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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, 2008
 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)
 Yes þ No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 þ No o




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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, 2008, and September 30, 2008
    
    
    1Unaudited Consolidated Statements of Income 
for the Three
Months Ended December 31, 2008 and 2007
    
    
    2Unaudited Consolidated Statements of Comprehensive Income 

for the Three Months Ended December 31, 2008 and 2007
    
    
    3Unaudited Consolidated Statement of Stockholders Equity

for the Three Months Ended December 31, 2008 and 2007
    
    
    4Unaudited Consolidated Statements of Cash Flows
 for the Three Months
Ended December 31, 2008 and 2007
    
    
    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
    
    
    19Item 4. Controls and Procedures
    
    
    20Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 3. Defaults upon Senior Securities
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    21Item 5. Other information
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23Exhibit 31.1Exhibit 31.2Exhibit 32




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Financial Condition
 December 31,
    
    
    September 30,(In thousands, except share data)
    
    2008
    
    
    2008AssetsCash and amounts due from depository institutions
    
    $
    2,342
    
    
    $
    2,217Interest bearing deposits in other banks
    
    
    6,373
    
    
    
    7,157Total cash and cash equivalents
    
    
    8,715
    
    
    
    9,374Investment
securities held to maturity (fair value 
December 31, $80,162; September 30, $78,973)
    
    
    79,281
    
    
    
    79,254Investment securities available-for-sale at fair value
    
    
    2,131
    
    
    
    854Mortgage-backed securities held to maturity (fair value 
December 31, $209,945; September 30, $211,814)
    
    
    205,907
    
    
    
    213,933Mortgage-backed securities available-for-sale at fair value
    
    
    767
    
    
    
    758Loans receivable (net of allowance for loan losses 
December 31, $2,097; September 30, $1,988)
    
    
    483,573
    
    
    
    476,858Accrued interest receivable
    
    
    3,810
    
    
    
    3,799Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,574Office properties and equipment, net
    
    
    10,086
    
    
    
    10,154Prepaid expenses and other assets
    
    
    13,921
    
    
    
    14,117TOTAL ASSETS
    
    $
    824,287
    
    
    $
    825,675Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    420,163
    
    
    $
    425,513Short-term borrowings
    
    
    29,800
    
    
    
    21,800Long-term debt
    
    
    320,545
    
    
    
    326,046Accrued interest payable
    
    
    1,620
    
    
    
    1,686Advances from borrowers for taxes and insurance
    
    
    3,496
    
    
    
    1,483Accounts payable and accrued expenses
    
    
    656
    
    
    
    1,938Total liabilities
    
    
    776,280
    
    
    
    778,466Stockholders equity:Preferred Stock: $.01 par value;
12,500,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock: $.01 par value; 25,000,000 shares authorized;
3,921,177 shares issued; outstanding December 31, 2008 3,580,711 shares
September 30, 2008 3,567,934 shares
    
    
    39
    
    
    
    39Additional Paid-in capital
    
    
    8,015
    
    
    
    7,993Treasury
stock, at cost (December 31, 2008, 340,466 shares; September 30, 2008, 353,243)
    
    
    (4,843
    )
    
    
    (5,017
    )Retained earnings  partially restricted
    
    
    44,969
    
    
    
    44,235Accumulated other comprehensive loss
    
    
    (173
    )
    
    
    (41
    )Total stockholders equity
    
    
    48,007
    
    
    
    47,209TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    824,287
    
    
    $
    825,675
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Income
 For the Three Months EndedDecember 31,(In thousands, except per share data)
    
    2008
    
    
    2007INTEREST INCOME:Interest on mortgage loans
    
    $
    5,009
    
    
    $
    4,585Interest on commercial loans
    
    
    710
    
    
    
    308Interest on mortgage-backed securities
    
    
    2,546
    
    
    
    2,281Interest on consumer and other loans
    
    
    1,307
    
    
    
    1,516Interest on taxable investments
    
    
    818
    
    
    
