securities		4,966			6,271			9,078
Additions to real estate acquired through foreclosure		(3	)		—			—
Proceeds from sale of real estate acquired through foreclosure		146			68			193
Purchase of office premises and equipment		(75	)		(2,075	)		(900	)
Proceeds from the sale of office premises and equipment		—			85			—
Purchase of bank-owned life insurance		—			—			(3,000	)
Net cash flows used in investing activities		(5,554	)		(21,178	)		(13,049	)
Net cash flows used in operating and investing activities balance carried forward	$	(3,525	)		(18,873	)		(11,155	)

– 28 –

CHEVIOT FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

For the years ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006			2005
Net cash flows used in operating and investing activities balance brought forward	$	(3,525	)	$	(18,873	)	$	(11,155	)
Cash flows provided by financing activities:
Net increase in deposits		14,076			24,212			1,249
Proceeds from Federal Home Loan Bank advances		13,000			5,500			20,600
Repayments on Federal Home Loan Bank advances		(13,571	)		(9,473	)		(3,590	)
Advances by borrowers for taxes and insurance		50			140			49
Purchase of shares for stock benefit plans		—			—			(2,235	)
Stock option expense, net		242			239			—
Treasury stock repurchases		(5,228	)		(4,309	)		(2,537	)
Dividends paid on common stock		(1,084	)		(1,049	)		(1,003	)
Net cash flows provided by financing activities		7,485			15,260			12,533
Net increase (decrease) in cash and cash equivalents		3,960			(3,613	)		1,378
Cash and cash equivalents at beginning of period		5,490			9,103			7,725
Cash and cash equivalents at end of period	$	9,450		$	5,490		$	9,103
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes	$	473		$	704		$	1,212
Interest on deposits and borrowings	$	9,497		$	7,667		$	5,129
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure	$	773		$	—		$	201
Loans originated upon sales of real estate acquired through foreclosure	$	66		$	—		$	—
Recognition of mortgage servicing rights in accordance with SFAS No. 140	$	14		$	19		$	13

The accompanying notes are an integral part of these statements.

– 29 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES
	In January 2004, the Board of Directors of Cheviot Savings Bank (the “Savings Bank”) completed a Plan of Reorganization (the “Plan” or the “Reorganization”) pursuant to which the Savings Bank reorganized into a two-tier mutual holding company structure with the establishment of a stock holding company, Cheviot Financial Corp. (“Cheviot Financial” or the “Corporation”) as parent of the Savings Bank, which converted to stock form, followed by the issuance of all the Savings Bank’s outstanding stock to Cheviot Financial. Pursuant to the Plan, Cheviot Financial issued 9,918,751 common shares, of which approximately 55% were issued to Cheviot Mutual Holding Company, a federally-chartered mutual holding company. Cheviot Financial sold 4,388,438 common shares, representing approximately 44% of the outstanding common stock to the Savings Bank’s depositors and a newly formed Employee Stock Ownership Plan (“ESOP”) at an initial issuance price of $10.00 per share. In addition, 75,000 shares, or approximately one percent of the outstanding shares, were issued to a charitable foundation established by Cheviot Financial. The Reorganization and related stock offering resulted in cash proceeds, net of offering costs and shares issued to the ESOP, totaling approximately $39.3 million.
	The Corporation conducts a general banking business in southwestern Ohio which consists of attracting deposits from the general public and applying those funds to the origination of loans for residential, commercial and consumer purposes. The Corporation’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 the Corporation can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management’s control.
	The financial information presented herein has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and general accounting practices within the financial services industry. In preparing financial statements in accordance with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from such estimates.
	The following is a summary of significant accounting policies which, with the exception of the policy described in Note A-15, have been consistently applied in the preparation of the accompanying financial statements.

1.  Principles of Consolidation

The accompanying consolidated financial statements as of and for the years ended December 31, 2007, 2006 and 2005, include the accounts of the Corporation and its wholly-owned subsidiary, the Savings Bank. All significant intercompany items have been eliminated.

– 30 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)
	2.  Investment and Mortgage-backed Securities
	The Corporation accounts for investment and mortgage-backed securities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities.” SFAS No. 115 requires that investments be categorized as held to maturity, trading, or available for sale. Securities classified as held to maturity are carried at cost only if the Corporation has the positive intent and ability to hold these securities to maturity. Securities available for sale are carried at fair value with resulting unrealized gains or losses recorded in shareholders’ equity. Realized gains or losses on sales of securities are recognized using the specific identification method.
	3.  Loans Receivable
	Loans receivable are stated at the principal amount outstanding, adjusted for deferred loan origination fees and the allowance for loan losses. Interest is accrued as earned unless the collectibility of the loan is in doubt. Loans are generally placed on nonaccrual status when they are contractually past due 150 days or more. Interest on loans that are contractually past due more than 150 days is charged off, or an allowance is established based on management’s periodic evaluation. The allowance is established by a charge to interest income equal to all interest previously accrued, and income is subsequently recognized only to the extent that cash payments are received until, in management’s judgment, the borrower’s ability to make periodic interest and principal payments has returned to normal, in which case the loan is returned to accrual status. If the ultimate collectibility of the loan is in doubt, in whole or in part, all payments received on nonaccrual loans are applied to reduce principal until such doubt is eliminated.
	Loans held for sale are carried at the lower of cost (less principal payments received) or fair value (market value), calculated on an aggregate basis. At December 31, 2006, the Corporation’s loans held for sale were carried at cost.
	The Corporation accounts for mortgage servicing rights in accordance with SFAS No. 156 “Accounting for Servicing of Financial Assets-an amendment of SFAS No 140” which requires that the Corporation recognize, as separate assets, rights to service mortgage loans for others, regardless of how those servicing rights are acquired. An institution that acquires mortgage servicing rights through either the purchase or origination of mortgage loans and sells those loans with servicing rights retained must allocate some of the cost of the loans to the mortgage servicing rights at fair value. The Company has opted to account for the capitalized servicing rights be amortized in proportion to and over the estimated period of servicing income. The adoption of SFAS 156, has not had a significant impact to the financial statements of the Company.
	The Corporation recorded mortgage servicing rights totaling $10,000, $16,000 and $10,000, net of amortization during the years ended December 31, 2007, 2006 and 2005, respectively. The carrying value of the Corporation’s mortgage servicing rights, which approximated fair value, totaled approximately $76,000 and $66,000 at December 31, 2007 and 2006, respectively.

– 31 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

3. Loans Receivable (continued)

The Corporation was servicing mortgage loans of approximately $8.9 million and $7.9 million at December 31, 2007 and 2006, respectively, all of which had been sold to the Federal Home Loan Bank of Cincinnati.

