##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20429
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 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 number 0-29709
 HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
  Pennsylvania
    
    23-3028464(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 271 Main Street, Harleysville, Pennsylvania 19438
 (Registrants telephone number, including area code)
 (Former name, former address and former fiscal year, if changed since last report)
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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##### 



HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
 Index
 PAGE(S)Part I FINANCIAL INFORMATIONItem 1. Financial StatementsUnaudited Consolidated Statements of Financial Condition as of 
March 31, 2009, and September 30, 2008
    
    
    1Unaudited Consolidated Statements of Income for the Three and Six
Months Ended March 31, 2009 and 2008
    
    
    2Unaudited Consolidated Statements of Comprehensive Income 
for the Three and Six Months Ended March 31, 2009 and 2008
    
    
    3Unaudited Consolidated Statements of Stockholders Equity 
for the Six Months Ended March 31, 2009 and 2008
    
    
    4Unaudited Consolidated Statements of Cash Flows for the Six Months 
Ended March 31, 2009 and 2008
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6 - 17Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    18 - 20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20 - 21Item 4. Controls and Procedures
    
    
    22Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    23Item 1A. Risk Factors
    
    
    23Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    23Item 3. Defaults upon Senior Securities
    
    
    23Item 4. Submission of Matters to a Vote of Security Holders
    
    
    23Item 5. Other information
    
    
    23Item 6. Exhibits
    
    
    23Signatures
    
    
    24Exhibit 31.1Exhibit 31.2Exhibit 32.0




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Financial Condition
 March 31,
    
    
    September 30,(In thousands, except share data)
    
    2009
    
    
    2008AssetsCash and amounts due from depository institutions
    
    $
    2,255
    
    
    $
    2,217Interest bearing deposits in other banks
    
    
    12,498
    
    
    
    7,157Total cash and cash equivalents
    
    
    14,753
    
    
    
    9,374Investment securities held to maturity (fair value -
March 31, $77,602; September 30, $78,973)
    
    
    76,457
    
    
    
    79,254Investment securities available-for-sale at fair value
    
    
    1,014
    
    
    
    854Mortgage-backed securities held to maturity (fair value -
March 31, $198,111; September 30, $211,814)
    
    
    192,383
    
    
    
    213,933Mortgage-backed securities available-for-sale at fair value
    
    
    796
    
    
    
    758Loans receivable (net of allowance for loan losses -
March 31, $2,193; September 30, $1,988)
    
    
    483,371
    
    
    
    476,858Accrued interest receivable
    
    
    3,457
    
    
    
    3,799Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,574Office properties and equipment, net
    
    
    10,187
    
    
    
    10,154Prepaid expenses and other assets
    
    
    15,218
    
    
    
    14,117TOTAL ASSETS
    
    $
    813,732
    
    
    $
    825,675Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    439,493
    
    
    $
    425,513Short-term borrowings
    
    
    
    
    
    
    21,800Long-term debt
    
    
    318,147
    
    
    
    326,046Accrued interest payable
    
    
    1,557
    
    
    
    1,686Advances from borrowers for taxes and insurance
    
    
    4,589
    
    
    
    1,483Accounts payable and accrued expenses
    
    
    958
    
    
    
    1,938Total liabilities
    
    
    764,744
    
    
    
    778,466Stockholders equity:Preferred Stock: $.01 par value;
12,500,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock: $.01 par value; 25,000,000 shares authorized;
3,921,177 shares issued; outstanding March 31, 2009 3,603,409 shares
September 30, 2008 3,567,934 shares
    
    
    39
    
    
    
    39Additional Paid-in capital
    
    
    7,998
    
    
    
    7,993Treasury stock, at cost (March 31, 2009, 317,768 shares;
September 30, 2008, 353,243)
    
    
    (4,531
    )
    
    
    (5,017
    )Retained earnings  partially restricted
    
    
    45,527
    
    
    
    44,235Accumulated other comprehensive loss
    
    
    (45
    )
    
    
    (41
    )Total stockholders equity
    
    
    48,988
    
    
    
    47,209TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    813,732
    
    
    $
    825,675
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Income
 For the Three Months Ended
    
    
    For the Six Months EndedMarch 31,
    
    
    March 31,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008INTEREST INCOME:Interest on mortgage loans
    