    1,451Interest on tax-exempt investments
    
    
    331
    
    
    
    351Dividends on investment securities
    
    
    5
    
    
    
    9Total interest income
    
    
    10,726
    
    
    
    10,501Interest Expense:Interest on deposits
    
    
    2,971
    
    
    
    4,145Interest on borrowings
    
    
    3,570
    
    
    
    3,486Total interest expense
    
    
    6,541
    
    
    
    7,631Net Interest Income
    
    
    4,185
    
    
    
    2,870Provision for loan losses
    
    
    100
    
    
    
    Net Interest Income after Provision
for Loan Losses
    
    
    4,085
    
    
    
    2,870Other Income:Customer service fees
    
    
    178
    
    
    
    164Income on bank-owned life insurance
    
    
    122
    
    
    
    131Other income
    
    
    171
    
    
    
    204Total other income
    
    
    471
    
    
    
    499Other Expenses:Salaries and employee benefits
    
    
    1,615
    
    
    
    1,320Occupancy and equipment
    
    
    310
    
    
    
    266Deposit insurance premiums
    
    
    18
    
    
    
    12Data processing
    
    
    137
    
    
    
    119Other
    
    
    674
    
    
    
    669Total other expenses
    
    
    2,754
    
    
    
    2,386Income before Income Taxes
    
    
    1,802
    
    
    
    983Income tax expense
    
    
    426
    
    
    
    182Net Income
    
    $
    1,376
    
    
    $
    801Basic Earnings Per Share
    
    $
    0.38
    
    
    $
    0.22Diluted Earnings Per Share
    
    $
    0.38
    
    
    $
    0.21Dividends Per Share
    
    $
    0.18
    
    
    $
    0.17
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statement of Comprehensive Income
 Three Months EndedDecember 31,(In thousands)
    
    2008
    
    
    2007Net Income
    
    $
    1,376
    
    
    $
    801Other Comprehensive IncomeUnrealized loss on securities available for sale, net of tax
benefit  2008, ($68); 2007, ($64)
    
    
    (132
    )(1)
    
    
    (125
    )(1)Total Comprehensive Income
    
    $
    1,244
    
    
    $
    676
 (1)
    
    Disclosure of reclassification amount, net of tax for the three months ended: 2008
    
    
    2007Net unrealized gain (loss) arising during the three months ended
    
    $
    (200
    )
    
    $
    (189
    )Reclassification adjustment for net losses (gains) included in net income
    
    
    
    
    
    
    $
    (200
    )
    
    
    (189
    )Tax (expense) benefit
    
    
    68
    
    
    
    64Net unrealized loss on securities
    
    $
    (132
    )
    
    $
    (125
    )
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statement of Stockholders Equity
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In thousands, except share and per share data)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Restricted
    
    
    (Loss) / Income
    
    
    Stock
    
    
    EquityBalance at October 1, 2008
    
    
    3,567,934
    
    
    $
    39
    
    
    $
    7,993
    
    
    $
    44,235
    
    
    $
    (41
    )
    
    $
    (5,017
    )
    
    $
    47,209Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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 tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (132
    )
    
    
    
    
    
    
    (132
    )Balance at December 31, 2008
    
    
    3,580,711
    
    
    $
    39
    
    
    $
    8,015
    
    
    $
    44,969
    
    
    $
    (173
    )
    
    $
    (4,843
    )
    
    $
    48,007
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In thousands, except share and per share data)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Restricted
    
    
    (Loss) / Income
    
    
    Stock
    
    
    EquityBalance at October 1, 2007
    
    
    3,717,519
    
    
    $
    39
    
    
    $
    8,044
    
    
    $
    42,363
    
    
    $
    (89
    )
    
    $
    (3,316
    )
    
    $
    47,041Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    801
    
    
    
    
    
    
    
    
    
    
    
    801Dividends  $.17 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (631
    )
    
    
    
    
    
    
    
    
    
