##### 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, 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
 Yes o No 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 December 31, 2009, and September 30, 2009
    
    
    1Unaudited Consolidated Statements of Income for the Three Months Ended December 31, 2009 and 2008
    
    
    2Unaudited Consolidated Statements of Comprehensive Income for the Three Months Ended December 31, 2009 and 2008
    
    
    3Unaudited Consolidated Statements of Stockholders Equity for the Three Months Ended December 31, 2009 and 2008
    
    
    4Unaudited Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2009 and 2008
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6 - 16Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    17 - 19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    19 - 20Item 4. Controls and Procedures
    
    
    21Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other information
    
    
    23Signatures
    
    
    24Exhibit 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)
    
    2009
    
    
    2009AssetsCash and amounts due from depository institutions
    
    $
    2,640
    
    
    $
    3,222Interest bearing deposits
    
    
    14,245
    
    
    
    6,220Total cash and cash equivalents
    
    
    16,885
    
    
    
    9,442Investment securities held to maturity (fair value 
December 31, $106,425; September 30, $106,174)
    
    
    107,145
    
    
    
    105,194Investment securities available-for-sale at fair value
    
    
    8,182
    
    
    
    6,728Mortgage-backed securities held to maturity (fair value 
December 31, $158,967; September 30, $169,210)
    
    
    153,511
    
    
    
    162,430Mortgage-backed securities available-for-sale at fair value
    
    
    782
    
    
    
    785Loans receivable (net of allowance for loan losses 
December 31, $2,194; September 30, $2,094)
    
    
    503,720
    
    
    
    498,391Accrued interest receivable
    
    
    3,741
    
    
    
    3,719Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,096Foreclosed real estate
    
    
    
    
    
    
    747Office properties and equipment, net
    
    
    11,323
    
    
    
    10,486Prepaid expenses and other assets
    
    
    18,509
    
    
    
    15,989TOTAL ASSETS
    
    $
    839,894
    
    
    $
    830,007Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    486,341
    
    
    $
    466,601Long-term debt
    
    
    297,141
    
    
    
    309,046Accrued interest payable
    
    
    1,558
    
    
    
    1,606Advances from borrowers for taxes and insurance
    
    
    3,406
    
    
    
    1,445Accounts payable and accrued expenses
    
    
    544
    
    
    
    1,170Total liabilities
    
    
    788,990
    
    
    
    779,868Commitments and contingenciesStockholders 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 December 31, 2009 3,645,288 shares
September 30, 2009 3,627,696 shares
    
    
    39
    
    
    
    39Additional Paid-in capital
    
    
    7,999
    
    
    
    8,002Treasury stock, at cost (December 31, 2009, 275,889 shares;
    
    
    (3,961
    )
    
    
    (4,202
    )September 30, 2009, 293,481 shares)Retained earnings  partially restricted
    
    
    46,854
    
    
    
    46,329Accumulated other comprehensive loss
    
    
    (27
    )
    
    
    (29
    )Total stockholders equity
    
    
    50,904
    
    
    
    50,139TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    839,894
    
    
    $
    830,007
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Income
 For the Three Months EndedDecember 31,(In thousands, except per share data)
    
    2009
    
    
    2008INTEREST INCOME:Interest on mortgage loans
    
    $
    5,084
    
    
    $
    5,009Interest on commercial loans
    
    
    938
    
    
    
    710Interest on mortgage-backed securities
    
    
    1,905
    
    
    
    2,546Interest on consumer and other loans
    
    
    1,137
    
    
    
    1,307Interest on taxable investments
    
    
    909
    
    
    
    818Interest on tax-exempt investments
    
    
    282
    
    
    
    331Dividends on investment securities
    
    
    1
    
    
    
    5Total interest income
    
    
    10,256
    
    
    
    10,726Interest Expense:Interest on deposits
    
    
    2,535
    
    
    
    2,971Interest on borrowings
    
    
    3,334
    
    
    
    3,570Total interest expense
    
    
    5,869
    
    
    
    6,541Net Interest Income
    
    
    4,387
    
    
    
    4,185Provision for loan losses
    
    
    150
    
    
    
    100Net Interest Income after Provision
for Loan Losses
    
    
    4,237
    
    
    
