##### 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 December 31, 2010
 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 
incorporation or organization)
    
    (I.R.S. Employer
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 Yes þ No




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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 

December 31, 2010, and September 30, 2010
    
    
    1Unaudited Consolidated Statements of Income for the 
Three
Months Ended December 31, 2010 and 2009
    
    
    2Unaudited Consolidated Statements of Comprehensive Income
for the 
Three Months Ended December 31, 2010 and 2009
    
    
    3Unaudited Consolidated Statements of Stockholders Equity
for the 
Three Months Ended December 31, 2010 and 2009
    
    
    4Unaudited Consolidated Statements of Cash Flows for the 
Three Months
Ended December 31, 2010 and 2009
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6 - 18Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    19 - 21Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    21 - 22Item 4. Controls and Procedures
    
    
    23Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    24Item 1A. Risk Factors
    
    
    24Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3. Defaults upon Senior Securities
    
    
    24Item 4. (Removed and Reserved)
    
    
    24Item 5. Other Information
    
    
    24Item 6. Exhibits
    
    
    24Signatures
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.0




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Financial Condition
 December 31,
    
    
    September 30,(In thousands, except share data)
    
    2010
    
    
    2010AssetsCash and amounts due from depository institutions
    
    $
    4,080
    
    
    $
    4,052Interest bearing deposits
    
    
    21,382
    
    
    
    16,138Total cash and cash equivalents
    
    
    25,462
    
    
    
    20,190Investments and mortgage-backed securities:Available for sale (amortized cost  December 31, $3,241; September 30, $21,401)
    
    
    3,358
    
    
    
    21,413Held to maturity (fair value  December 31, $278,922; September 30, $264,448)
    
    
    274,642
    
    
    
    256,088Loans receivable (net of allowance for loan
losses  December 31, $2,639; September 30, $2,504)
    
    
    504,787
    
    
    
    510,093Accrued interest receivable
    
    
    3,029
    
    
    
    3,210Federal Home Loan Bank stock  at cost
    
    
    15,291
    
    
    
    16,096Foreclosed real estate
    
    
    261
    
    
    
    186Office properties and equipment, net
    
    
    12,152
    
    
    
    12,158Prepaid expenses and other assets
    
    
    17,699
    
    
    
    17,706TOTAL ASSETS
    
    $
    856,681
    
    
    $
    857,140Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    531,647
    
    
    $
    528,100Long-term debt
    
    
    265,347
    
    
    
    272,047Accrued interest payable
    
    
    1,380
    
    
    
    1,407Advances from borrowers for taxes and insurance
    
    
    3,349
    
    
    
    1,247Accounts payable and accrued expenses
    
    
    754
    
    
    
    988Total liabilities
    
    
    802,477
    
    
    
    803,789Commitments and contingenciesStockholders equity:Preferred Stock: $.01 par value;
7,500,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock: $.01 par value; 15,000,000 shares authorized;
3,921,177 shares issued; outstanding December 31, 2010 3,704,940 shares
September 30, 2010 3,687,409 shares
    
    
    39
    
    
    
    39Additional paid-in capital
    
    
    8,154
    
    
    
    8,126Treasury stock, at cost (December 31, 2010, 216,237 shares; September 30, 2010, 233,768 shares)
    
    
    (3,143
    )
    
    
    (3,383
    )Retained earnings  partially restricted
    
    
    49,077
    
    
    
    48,562Accumulated other comprehensive income
    
    
    77
    
    
    
    7Total stockholders equity
    
    
    54,204
    
    
    
    53,351TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    856,681
    
    
    $
    857,140
 See notes to unaudited consolidated financial statements.
  page -1-




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Income
 For the Three Months EndedDecember 30,(In thousands, except per share data)
    
    2010
    
    
    2009Interest Income:Interest on mortgage loans
    
    $
    4,804
    
    
    $
    5,084Interest on commercial loans
    
    
    1,236
    
    
    
    938Interest on mortgage-backed securities
    
    
    1,405
    
    
    
    1,905Interest on consumer and other loans
    
    
    1,052
    
    
    
    1,137Interest on other taxable investments
    
    
    731
    
    
    
    909Interest on tax-exempt investments
    
    
    201
    
    
    
    282Dividends on investment securities
    
    
    1
    
    
    
    1Total interest income
    
    
    9,430
    
    
    