4. Loan Origination Fees and Costs

The Corporation accounts for loan origination fees and costs in accordance with the provisions of SFAS No. 91 “Accounting for Nonrefundable Fees and Costs Associated with Originating or Acquiring Loans and Initial Direct Costs of Leases.” Pursuant to the provisions of SFAS No. 91, origination fees received from loans, net of direct origination costs, are deferred and amortized to interest income using the level-yield method, giving effect to actual loan prepayments. Additionally, SFAS No. 91 generally limits the definition of loan origination costs to the direct costs attributable to originating a loan, i.e., principally actual personnel costs. Fees received for loan commitments that are expected to be drawn upon, based on the Corporation’s experience with similar commitments, are deferred and amortized over the life of the loan using the level-yield method. Fees for other loan commitments are deferred and amortized over the loan commitment period on a straight-line basis.

5. Allowance for Loan Losses

It is the Corporation’s policy to provide valuation allowances for estimated losses on loans primarily based on past loan loss experience. Additionally, the Corporation considers changes in the composition of the loan portfolio, trends in the level of delinquent and problem loans, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and current and anticipated economic conditions in the primary lending area. When the collection of a loan becomes doubtful, or otherwise troubled, the Corporation records a charge-off equal to the difference between the fair value of the property securing the loan and the loan’s carrying value. Major loans and major lending areas are reviewed periodically to determine potential problems at an early date. The allowance for loan losses is increased by charges to earnings and decreased by charge-offs (net of recoveries).

The Corporation accounts for impaired loans in accordance with SFAS No. 114 “Accounting by Creditors for Impairment of a Loan.” This Statement requires that impaired loans be measured based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or, as an alternative, at the loan’s observable market price or fair value of the collateral if the loan is collateral dependent.

A loan is defined under SFAS No. 114 as impaired when, based on current information and events, it is probable that a creditor will be unable to collect all amounts due according to the contractual terms of the loan agreement. In applying the provisions of SFAS No. 114, the Corporation considers its investment in existing one- to four-family residential loans and consumer installment loans to be homogeneous and therefore excluded from separate identification for evaluation of impairment. With respect to the Corporation’s investment in construction, commercial and multi-family residential real estate loans, and its evaluation of impairment thereof, such loans are generally collateral dependent and, as a result, are carried as a practical expedient at the lower of cost or fair value of collateral.

– 32 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

5. Allowance for Loan Losses (continued)

Collateral dependent loans which are more than one hundred fifty days delinquent are considered to constitute more than a minimum delay in repayment and are evaluated for impairment under SFAS No. 114 at that time.

6. Real Estate Acquired through Foreclosure

Real estate acquired through foreclosure is carried at the lower of the loan’s unpaid principal balance (cost) or fair value less estimated selling expenses at the date of acquisition. A loan loss provision is recorded for any write down in the loan’s carrying value to fair value at the date of acquisition. Real estate loss provisions are recorded if the properties’ fair value subsequently declines below the value determined at the recording date. In determining the lower of cost or fair value at acquisition, costs relating to development and improvement of property are considered. Costs relating to holding real estate acquired through foreclosure, net of rental income, are charged against earnings as incurred.

7. Investment in Federal Home Loan Bank Stock

The Corporation is required as a condition of membership in the Federal Home Loan Bank of Cincinnati (FHLB) to maintain an investment in FHLB common stock. The stock is redeemable at par and, therefore, its cost is equivalent to its redemption value. The Corporation’s ability to redeem FHLB shares is dependent on the redemption practices of the FHLB of Cincinnati. At December 31, 2007, the FHLB of Cincinnati placed no restrictions on redemption of shares in excess of a member’s required investment in the stock.

8. Office Premises and Equipment

Office premises and equipment are carried at cost. Maintenance, repairs and minor renewals are expensed as incurred. For financial reporting, depreciation and amortization are provided on the straight-line and accelerated methods over the useful lives of the assets, estimated to be between fifteen and forty years for buildings and improvements, five to ten years for furniture and equipment and five years for automobiles. An accelerated method is used for tax reporting purposes.

9. Federal Income Taxes

The Corporation accounts for federal income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes.” In accordance with SFAS No. 109, a deferred tax liability or deferred tax asset is computed by applying the current statutory tax rates to net taxable or deductible temporary differences between the tax basis of an asset or liability and its reported amount in the financial statements that will result in net taxable or deductible amounts in future periods. Deferred tax assets are recorded only to the extent that the amount of net deductible temporary differences or carryforward attributes may be utilized against current period earnings, carried back against prior years’ earnings, offset against taxable temporary differences reversing in future periods, or utilized to the extent of management’s estimate of future taxable income. A valuation allowance is provided for deferred tax assets to the extent that the value of net deductible temporary differences and carryforward attributes exceeds management’s estimates of taxes payable on future taxable income. Deferred tax liabilities are provided on the total amount of net temporary differences taxable in the future.

– 33 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

9. Federal Income Taxes (continued)

The Corporation’s principal temporary differences between pretax financial income and taxable income result from different methods of accounting for deferred loan origination fees and costs, Federal Home Loan Bank stock dividends, the general loan loss allowance, charitable contributions, deferred compensation and stock benefit plans. Additional temporary differences result from depreciation computed using accelerated methods for tax purposes.

10. Benefit Plans

The Corporation has a 401(k) retirement savings plan, which covers all employees who have attained the age of 21 and have completed one year of service. The Corporation is annually required to contribute 3% of eligible employees’ salaries, plus the lesser of 3% of each participant’s salary or 50% of each participant’s contributions to the plan. Additional employer contributions are made at the discretion of the Board of Directors. Employer contributions totaled $176,000, $172,000, and $166,000 for the years ended December 31, 2007, 2006 and 2005, respectively.

The Corporation has a nonqualified directors deferred compensation plan (the “compensation plan”) which provides for the payment of benefits to its directors upon termination of service with the Corporation. The Corporation recorded expense of approximately $21,000 for the directors deferred compensation plan for each of the years ended December 31, 2007, 2006 and 2005, respectively.

In connection with the Reorganization, the Corporation implemented an Employee Stock Ownership Plan (“ESOP”) which provides retirement benefits for substantially all full-time employees who have completed one year of service and have attained the age of 21. The Corporation accounts for the ESOP in accordance with Statement of Position (“SOP”) 93-6, “Employers Accounting for Employee Stock Ownership Plans.” SOP 93-6 requires that compensation expense recorded by employers equal the fair value of ESOP shares allocated to participants during a given year. Allocation of shares to the ESOP participants is predicated upon the repayment of a loan to Cheviot Financial Corp. totaling $2.3 million and $2.6 million at December 31, 2007 and 2006, respectively. The Corporation recorded expense related to the ESOP of approximately $453,000, $432,000 and $414,000 for the years ended December 31, 2007, 2006 and 2005, respectively. The fair value of the unearned ESOP shares approximated $2.0 million at December 31, 2007.

