##### 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 June 30, 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.)
  
  
  
  Yes þ No o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 o þ




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##### 



HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
 Index
 PAGE(S)Part I FINANCIAL INFORMATIONItem 1. Financial StatementsUnaudited Consolidated Statements of Financial Condition as of
June 30, 2009, and September 30, 2008
    
    
    1Unaudited Consolidated Statements of Income for the Three and Nine
Months Ended June 30, 2009 and 2008
    
    
    2Unaudited Consolidated Statements of Comprehensive Income
for the Three and Nine Months Ended June 30, 2009 and 2008
    
    
    3Unaudited Consolidated Statements of Stockholders Equity
for the Nine Months Ended June 30, 2009 and 2008
    
    
    4Unaudited Consolidated Statements of Cash Flows for the Nine Months
Ended June 30, 2009 and 2008
    
    
    5Notes to Unaudited Consolidated Financial Statements
    
    
    6 - 19Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    20 - 22Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    22 - 23Item 4. Controls and Procedures
    
    
    24Part II OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults upon Senior Securities
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other information
    
    
    25Item 6. Exhibits
    
    
    25Signatures
    
    
    26Exhibit 31.1Exhibit 31.2Exhibit 32.0




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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Financial Condition
 June 30,
    
    
    September 30,(In thousands, except share data)
    
    2009
    
    
    2008AssetsCash and amounts due from depository institutions
    
    $
    2,645
    
    
    $
    2,217Interest bearing deposits in other banks
    
    
    20,481
    
    
    
    7,157Total cash and cash equivalents
    
    
    23,126
    
    
    
    9,374Investment securities held to maturity (fair value 
June 30, $77,672; September 30, $78,973)
    
    
    77,337
    
    
    
    79,254Investment securities available-for-sale at fair value
    
    
    19,827
    
    
    
    854Mortgage-backed securities held to maturity (fair value 
June 30, $179,833; September 30, $211,814)
    
    
    175,275
    
    
    
    213,933Mortgage-backed securities available-for-sale at fair value
    
    
    816
    
    
    
    758Loans receivable (net of allowance for loan losses 
June 30, $2,272; September 30, $1,988)
    
    
    483,098
    
    
    
    476,858Accrued interest receivable
    
    
    3,341
    
    
    
    3,799Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,574Real estate owned
    
    
    567
    
    
    
    Office properties and equipment, net
    
    
    9,739
    
    
    
    9,769Prepaid expenses and other assets
    
    
    15,928
    
    
    
    14,502TOTAL ASSETS
    
    $
    825,150
    
    
    $
    825,675Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    450,997
    
    
    $
    425,513Short-term borrowings
    
    
    
    
    
    
    21,800Long-term debt
    
    
    316,088
    
    
    
    326,046Accrued interest payable
    
    
    1,615
    
    
    
    1,686Advances from borrowers for taxes and insurance
    
    
    5,583
    
    
    
    1,483Accounts payable and accrued expenses
    
    
    1,484
    
    
    
    1,938Total liabilities
    
    
    775,767
    
    
    
    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 June 30, 2009 3,614,903 shares
September 30, 2008 3,567,934 shares
    
    
    39
    
    
    
    39Additional Paid-in capital
    
    
    8,022
    
    
    
    7,993Treasury stock, at cost (June 30, 2009, 306,274 shares; September 30, 2008, 353,243)
    
    
    (4,373
    )
    
    
    (5,017
    )Retained earnings  partially restricted
    
    
    45,734
    
    
    
    44,235Accumulated other comprehensive loss
    
    
    (39
    )
    
    
    (41
    )Total stockholders equity
    
    
    49,383
    
    
    
    47,209TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    825,150
    
    
    $
    825,675
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Income
 For the Three Months Ended
    
    
    For the Nine Months EndedJune 30,
    
    
    June 30,(In thousands, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008INTEREST INCOME:Interest on mortgage loans
    
    $
    4,961
    
    
    $
    4,797
    
    
    $
    15,066
    
    
    $
    14,053Interest on commercial loans
    
    
    774
    
    
    
    449
    
    
    
    2,223
    
    
    
    1,166Interest on mortgage-backed securities
    
    
    2,209
    
    
    
    2,724
    
    
    
    7,163
    
    
    
    7,442Interest on consumer and other loans
    
    
    1,144
    
    
    
    1,373
    
    
    
    3,639
    
    
    
    4,356Interest on taxable investments
    
    
    572
    
    
    
    1,114
    
    
    
    2,134
    
    
    
    3,943Interest on tax-exempt investments
    
    
    312
    
    
    
    345
    
    
    
    968
    
    
    
    1,043Dividends on investment securities
    
    
    1
    
    
    
    10
    
    
    
    10
    
    
    
    32Total interest income
    
    
    9,973
    
    
    
    10,812
    
    
    
    31,203
    
    
    
    32,035Interest Expense:Interest on deposits
    
    
    2,642
    
    
    
    3,685
    
    
    
    8,356
    
    
    
    11,997Interest on borrowings
    
    
    3,486
    
    
    
    3,371
    
    
    
    10,460
    
    
    
    10,209Total interest expense
    
    
    6,128
    
    
    