    10,256Interest Expense:Interest on deposits
    
    
    2,018
    
    
    
    2,535Interest on borrowings
    
    
    2,957
    
    
    
    3,334Total interest expense
    
    
    4,975
    
    
    
    5,869Net Interest Income
    
    
    4,455
    
    
    
    4,387Provision for loan losses
    
    
    150
    
    
    
    150Net Interest Income after Provision for Loan Losses
    
    
    4,305
    
    
    
    4,237Other Income:Customer service fees
    
    
    138
    
    
    
    161Income on bank-owned life insurance
    
    
    123
    
    
    
    122Other income
    
    
    240
    
    
    
    219Total other income
    
    
    501
    
    
    
    502Other Expenses:Salaries and employee benefits
    
    
    1,729
    
    
    
    1,669Occupancy and equipment
    
    
    346
    
    
    
    294Deposit insurance premiums
    
    
    226
    
    
    
    227Data processing
    
    
    167
    
    
    
    152Other
    
    
    693
    
    
    
    728Total other expenses
    
    
    3,161
    
    
    
    3,070Income before Income Taxes
    
    
    1,645
    
    
    
    1,669Income tax expense
    
    
    429
    
    
    
    455Net Income
    
    $
    1,216
    
    
    $
    1,214Basic Earnings Per Share
    
    $
    0.33
    
    
    $
    0.33Diluted Earnings Per Share
    
    $
    0.33
    
    
    $
    0.33Dividends Per Share
    
    $
    0.19
    
    
    $
    0.19
 See notes to unaudited consolidated financial statements.
  page -2-




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Comprehensive Income
 Three Months EndedDecember 31,(In thousands)
    
    2010
    
    
    2009Net Income
    
    $
    1,216
    
    
    $
    1,214Other Comprehensive IncomeUnrealized (loss) gain on securities available for sale, net of tax (benefit)
expense 2010, $35; 2009, $1 and reclassifications
    
    
    70
    (1)
    
    
    1
    (1)Total Comprehensive Income
    
    $
    1,286
    
    
    $
    1,2152010
    
    
    2009(1) Disclosure of reclassification amount, net of tax for the three months ended:Net unrealized (loss) gain arising during the three months ended
    
    $
    105
    
    
    $
    2Reclassification adjustment for net losses (gains) included in net income
    
    
    
    
    
    
    105
    
    
    
    2Tax benefit (expense)
    
    
    (35
    )
    
    
    (1
    )Net unrealized (loss) gain on securities available for sale
    
    $
    70
    
    
    $
    1
 See notes to unaudited consolidated financial statements.
  page -3-




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Harleysville Savings Financial Corporation


Unaudited Consolidated Statements 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, 2010
    
    
    3,687,409
    
    
    $
    39
    
    
    $
    8,126
    
    
    $
    48,562
    
    
    $
    7
    
    
    $
    (3,383
    )
    
    $
    53,351Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,216
    
    
    
    
    
    
    
    
    
    
    
    1,216Dividends  $.19 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (701
    )
    
    
    
    
    
    
    
    
    
    
    (701
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    47Treasury stock delivered under reinvestment plan
    
    
    9,913
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    136
    
    
    
    149Employee options exercised
    
    
    7,618
    
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    104
    
    
    
    72Change in unrealized holding gain on
available-for-sale securities, net of
reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    70Balance at December 31, 2010
    
    
    3,704,940
    
    
    $
    39
    
    
    $
    8,154
    
    
    $
    49,077
    
    
    $
    77
    
    
    $
    (3,143
    )
    
    $
    54,204
 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, 2009
    
    
    3,627,696
    
    
    $
    39
    
    
    $
    8,002
    
    
    $
    46,329
    
    
    $
    (29
    )
    
    $
    (4,202
    )
    
    $
    50,139Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,214
    
    
    
    
    
    
    
    
    
    
    
    1,214Dividends  $.19 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (689
    )
    
    
    
    
    
    
    
    
    
    
    (689
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35Treasury stock delivered under reinvestment plan
    
    
    10,509
    
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    144
    
    
    
    139Employee options exercised
    
    
    7,083
    
    
    
    
    
    
    
    (33
    )
    
    
    
    
    
    
    
    
    
    
    97
    
    
    
    64Change in unrealized holding loss
on available-for-sale securities, net of
reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Balance at December 31, 2009
    