    4,085Other Income:Customer service fees
    
    
    161
    
    
    
    178Income on bank-owned life insurance
    
    
    122
    
    
    
    122Other income
    
    
    219
    
    
    
    171Total other income
    
    
    502
    
    
    
    471Other Expenses:Salaries and employee benefits
    
    
    1,669
    
    
    
    1,615Occupancy and equipment
    
    
    294
    
    
    
    310Deposit insurance premiums
    
    
    227
    
    
    
    18Data processing
    
    
    152
    
    
    
    137Other
    
    
    728
    
    
    
    674Total other expenses
    
    
    3,070
    
    
    
    2,754Income before Income Taxes
    
    
    1,669
    
    
    
    1,802Income tax expense
    
    
    455
    
    
    
    426Net Income
    
    $
    1,214
    
    
    $
    1,376Basic Earnings Per Share
    
    $
    0.33
    
    
    $
    0.38Diluted Earnings Per Share
    
    $
    0.33
    
    
    $
    0.38Dividends Per Share
    
    $
    0.19
    
    
    $
    0.18
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Comprehensive Income
 Three Months EndedDecember 31,(In thousands)
    
    2009
    
    
    2008Net Income
    
    $
    1,214
    
    
    $
    1,376Other Comprehensive IncomeUnrealized gain (loss) on securities available for sale, net of tax expense
(benefit)  2009, $1; 2008, ($68) and reclassifications
    
    
    1
    (1)
    
    
    (132
    )(1)Total Comprehensive Income
    
    $
    1,215
    
    
    $
    1,2442009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the three months ended:Net unrealized gain (loss) arising during the three months ended
    
    $
    2
    
    
    $
    (200
    )Reclassification adjustment for net losses (gains) included in net income
    
    
    
    
    
    
    2
    
    
    
    (200
    )Tax (expense) benefit
    
    
    (1
    )
    
    
    68Net unrealized gain on securities available for sale
    
    $
    1
    
    
    $
    (132
    )
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Stockholders Equity
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    Total(In thousands, except share and
    
    Shares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders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
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    Total(In thousands, except share and
    
    Shares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,376
    
    
    
    
    
    
    
    
    
    
    
    1,376Dividends  $.18 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (642
    )
    
    
    
    
    
    
    
    
    
    
    (642
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39Treasury stock delivered under reinvestment plan
    
    
    11,110
    
    
    
    
    
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    142Employee options exercised
    
    
    1,667
    
    
    
    
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    15Change in unrealized holding loss
on available-for-sale securities, net of
reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )
    
    
    
    
    
    
    (132
    )Balance at December 31, 2008
    
    
    3,580,711
    
    
    $
    39
    
    
    $
    8,015
    
    
    $
    44,969
    
    
    $
    (173
    )
    
    $
    (4,843
    )
    
    $
    48,007
 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 EndedDecember 31,(In thousands)
    
    2009
    
    
    2008Operating Activities:Net Income
    
    $
    1,214
    
    
    $
    1,376Adjustments to reconcile net income to net cash (used in) provided by operating activities:Depreciation
    
    
    124
    
    
    
    124Provision for loan losses
    
    
    150
    
    
    
    100Loss on sale of foreclosed real estate
    
    
    159
    
    
    
    Amortization of deferred loan fees
    
    
    17
    
    
    
    11Net amortization of premiums and discounts
    
    
    32
    
    
    
    25Increase in cash surrender value of bank owned life insurance
    
    
    (122
    )
    
    
    (122
    )Compensation charge on stock options
    
    
    35
    
    
    
    39Changes in assets and liabilities which provided (used) cash:Decrease in accounts payable and accrued expenses
    
    
    (626
    )
    
    
    (1,282
    )(Increase) decrease in prepaid expenses and other assets
    
    
    (2,398
    )
    
    
    386Decrease in accrued interest receivable
    
    
    (22
    )
    
    
    (11
    )Decrease in accrued interest payable
    
    
    (48
    )
    
    
    (66
    )Net cash (used in) provided by operating activities
    
    
    (1,485
    )
    
    
    580Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    (1,571
    )
    