    $
    5,096
    
    
    $
    4,671
    
    
    $
    10,105
    
    
    $
    9,256Interest on commercial loans
    
    
    740
    
    
    
    409
    
    
    
    1,449
    
    
    
    717Interest on mortgage-backed securities
    
    
    2,409
    
    
    
    2,437
    
    
    
    4,955
    
    
    
    4,718Interest on consumer and other loans
    
    
    1,188
    
    
    
    1,466
    
    
    
    2,495
    
    
    
    2,982Interest on taxable investments
    
    
    743
    
    
    
    1,378
    
    
    
    1,562
    
    
    
    2,829Interest on tax-exempt investments
    
    
    325
    
    
    
    348
    
    
    
    656
    
    
    
    699Dividends on investment securities
    
    
    3
    
    
    
    13
    
    
    
    8
    
    
    
    22Total interest income
    
    
    10,504
    
    
    
    10,722
    
    
    
    21,230
    
    
    
    21,223Interest Expense:Interest on deposits
    
    
    2,744
    
    
    
    4,167
    
    
    
    5,714
    
    
    
    8,312Interest on borrowings
    
    
    3,403
    
    
    
    3,352
    
    
    
    6,974
    
    
    
    6,839Total interest expense
    
    
    6,147
    
    
    
    7,519
    
    
    
    12,688
    
    
    
    15,151Net Interest Income
    
    
    4,357
    
    
    
    3,203
    
    
    
    8,542
    
    
    
    6,072Provision for loan losses
    
    
    100
    
    
    
    5
    
    
    
    200
    
    
    
    5Net Interest Income after Provision
for Loan Losses
    
    
    4,257
    
    
    
    3,198
    
    
    
    8,342
    
    
    
    6,067Other Income:Customer service fees
    
    
    158
    
    
    
    140
    
    
    
    336
    
    
    
    304Impairment of equity securities
    
    
    (449
    )
    
    
    
    
    
    
    (449
    )
    
    
    Gain on sale of investments
    
    
    20
    
    
    
    
    
    
    
    20
    
    
    
    Loss on sale of investments
    
    
    (11
    )
    
    
    4
    
    
    
    (11
    )
    
    
    4Income on bank-owned life insurance
    
    
    121
    
    
    
    121
    
    
    
    243
    
    
    
    252Other income
    
    
    184
    
    
    
    202
    
    
    
    355
    
    
    
    406Total other income
    
    
    23
    
    
    
    467
    
    
    
    494
    
    
    
    966Other Expenses:Salaries and employee benefits
    
    
    1,580
    
    
    
    1,438
    
    
    
    3,195
    
    
    
    2,758Occupancy and equipment
    
    
    291
    
    
    
    262
    
    
    
    601
    
    
    
    527Deposit insurance premiums
    
    
    239
    
    
    
    12
    
    
    
    257
    
    
    
    25Data processing
    
    
    127
    
    
    
    130
    
    
    
    263
    
    
    
    248Other
    
    
    582
    
    
    
    583
    
    
    
    1,256
    
    
    
    1,252Total other expenses
    
    
    2,819
    
    
    
    2,425
    
    
    
    5,572
    
    
    
    4,810Income before Income Taxes
    
    
    1,461
    
    
    
    1,240
    
    
    
    3,264
    
    
    
    2,223Income tax expense
    
    
    258
    
    
    
    206
    
    
    
    685
    
    
    
    388Net Income
    
    $
    1,203
    
    
    $
    1,034
    
    
    $
    2,579
    
    
    $
    1,835Basic Earnings Per Share
    
    $
    0.33
    
    
    $
    0.28
    
    
    $
    0.72
    
    
    $
    0.49Diluted Earnings Per Share
    
    $
    0.33
    
    
    $
    0.28
    
    
    $
    0.72
    
    
    $
    0.49Dividends Per Share
    
    $
    0.18
    
    
    $
    0.17
    
    
    $
    0.36
    
    
    $
    0.34
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Comprehensive Income
 Three Months EndedMarch 31,(In thousands)
    
    2009
    
    
    2008Net Income
    
    $
    1,203
    
    
    $
    1,034Other Comprehensive IncomeUnrealized loss on securities available for sale, net of tax
benefit  2009, ($66); 2008, ($7) and reclassifications
    