    
    3,645,288
    
    
    $
    39
    
    
    $
    7,999
    
    
    $
    46,854
    
    
    $
    (27
    )
    
    $
    (3,961
    )
    
    $
    50,904
 See notes to unaudited consolidated financial statements.
  page -4-




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Cash Flows
 Three Months Ended December 31,(In thousands)
    
    2010
    
    
    2009Operating Activities:Net Income
    
    $
    1,216
    
    
    $
    1,214Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    153
    
    
    
    124Provision for loan losses
    
    
    150
    
    
    
    150Loss on sale of foreclosed real estate
    
    
    
    
    
    
    159Amortization of deferred loan fees
    
    
    73
    
    
    
    17Net (accretion) amortization of premiums and discounts
    
    
    (27
    )
    
    
    32Increase in cash surrender value of bank owned life insurance
    
    
    (123
    )
    
    
    (122
    )Compensation charge on stock options
    
    
    47
    
    
    
    35Changes in assets and liabilities which provided (used) cash:Decrease in accounts payable and accrued expenses
    
    
    (234
    )
    
    
    (626
    )Decrease (increase) in prepaid expenses and other assets
    
    
    130
    
    
    
    (2,398
    )Increase (decrease) in accrued interest receivable
    
    
    181
    
    
    
    (22
    )Decrease in accrued interest payable
    
    
    (27
    )
    
    
    (48
    )Net cash provided by (used in) operating activities
    
    
    1,539
    
    
    
    (1,485
    )Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    (8,958
    )
    
    
    (1,571
    )Purchase of investment securities held to maturity
    
    
    (34,000
    )
    
    
    (19,000
    )Purchase of investment securities available-for-sale
    
    
    (17,220
    )
    
    
    (17,838
    )Redemption of FHLB stock
    
    
    805
    
    
    
    Proceeds from the sale of investment securities available-for-sale
    
    
    35,345
    
    
    
    16,389Proceeds from maturities of investment securities held to maturity
    
    
    11,000
    
    
    
    17,075Proceeds from sale of foreclosed real estate
    
    
    
    
    
    
    588Principal collected on mortgage-backed securities held to maturity
    
    
    13,431
    
    
    
    10,432Principal collected on loans receivable
    
    
    34,477
    
    
    
    29,361Loans originated or acquired
    
    
    (29,469
    )
    
    
    (34,858
    )Purchases of premises and equipment
    
    
    (147
    )
    
    
    (961
    )Net cash provided by (used in) investing activities
    
    
    5,264
    
    
    
    (383
    )Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    4,367
    
    
    
    21,790Net decrease in certificates of deposit
    
    
    (820
    )
    
    
    (2,050
    )Cash dividends
    
    
    (552
    )
    
    
    (549
    )Repayment of long-term debt
    
    
    (6,700
    )
    
    
    (11,905
    )Treasury stock delivered under employee stock plans
    
    
    72
    
    
    
    64Net increase in advances from borrowers for taxes and insurance
    
    
    2,102
    
    
    
    1,961Net cash (used in) provided by financing activities
    
    
    (1,531
    )
    
    
    9,311INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    5,272
    
    
    
    7,443CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    20,190
    
    
    
    9,442CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    25,462
    
    
    $
    16,885Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    5,002
    
    
    $
    5,917Income taxes
    
    
    490
    
    
    
    450Non  cash transfer of loans to real estate owned
    
    
    75
    
    
    
    
 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
  Reclassifications
  Subsequent Events
   page -6-




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Recent Accounting Pronouncements Transfers and Servicing (Topic 860)  Accounting for Transfers of Financial Assets. Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140
 Consolidations (Topic 810)  Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities Amendments to FASB Interpretation No.
46(R)
 Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements.
 