    
    (631
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Treasury stock delivered under
reinvestment plan
    
    
    9,958
    
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    165
    
    
    
    133Employee options exercisedChange in unrealized holding loss
on available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (125
    )
    
    
    
    
    
    
    (125
    )Balance at December 31, 2007
    
    
    3,727,477
    
    
    $
    39
    
    
    $
    8,032
    
    
    $
    42,533
    
    
    $
    (214
    )
    
    $
    (3,151
    )
    
    $
    47,239
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Cash Flows
 Three Months Ended December 31,(In thousands)
    
    2008
    
    
    2007Operating Activities:Net Income
    
    $
    1,376
    
    
    $
    801Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    124
    
    
    
    127Provision for loan loss
    
    
    100
    
    
    
    Amortization of deferred loan fees
    
    
    11
    
    
    
    5Net amortization of premiums and discounts
    
    
    25
    
    
    
    17Increase in cash surrender value
    
    
    (122
    )
    
    
    (131
    )Compensation charge on stock options
    
    
    39
    
    
    
    20Changes in assets and liabilities which provided (used) cash:Decrease in accounts payable and accrued expenses
    
    
    (1,282
    )
    
    
    (426
    )Decrease in prepaid expenses and other assets
    
    
    386
    
    
    
    423Increase in accrued interest receivable
    
    
    (11
    )
    
    
    (8
    )Decrease in accrued interest payable
    
    
    (66
    )
    
    
    (15
    )Net cash provided by operating activities
    
    
    580
    
    
    
    813Investing Activities:Purchase of investment securities held to maturity
    
    
    
    
    
    
    (14,619
    )Purchase of investment securities available-for-sale
    
    
    (1,418
    )
    
    
    Net redemption of FHLB stock
    
    
    478
    
    
    
    141Proceeds from sale of investment securities available-for-sale
    
    
    
    
    
    
    222Proceeds from maturities of investment securities
    
    
    1,169
    
    
    
    7,964Principal collected on mortgage-backed securities
    
    
    6,737
    
    
    
    7,475Principal collected on long-term loans
    
    
    26,584
    
    
    
    14,971Long-term loans originated or acquired
    
    
    (33,410
    )
    
    
    (32,314
    )Purchases of premises and equipment
    
    
    (56
    )
    
    
    (85
    )Net cash (used in) provided by investing activities
    
    
    84
    
    
    
    (16,245
    )Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    2,863
    
    
    
    372Net (decrease) increase in certificates of deposit
    
    
    (8,213
    )
    
    
    16,093Cash dividends
    
    
    (500
    )
    
    
    (631
    )Net increase (decrease) in short-term borrowings
    
    
    8,000
    
    
    
    (6,000
    )Proceeds from long-term debt
    
    
    4,500
    
    
    
    20,000Repayment of long-term debt
    
    
    (10,001
    )
    
    
    (13,898
    )Exercise of stock options
    
    
    15
    
    
    
    133Net increase in advances from borrowers for taxes and insurance
    
    
    2,013
    
    
    
    2,020Net cash provided by (used in) financing activities
    
    
    (1,323
    )
    
    
    18,089(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (659
    )
    
    
    2,657CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,374
    
    
    
    8,317CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    8,715
    
    
    $
    10,974Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    6,607
    
    
    $
    7,646Income taxes
    
    
    700
    
    
    
    300
 See notes to consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Notes to Unaudited Consolidated Financial Statements
 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   Use of Estimates in Preparation of Consolidated Financial Statements
 Recent
Accounting Pronouncements
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2. INVESTMENT SECURITIES HELD TO MATURITY
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government Agencies
    
    $
    54,315
    
    
    $
    767
    
    
    $
    (40
    )
    
    $
    55,042Tax-Exempt Obligations
    
    
    24,966
    
    
    
    651
    
    
    
    (497
    )
    
    
    25,120Total Investment Securities
    
    $
    79,281
    
    
    $
    1,418
    
    
    $
    (537
    )
    