    
    Purchase of investment securities held to maturity
    
    
    (19,000
    )
    
    
    Purchase of investment securities available-for-sale
    
    
    (1,449
    )
    
    
    (1,418
    )Net purchase of FHLB stock
    
    
    
    
    
    
    478Proceeds from maturities of investment securities held to maturity
    
    
    17,075
    
    
    
    1,169Proceeds from sale of foreclosed real estate
    
    
    588
    
    
    
    Principal collected on mortgage-backed securities
    
    
    10,432
    
    
    
    6,737Principal collected on long-term loans
    
    
    29,361
    
    
    
    26,584Long-term loans orginated or acquired
    
    
    (34,858
    )
    
    
    (33,410
    )Purchases of premises and equipment
    
    
    (961
    )
    
    
    (56
    )Net cash (used in) provided by investing activities
    
    
    (383
    )
    
    
    84Financing Activities:Net increase in demand deposits, NOW accounts and savings accounts
    
    
    21,790
    
    
    
    2,863Net decrease in certificates of deposit
    
    
    (2,050
    )
    
    
    (8,213
    )Cash dividends
    
    
    (549
    )
    
    
    (500
    )Net increase in short-term borrowings
    
    
    
    
    
    
    8,000Proceeds from long-term debt
    
    
    
    
    
    
    4,500Repayment of long-term debt
    
    
    (11,905
    )
    
    
    (10,001
    )Treasury stock delivered under employee stock plans
    
    
    64
    
    
    
    15Net increase in advances from borrowers for taxes and insurance
    
    
    1,961
    
    
    
    2,013Net cash provided by (used in) financing activities
    
    
    9,311
    
    
    
    (1,323
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    7,443
    
    
    
    (659
    )CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,442
    
    
    
    9,374CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    16,885
    
    
    $
    8,715Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    5,917
    
    
    $
    6,607Income taxes
    
    
    450
    
    
    
    700
 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
  Form 10-K
 Use of Estimates in Preparation of Consolidated Financial Statements
  Reclassifications
  Subsequent Events
   page -6-




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New Accounting Standards
 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)
  page -7-




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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.
  
    
    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.
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2. INVESTMENT SECURITIES HELD TO MATURITY
  December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue 1 year or less
    
    $
    5,000
    
    
    $
    51
    
    
    $
    
    
    
    $
    5,051Due after 1 year through 5 years
    
    
    8,000
    
    
    
    33
    
    
    
    
    
    
    
    8,033Due after 5 years through 10 years
    
    
    7,997
    
    
    
    
    
    
    
    (153
    )
    
    
    7,844Due after 10 years through 15 years
    
    
    62,000
    
    
    
    55
    
    
    
    (1,297
    )
    
    
    60,758Due after 15 years
    
    
    2,431
    
    
    
    101
    
    
    
    
    
    
    
    2,532Tax Exempt ObligationsDue after 5 years through 10 years
    
    
    4,227
    
    
    
    159
    
    
    
    
    
    
    
    4,386Due after 10 years through 15 years
    
    
    15,098
    
    
    
    552
    
    
    
    (30
    )
    
    
    15,620Due after 15 years
    
    
    2,392
    
    
    
    
    
    
    
    (191
    )
    
    
    2,201Total Investment Securities
    
    $
    107,145
    
    
    $
    951
    
    
    $
    (1,671
    )
    
    $
    106,425
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue 1 year or less
    
    $
    5,000
    
    
    $
    98
    
    
    $
    
    
    
    $
    5,098Due after 1 year through 5 years
    
    
    8,000
    
    
    
    34
    
    
    
    
    
    
    
    8,034Due after 5 years through 10 years
    
    
    10,996
    
    
    
    4
    
    
    
    (80
    )
    
    
    10,920Due after 10 years through 15 years
    
    
    56,175
    
    
    
    299
    
    
    
    (278
    )
    
    
    56,196Due after 15 years
    
    
    2,431
    
    
    
    178
    
    
    
    
    
    
    
    2,609Tax Exempt ObligationsDue after 5 years through 10 years
    
    
    3,898
    
    
    
    170
    
    
    
    
    
    
    
    4,068Due after 10 years through 15 years
    
    
    16,303
    
    
    