    
    A reporting entity to disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for the
transfers; and
 
    
    In the reconciliation for fair value measurements using significant unobservable
inputs, a reporting entity should present separately information about purchases, sales,
issuances, and settlements.
  page -7-




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
    
    For purposes of reporting fair value measurement for each class of assets and
liabilities, a reporting entity needs to use judgment in determining the appropriate
classes of assets and liabilities; and
 
    
    A reporting entity should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair value measurements.
  ASU 2010-18, Receivables (Topic 310):
  Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses,
   page -8-




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ending beginning
 ASU 2011  01 Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in
Update No. 2010-20.
  page -9-




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2. INVESTMENT AND MORTGAGE-BACKED SECURITIES
  Available for sale securities:
 December 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    ValueEquity securities
    
    $
    355
    
    
    $
    82
    
    
    $
    (18
    )
    
    $
    419Collateralized mortgage obligations
    
    
    785
    
    
    
    53
    
    
    
    
    
    
    
    838U.S. Government money market funds
    
    
    2,101
    
    
    
    
    
    
    
    
    
    
    
    2,101Total Available for Sale Securities
    
    $
    3,241
    
    
    $
    135
    
    
    $
    (18
    )
    
    $
    3,358
 September 30, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    ValueEquity securities
    
    $
    355
    
    
    $
    42
    
    
    $
    (54
    )
    
    $
    343Collateralized mortgage obligations
    
    
    785
    
    
    
    24
    
    
    
    
    
    
    
    809U.S. Government money market funds
    
    
    20,261
    
    
    
    
    
    
    
    
    
    
    
    20,261Total Available for Sale Securities
    
    $
    21,401
    
    
    $
    66
    
    
    $
    (54
    )
    
    $
    21,413
 Held to maturity securities:
 December 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    ValueMortgage-backed securities- U.S. Government
Sponsored Enterpirses (GSES)
    
    $
    99,763
    
    
    $
    6,076
    
    
    $
    
    
    
    $
    105,839Collateralized mortgage obligations
    
    
    26,587
    
    
    
    210
    
    
    
    (95
    )
    
    
    26,702Municipal Bonds
    
    
    16,486
    
    
    
    455
    
    
    
    (187
    )
    
    
    16,754U.S. Government Agencies
    
    
    131,806
    
    
    
    326
    
    
    
    (2,505
    )
    
    
    129,627Total Investment and Mortgage-backed Securities
    
    $
    274,642
    
    
    $
    7,067
    
    
    $
    (2,787
    )
    
    $
    278,922
 September 30, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    ValueMortgage-backed securities- U.S. Government
Sponsored Enterpirses (GSES)
    
    $
    110,732
    
    
    $
    6,755
    
    
    $
    
    
    
    $
    117,487Collateralized mortgage obligations
    
    
    20,087
    
    
    
    193
    
    
    
    (37
    )
    
    
    20,243Municipal Bonds
    
    
    16,462
    
    
    
    773
    
    
    
    (47
    )
    
    
    17,188U.S. Government Agencies
    
    
    108,807
    
    
    
    768
    
    
    
    (45
    )
    
    
    109,530Total Investment and Mortgage-backed Securities
    
    $
    256,088
    
    
    $
    8,489
    
    
    $
    (129
    )
    
    $
    264,448
  page -10-




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Less than 12 months
    
    
    12 months of longer
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesCollateralized mortgage obligations
    
    $
    5,873
    
    
    $
    (76
    )
    
    $
    1,421
    
    
    $
    (19
    )
    
    $
    7,294
    
    
    $
    (95
    )Municipal bonds
    
    
    1,807
    
    
    
    (49
    )
    
    
    1,400
    
    
    
    (138
    )
    
    
    3,207
    
    
    
    (187
    )U.S. Government Agencies
    
    
    83,881
    
    
    
    (2,505
    )
    
    
    
    
    
    
    
    
    
    
    83,881
    
    
    
    (2,505
    )Subtotal, debt securities
    
    
    91,561
    
    
    
    (2,630
    )
    
    
    2,821
    
    
    
    (157
    )
    
    
    94,382
    
    
    
    (2,787
    )Equity securities
    
    
    
    
    
    
    
    
    
    
    193
    
    
    
    (18
    )
    
    
    193
    
    
    
    (18
    )Total temporarily impaired securities
    
    $
    91,561
    
    
    $
    (2,630
    )
    
    $
    3,014
    
    
    $
    (175
    )
    
    $
    94,575
    
    
    $
    (2,805
    )
    Less than 12 months
    
    
    12 months of longer
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedFair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesCollateralized mortgage obligations
    
    $
    8,262
    
    
    $
    (4
    )
    
    $
    1,530
    
    
    $
    (33
    )
    
    $
    9,792
    
    
    $
    (37
    )Municipal bonds
    
    
    378
    
    
    
    
    
    
    
    1,494
    
    
    
    (47
    )
    
    
    1,872
    
    
    