In 2005, the Corporation initiated a Management Recognition Plan (“MRP” or the “Plan”) which provided for awards of 194,408 shares to members of the board of directors, management and certain employees. Common shares awarded under the MRP vest over a five year period, commencing with the date of the grant. Expense recognized under the MRP totaled $394,000, $408,000 and $260,000 for the years ended December 31, 2007, 2006 and 2005, respectively. During the years ended December 31, 2007, 2006 and 2005, 2,325, 2,125 and 169,310 shares under the Corporation’s MRP were awarded, of which 33,505 and 425 shares vested during the current year at a cost of $13.49 and $13.61 per share.

– 34 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

11. Fair Value of Financial Instruments

SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” requires disclosure of fair value of financial instruments, both assets and liabilities, whether or not recognized in the statement of financial condition, for which it is practicable to estimate that value. For financial instruments where quoted market prices are not available, fair values are based on estimates using present value and other valuation methods.

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 December 31, 2007 and 2006:

Cash and cash equivalents: The carrying amounts presented in the consolidated statements of financial condition 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 was segregated into categories with similar characteristics, such as one-to four-family residential, multi-family residential and commercial real estate. 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. For loans on deposit accounts, fair values were deemed to equal the historic carrying values. The historical carrying amount of accrued interest on loans is deemed to approximate fair value.

Federal Home Loan Bank stock: The carrying amount presented in the consolidated statements of financial condition is deemed to approximate fair value.

Deposits: The fair value of NOW accounts, passbook accounts, and money market demand deposits is deemed to approximate the amount payable on demand at December 31, 2007 and 2006. 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.

Advances from the Federal Home Loan Bank: The fair value of these advances is estimated using the rates currently offered for similar advances of similar remaining maturities or, when available, quoted market prices.

Advances by Borrowers for Taxes and Insurance: The carrying amount of advances by borrowers for taxes and insurance is deemed to approximate fair value.

– 35 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

11. Fair Value of Financial Instruments (continued)
	Commitments to extend credit: For fixed-rate loan commitments, the fair value estimate considers the difference between current levels of interest rates and committed rates. At December 31, 2007 and 2006, the fair value of loan commitments was not material.
Based on the foregoing methods and assumptions, the carrying value and fair value of the Corporation’s financial instruments were as follows at December 31:

	2007				2006
	Carrying		Fair		Carrying		Fair
	value		value		value		value
			(In thousands)
Financial assets
Cash and cash equivalents	$	9,450	$	9,450	$	5,490	$	5,490
Investment securities		35,178		35,264		34,184		33,824
Mortgage-backed securities		10,314		10,391		15,279		15,293
Loans receivable - net		249,832		249,371		241,178		238,315
Federal Home Loan Bank stock		3,238		3,238		3,238		3,238
	$	308,012	$	307,714	$	299,369	$	296,160
Financial liabilities
Deposits	$	219,526	$	219,701	$	205,450	$	205,508
Advances from the Federal Home Loan Bank		28,665		30,165		29,236		30,033
Advances by borrowers for taxes and insurance		1,253		1,253		1,203		1,203
	$	249,444	$	251,119	$	235,889	$	236,744

12. Advertising

Advertising costs are expensed when incurred.

13. Cash and Cash Equivalents

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, federal funds sold and interest-bearing deposits in other financial institutions with original terms to maturity of ninety days or less.

– 36 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

14. Earnings Per Share

Basic earnings per share is computed based upon the weighted-average common shares outstanding during the year less shares in the ESOP that are unallocated and not committed to be released. Weighted-average common shares deemed outstanding gives effect to a reduction for 214,247, 249,954 and 285,661 unallocated shares held by the ESOP for the fiscal year ended December 31, 2007, 2006 and 2005, respectively.

	December 31,
	2007		2006		2005
Weighted-average common shares outstanding (basic)		8,904,177		9,225,311		9,574,837
Dilutive effect of assumed exercise of stock options		96,184		31,117		14,885
Weighted-average common shares outstanding (diluted)		9,000,361		9,256,428		9,589,722

15. Stock Option Plan

During 2005, the Corporation approved a Stock Incentive Plan that provides for grants of up to 486,018 stock options. During 2007, 2006 and 2005, approximately 6,460, 6,100 and 384,000 option shares were granted subject to five year vesting.

In 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 123(R), “Share-Based Payment,” which revises SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS No. 123(R) requires that cost related to the fair value of all equity-based awards to employees, including grants of employee stock options, be recognized in the financial statements.

The Corporation adopted the provisions of SFAS No. 123(R) effective January 1, 2006, using the modified prospective transition method, and therefore has not restated its financial statements for prior periods. Under this method, the Corporation has applied the provisions of SFAS No. 123(R) to new equity-based awards and to equity-based awards modified, repurchased, or cancelled after January 1, 2006. In addition, the Corporation compensation cost includes the portion of equity-based awards for which the requisite service period has not been rendered (“unvested equity-based awards”) that are outstanding as of January 1, 2006. The compensation cost recorded for unvested equity-based awards is based on their grant-date fair value. For the year ended December 31, 2007, the Corporation recorded $264,000, ($242,000 after-tax) compensation cost for equity-based awards that vested during the year ended December 31, 2007. The Corporation has $629,000 unrecognized pre-tax compensation cost related to non-vested equity-based awards granted under its stock incentive plan as of December 31, 2007, which is expected to be recognized over a weighted-average vesting period of approximately 2.5 years. There is no intrinsic value on the outstanding options due to the strike price exceeding the market price at December 31, 2007.

– 37 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

15. Stock Option Plan (continued)

Prior to January 1, 2006, the Corporation accounted for its stock option plan in accordance with SFAS No. 123, “Accounting for Stock-based Compensation,” which contained a fair value based method for valuing stock-based compensation that entities may have used, which measured compensation cost at the grant date based on the fair value of the award. Compensation was then recognized over the service period, which was usually the vesting period. Alternatively, SFAS No. 123 permitted entities to continue to account for stock options and similar equity instruments under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” Entities that continue to account for stock options using APB Opinion No. 25 were required to make pro-forma disclosures of net earnings and earnings per share, as if the fair value-based method of accounting defined in SFAS No. 123 had been applied.