    $
    80,162
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government Agencies
    
    $
    54,315
    
    
    $
    147
    
    
    $
    (385
    )
    
    $
    54,077Tax Exempt Obligations
    
    
    24,939
    
    
    
    592
    
    
    
    (635
    )
    
    
    24,896Total Investment Securities
    
    $
    79,254
    
    
    $
    739
    
    
    $
    (1,020
    )
    
    $
    78,973
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3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    901
    
    
    $
    8
    
    
    $
    (252
    )
    
    $
    657Money Market Mutual Funds
    
    
    1,474
    
    
    
    
    
    
    
    
    
    
    
    1,474Total Investment Securities
    
    $
    2,375
    
    
    $
    8
    
    
    $
    (252
    )
    
    $
    2,131
  September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    877
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    842Money Market Mutual Funds
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Total Investment Securities
    
    $
    889
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    854
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4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    14,348
    
    
    $
    10
    
    
    $
    (775
    )
    
    $
    13,583FHLMC pass-through certificates
    
    
    85,017
    
    
    
    2,178
    
    
    
    (8
    )
    
    
    87,187FNMA pass-through certificates
    
    
    106,349
    
    
    
    2,650
    
    
    
    (15
    )
    
    
    108,984GNMA pass-through certificates
    
    
    193
    
    
    
    
    
    
    
    (2
    )
    
    
    191Total Mortgage-Backed Securities
    
    $
    205,907
    
    
    $
    4,838
    
    
    $
    (800
    )
    
    $
    209,945
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Approximate(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    14,708
    
    
    $
    8
    
    
    $
    (624
    )
    
    $
    14,092FHLMC pass-through certificates
    
    
    88,594
    
    
    
    283
    
    
    
    (826
    )
    
    
    88,051FNMA pass-through certificates
    
    
    110,431
    
    
    
    99
    
    
    
    (1,061
    )
    
    
    109,469GNMA pass-through certificates
    
    
    200
    
    
    
    2
    
    
    
    
    
    
    
    202Total Mortgage-Backed Securities
    
    $
    213,933
    
    
    $
    392
    
    
    $
    (2,511
    )
    
    $
    211,814
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5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
  December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    (18
    )
    
    $
    767Total Mortgage-Backed Securities
    
    $
    785
    
    
    $
    
    
    
    $
    (18
    )
    
    $
    767
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758Total Mortgage-Backed Securities
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758
 6. LOANS RECEIVABLE
  (In thousands)December 31, 2008
    
    
    September 30, 2008Residential Mortgages
    
    $
    342,452
    
    
    $
    337,316Commercial Mortgages
    
    
    46,910
    
    
    
    44,407Construction
    
    
    9,362
    
    
    
    8,346Savings Account
    
    
    952
    
    
    
    955Home Equity
    
    
    63,397
    
    
    
    66,280Automobile and other
    
    
    1,041
    
    
    
    1,000Home Equity Line of Credit
    
    
    27,630
    
    
    
    26,103Total
    
    
    491,744
    
    
    
    484,407Undisbursed portion of loans in process
    
    
    (5,650
    )
    
    
    (5,109
    )Deferred loan fees
    
    
    (424
    )
    
    
    (452
    )Allowance for loan losses
    
    
    (2,097
    )
    
    
    (1,988
    )Loans Receivable  net
    
    $
    483,573
    
    
    $
    476,858
   Three Months EndedDecember 31, 2008(In thousands)Balance, beginning of period
    
    $
    1,988Provision for loan losses
    
    
    100Recoveries
    
    
    14Charge offs
    
    
    (5
    )Balance, end of period
    
    $
    2,097
 7. Federal Home Loan Bank Stock
     -13-




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##### Table of Contents



8. DEPOSITS
  (In thousands)December 31, 2008
    
    
    September 30, 2008Non-interest bearing checking accounts
    
    $
    10,975
    
    
    $
    10,963NOW accounts
    
    
    15,727
    
    
    