    (47
    )U.S. Government Agencies
    
    
    6,955
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    6,955
    
    
    
    (45
    )Subtotal, debt securities
    
    
    15,595
    
    
    
    (49
    )
    
    
    3,024
    
    
    
    (80
    )
    
    
    18,619
    
    
    
    (129
    )Equity securities
    
    
    55
    
    
    
    (3
    )
    
    
    160
    
    
    
    (51
    )
    
    
    215
    
    
    
    (54
    )Total temporarily impaired securities
    
    $
    15,650
    
    
    $
    (52
    )
    
    $
    3,184
    
    
    $
    (131
    )
    
    $
    18,834
    
    
    $
    (183
    )
  December 31, 2010Amortized
    
    
    Estimated(In Thousands)
    
    Cost
    
    
    Fair  ValueAvailable for sale:Due in one year or less
    
    $
    
    
    
    $
    Due after one year through five years
    
    
    
    
    
    
    Due after five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    785
    
    
    
    838Total
    
    $
    785
    
    
    $
    838Held to maturity:Due in one year or less
    
    $
    17,101
    
    
    $
    17,158Due after one year through five years
    
    
    22,196
    
    
    
    22,795Due after five years through ten years
    
    
    48,657
    
    
    
    50,143Due after ten years
    
    
    186,688
    
    
    
    188,826Total
    
    $
    274,642
    
    
    $
    278,922
   page -11-




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##### Table of Contents



3. LOANS RECEIVABLE
  (In thousands)December 31, 2010
    
    
    September 30, 2010Residential Mortgages
    
    $
    330,840
    
    
    $
    337,888Construction
    
    
    5,420
    
    
    
    4,752Lot Loans
    
    
    2,058
    
    
    
    1,986Home Equity
    
    
    88,927
    
    
    
    90,511Commercial Mortgages
    
    
    78,622
    
    
    
    75,450Commercial Business Loans
    
    
    6,598
    
    
    
    4,327Consumer Non-Real Estate
    
    
    1,200
    
    
    
    1,980Total
    
    
    513,665
    
    
    
    516,894Undisbursed portion of loans in process
    
    
    (5,321
    )
    
    
    (3,426
    )Deferred loan fees
    
    
    (918
    )
    
    
    (871
    )Allowance for loan losses
    
    
    (2,639
    )
    
    
    (2,504
    )Loans Receivable  net
    
    $
    504,787
    
    
    $
    510,093
   Pass
    
    
    Special Mention
    
    
    Substandard
    
    
    Doubtful
    
    
    TotalResidential Mortgages
    
    $
    328,225
    
    
    $
    
    
    
    $
    1,974
    
    
    $
    641
    
    
    $
    330,840Construction
    
    
    5,420
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,420Lot Loans
    
    
    2,058
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,058Home Equity
    
    
    88,759
    
    
    
    
    
    
    
    103
    
    
    
    65
    
    
    
    88,927Commercial Mortgages
    
    
    76,096
    
    
    
    2,214
    
    
    
    
    
    
    
    312
    
    
    
    78,622Commercial Business Loans
    
    
    6,498
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    6,598Consumer Non-Real Estate
    
    
    1,194
    
    
    
    
    
    
    
    
    
    
    
    6
    
    
    
    1,200Total
    
    $
    508,250
    
    
    $
    2,314
    
    
    $
    2,077
    
    
    $
    1,024
    
    
    $
    513,665
  Recorded
    
    
    Unpaid Principal
    
    
    
    
    
    
    Average Recorded
    
    
    Interest IncomeInvestment
    
    
    Balance
    
    
    Related Allowance
    
    
    Investment
    
    
    RecognizedWith no related allowance recorded:Residential Mortgages
    
    $
    1,047
    
    
    $
    1,047
    
    
    $
    
    
    
    $
    1,050
    
    
    $
    10Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lot Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home Equity
    
    
    65
    
    
    
    65
    
    
    
    
    
    
    
    65
    
    
    
    Commercial Mortgages
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial Business Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer Non-Real Estate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    With an allowance recorded:Residential Mortgages
    
    $
    1,568
    
    
    $
    1,568
    
    
    $
    (269
    )
    
    $
    1,568
    
    
    $
    2Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lot Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home Equity
    
    
    103
    
    
    
    103
    
    
    
    (103
    )
    
    
    104
    
    
    
    Commercial Mortgages
    
    
    312
    
    
    