The Corporation applied APB Opinion No. 25 and related interpretations in accounting for its stock option plan. Accordingly, no compensation cost had been recognized for the plan. Had compensation cost for the Corporation’s stock option plan been determined based on the fair value at the grant dates for awards under the plan consistent with the accounting method utilized in SFAS No. 123, the Corporation’s net earnings and earnings per share would have been reduced to the pro-forma amounts indicated below for the year ended December 31:

		Year ended
		December 31, 2005
Net earnings (In thousands)	As reported	$	2,153
	Stock-based compensation, net of tax		(113	)
	Pro-forma	$	2,040
Earnings per share
Basic	As reported	$	.22
	Stock-based compensation, net of tax		(.01	)
	Pro-forma	$	.21
Diluted	As reported	$	.22
	Stock-based compensation, net of tax		(.01	)
	Pro-forma	$	.21

– 38 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

15. Stock Option Plan (continued)

A summary of the status of the Corporation’s stock option plan as of December 31, 2007, 2006, and 2005 changes during the year then ended is presented below:

	2007				2006				2005
	Shares		Weighted- average exercise price		Shares		Weighted- average exercise price		Shares		Weighted- average exercise price
Outstanding at beginning of year		389,760	$	11.17		383,700	$	11.15		—	$	—
Granted		6,460		13.63		6,060		12.12		383,700		11.15
Exercised		—		—		—		—		—		—
Forfeited		—		—		—		—		—		—
Outstanding at end of year		396,220	$	11.21		389,760	$	11.17		383,700	$	11.15
Options exercisable at year-end		154,692	$	11.16		76,740	$	11.15		—		—
Fair value of options granted during the year			$	2.77			$	2.97			$	2.82
Cumulative option compensation cost over service period			$	1,153			$	1,135			$	1,121
Remaining service period			30 months				41 months				52 months

The following information applies to options outstanding at December 31, 2007:
Number outstanding			396,220
Exercise price	$11.15 - $13.63
Weighted-average exercise price			$11.21
Weighted-average remaining contractual life		7.5 years

The expected term of options is based on evaluations of historical and expected future employee exercise behavior. The risk-free interest rate is based upon the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based upon the historical volatility of the Corporation’s stock.

The fair value of each option granted is estimated on the date of grant using the modified Black-Scholes options-pricing model with the following weighted-average assumptions used for grants in 2007, 2006 and 2005: dividend yield of 2.35%, 2.31% and 2.15%; expected volatility of 10.12%, 14.43% and 22.45%; risk-free interest rates of 4.83%, 5.07% and 4.19%; and expected lives of 10 years.

– 39 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

16. Recent Accounting Developments
	FASB Statement No. 157, Fair Value Measurements (Statement No. 157)  — In September 2006, the FASB issued Statement No. 157. This Statement establishes a common definition for fair value to be applied to GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. Statement No. 157 is effective for fiscal years beginning after November 15, 2007. The Company adopted Statement No. 157, effective January 1, 2008. The impact of this new pronouncement was not material to the Company’s consolidated financial statements.
	FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (Statement No. 159)  — In February 2007, the FASB issued Statement No. 159. This Statement permits entities to choose to measure financial instruments and certain other financial assets and financial liabilities at fair value. This Statement is effective for fiscal years beginning after November 15, 2007. The Company adopted Statement No. 159, effective January 1, 2008. The impact of this new pronouncement was not material to the Company’s consolidated financial statements.
	Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 109, Written Loan Commitments Recorded at Fair Value Through Earnings (SAB 109)  — In November 2007, SEC SAB 109 was issued. SAB 109 provides the staff’s views on the accounting for written loan commitments recorded at fair value. To make the staff’s views consistent with Statement No. 156, Accounting for Servicing of Financial Assets, and Statement No. 159, SAB 109 revises and rescinds portions of SAB No. 105, Application of Accounting Principles to Loan Commitments, and requires that the expected net future cash flows related to the associated servicing of a loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. The provisions of SAB 109 are applicable to written loan commitments issued or modified in fiscal quarters beginning after December 15, 2007. The Company is currently assessing the impact this Statement will have on its consolidated financial statements.
	FASB Statement No. 141 (Revised 2007), Business Combinations (Statement No. 141R)  — Statement No. 141R was issued in December 2007. The revised statement requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions specified in the Statement. Statement No. 141R requires prospective application for business combinations consummated in fiscal years beginning on or after December 15, 2008. Early application is prohibited.
	FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (Statement No. 160)  — Statement No. 160 was issued in December 2007. The statement requires that noncontrolling interests in subsidiaries be initially measured at fair value and classified as a separate component of equity. The statement is effective for fiscal year beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently assessing the impact this Statement will have on its consolidated financial statements.

– 40 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE A - SUMMARY OF ACCOUNTING POLICIES (continued)

16. Recent Accounting Developments (continued)

EITF Issue No. 06-4, In September 2006, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements”. The issue requires that an employer who issues an endorsement split-dollar life insurance arrangement that provides a benefit to an employee should recognize a liability for future benefits in accordance with SFAS No. 106, “Employers Accounting for Postretirement Benefits Other Than Pensions”, if in substance a postretirement plan exists, or Accounting Principles Board (APB) Opinion No. 12, “Omnibus Opinion”, if the arrangement is, in substance, an individual deferred compensation contract, based on the substantive agreement with the employee. This issue is effective for fiscal years beginning after December 31, 2007 with earlier application permitted. Management is currently assessing the impact of the Issue on the Company’s financial statements.

NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of investment securities at December 31 are shown below.

		December 31, 2007
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(In thousands)
Available for Sale:
U.S. Government agency securities	$	10,001	$	87	$	—	$	10,088
Municipal obligations		2,110		3		23		2,090
	$	12,111	$	90	$	23	$	12,178
Held to Maturity:
U.S. Government agency securities	$	23,000	$	100	$	14	$	23,086

– 41 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)

		December 31, 2006
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(In thousands)
Available for Sale:
U.S. Government agency securities	$	6,998	$	4	$	20	$	6,982
Municipal obligations		2,094		10		1		2,103
	$	9,092	$	14	$	21	$	9,085
Held to Maturity:
U.S. Government agency securities	$	24,999	$	—	$	362	$	24,637
Municipal obligations		100		2		—		102
	$	25,099	$	2	$	362	$	24,739

The amortized cost of investment securities at December 31, 2007 and 2006, by contractual term to maturity are shown below.

					December 31,
						2007		2006
					(In thousands)
Less than one year					$	—	$	—
One to five years						24,000		29,999
Five to ten years						565		—
More than ten years						10,546		4,192
					$	35,111	$	34,191
The amortized cost, gross unrealized gains, gross unrealized losses and estimated fair values of mortgage-backed securities at December 31, 2007 and 2006 are shown below.
	December 31, 2007
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(In thousands)
Available for sale:
Government National Mortgage Association adjustable-rate participation certificates	$	811	$	3	$	—	$	814
Held to maturity:
Federal Home Loan Mortgage Corporation adjustable-rate participation certificates	$	802	$	7	$	—	$	809
Federal National Mortgage Association adjustable-rate participation certificates		930		5		1		934
Government National Mortgage Association adjustable-rate participation certificates		7,768		66		—		7,834
	$	9,500	$	78	$	1	$	9,577

– 42 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)

			December 31, 2006
	Amortized cost		Gross unrealized gains		Gross unrealized losses		Estimated fair value
	(In thousands)
Available for sale:
Government National Mortgage Association adjustable-rate participation certificates	$	1,048	$	—	$	6	$	1,042
Held to maturity:
Federal Home Loan Mortgage Corporation adjustable-rate participation certificates	$	924	$	5	$	6	$	923
Federal National Mortgage Association adjustable-rate participation certificates		1,097		7		1		1,103
Government National Mortgage Association adjustable-rate participation certificates		12,216		34		25		12,225
	$	14,237	$	46	$	32	$	14,251

The amortized cost of mortgage-backed securities, including those designated as available for sale, at December 31, 2007 and 2006, by contractual terms to maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may generally prepay obligations without prepayment penalties.