    708
    
    
    
    (3
    )
    
    
    17,008Due after 15 years
    
    
    2,391
    
    
    
    
    
    
    
    (150
    )
    
    
    2,241Total Investment Securities
    
    $
    105,194
    
    
    $
    1,491
    
    
    $
    (511
    )
    
    $
    106,174
  Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesUS Government agencies
    
    $
    52,547
    
    
    $
    (1,450
    )
    
    $
    
    
    
    $
    
    
    
    $
    52,547
    
    
    $
    (1,450
    )Tax exempt obligations
    
    
    984
    
    
    
    (19
    )
    
    
    2,985
    
    
    
    (202
    )
    
    
    3,969
    
    
    
    (221
    )Total
    
    $
    53,531
    
    
    $
    (1,469
    )
    
    $
    2,985
    
    
    $
    (202
    )
    
    $
    56,516
    
    
    $
    (1,671
    )
   Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesUS Government agencies
    
    $
    29,637
    
    
    $
    (358
    )
    
    $
    
    
    
    $
    
    
    
    $
    29,637
    
    
    $
    (358
    )Tax exempt obligations
    
    
    1,000
    
    
    
    (3
    )
    
    
    3,036
    
    
    
    (150
    )
    
    
    4,036
    
    
    
    (153
    )Total
    
    $
    30,637
    
    
    $
    (361
    )
    
    $
    3,036
    
    
    $
    (150
    )
    
    $
    33,673
    
    
    $
    (511
    )
  page -9-




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3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    355
    
    
    $
    45
    
    
    $
    (84
    )
    
    $
    316Money Market Mutual Funds
    
    
    7,866
    
    
    
    
    
    
    
    
    
    
    
    7,866Total Investment Securities
    
    $
    8,221
    
    
    $
    45
    
    
    $
    (84
    )
    
    $
    8,182
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    355
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    311Money Market Mutual Funds
    
    
    6,417
    
    
    
    
    
    
    
    
    
    
    
    6,417Total Investment Securities
    
    $
    6,772
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    6,728
  Less than 12 Months
    
    
    12  Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesEquity Securities
    
    $
    47
    
    
    $
    (42
    )
    
    $
    114
    
    
    $
    (42
    )
    
    $
    161
    
    
    $
    (84
    )
   Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesEquity Securities
    
    $
    104
    
    
    $
    (43
    )
    
    $
    74
    
    
    $
    (49
    )
    
    $
    178
    
    
    $
    (92
    )
  page -10-




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4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
  December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    10,972
    
    
    $
    50
    
    
    $
    (228
    )
    
    $
    10,794FHLMC pass-through certificates
    
    
    60,734
    
    
    
    2,617
    
    
    
    
    
    
    
    63,351FNMA pass-through certificates
    
    
    80,240
    
    
    
    3,040
    
    
    
    
    
    
    
    83,280GNMA pass-through certificates
    
    
    1,565
    
    
    
    
    
    
    
    (23
    )
    
    
    1,542Total residential mortgage-backed securities
    
    $
    153,511
    
    
    $
    5,707
    
    
    $
    (251
    )
    
    $
    158,967
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    11,681
    
    
    $
    54
    
    
    $
    (271
    )
    
    $
    11,464FHLMC pass-through certificates
    
    
    65,005
    
    
    
    3,270
    
    
    
    
    
    
    
    68,275FNMA pass-through certificates
    
    
    85,744
    
    
    
    3,728
    
    
    
    (1
    )
    
    
    89,471Total residential mortgage-backed securities
    
    $
    162,430
    
    
    $
    7,052
    
    
    $
    (272
    )
    
    $
    169,210
  Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesMortgage-backed securities
held to maturity
    
    $
    7,654
    
    
    $
    (96
    )
    
    $
    1,789
    
    
    $
    (155
    )
    
    $
    9,443
    
    
    $
    (251
    )
   Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesMortgage-backed securities held to maturity
    
    $
    2,264
    
    
    $
    (49
    )
    
    $
    6,576
    
    
    $
    (223
    )
    
    $
    8,840
    
    
    $
    (272
    )
  page -11-




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5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
  December 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    (3
    )
    