    312
    
    
    
    (127
    )
    
    
    312
    
    
    
    Commercial Business Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer Non-Real Estate
    
    
    6
    
    
    
    6
    
    
    
    (6
    )
    
    
    6
    
    
    
    Total:Residential Mortgages
    
    $
    2,615
    
    
    $
    2,615
    
    
    $
    (269
    )
    
    $
    2,618
    
    
    $
    12Construction
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Lot Loans
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Home Equity
    
    $
    168
    
    
    $
    168
    
    
    $
    (103
    )
    
    $
    169
    
    
    $
    Commercial Mortgages
    
    $
    312
    
    
    $
    312
    
    
    $
    (127
    )
    
    $
    312
    
    
    $
    Commercial Business Loans
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Consumer Non-Real Estate
    
    $
    6
    
    
    $
    6
    
    
    $
    (6
    )
    
    $
    6
    
    
    $
    
  page -12-




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page -13-




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page -14-




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LoansReceivable >30-89 Days
    
    
    Greater than
    
    
    
    
    
    
    
    
    
    
    Total Loans
    
    
    90 Days andPast Due
    
    
    90 Days
    
    
    Total Past Due
    
    
    Current
    
    
    Receivables
    
    
    AccruingResidential Mortgages
    
    $
    2,691
    
    
    $
    2,447
    
    
    $
    5,138
    
    
    $
    325,702
    
    
    $
    330,840
    
    
    $
    380Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,420
    
    
    
    5,420
    
    
    
    Lot Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,058
    
    
    
    2,058
    
    
    
    Home Equity
    
    
    57
    
    
    
    12
    
    
    
    69
    
    
    
    88,858
    
    
    
    88,927
    
    
    
    12Commercial Mortgages
    
    
    
    
    
    
    312
    
    
    
    312
    
    
    
    78,310
    
    
    
    78,622
    
    
    
    Commercial Business Loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,598
    
    
    
    6,598
    
    
    
    Consumer Non-Real Estate
    
    
    31
    
    
    
    6
    
    
    
    37
    
    
    
    1,163
    
    
    
    1,200
    
    
    
    Total
    
    $
    2,779
    
    
    $
    2,777
    
    
    $
    5,556
    
    
    $
    508,109
    
    
    $
    513,665
    
    
    $
    392
  2010Residential Mortgages
    
    $
    2,392Construction
    
    
    Lot Loans
    
    
    Home Equity
    
    
    Commercial Mortgages
    
    
    312Commercial Business Loans
    
    
    Consumer Non-Real Estate
    
    
    6Total
    
    $
    2,710
 4. Federal Home Loan Bank Stock
    5. DEPOSITS
  (In thousands)December 31, 2010
    
    
    September 30, 2010Non-interest bearing checking accounts
    
    $
    17,859
    
    
    $
    17,015NOW accounts
    
    
    27,411
    
    
    
    21,320Interest bearing checking accounts
    
    
    35,156
    
    
    
    32,577Money market demand accounts
    
    
    130,899
    
    
    
    136,079Passbook and club accounts
    
    
    3,772
    
    
    
    3,739Certificate of deposit accounts
    
    
    316,550
    
    
    
    317,370Total deposits
    
    $
    531,647
    
    
    $
    528,100
  6. COMMITMENTS
  (In thousands)Letters of credit
    
    $
    336Commitments to originate loans
    
    
    12,800Unused portion of home equity lines of credits
    
    
    52,377Unused portion of commercial lines of credits
    
    
    7,597Undisbursed portion of construction loans in process
    
    
    2,950Total
    
    $
    76,060
   page -15-




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##### Table of Contents



7. EARNINGS PER SHARE
  For the Three Months EndedDecember 31,2010
    
    
    2009Basic
    
    
    3,693,373
    
    
    
    3,633,347Diluted
    
    
    3,731,203
    
    
    
    3,646,284
  8. LONG-TERM DEBT
  December 31,
    
    
    September 30,2010
    
    
    2010(In thousands)Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    InterestMaturing Period
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate1 to 12 months
    
    $
    21,007
    
    
    
    4.30
    %
    
    $
    15,923
    
    
    
    4.37
    %13 to 24 months
    
    
    43,772
    
    
    
    4.57
    %
    
    
    54,440
    
    
    
    4.50
    %25 to 36 months
    
    
    38,968
    
    
    