	December 31,
	2007		2006
	(In thousands)
Due in one year or less	$	219	$	322
Due in one year through five years		1,019		1,461
Due in five years through ten years		1,666		2,306
Due in more than ten years		7,407		11,196
	$	10,311	$	15,285

– 43 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE B - INVESTMENT AND MORTGAGE-BACKED SECURITIES (continued)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2007 and 2006:

							December 31, 2007
	Less than 12 months						12 months or longer								Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
	(Dollars in thousands)
U.S. Government agency securities		—	$	—	$	—		1	$	1,986	$	14		1	$	1,986	$	14
Municipal obligations		1		512		8		1		700		15		2		1,212		23
Mortgage-backed securities		—		—		—		2		135		1		2		135		1
Total temporarily impaired securities		1	$	512	$	8		4	$	2,821	$	30		5	$	3,333	$	38

	Less than 12 months						December 31, 2006 12 months or longer								Total
Description of securities	Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses		Number of investments		Fair value		Unrealized losses
	(Dollars in thousands)
U.S. Government agency securities		3	$	3,948	$	20		7	$	24,637	$	362		10	$	28,585	$	382
Municipal obligations		1		711		1		—		—		—		1		711		1
Mortgage-backed securities		5		317		1		9		7,854		37		14		8,171		38
Total temporarily impaired securities		9	$	4,976	$	22		16	$	32,491	$	399		25	$	37,467	$	421

Management has the intent and ability to hold these securities for the foreseeable future. The decline in the fair value is primarily due to an increase in market interest rates. The fair values are expected to recover as securities approach maturity dates.

– 44 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE C - LOANS RECEIVABLE

          The composition of the loan portfolio, including loans held for sale, at December 31 was as follows:

	2007		2006
	(In thousands)
One- to four-family residential	$	216,958	$	209,996
Multi-family residential		10,638		11,250
Construction		19,421		19,022
Commercial		10,018		9,466
Consumer		66		82
		257,101		249,816
Less:
Undisbursed portion of loans in process		6,585		7,646
Deferred loan origination fees		88		159
Allowance for loan losses		596		833
	$	249,832	$	241,178

The Corporation’s lending efforts have historically focused on one- to four-family and multi-family residential real estate loans, which comprise approximately $240.4 million, or 96% of the net loan portfolio at December 31, 2007 and approximately $232.6 million, or 96% of the net loan portfolio at December 31, 2006. Generally, such loans have been underwritten on the basis of no more than an 85% loan-to-value ratio, which has historically provided the Corporation with adequate collateral coverage in the event of default. Nevertheless, the Corporation, as with any lending institution, is subject to the risk that real estate values could deteriorate in its primary lending area of southwestern Ohio, thereby impairing collateral values. However, management is of the belief that real estate values in the Corporation’s primary lending area are presently stable.

In the ordinary course of business, the Corporation has made loans to its executive officers and directors. Loans to these officers and directors, as well as employees, are made at reduced interest rates and closing costs. These loans do not involve more than the normal risk of collectibility. The aggregate dollar amount of loans to executive officers and directors totaled approximately $1.3 million and $972,000 at December 31, 2007 and 2006, respectively.

– 45 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE D - ALLOWANCE FOR LOAN LOSSES

          The activity in the allowance for loan losses is as follows:

	2007			2006		2005
	(In thousands)
Beginning balance	$	833		$	808	$	732
Provision for losses on loans		116			25		97
Charge-offs of loans		(353	)		—		(21	)
Recoveries		—			—		—
Ending balance	$	596		$	833	$	808

At December 31, 2007, 2006 and 2005, the Corporation’s allowance for loan losses was comprised of a general loan loss allowance of $519,000, $822,000 and $794,000, respectively, which is includible as a component of regulatory risk-based capital, and a specific loan loss allowance totaling $77,000 at December 31, 2007, $11,000 at December 31, 2006 and $14,000 at December 31, 2005.

Nonperforming and impaired loans totaled approximately $660,000, $281,000 and $149,000 at December 31, 2007, 2006 and 2005, respectively. Loans past due more than 90 days and still accruing totaled approximately $941,000 and $187,000 at December 31, 2007 and 2006, respectively. In addition, approximately $32,000 and $6,000 of interest income was accrued on these loans at December 31, 2007 and 2006, respectively.

During the years ended December 31, 2007, 2006 and 2005, interest income of approximately $51,000, $7,000 and $5,000, respectively, would have been recognized had nonperforming loans been performing in accordance with contractual terms.

NOTE E - OFFICE PREMISES AND EQUIPMENT

          Office premises and equipment are comprised of the following at December 31:

	2007		2006
	(In thousands)
Land	$	1,045	$	1,045
Buildings and improvements, including construction-in-progress		5,835		5,834
Furniture and equipment		1,825		1,751
Automobiles		45		45
		8,750		8,675
Less accumulated depreciation		3,619		3,278
	$	5,131	$	5,397

At December 31, 2007 and 2006, the Corporation had capitalized interest costs of approximately $11,000 and $12,000 related to the construction of branch offices.

– 46 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE F - DEPOSITS

          Deposits consist of the following major classifications at December 31:

Deposit type and weighted-average interest rate	2007		2006
	(In thousands)
NOW accounts
2007 - 0.67%	$	15,830
2006 - 0.56%			$	13,993
Passbook accounts
2007 - 0.99%		14,938
2006 - 1.02%				16,970
Money market demand deposit
2007 - 2.23%		33,069
2006 - 2.15%				34,952
Total demand, transaction and passbook deposits		63,837		65,915
Certificates of deposit
Original maturities of:
Less than 12 months
2007 - 4.72%
2006 - 4.86%		71,043		75,005
12 to 18 months
2007 - 4.86%
2006 - 4.40%		47,199		23,004
24 months – 36 months
2007 - 4.71%
2006 - 4.10%		21,928		23,589
Over 36 months
2007 - 4.31%
2006 - 4.14%		15,519		17,937
Total certificates of deposit		155,689		139,535
Total deposits	$	219,526	$	205,450

The Savings Bank had deposit accounts with balances in excess of $100,000 totaling $54.4 million and $53.1 million, including intercompany accounts totaling $12.2 million and $18.1 million, which are eliminated in consolidation, at December 31, 2007 and 2006, respectively. Deposits issued in amounts greater than $100,000 are not federally insured.

– 47 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE F - DEPOSITS (continued)

          Interest expense on deposits is summarized as follows at December 31:

	2007		2006		2005
	(In thousands)
Passbook savings	$	134	$	150	$	145
NOW and money market demand deposits		818		781		601
Certificates of deposit		7,114		5,374		3,283
	$	8,066	$	6,305	$	4,029

          Maturities of outstanding certificates of deposit at December 31 are summarized as follows:

	2007		2006
	(In thousands)
Less than six months	$	83,496	$	82,722
Six months to one year		45,466		34,241
Over one year to three years		26,559		22,054
Over three years		168		518
	$	155,689	$	139,535

In the ordinary course of business, the Corporation accepted deposits from officers and directors. At December 31, 2007, total deposits from officers and directors totaled approximately $742,000.