    $
    782Total Residential Mortgage-Backed Securities
    
    $
    785
    
    
    $
    
    
    
    $
    (3
    )
    
    $
    782
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    
    
    
    $
    785Total Residential Mortgage-Backed Securities
    
    $
    785
    
    
    $
    
    
    
    $
    
    
    
    $
    785
 6. LOANS RECEIVABLE
  (In thousands)December 31, 2009
    
    
    September 30, 2009Residential Mortgages
    
    $
    345,471
    
    
    $
    346,202Construction
    
    
    5,855
    
    
    
    2,912Home Equity
    
    
    91,953
    
    
    
    92,434Commercial Mortgages
    
    
    53,575
    
    
    
    48,958Commercial Business Loans
    
    
    9,858
    
    
    
    10,389Consumer Non-Real Estate
    
    
    2,289
    
    
    
    2,242Total
    
    
    509,001
    
    
    
    503,137Undisbursed portion of loans in process
    
    
    (2,334
    )
    
    
    (1,873
    )Deferred loan fees
    
    
    (753
    )
    
    
    (779
    )Allowance for loan losses
    
    
    (2,194
    )
    
    
    (2,094
    )Loans Receivable  net
    
    $
    503,720
    
    
    $
    498,391
   Three Months EndedDecember 31, 2009(In thousands)Balance, beginning of period
    
    $
    2,094Provision for loan losses
    
    
    150Recoveries
    
    
    2Charge offs
    
    
    (52
    )Balance, end of period
    
    $
    2,194
  page -12-




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7. Federal Home Loan Bank Stock
    8. DEPOSITS
  (In thousands)December 31, 2009
    
    
    September 30, 2009Non-interest bearing checking accounts
    
    $
    14,250
    
    
    $
    12,364NOW accounts
    
    
    19,991
    
    
    
    16,818Interest bearing checking accounts
    
    
    31,172
    
    
    
    29,282Money market demand accounts
    
    
    92,398
    
    
    
    77,432Passbook and club accounts
    
    
    2,815
    
    
    
    2,940Certificate of deposit accounts
    
    
    325,715
    
    
    
    327,765Total deposits
    
    $
    486,341
    
    
    $
    466,601
  9. COMMITMENTS
  (In thousands)Letters of credit
    
    $
    868Commitments to originate loans
    
    
    11,201Unused portion of home equity lines of credits
    
    
    49,285Unused portion of commercial lines of credits
    
    
    6,694Undisbursed portion of construction loans in process
    
    
    2,256Total
    
    $
    70,304
 10. EARNINGS PER SHARE
  For the Three Months EndedDecember 31,2009
    
    
    2008Basic
    
    
    3,633,347
    
    
    
    3,580,630Diluted
    
    
    3,646,284
    
    
    
    3,592,483
   page -13-




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11. LONG-TERM DEBT
  December 31,
    
    
    September 30,2009
    
    
    2009(In thousands)Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    InterestMaturing Period
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate1 to 12 months
    
    $
    25,090
    
    
    
    4.40
    %
    
    $
    30,358
    
    
    
    4.37
    %13 to 24 months
    
    
    22,251
    
    
    
    4.28
    %
    
    
    16,849
    
    
    
    4.34
    %25 to 36 months
    
    
    44,830
    
    
    
    4.56
    %
    
    
    55,793
    
    
    
    4.49
    %37 to 48 months
    
    
    41,154
    
    
    
    3.90
    %
    
    
    37,189
    
    
    
    4.00
    %49 to 60 months
    
    
    25,077
    
    
    
    4.27
    %
    
    
    29,856
    
    
    
    4.07
    %61 to 72 months
    
    
    18,865
    
    
    
    3.82
    %
    
    
    19,031
    
    
    
    3.82
    %73 to 84 months
    
    
    10,000
    
    
    
    4.71
    %
    
    
    10,000
    
    
    
    4.71
    %85 to 120 months
    
    
    109,874
    
    
    
    4.44
    %
    
    
    109,970
    
    
    
    4.42
    %Total
    
    $
    297,141
    
    
    
    4.32
    %
    
    $
    309,046
    
    
    
    4.31
    %
  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 December 31, 2009Tier 1 Capital (to assets)
    