    14,315Interest bearing checking accounts
    
    
    30,191
    
    
    
    27,888Money market demand accounts
    
    
    51,315
    
    
    
    52,005Passbook and club accounts
    
    
    2,467
    
    
    
    2,641Certificate of deposit accounts
    
    
    309,488
    
    
    
    317,701Total deposits
    
    $
    420,163
    
    
    $
    425,513
  9. COMMITMENTS
  (In thousands)Letters of credit
    
    $
    868Commitments to originate loans
    
    
    13,997Unused portion of home equity lines of credits
    
    
    41,363Unused portion of commercial lines of credits
    
    
    3,330Undisbursed portion of construction loans in process
    
    
    5,496Total
    
    $
    65,054
  -14-




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10. EARNINGS PER SHARE
  For the Three Months EndedDecember 31,2008
    
    
    2007Basic
    
    
    3,580,711
    
    
    
    3,721,413Diluted
    
    
    3,592,483
    
    
    
    3,736,585
  11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
  December 31,
    
    
    September 30,2008
    
    
    2008(In thousands)Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    InterestMaturing Period
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate1 to 12 months
    
    $
    45,689
    
    
    
    2.02
    %
    
    $
    35,855
    
    
    
    3.18
    %13 to 24 months
    
    
    26,147
    
    
    
    4.38
    %
    
    
    31,405
    
    
    
    4.36
    %25 to 36 months
    
    
    23,447
    
    
    
    4.27
    %
    
    
    17,739
    
    
    
    4.33
    %37 to 48 months
    
    
    45,844
    
    
    
    4.56
    %
    
    
    57,090
    
    
    
    4.48
    %49 to 60 months
    
    
    43,265
    
    
    
    3.96
    %
    
    
    39,282
    
    
    
    3.97
    %61 to 72 months
    
    
    26,176
    
    
    
    4.06
    %
    
    
    26,444
    
    
    
    4.05
    %73 to 84 months
    
    
    19,522
    
    
    
    3.82
    %
    
    
    19,683
    
    
    
    3.81
    %85 to 120 months
    
    
    120,255
    
    
    
    4.21
    %
    
    
    120,348
    
    
    
    4.25
    %Total
    
    $
    350,345
    
    
    
    3.92
    %
    
    $
    347,846
    
    
    
    4.12
    %
  12. REGULATORY CAPITAL REQUIREMENTS
    To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(In thousands)Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAs of December 31, 2008Tier 1 Capital (to assets)
    
    $
    47,990
    
    
    
    5.82
    %
    
    $
    32,959
    
    
    
    4.00
    %
    
    $
    41,198
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    47,990
    
    
    
    11.11
    %
    
    
    17,284
    
    
    
    4.00
    %
    
    
    25,925
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    50,087
    
    
    
    11.59
    %
    
    
    34,567
    
    
    
    8.00
    %
    
    
    43,209
    
    
    
    10.00
    %As of September 30, 2008Tier 1 Capital (to assets)
    
    $
    47,191
    
    
    
    5.69
    %
    
    $
    33,167
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    47,191
    
    
    
    10.97
    %
    
    
    17,203
    
    
    
    4.00
    %
    
    
    25,804
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    49,179
    
    
    
    11.44
    %
    
    
    34,406
    
    
    
    8.00
    %
    
    
    43,007
    
    
    
    10.00
    %
  -15-




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13. FAIR VALUES OF FINANCIAL INSTRUMENTS
          (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantDecember 31,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2008
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    2,131
    
    
    $
    1,474
    
    
    $
    657
    
    
    $
    Mortgage-backed securities available
for sale
    
    
    767
    
    
    
    
    
    
    
    767
    
    
    
    $
    2,898
    
    
    $
    1,474
    
    
    $
    1,424
    
    
    $
    
  Fair Value Measurements UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableDecember 31,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2008
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loan
    
    $
    693
    
    
    $
    
    
    
    $
    
    
    