NOTE G - ADVANCES FROM THE FEDERAL HOME LOAN BANK

Advances from the Federal Home Loan Bank, collateralized at December 31, 2007 and 2006 by pledges of certain residential mortgage loans totaling $35.8 million and $36.5 million, respectively, and the Savings Bank’s investment in Federal Home Loan Bank stock, are summarized as follows:

	Maturing
	year ending
Interest rate range	December 31,		2007			2006
			(Dollars in thousands)
4.61%		2010	$	2,000		$	—
3.89% - 5.44%		2012		3,905			4,972
3.75% - 4.84%		2014		4,760			5,829
4.31% - 5.36%		2015		12,076			14,775
5.25%		2016		1,360			1,660
5.27% - 5.35%		2017		4,564			2,000
			$	28,665		$	29,236
Weighted-average interest rate				4.83	%		4.77	%

– 48 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE H - FEDERAL INCOME TAXES

Federal income taxes on earnings differs from that computed at the statutory corporate tax rate for the years ended December 31, 2007, 2006 and 2005 as follows:

		2007			2006			2005
	(Dollars in thousands)
Federal income taxes at statutory rate	$	460		$	840		$	1,091
Increase (decrease) in taxes resulting primarily from:
Stock option expense		68			68			—
Charitable contributions carryforwards		(37	)		(67	)		—
Nontaxable interest income		(38	)		(20	)		(2	)
Cash surrender value of life insurance		(44	)		(45	)		(41	)
Other		19			(2	)		8
Federal income taxes per financial statements	$	428		$	774		$	1,056
Effective tax rate		31.6	%		31.3	%		32.9	%

The composition of the Corporation’s net deferred tax liability at December 31 is as follows:

Taxes (payable) refundable on temporary	2007			2006
differences at statutory rate:	(In thousands)
Deferred tax assets:
General loan loss allowance	$	176		$	279
Deferred compensation		98			99
Stock benefit plans		148			117
Unrealized losses on securities available for sale		—			4
Other		9			4
Total deferred tax assets		431			503
Deferred tax liabilities:
Deferred loan origination costs		(208	)		(141	)
Federal Home Loan Bank stock dividends		(739	)		(740	)
Book/tax depreciation		(75	)		(88	)
Mortgage servicing rights		(26	)		(22	)
Unrealized gains on securities designated as available for sale		(23	)		—
Total deferred tax liabilities		(1,071	)		(991	)
Net deferred tax liability	$	(640	)	$	(488	)

The Corporation was allowed a special bad debt deduction, generally limited to 8% of otherwise taxable income, subject to certain limitations based on aggregate loans and deposit account balances at the end of the year. If the amounts that qualified as deductions for federal income taxes are later used for purposes other than bad debt losses, including distributions in liquidation, such distributions will be subject to federal income taxes at the then current corporate income tax rate. Retained earnings at December 31, 2007 include approximately $3.0 million for which federal income taxes have not been provided. The amount of unrecognized deferred tax liability relating to the cumulative bad debt deduction at December 31, 2007 was approximately $1.0 million. During 2006, the Corporation elected to file a consolidated federal tax return with the Bank. This enabled the Corporation to utilize approximately $113,000 and $199,000 of charitable contribution carryforwards for the years ended December 31, 2007 and 2006. At December 31, 2007, the Corporation had remaining charitable contribution carryforwards of approximately $438,000 the benefits of which, in the absence of tax planning strategies, have been fully reserved.

– 49 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE I - COMMITMENTS

The Corporation is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers, including commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the statements of financial condition. The contract or notional amounts of the commitments reflect the extent of the Corporation’s involvement in such financial instruments.

The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contractual notional amount of those instruments. The Corporation uses the same credit policies in making commitments and conditional obligations as those utilized for on-balance-sheet instruments.

At December 31, 2007 and 2006, the Corporation had outstanding commitments to originate fixed-rate loans with interest rates ranging from 5.75% to 8.25% totaling $1.3 million and $2.7 million, respectively, secured by one- to four-family residential real estate. Additionally, the Corporation had unused lines of credit under home equity loans totaling $11.3 million and $11.1 million at December 31, 2007 and 2006, respectively. In the opinion of management, all loan commitments equaled or exceeded prevalent market interest rates as of December 31, 2007 and 2006, and such commitments have been underwritten on the same basis as that of the existing loan portfolio. Management believes that all loan commitments are able to be funded through cash flow from operations and existing excess liquidity. Fees received in connection with these commitments have not been recognized in earnings.

At December 31, 2007 and 2006, Corporation had a deposit of earnest money for the purchase of land at a total cost of $1,000.

During 2004, the Savings Bank entered into a lease agreement for office space under an operating lease which expired in January 2006. The lease agreement required annual rental payments of approximately $20,000 through December 2005, and approximately $2,000 in 2006. The lease contained three one-year renewal options which the Savings Bank opted not to renew in 2006. In January 2006, the Savings Bank entered into a new one year operating lease agreement which the Savings Bank opted to renew in January 2007. This lease expired in January 2008 and will not be renewed by the Bank. The Savings Bank’s rental expense totaled $5,000 for both the years ended December 31, 2007 and 2006, respectively.

NOTE J - REGULATORY CAPITAL

The Savings Bank is subject to minimum regulatory capital standards promulgated by the Office of Thrift Supervision (the “OTS”). Failure to meet minimum capital requirements can initiate certain mandatory — and possibly additional discretionary — actions by regulators that, if undertaken, could have a direct material effect on its financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Savings Bank must meet specific capital guidelines that involve quantitative measures of the Savings Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Savings Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

– 50 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE J - REGULATORY CAPITAL (continued)

The minimum capital standards of the OTS generally require the maintenance of regulatory capital sufficient to meet each of three tests, hereinafter described as the tangible capital requirement, the core capital requirement and the risk-based capital requirement. The tangible capital requirement provides for minimum tangible capital (defined as shareholders’ equity less all intangible assets) equal to 1.5% of adjusted total assets. The core capital requirement provides for minimum core capital (tangible capital plus certain forms of supervisory goodwill and other qualifying intangible assets) generally equal to 4.0% of adjusted total assets, except for those associations with the highest examination rating and acceptable levels of risk. The risk-based capital requirement provides for the maintenance of core capital plus general loss allowances equal to 8.0% of risk-weighted assets. In computing risk-weighted assets, the Corporation multiplies the value of each asset on its statement of financial condition by a defined risk-weighting factor, e.g., one- to four-family residential loans carry a risk-weighted factor of 50%.