    3.92
    %
    
    
    35,022
    
    
    
    4.03
    %37 to 48 months
    
    
    23,941
    
    
    
    4.31
    %
    
    
    28,729
    
    
    
    4.10
    %49 to 60 months
    
    
    18,183
    
    
    
    3.83
    %
    
    
    18,356
    
    
    
    3.83
    %61 to 72 months
    
    
    10,000
    
    
    
    4.71
    %
    
    
    10,000
    
    
    
    4.71
    %73 to 84 months
    
    
    50,000
    
    
    
    4.43
    %
    
    
    45,000
    
    
    
    4.52
    %85 to 120 months
    
    
    59,476
    
    
    
    4.44
    %
    
    
    64,577
    
    
    
    4.38
    %Total
    
    $
    265,347
    
    
    
    4.33
    %
    
    $
    272,047
    
    
    
    4.33
    %
  9. REGULATORY CAPITAL REQUIREMENTS
     To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(In thousands)As of December 31, 2010Tier 1 Capital (to assets)
    
    $
    54,089
    
    
    
    6.33
    %
    
    $
    34,201
    
    
    
    4.00
    %
    
    $
    42,751
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    54,089
    
    
    
    11.58
    %
    
    
    18,678
    
    
    
    4.00
    %
    
    
    28,017
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    56,757
    
    
    
    12.15
    %
    
    
    37,356
    
    
    
    8.00
    %
    
    
    46,695
    
    
    
    10.00
    %As of September 30, 2010Tier 1 Capital (to assets)
    
    $
    53,330
    
    
    
    6.19
    %
    
    $
    34,440
    
    
    
    4.00
    %
    
    $
    43,050
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    53,330
    
    
    
    11.35
    %
    
    
    18,799
    
    
    
    4.00
    %
    
    
    28,199
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    55,834
    
    
    
    11.88
    %
    
    
    37,599
    
    
    
    8.00
    %
    
    
    46,999
    
    
    
    10.00
    %
  page -16-




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##### Table of Contents



10. FAIR VALUES MEASUREMENTS AND DISCLOSURES
         (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantDecember 31,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2010
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    2,520
    
    
    $
    2,520
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    838
    
    
    
    
    
    
    
    838
    
    
    
    $
    3,358
    
    
    $
    2,520
    
    
    $
    838
    
    
    $
    (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantSeptember 30,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2010
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    20,604
    
    
    $
    20,604
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    809
    
    
    
    
    
    
    
    809
    
    
    
    $
    21,413
    
    
    $
    20,604
    
    
    $
    809
    
    
    $
    
   Fair Value Measurements UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    1,484
    
    
    $
    
    
    
    $
    
    
    
    $
    1,484Fair Value Measurements UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableSeptember 30,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2010
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    186
    
    
    $
    
    
    
    $
    
    
    
    $
    186
  Cash and Cash Equivalents (Carried at Cost)
  Securities
   page -17-




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##### Table of Contents



Loans Receivable (Carried at Cost)
   Federal Home Loan Bank Stock (Carried at Cost)
  Accrued Interest Receivable and Payable (Carried at Cost)
  Deposit Liabilities (Carried at Cost)
  Borrowings (Carried at Cost)
  Off-Balance Sheet Financial Instruments (Disclosed at Cost)
    December 31,
    
    
    September 30,2010
    
    
    2010Carrying
    
    
    Estimated Fair
    
    
    Carrying
    
    
    Estimated Fair(In Thousands)
    
    Amount
    
    
    Value
    
    
    Amount
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    25,462
    
    
    $
    25,462
    
    
    $
    20,190
    
    
    $
    20,190Securitys held to maturity
    
    
    274,642
    
    
    
    278,922
    
    
    
    256,088
    
    
    
    264,448Securities available-for-sale
    
    
    3,358
    
    
    
    3,358
    
    
    
    21,413
    
    
    
    21,413Loans receivable   net
    
    
    504,787
    
    
    
    516,755
    
    
    
    510,093
    
    
    
    530,294Federal Home Loan Bank Stock
    
    
    15,291
    
    
    
    15,291
    
    
    
    16,096
    
    
    
    16,096Accrued interest receivable
    
    
    3,029
    
    
    
    3,029
    
    
    
    3,210
    
    
    
    3,210Liabilities:Checking, Passbook, Club and NOW
accounts
    
    
    84,198
    
    
    