    
    128
    (1)
    
    
    14
    (1)Total Comprehensive Income
    
    $
    1,331
    
    
    $
    1,048
 2009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the three months
ended:Net unrealized gain (loss) arising during the three months ended
    
    $
    (246
    )
    
    $
    25Reclassification adjustment for net losses (gains) included in net income
    
    
    440
    
    
    
    (4
    )$
    194
    
    
    
    21Tax (expense) benefit
    
    
    (66
    )
    
    
    (7
    )Net unrealized gain on securities avalaible for sale
    
    $
    128
    
    
    $
    14
 Six Months EndedMarch 31,(In thousands)
    
    2009
    
    
    2008Net Income
    
    $
    2,579
    
    
    $
    1,835Other Comprehensive IncomeUnrealized loss on securities available for sale, net of tax
benefit  2009, ($2); 2008, ($57) and reclassifications
    
    
    (4
    ) (1)
    
    
    (111
    ) (1)Total Comprehensive Income
    
    $
    2,575
    
    
    $
    1,724
 2009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the six months ended:Net unrealized gain (loss) arising during the six months ended
    
    $
    (446
    )
    
    $
    (164
    )Reclassification adjustment for net losses (gains) included in net income
    
    
    440
    
    
    
    (4
    )$
    (6
    )
    
    
    (168
    )Tax (expense) benefit
    
    
    2
    
    
    
    57Net unrealized loss on securities available for sale
    
    $
    (4
    )
    
    $
    (111
    )
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statement of Stockholders Equity
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In thousands, except share and per share data)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Restricted
    
    
    (Loss) / Income
    
    
    Stock
    
    
    EquityBalance at October 1, 2008
    
    
    3,567,934
    
    
    $
    39
    
    
    $
    7,993
    
    
    $
    44,235
    
    
    $
    (41
    )
    
    $
    (5,017
    )
    
    $
    47,209Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,579
    
    
    
    
    
    
    
    
    
    
    
    2,579Dividends  $.36 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,287
    )
    
    
    
    
    
    
    
    
    
    
    (1,287
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70Treasury stock delivered under employee stock plan
    
    
    10,000
    
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    120Treasury stock delivered under
reinvestment plan
    
    
    23,808
    
    
    
    
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    326
    
    
    
    285Employee options exercised
    
    
    1,667
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    16Change in unrealized holding loss
on available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    (4
    )Balance at March 31, 2009
    
    
    3,603,409
    
    
    $
    39
    
    
    $
    7,998
    
    
    $
    45,527
    
    
    $
    (45
    )
    
    $
    (4,531
    )
    
    $
    48,988
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In thousands, except share and per share data)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Restricted
    
    
    (Loss) / Income
    
    
    Stock
    
    
    EquityBalance at October 1, 2007
    
    
    3,717,519
    
    
    $
    39
    
    
    $
    8,044
    
    
    $
    42,363
    
    
    $
    (89
    )
    
    $
    (3,316
    )
    
    $
    47,041Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    1,835Dividends  $.34 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,265
    )
    
    
    
    
    
    
    
    
    
    
    (1,265
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    54
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54Treasury stock purchased
    
    
    (205,358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,557
    )
    
    
    (2,557
    )Treasury stock delivered under employee stock plan
    
    
    8,000
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    107Treasury stock delivered under
reinvestment plan
    
    
    20,779
    
    
    
    
    
    
    
    (71
    )
    
    
    
    
    
    
    
    
    
    
    345
    
    
    
    274Employee options exercised
    
    
    2,250
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    19Change in unrealized holding loss
on available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (111
    )
    
    
    
    
    
    
    (111
    )Balance at March 31, 2008
    
    
    3,543,190
    
    
    $
    39
    
    
    $
    7,982
    
    
    $
    42,933
    
    
    $
    (200
    )
    
    $
    (5,357
    )
    
    $
    45,397
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Cash Flows
 Six Months Ended March 31,(In thousands)
    
    2009
    
    
    2008Operating Activities:Net Income
    
    $
    2,579
    
    
    $
    1,835Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    224
    
    
    
    257Provision for loan losses
    
    
    200
    
    
    