    $
    50,881
    
    
    
    6.11
    %
    
    $
    33,308
    
    
    
    4.00
    %
    
    $
    41,635
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    50,881
    
    
    
    11.19
    %
    
    
    18,192
    
    
    
    4.00
    %
    
    
    27,289
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    53,075
    
    
    
    11.67
    %
    
    
    36,385
    
    
    
    8.00
    %
    
    
    45,481
    
    
    
    10.00
    %As of September 30, 2009Tier 1 Capital (to assets)
    
    $
    50,149
    
    
    
    6.06
    %
    
    $
    33,103
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    50,149
    
    
    
    11.26
    %
    
    
    17,809
    
    
    
    4.00
    %
    
    
    26,714
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    52,242
    
    
    
    11.73
    %
    
    
    35,618
    
    
    
    8.00
    %
    
    
    44,523
    
    
    
    10.00
    %
  page -14-




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13. FAIR VALUES MEASUREMENTS AND DISCLOSURES
          (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantDecember 31,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2009
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    8,182
    
    
    $
    8,182
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    782
    
    
    
    
    
    
    
    782
    
    
    
    $
    8,964
    
    
    $
    8,182
    
    
    $
    782
    
    
    $
    
 (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantSeptember 30,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2009
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    6,728
    
    
    $
    6,728
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    785
    
    
    
    
    
    
    
    785
    
    
    
    $
    7,513
    
    
    $
    6,728
    
    
    $
    785
    
    
    $
    
  Fair Value Measurements UsingQuoted Prices in
    
    
    SignificantActive Markets
    
    
    Other
    
    
    Significantfor Identical
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    432
    
    
    $
    
    
    
    $
    
    
    
    $
    432
   Cash and Cash Equivalents (Carried at Cost)
  Securities
   page -15-




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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 30,2009
    
    
    2009Carrying
    
    
    Estimated Fair
    
    
    Carrying
    
    
    Estimated Fair(In Thousands)
    
    Amount
    
    
    Value
    
    
    Amount
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    16,885
    
    
    $
    16,885
    
    
    $
    9,442
    
    
    $
    9,442Investment securities held to maturity
    
    
    107,145
    
    
    
    106,425
    
    
    
    105,194
    
    
    
    106,174Investment securities available-for-sale
    
    
    8,182
    
    
    
    8,182
    
    
    
    6,728
    
    
    
    6,728Mortgage-backed securities held to maturity
    
    
    153,511
    
    
    
    158,967
    
    
    
    162,430
    
    
    
    169,210Mortgage-backed securities available-for-sale
    
    
    782
    
    
    
    782
    
    
    
    785
    
    
    
    785Loans receivable  net
    
    
    503,720
    
    
    
    514,906
    
    
    
    498,391
    
    
    
    512,512Federal Home Loan Bank Stock
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096Accrued interest receivable
    
    
    3,741
    
    
    
    3,741
    
    
    
    3,719
    
    
    
    3,719Liabilities:Checking, Passbook, Club and NOW accounts
    
    
    68,228
    
    
    
    68,228
    
    
    
    61,404
    
    
    
    61,404Money Market Demand accounts
    
    
    92,398
    
    
    
    92,398
    
    
    
    77,432
    
    
    
    77,432Certificate accounts
    
    
    325,715
    
    
    
    330,000
    
    
    
    327,765
    
    
    
    332,733Borrowings
    
    
    297,141
    
    
    
    317,579
    
    
    
    309,046
    
    
    
    331,330Accrued interest payable
    
    
    1,558
    
    
    
    1,558
    
    
    
    1,606
    
    
    
    1,606
 Limitations
    page -16-




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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 -17-




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Other-than-Temporary Impairment of Investment Securities
  Changes in Financial Position for the Three-Month Period Ended December 31, 2009
   Comparisons of Results of Operations for the Three Month Period Ended December 31, 2009 with
the Three Month Period Ended December 31, 2008
 Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
    page -18-




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##### Table of Contents



Income Taxes
   Liquidity and Capital Recourses
     
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    page -19-




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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
    
    $
    55,519
    
    
    $
    58,122
    
    
    $
    46,385
    
    
    $
    185,445
    
    
    $
    345,471Commercial loans
    
    
    28,935
    
    
    