    $
    693
  
 
  -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
  -17-




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Other-than-Temporary Impairment of Investment Securities
  Changes in Financial Position for the Three-Month Period Ended December 31, 2008
   Comparisons of Results of Operations for the Three Month Period Ended December 31, 2008 with
the Three Month Period Ended December 31, 2007
 Net Interest Income
   Non-Interest Income
  Non-Interest Expenses
    -18-




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Income Taxes
  Liquidity and Capital Recourses
     
 Item 3 Quantitative and Qualitative Disclosures About Market Risk
      -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
    
    $
    68,445
    
    
    $
    55,784
    
    
    $
    23,431
    
    
    $
    194,792
    
    
    $
    342,452Commercial loans
    
    
    18,945
    
    
    
    5,314
    
    
    
    7,698
    
    
    
    14,953
    
    
    
    46,910Mortgage-backed securities
    
    
    68,396
    
    
    
    70,520
    
    
    
    20,327
    
    
    
    47,431
    
    
    
    206,674Consumer and other loans
    
    
    47,729
    
    
    
    23,545
    
    
    
    6,523
    
    
    
    24,585
    
    
    
    102,382Investment securities and other investments
    
    
    67,572
    
    
    
    27,145
    
    
    
    5,766
    
    
    
    3,398
    
    
    
    103,881Total interest-earning assets
    
    
    271,087
    
    
    
    182,308
    
    
    
    63,745
    
    
    
    285,159
    
    
    
    802,299Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,467
    
    
    
    2,467NOW and checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,918
    
    
    
    45,918Money market deposit accounts
    
    
    17,894
    
    
    
    
    
    
    
    
    
    
    
    33,421
    
    
    
    51,315Certificate accounts
    
    
    188,037
    
    
    
    91,149
    
    
    
    30,302
    
    
    
    
    
    
    
    309,488Borrowed money
    
    
    53,204
    
    
    
    58,465
    
    
    
    84,218
    
    
    
    154,458
    
    
    
    350,345Total interest-bearing liabilities
    
    
    259,135
    
    
    
    149,614
    
    
    
    114,520
    
    
    
    236,264
    
    
    
    759,533Repricing GAP during the period
    
    $
    11,952
    
    
    $
    32,694
    
    
    $
    (50,775
    )
    
    $
    48,895
    
    
    $
    42,766Cumulative GAP
    
    $
    11,952
    
    
    $
    44,646
    
    
    $
    (6,129
    )
    
    $
    42,766Ratio of GAP during the period to total assets
    
    
    1.45
    %
    
    
    3.97
    %
    
    
    -6.16
    %
    
    
    5.93
    %Ratio of cumulative GAP to total assets
    
    
    1.45
    %
    
    
    5.42
    %
    
    
    -0.74
    %
    
    
    5.19
    %
 
 Item 4. Controls and Procedures
    -20-




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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 28, 2009.
 (c)
    
    There were 3,578,835 shares of Common Stock of the Company eligible to be voted at the Annual
Meeting and 2,991,058 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
    
    
    WITHHELDGeorge W. Meschter
    
    
    2,928,834
    
    
    
    62,224James L. Rittenhouse
    
    
    2,974,212
    
    
    
    16,846Thomas D. Clemens
    
    
    2,974,162
    
    
    
    16,896
       2.
    
    Proposal to ratify the appointment by the board of Beard Miller Company LLP as the Companys
independent auditors for the year ending September 30, 2009
 FOR
    
    AGAINST
    
    
    ABSTAIN2,982,717
    
    
    1,877
    
    
    
    6,464
   -21-




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##### Table of Contents



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
  -22-




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##### Table of Contents



Signatures
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDate: February 13, 2009
    By:
    /s/ Ronald B. GeibRonald B. GeibChief Executive OfficerDate: February 13, 2009
    By:
    /s/ Brendan J. McGillBrendan J. McGillSenior Vice President
Treasurer and Chief Financial Officer  -23-




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##### Table of Contents



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