    5Gain on sales of securities
    
    
    (20
    )
    
    
    (4
    )Loss on sales of securities
    
    
    11
    
    
    
    Loss on impairment of securities
    
    
    449
    
    
    
    Amortization of deferred loan fees
    
    
    25
    
    
    
    12Net amortization of premiums and discounts
    
    
    63
    
    
    
    17Increase in cash surrender value
    
    
    (243
    )
    
    
    (252
    )Compensation charge on stock options
    
    
    70
    
    
    
    54Changes in assets and liabilities which provided (used) cash:Decrease in accounts payable and accrued expenses
    
    
    (980
    )
    
    
    (296
    )Increase in prepaid expenses and other assets
    
    
    (858
    )
    
    
    (104
    )Decrease in accrued interest receivable
    
    
    342
    
    
    
    166Decrease in accrued interest payable
    
    
    (129
    )
    
    
    (74
    )Net cash provided by operating activities
    
    
    1,733
    
    
    
    1,616Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    
    
    
    
    (48,147
    )Purchase of investment securities held to maturity
    
    
    
    
    
    
    (18,086
    )Purchase of investment securities available-for-sale
    
    
    (651
    )
    
    
    Net redemption of FHLB stock
    
    
    478
    
    
    
    44Proceeds from the sale of investment securities available-for-sale
    
    
    
    
    
    
    568Proceeds from maturities of investment securities held to maturity
    
    
    1,365
    
    
    
    29,948Principal collected on mortgage-backed securities
    
    
    22,928
    
    
    
    19,388Principal collected on long-term loans
    
    
    64,116
    
    
    
    42,899Long-term loans originated or acquired
    
    
    (70,854
    )
    
    
    (65,394
    )Purchases of premises and equipment
    
    
    (257
    )
    
    
    (311
    )Net cash provided by (used in) investing activities
    
    
    17,125
    
    
    
    (39,091
    )Financing Activities:Net increase (decrease) in demand deposits, NOW accounts
and savings accounts
    
    
    8,941
    
    
    
    (620
    )Net increase in certificates of deposit
    
    
    5,039
    
    
    
    27,101Cash dividends
    
    
    (1,002
    )
    
    
    (1,265
    )Net decrease in short-term borrowings
    
    
    (21,800
    )
    
    
    (23,500
    )Proceeds from long-term debt
    
    
    24,500
    
    
    
    63,000Repayment of long-term debt
    
    
    (32,399
    )
    
    
    (28,824
    )Acquisition of treasury stock
    
    
    
    
    
    
    (2,557
    )Treasury stock delivered under employee stock plans
    
    
    136
    
    
    
    400Net increase in advances from borrowers for taxes and insurance
    
    
    3,106
    
    
    
    3,167Net cash (used in) provided by financing activities
    
    
    (13,479
    )
    
    
    36,902INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    5,379
    
    
    
    (573
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,374
    
    
    
    8,317CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    14,753
    
    
    $
    7,744Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    12,817
    
    
    $
    15,225Income taxes
    
    
    1,203
    
    
    
    433
 See notes to consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Notes to Unaudited Consolidated Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Use of Estimates in Preparation of Consolidated Financial Statements
 Recent Accounting Pronouncements 
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Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly Fair Value Measurements
   Recognition and Presentation of
Other-Than-Temporary Impairments
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Recognition and Presentation of
Other-Than-Temporary Impairments
  Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly
 Interim Disclosures about Fair Value
of Financial Instruments Disclosures about Fair Value of Financial Instruments Interim Financial Reporting
 Determining Fair Value When the Volume and
Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly Recognition and Presentation of
Other-Than-Temporary Impairments.
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2. INVESTMENT SECURITIES HELD TO MATURITY
  March 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government Agencies
    
    $
    51,816
    
    
    $
    652
    
    
    $
    (19
    )
    
    $
    52,449Tax Exempt Obligations
    
    
    24,641
    
    
    
    868
    
    
    
    (356
    )
    
    
    25,153Total Investment Securities
    
    $
    76,457
    
    
    $
    1,520
    
    
    $
    (375
    )
    
    $
    77,602
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government Agencies
    
    $
    54,315
    
    
    $
    147
    
    
    $
    (385
    )
    