    84,198
    
    
    
    74,651
    
    
    
    74,651Money Market Demand accounts
    
    
    130,899
    
    
    
    130,899
    
    
    
    136,079
    
    
    
    136,079Certificate of deposit accounts
    
    
    316,550
    
    
    
    326,216
    
    
    
    317,370
    
    
    
    325,881Borrowings
    
    
    265,347
    
    
    
    286,817
    
    
    
    272,047
    
    
    
    291,857Accrued interest payable
    
    
    1,380
    
    
    
    1,380
    
    
    
    1,407
    
    
    
    1,407Off balance sheet financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Limitations
    page -18-




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##### Table of Contents



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 -19-




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##### Table of Contents



Other-than-Temporary Impairment of Investment Securities
  Changes in Financial Position for the Three-Month Period Ended December 31, 2010
   Comparisons of Results of Operations for the Three Month Ended December 31, 2010 with the Three
Month Period Ended December 31, 2009
 Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
    page -20-




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##### Table of Contents



Income Taxes
   Liquidity and Capital Recourses
     
 Item 3 Quantitative and Qualitative Disclosures About Market Risk
   page -21-




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##### Table of Contents



1 Year
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5(In thousands)
    
    or less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalInterest-earning assets:Mortgage loans
    
    $
    47,925
    
    
    $
    55,788
    
    
    $
    44,651
    
    
    $
    184,534
    
    
    $
    332,898Commercial loans
    
    
    36,241
    
    
    
    9,309
    
    
    
    25,279
    
    
    
    14,391
    
    
    
    85,220Mortgage-backed securities
    
    
    53,209
    
    
    
    37,728
    
    
    
    18,488
    
    
    
    17,763
    
    
    
    127,188Consumer and other loans
    
    
    67,205
    
    
    
    12,575
    
    
    
    5,700
    
    
    
    10,067
    
    
    
    95,547Investment securities and other investments
    
    
    71,374
    
    
    
    32,971
    
    
    
    28,405
    
    
    
    54,735
    
    
    
    187,485Total interest-earning assets
    
    
    275,954
    
    
    
    148,371
    
    
    
    122,523
    
    
    
    281,490
    
    
    
    828,338Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,772
    
    
    
    3,772NOW and checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,567
    
    
    
    62,567Consumer Money Market Deposit accounts
    
    
    51,569
    
    
    
    
    
    
    
    
    
    
    
    58,296
    
    
    
    109,865Business Money Market Deposit accounts
    
    
    15,775
    
    
    
    
    
    
    
    
    
    
    
    5,259
    
    
    
    21,034Certificate accounts
    
    
    171,671
    
    
    
    86,985
    
    
    
    57,894
    
    
    
    
    
    
    
    316,550Borrowed money
    
    
    26,671
    
    
    
    84,218
    
    
    
    37,235
    
    
    
    117,223
    
    
    
    265,347Total interest-bearing liabilities
    
    
    265,686
    
    
    
    171,203
    
    
    
    95,129
    
    
    
    247,117
    
    
    
    779,135Repricing GAP during the period
    
    $
    10,268
    
    
    $
    (22,832
    )
    
    $
    27,394
    
    
    $
    34,373
    
    
    $
    49,203Cumulative GAP
    
    $
    10,268
    
    
    $
    (12,564
    )
    
    $
    14,830
    
    
    $
    49,203Ratio of GAP during the period to total assets
    
    
    1.20
    %
    
    
    -2.67
    %
    
    
    3.20
    %
    
    
    4.01
    %Ratio of cumulative GAP to total assets
    
    
    1.20
    %
    
    
    -1.47
    %
    
    
    1,73
    %
    
    
    5.74
    %
  page -22-




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##### Table of Contents



Item 4.
    
    Controls and Procedures
    page -23-




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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. (Removed and Reserved)
 
 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 Operating and
Finance Officer32.0
    
    
    Section 1350 Certification of Chief
Executive Officer and Chief Operating
and Finance Officer
  page -24-




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##### Table of Contents



Signatures
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDate: February 11, 2011
    By:
    /s/ Ronald B. GeibRonald B. GeibChief Executive OfficerDate: February 11, 2011
    By:
    /s/ Brendan J. McGillBrendan J. McGillExecutive Vice President

Chief Operating and Financial Officer  page -25-