During 2007, the Savings Bank was notified by the OTS that it was categorized as “well-capitalized” under the regulatory framework for prompt corrective action. Additionally, management is not aware of any recent event that would cause this classification to change. To be categorized as “well-capitalized” the Savings Bank must maintain minimum capital ratios as set forth in the following table.

As of December 31, 2007 and 2006, the Savings Bank met all capital adequacy requirements to which it was subject.

As of December 31, 2007

Actual

For capital adequacy purposes

To be “well- capitalized” under prompt corrective action provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

(Dollars in thousands)

Tangible capital

$

53,437

16.8%

³$

4,786

³1.5%

³$

15,954

³  5.0%

Core capital

$

53,437

16.8%

³$

12,763

³4.0%

³$

19,145

³  6.0%

Risk-based capital

$

53,956

32.7%

³$

13,213

³8.0%

³$

16,516

³10.0%

	As of December 31, 2006
	Actual			For capital adequacy purposes			To be “well- capitalized” under prompt corrective action provisions
		Amount	Ratio		Amount	Ratio	Amount		Ratio
	(Dollars in thousands)
Tangible capital	$	51,452	16.6%	³$	4,647	³1.5%	³$	15,490		³  5.0%
Core capital	$	51,452	16.6%	³$	12,392	³4.0%	³$	18,588		³  6.0%
Risk-based capital	$	52,273	33.3%	³$	12,558	³8.0%	³$	15,698		³10.0%

– 51 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE J - REGULATORY CAPITAL (continued)

The Savings Bank’s management believes that, under the current regulatory capital regulations, the Savings Bank will continue to meet its minimum capital requirements in the foreseeable future. However, events beyond the control of the Savings Bank, such as increased interest rates or a downturn in the economy in the Savings Bank’s market area, could adversely affect future earnings and, consequently, the ability to meet future minimum regulatory capital requirements.

The Savings Bank is subject to regulations imposed by the OTS regarding the amount of capital distributions payable by the Savings Bank to Cheviot Financial. Generally, the Savings Bank’s payment of dividends is limited, without prior OTS approval, to net earnings for the current calendar year plus the two preceding calendar years, less capital distributions paid over the comparable time period. Insured institutions are required to file an application with the OTS for capital distributions in excess of this limitation. During 2005, the Savings Bank received approval from the OTS to declare $12.5 million in dividends to Cheviot Financial. Such dividends were paid in 2006. As a result of such dividend, the Savings Bank is required to receive prior OTS approval before declaring dividends to Cheviot Financial Corp.

Regulations of the OTS governing mutual holding companies permit Cheviot Mutual Holding Company (the “Holding Company”) to waive the receipt by it of any common stock dividend declared by Cheviot Financial or the Savings Bank, provided the OTS does not object to such waiver. Pursuant to these provisions, the Holding Company waived $1.7 million in dividends during 2007.

– 52 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE K - CHEVIOT FINANCIAL CORP. CONDENSED FINANCIAL INFORMATION

The following condensed financial statements summarize the financial position of the Corporation as of December 31, 2007 and 2006, and the results of its operations and its cash flows for the years ended December 31, 2007, 2006 and 2005:

CHEVIOT FINANCIAL CORP.
STATEMENT OF FINANCIAL CONDITION
December 31, 2007 and 2006
(In thousands)

	2007			2006
ASSETS
Cash in Cheviot Savings Bank	$	12,171		$	18,137
Cash and due from banks		32			38
Loan receivable - ESOP		2,309			2,643
Investment in Cheviot Savings Bank		53,490			51,426
Prepaid expenses and other assets		—			10
Prepaid federal income taxes		13			56
Total assets	$	68,015		$	72,310
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other liabilities	$	95		$	110
Common stock		99			99
Additional paid-in capital		43,418			43,113
Shares acquired by stock benefit plans		(3,582	)		(4,329	)
Treasury stock		(12,074	)		(6,846	)
Retained earnings		40,013			40,171
Accumulated comprehensive loss		46			(8	)
Total shareholders’ equity	$	67,920			72,200
Total liabilities and shareholders’ equity	$	68,015		$	72,310

CHEVIOT FINANCIAL CORP.
STATEMENT OF EARNINGS
Year ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006		2005
Income
Interest income	$	157		$	208	$	184
Equity in earnings of Cheviot Savings Bank		955			1,693		2,248
Total income		1,112			1,901		2,432
General, administrative and other expense		201			203		328
Earnings before federal income tax benefits		911			1,698		2,104
Federal income taxes (benefits)		(15	)		2		(49	)
Net earnings	$	926		$	1,696	$	2,153

– 53 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE K - CHEVIOT FINANCIAL CORP. CONDENSED FINANCIAL INFORMATION (continued)

CHEVIOT FINANCIAL CORP.
STATEMENT OF CASH FLOWS
Year ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006			2005
Cash flows provided by operating activities:
Net earnings for the year	$	926		$	1,696		$	2,153
Excess distribution from (equity in undistributed earnings of) Cheviot Savings Bank		(1,676	)		(2,426	)		10,065
Amortization of expense related to stock benefit plans		810			813			494
Increase (decrease) in cash due to changes in
Prepaid expenses and other assets		10			12,511			(12,080	)
Accounts payable and other liabilities		(15	)		32			78
Prepaid federal income taxes		43			2			(49	)
Net cash provided by operating activities		98			12,628			661
Cash flows used in financing activities:
Purchase of shares for stock benefit plans		—			—			(2,235	)
Stock option expense, net		242			239			—
Treasury stock repurchases		(5,228	)		(4,309	)		(2,537	)
Dividends paid		(1,084	)		(1,049	)		(1,003	)
Net cash used in financing activities		(6,070	)		(5,119	)		(5,775	)
Net (decrease) increase in cash and cash equivalents		(5,972	)		7,509			(5,114	)
Cash and cash equivalents at beginning of year		18,175			10,666			15,780
Cash and cash equivalents at end of year	$	12,203		$	18,175		$	10,666

– 54 –

CHEVIOT FINANCIAL CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Years ended December 31, 2007, 2006 and 2005

NOTE L - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following table summarizes the Corporation’s quarterly results for the years ended December 31, 2007 and 2006.