    $
    54,077Tax Exempt Obligations
    
    
    24,939
    
    
    
    592
    
    
    
    (635
    )
    
    
    24,896Total Investment Securities
    
    $
    79,254
    
    
    $
    739
    
    
    $
    (1,020
    )
    
    $
    78,973
  page -11-




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3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  March 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    452
    
    
    $
    
    
    
    $
    (79
    )
    
    $
    373Money Market Mutual Funds
    
    
    641
    
    
    
    
    
    
    
    
    
    
    
    641Total Investment Securities
    
    $
    1,093
    
    
    $
    
    
    
    $
    (79
    )
    
    $
    1,014
  September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    877
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    842Money Market Mutual Funds
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Total Investment Securities
    
    $
    889
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    854
  page -12-




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4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
  March 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    13,344
    
    
    $
    54
    
    
    $
    (560
    )
    
    $
    12,838FHLMC pass-through certificates
    
    
    78,578
    
    
    
    2,673
    
    
    
    (1
    )
    
    
    81,250FNMA pass-through certificates
    
    
    100,461
    
    
    
    3,563
    
    
    
    (1
    )
    
    
    104,023Total Mortgage-Backed Securities
    
    $
    192,383
    
    
    $
    6,290
    
    
    $
    (562
    )
    
    $
    198,111
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    14,708
    
    
    $
    8
    
    
    $
    (624
    )
    
    $
    14,092FHLMC pass-through certificates
    
    
    88,594
    
    
    
    283
    
    
    
    (826
    )
    
    
    88,051FNMA pass-through certificates
    
    
    110,431
    
    
    
    99
    
    
    
    (1,061
    )
    
    
    109,469GNMA pass-through certificates
    
    
    200
    
    
    
    2
    
    
    
    
    
    
    
    202Total Mortgage-Backed Securities
    
    $
    213,933
    
    
    $
    392
    
    
    $
    (2,511
    )
    
    $
    211,814
  page -13-




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5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
  March 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    11
    
    
    $
    
    
    
    $
    796Total Mortgage-Backed Securities
    
    $
    785
    
    
    $
    11
    
    
    $
    
    
    
    $
    796
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758Total Mortgage-Backed Securities
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758
 6. LOANS RECEIVABLE
  (In thousands)March 31, 2009
    
    
    September 30, 2008Residential Mortgages
    
    $
    341,527
    
    
    $
    337,316Commercial Mortgages
    
    
    49,974
    
    
    
    44,407Construction
    
    
    5,604
    
    
    
    8,346Savings Account
    
    
    1,075
    
    
    
    955Home Equity
    
    
    58,156
    
    
    
    66,280Automobile and other
    
    
    1,047
    
    
    
    1,000Home Equity Line of Credit
    
    
    31,504
    
    
    
    26,103Total
    
    
    488,887
    
    
    
    484,407Undisbursed portion of loans in process
    
    
    (2,773
    )
    
    
    (5,109
    )Deferred loan fees
    
    
    (550
    )
    
    
    (452
    )Allowance for loan losses
    
    
    (2,193
    )
    
    
    (1,988
    )Loans Receivable  net
    
    $
    483,371
    
    
    $
    476,858
   Three Months Ended
    
    
    Six Months EndedMarch 31, 2009
    
    
    March 31,2008
    
    
    March 31, 2009
    
    
    March 31,2008(In thousands)
    
    
    (In thousands)Balance, beginning of period
    
    $
    2,097
    
    
    $
    1,924
    
    
    $
    1,988
    
    
    $
    1,933Provision for loan losses
    
    
    100
    
    
    
    5
    
    
    
    200
    
    
    
    5Recoveries
    
    
    2
    
    
    
    2
    
    
    
    17
    
    
    
    7Charge offs
    
    
    (6
    )
    
    
    (6
    )
    
    
    (12
    )
    
    
    (20
    )Balance, end of period
    
    $
    2,193
    
    
    $
    1,925
    
    
    $
    2,193
    
    
    $
    1,925
 7. Federal Home Loan Bank Stock
     page -14-




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8. DEPOSITS
  (In thousands)March 31, 2009
    