    6,553
    
    
    
    16,948
    
    
    
    10,997
    
    
    
    63,433Mortgage-backed securities
    
    
    51,101
    
    
    
    52,630
    
    
    
    25,787
    
    
    
    24,778
    
    
    
    154,296Consumer and other loans
    
    
    61,353
    
    
    
    17,279
    
    
    
    7,961
    
    
    
    13,504
    
    
    
    100,097Investment securities and other investments
    
    
    68,483
    
    
    
    18,816
    
    
    
    43,220
    
    
    
    15,149
    
    
    
    145,668Total interest-earning assets
    
    
    265,391
    
    
    
    153,400
    
    
    
    140,301
    
    
    
    249,873
    
    
    
    808,965Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,815
    
    
    
    2,815NOW and checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,163
    
    
    
    51,163Consumer Money Market Deposit accounts
    
    
    25,017
    
    
    
    
    
    
    
    
    
    
    
    40,672
    
    
    
    65,689Business Money Market Deposit accounts
    
    
    20,032
    
    
    
    
    
    
    
    
    
    
    
    6,677
    
    
    
    26,709Certificate accounts
    
    
    175,748
    
    
    
    96,819
    
    
    
    53,150
    
    
    
    
    
    
    
    325,717Borrowed money
    
    
    31,793
    
    
    
    74,061
    
    
    
    58,374
    
    
    
    132,913
    
    
    
    297,141Total interest-bearing liabilities
    
    
    252,590
    
    
    
    170,880
    
    
    
    111,524
    
    
    
    234,240
    
    
    
    769,234Repricing GAP during the period
    
    $
    12,801
    
    
    $
    (17,480
    )
    
    $
    28,777
    
    
    $
    15,633
    
    
    $
    39,731Cumulative GAP
    
    $
    12,801
    
    
    $
    (4,679
    )
    
    $
    24,098
    
    
    $
    39,731Ratio of GAP during the period to total assets
    
    
    1.52
    %
    
    
    -2.08
    %
    
    
    3.43
    %
    
    
    1.86
    %Ratio of cumulative GAP to total assets
    
    
    1.52
    %
    
    
    -0.56
    %
    
    
    2.87
    %
    
    
    4.73
    %
  page -20-




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##### Table of Contents



Item 4.
    
    Controls and Procedures
    page -21-




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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
 (a)
    
    The annual meeting of Stockholders was held on January 27, 2010.
 (c)
    
    There were 3,638,205 shares of Common Stock of the Company eligible to be
voted at the Annual Meeting and 2,887,733 shares were represented at the
meeting by the holders thereof, which constituted a quorum. The items voted
upon at the Annual Meeting and the vote for each proposal were as follows:
 1.
    
    Election of directors for a three-year term:
 FOR
    
    
    WITHHELDSanford L. Alderfer
    
    
    2,229,480
    
    
    
    28,747Mark R. Cummins
    
    
    2,242,304
    
    
    
    15,923Ronald B. Geib
    
    
    2,238,599
    
    
    
    19,628
 Name of each director whose term of office continued:Thomas D. Clemens
Charlotte A. Hunsberger, Esq.
George W. Meschter
Edward J. Molnar
James L. Rittenhouse2.
    
    To Approve the Companys 2009 Stock Incentive Plan:
 FOR
    
    
    AGAINST
    
    
    ABSTAIN2,014,496

    
    
    222,694

    
    
    21,037
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##### Table of Contents



3.
    
    Proposal to ratify the appointment by the board of ParenteBeard, LLC
as the Companys independent auditors for the year ending September 30, 2010
 FOR
    
    
    AGAINST
    
    
    ABSTAIN2,861,603
    
    
    
    14,668
    
    
    
    10,462
  
 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
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##### Table of Contents



Signatures
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDate: February 12, 2010
    
    By:
    
    /s/ Ronald B. Geib

Ronald B. GeibChief Executive OfficerDate: February 12, 2010
    
    By:
    
    /s/ Brendan J. McGill

Brendan J. McGillExecutive Vice PresidentTreasurer and Chief Financial Officer
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