	Three Months Ended
	December 31,		September 30,		June 30,		March 31,
2007:	(In thousands, except per share data)
Total interest income	$	4,522	$	4,515	$	4,418	$	4,336
Total interest expense		2,469		2,445		2,336		2,249
Net interest income		2,053		2,070		2,082		2,087
Provision for losses on loans		101		15		—		—
Net interest income after provision for loan losses		1,952		2,055		2,082		2,087
Other income		134		153		129		129
General, administrative and other expense		1,833		1,805		1,802		1,927
Earnings before income taxes		253		403		409		289
Federal income taxes		80		128		137		83
Net earnings	$	173	$	275	$	272	$	206
Earnings per share:
Basic and diluted	$	.02	$	.03	$	.03	$	.02

	Three Months Ended
	December 31,		September 30,		June 30,		March 31,
2006:	(In thousands, except per share data)
Total interest income	$	4,358	$	4,283	$	4,024	$	3,844
Total interest expense		2,222		2,131		1,821		1,608
Net interest income		2,136		2,152		2,203		2,236
Provision for losses on loans		25		—		—		—
Net interest income after provision for loan losses		2,111		2,152		2,203		2,236
Other income		139		176		103		120
General, administrative and other expense		1,698		1,690		1,702		1,680
Earnings before income taxes		552		638		604		676
Federal income taxes		160		201		198		215
Net earnings	$	392	$	437	$	406	$	461
Earnings per share:
Basic and diluted	$	.04	$	.05	$	.04	$	.05

– 55 –

DIRECTORS AND OFFICERS

Directors of Cheviot
Financial Corp. and	Officers of	Officers of
Cheviot Savings Bank	Cheviot Financial Corp.	Cheviot Savings Bank
Thomas J. Linneman	Thomas J. Linneman	Thomas J. Linneman
President and Chief	President and Chief	President and Chief
Executive Officer	Executive Officer	Executive Officer
James E. Williamson	Scott T. Smith	Jeffrey J. Lenzer
Executive Secretary,	Chief Financial Officer	Vice President, Operations
Retired District Administrator
of Oak Hills Local		Kevin M. Kappa
School District		Vice President, Compliance
Edward L. Kleemeier		Deborah A. Fischer
Retired District Fire Chief,		Vice President, Lending
City of Cincinnati
		Scott T. Smith
John T. Smith		Chief Financial Officer
Secretary/Treasurer
of Hawkstone Associates
Robert L. Thomas
Owner/Operator
R&R Quality Meats
and Catering
Steven R. Hausfeld
CPA/Owner
Steven R. Hausfeld, CPA

– 56 –

INVESTOR AND CORPORATE INFORMATION

Annual Meeting

The Annual Meeting of shareholders will be held at 3:00 p.m., Eastern Daylight Savings Time, on April 22, 2008 at the Cheviot Savings Bank Corporate Offices located at 3723 Glenmore Avenue, Cheviot, Ohio.

Stock Listing

Cheviot Financial Corp. common stock is listed on The Nasdaq Capital Market under the symbol “CHEV”.

As of March 12, 2008, there were 9,918,751 shares of Cheviot Financial Corp. common stock issued (including unallocated ESOP shares) and there were approximately 838 registered holders of record.

Set forth below are the high and low prices of our common stock for the year, as well as our quarterly dividend payment history.

Quarter Ended	High		Low		Dividend paid
March 31, 2007	$	13.42	$	12.93	$	.08
June 30, 2007	$	13.75	$	13.22	$	.08
September 30, 2007	$	13.50	$	11.99	$	.08
December 31, 2007	$	12.63	$	9.40	$	.08

Shareholder and General Inquiries	Transfer Agent
Cheviot Financial Corp.	Registrar and Transfer Company
3723 Glenmore Avenue	10 Commerce Drive
Cincinnati, Ohio 45211	Cranford, New Jersey
(513) 661-0457	(800) 525-7686
Attn: Kimberly A. Siener
Investor Relations
Registered Independent Auditors	Corporate Counsel
Clark, Schaefer, Hackett & Co.	Luse Gorman Pomerenk & Schick, P.C.
105 East Fourth Street	5335 Wisconsin Avenue NW
Suite 1500	Suite 400
Cincinnati, Ohio 45202	Washington, DC 20015
(513) 241-3111	(202) 274-2000

Annual Reports

A copy, without exhibits, of the Cheviot Financial Corp. Annual Report on Form 10-K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission, may be obtained without charge by contacting Kimberly A. Siener, Investor Relations, Cheviot Financial Corp., 3723 Glenmore Avenue, Cheviot, Ohio 45211.

– 57 –

OFFICE LOCATIONS

Full Service Banking Locations

Main Office:	Cheviot	Branch Offices:	Monfort Heights
	3723 Glenmore Avenue		5550 Cheviot Road
	Cheviot, Ohio 45211		Cincinnati, Ohio 45247
	(513) 661-0457		(513)389-3325
			Bridgetown
			6060 Bridgetown Road
			Cincinnati, Ohio 45248
			(513) 389-3333
			Harrison
			1194 Stone Drive
			Harrison, Ohio 45030
			(513) 202-5490
			Delhi
			585 Anderson Ferry Road
			Cincinnati, Ohio 45238
			(513) 347-4992
			Taylor Creek
			7072 Harrison Avenue
			Cincinnati, Ohio 45247
			(513) 353-5140

– 58 –

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our report dated March 28, 2007, accompanying the consolidated financial statements incorporated by reference in the Annual Report on Form 10-K of Cheviot Financial Corp. for the year ended December 31, 2006. We hereby consent to the incorporation by reference of said report in the Registration Statements of Cheviot Financial Corp. on Forms S-8, File Nos. 333-113919 and 333-125620.

/s/ GRANT THORNTON LLP

Cincinnati, Ohio
March 25, 2008

EX-23.2

Exhibit 23.2

Consent Of Independent Registered Public Accounting Firm

Board of Directors
Cheviot Financial Corp.
Cincinnati, Ohio

We consent to incorporation by reference in Registration Statement No. 333-113919 and 333-125620 on Form S-8 of Cheviot Financial Corp. of our Report of Independent Registered Public Accounting Firm, dated March 25, 2008, on the consolidated balance sheet of Cheviot Financial Corp. as of December 31, 2007 and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for the year ended December 31, 2007, which reports appear in Cheviot Financial Corp.’s 2007 Annual Report to Stockholders and are incorporated by reference into the Form 10-K of Cheviot Financial Corp. for the year ended December 31, 2007.

/s/ Clark, Schaefer, Hackett & Co.

Cincinnati, Ohio
March 25, 2008

EX-31.1

Exhibit 31.1

Certification of President and Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	I, Thomas J. Linneman, certify that
1.	I have reviewed this annual report on Form 10-K of Cheviot Financial Corp.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 25, 2008	/s/ Thomas J. Linneman
Date
	Thomas J. Linneman
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

	I, Scott T. Smith, certify that
1.	I have reviewed this annual report on Form 10-K of Cheviot Financial Corp.;
2.	Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;
b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 25, 2008	/s/ Scott T. Smith
Date
	Scott T. Smith
	Chief Financial Officer

EX-32

Exhibit 32

Certification pursuant to
18 U.S.C. Section 1350,
as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

          Thomas J. Linneman, President and Chief Executive Officer and Scott T. Smith, Chief Financial Officer of Cheviot Financial Corp. (the “Company”) each certify in their capacity as officers of the Company that they have reviewed the annual report of the Company on Form 10-K for the fiscal year ended December 31, 2007 and that to the best of their knowledge:

1.	the report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and
2.	the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.

The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002.

Date	/s/ Thomas J. Linneman
March 25, 2008
	President and Chief Executive Officer
Date	/s/ Scott T. Smith
March 25, 2008
	Chief Financial Officer