    
    September 30, 2008Non-interest bearing checking accounts
    
    $
    11,921
    
    
    $
    10,963NOW accounts
    
    
    16,773
    
    
    
    14,315Interest bearing checking accounts
    
    
    30,929
    
    
    
    27,888Money market demand accounts
    
    
    54,546
    
    
    
    52,005Passbook and club accounts
    
    
    2,584
    
    
    
    2,641Certificate of deposit accounts
    
    
    322,740
    
    
    
    317,701Total deposits
    
    $
    439,493
    
    
    $
    425,513
  9. COMMITMENTS
  (In thousands)Letters of credit
    
    $
    588Commitments to originate loans
    
    
    14,916Unused portion of home equity lines of credits
    
    
    44,333Unused portion of commercial lines of credits
    
    
    3,600Undisbursed portion of construction loans in process
    
    
    2,251Total
    
    $
    65,688
  page -15-




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10. EARNINGS PER SHARE
  For the Three Months Ended
    
    
    For the Six Months EndedMarch 31,
    
    
    March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic
    
    
    3,592,286
    
    
    
    3,730,759
    
    
    
    3,582,760
    
    
    
    3,726,061Diluted
    
    
    3,600,292
    
    
    
    3,746,480
    
    
    
    3,592,571
    
    
    
    3,743,211
  11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
  March 31,
    
    
    September 30,2009
    
    
    2008(In thousands)Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    InterestMaturing Period
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate1 to 12 months
    
    $
    21,230
    
    
    
    4.48
    %
    
    $
    35,855
    
    
    
    3.18
    %13 to 24 months
    
    
    20,000
    
    
    
    4.52
    %
    
    
    31,405
    
    
    
    4.36
    %25 to 36 months
    
    
    33,152
    
    
    
    4.40
    %
    
    
    17,739
    
    
    
    4.33
    %37 to 48 months
    
    
    49,339
    
    
    
    4.26
    %
    
    
    57,090
    
    
    
    4.48
    %49 to 60 months
    
    
    54,905
    
    
    
    4.04
    %
    
    
    39,282
    
    
    
    3.97
    %61 to 72 months
    
    
    4,360
    
    
    
    3.58
    %
    
    
    26,444
    
    
    
    4.05
    %73 to 84 months
    
    
    15,000
    
    
    
    3.89
    %
    
    
    19,683
    
    
    
    3.81
    %85 to 120 months
    
    
    120,161
    
    
    
    4.39
    %
    
    
    120,348
    
    
    
    4.25
    %Total
    
    $
    318,147
    
    
    
    4.29
    %
    
    $
    347,846
    
    
    
    4.12
    %
  12. REGULATORY CAPITAL REQUIREMENTS
    To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(In thousands)As of March 31, 2009Tier 1 Capital (to assets)
    
    $
    48,978
    
    
    
    5.98
    %
    
    $
    32,799
    
    
    
    4.00
    %
    
    $
    40,985
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    48,978
    
    
    
    11.39
    %
    
    
    17,200
    
    
    
    4.00
    %
    
    
    25,800
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    51,170
    
    
    
    11.90
    %
    
    
    34,400
    
    
    
    8.00
    %
    
    
    43,000
    
    
    
    10.00
    %As of September 30, 2008Tier 1 Capital (to assets)
    
    $
    47,191
    
    
    
    5.69
    %
    
    $
    33,167
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    47,191
    
    
    
    10.97
    %
    
    
    17,203
    
    
    
    4.00
    %
    
    
    25,804
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    49,179
    
    
    
    11.44
    %
    
    
    34,406
    
    
    
    8.00
    %
    
    
    43,007
    
    
    
    10.00
    %
  page -16-




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13. FAIR VALUES OF FINANCIAL INSTRUMENTS
          (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantMarch 31,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2009
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    1,014
    
    
    $
    1,014
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    796
    
    
    
    
    
    
    
    796
    
    
    
    $
    1,810
    
    
    $
    1,014
    
    
    $
    796
    
    
    $
    
  Fair Value Measurements UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loan
    
    $
    1,494
    
    
    $
    
    
    
    $
    
    
    
    $
    1,494
  
 
  page -17-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Critical Accounting Policies and Judgments
  Allowance for Loan Losses
 Analysis and Determination of the Allowance for Loan Losses
  Specific Allowance Required for Certain Impaired Loans
 General Valuation Allowance on Certain Identified Problem Loans
 General Valuation Allowance on the Remainder of the Loan Portfolio
  page -18-




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Other-than-Temporary Impairment of Investment Securities
  Changes in Financial Position for the Six-Month Period Ended March 31, 2009
   Comparisons of Results of Operations for the Three Month and Six Month Period Ended March 31,
2009 with the Three Month and Six Month Period Ended March 31, 2008
 Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
   page -19-




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Income Taxes
  Liquidity and Capital Recourses
     
 Item 3 Quantitative and Qualitative Disclosures About Market Risk
   page -20-




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##### Table of Contents



1 Year
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5or less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalInterest-earning assets:Mortgage loans
    
    $
    60,474
    
    
    $
    56,793
    
    
    $
    45,177
    
    
    $
    179,083
    
    
    $
    341,527Commercial loans
    
    
    20,444
    
    
    
    5,609
    
    
    
    10,081
    
    
    
    13,840
    
    
    
    49,974Mortgage-backed securities
    
    
    63,960
    
    
    
    65,897
    
    
    
    32,288
    
    
    
    31,034
    
    
    
    193,179Consumer and other loans
    
    
    50,124
    
    
    
    21,712
    
    
    
    10,173
    
    
    
    15,377
    
    
    
    97,386Investment securities and other investments
    
    
    84,294
    
    
    
    14,254
    
    
    
    4,020
    
    
    
    3,497
    
    
    
    106,065Total interest-earning assets
    
    
    279,296
    
    
    
    164,265
    
    
    
    101,739
    
    
    
    242,831
    
    
    
    788,131Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,584
    
    
    
    2,584NOW and checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47,702
    
    
    
    47,702Consumer Money Market Deposit accounts
    
    
    12,206
    
    
    
    
    
    
    
    
    
    
    
    33,506
    
    
    
    45,712Business Money Market Deposit accounts
    
    
    6,626
    
    
    
    
    
    
    
    
    
    
    
    2,208
    
    
    
    8,834Certificate accounts
    
    
    214,921
    
    
    
    71,366
    
    
    
    36,453
    
    
    
    
    
    
    
    322,740Borrowed money
    
    
    27,749
    
    
    
    63,171
    
    
    
    93,369
    
    
    
    133,858
    
    
    
    318,147Total interest-bearing liabilities
    
    
    261,502
    
    
    
    134,537
    
    
    
    129,822
    
    
    
    219,858
    
    
    
    745,719Repricing GAP during the period
    
    $
    17,794
    
    
    $
    29,728
    
    
    $
    (28,083
    )
    
    $
    22,973
    
    
    $
    42,412Cumulative GAP
    
    $
    17,794
    
    
    $
    47,522
    
    
    $
    19,439
    
    
    $
    42,412Ratio of GAP during the period to total assets
    
    
    2.19
    %
    
    
    3.65
    %
    
    
    -3.45
    %
    
    
    2.82
    %Ratio of cumulative GAP to total assets
    
    
    2.19
    %
    
    
    5.84
    %
    
    
    2.39
    %
    
    
    5.21
    %
  page -21-




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Item 4. Controls and Procedures
    page -22-




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##### Table of Contents



Part II OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other information.
  
 Item 6. Exhibits and Reports on Form 8-K
 No.31.1
    
    
    Certification of Chief Executive Officer31.2
    
    
    Certification of Chief Financial Officer32.0
    
    
    Section 1350 Certification of Chief Executive Officer and Chief
Financial Officer
  page -23-




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##### Table of Contents



Signatures
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDate: May 14, 2009
    By:
    /s/ Ronald B. GeibRonald B. GeibChief Executive OfficerDate: May 14, 2009
    By:
    /s/ Brendan J. McGillBrendan J. McGillSenior Vice President
Treasurer and 
Chief Financial Officer  page -24-




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##### Table of Contents



Exhibit Index
 No.31.1
    
    
    Certification of Chief Executive Officer31.2
    
    
    Certification of Chief Financial Officer32.0
    
    
    Section 1350 Certification of Chief Executive Officer and Chief
Financial Officer
  page -25-