    7,056
    
    
    
    18,816
    
    
    
    22,206Net Interest Income
    
    
    3,845
    
    
    
    3,756
    
    
    
    12,387
    
    
    
    9,829Provision for loan losses
    
    
    90
    
    
    
    35
    
    
    
    290
    
    
    
    40Net Interest Income after Provision
for Loan Losses
    
    
    3,755
    
    
    
    3,721
    
    
    
    12,097
    
    
    
    9,789Other Income:Customer service fees
    
    
    161
    
    
    
    156
    
    
    
    497
    
    
    
    460Impairment of equity securities
    
    
    
    
    
    
    (252
    )
    
    
    (449
    )
    
    
    (252
    )Gain on sale of investments
    
    
    
    
    
    
    
    
    
    
    (11
    )
    
    
    Loss on sale of investments
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    4Income on bank-owned life insurance
    
    
    121
    
    
    
    120
    
    
    
    364
    
    
    
    372Other income
    
    
    178
    
    
    
    177
    
    
    
    534
    
    
    
    583Total other income
    
    
    460
    
    
    
    201
    
    
    
    955
    
    
    
    1,167Other Expenses:Salaries and employee benefits
    
    
    1,523
    
    
    
    1,437
    
    
    
    4,719
    
    
    
    4,195Occupancy and equipment
    
    
    299
    
    
    
    289
    
    
    
    900
    
    
    
    817Deposit insurance premiums
    
    
    604
    
    
    
    12
    
    
    
    861
    
    
    
    37Data processing
    
    
    146
    
    
    
    186
    
    
    
    409
    
    
    
    434Other
    
    
    541
    
    
    
    630
    
    
    
    1,798
    
    
    
    1,882Total other expenses
    
    
    3,113
    
    
    
    2,554
    
    
    
    8,687
    
    
    
    7,365Income before Income Taxes
    
    
    1,102
    
    
    
    1,368
    
    
    
    4,365
    
    
    
    3,591Income tax expense
    
    
    246
    
    
    
    332
    
    
    
    930
    
    
    
    720Net Income
    
    $
    856
    
    
    $
    1,036
    
    
    $
    3,435
    
    
    $
    2,871Basic Earnings Per Share
    
    $
    0.24
    
    
    $
    0.29
    
    
    $
    0.96
    
    
    $
    0.78Diluted Earnings Per Share
    
    $
    0.24
    
    
    $
    0.29
    
    
    $
    0.95
    
    
    $
    0.77Dividends Per Share
    
    $
    0.18
    
    
    $
    0.17
    
    
    $
    0.54
    
    
    $
    0.51
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Comprehensive Income
 Three Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Net Income
    
    $
    856
    
    
    $
    1,036Other Comprehensive IncomeUnrealized gain (loss) on securities available for sale, net of tax
benefit  2009, ($3); 2008, ($2) and reclassifications
    
    
    6
    (1)
    
    
    4
    (1)Total Comprehensive Income
    
    $
    862
    
    
    $
    1,0402009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the three months ended:Net unrealized gain (loss) arising during the three months ended
    
    $
    9
    
    
    $
    (246
    )Reclassification adjustment for net losses (gains) included in net income
    
    
    
    
    
    
    252$
    9
    
    
    
    6Tax (expense) benefit
    
    
    (3
    )
    
    
    (2
    )Net unrealized gain on securities avalaible for sale
    
    $
    6
    
    
    $
    4Nine Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Net Income
    
    $
    3,435
    
    
    $
    2,871Other Comprehensive IncomeUnrealized gain (loss) on securities available for sale, net of tax
benefit  2009, $1; 2008, $55 and reclassifications
    
    
    2
    (1)
    
    
    (107
    )(1)Total Comprehensive Income
    
    $
    3,437
    
    
    $
    2,7642009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the nine months ended:Net unrealized gain (loss) arising during the nine months ended
    
    $
    (437
    )
    
    $
    (410
    )Reclassification adjustment for net losses (gains) included in net income
    
    
    440
    
    
    
    248$
    3
    
    
    
    (162
    )Tax (expense) benefit
    
    
    (1
    )
    
    
    55Net unrealized loss on securities available for sale
    
    $
    2
    
    
    $
    (107
    )
 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
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,435
    
    
    
    
    
    
    
    
    
    
    
    3,435Dividends  $.54 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,936
    )
    
    
    
    
    
    
    
    
    
    
    (1,936
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Treasury stock delivered under employee stock plan
    
    
    10,000
    
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    120Treasury stock delivered under
reinvestment plan
    
    
    34,885
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    478
    
    
    
    431Employee options exercised
    
    
    2,084
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    29
    
    
    
    20Change in unrealized holding loss
on available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Balance at June 30, 2009
    
    
    3,614,903
    
    
    $
    39
    
    
    $
    8,022
    
    
    $
    45,734
    
    
    $
    (39
    )
    
    $
    (4,373
    )
    
    $
    49,383
 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,871
    
    
    
    
    
    
    
    
    
    
    
    2,871Dividends  $.51 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,868
    )
    
    
    
    
    
    
    
    
    
    
    (1,868
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    88Treasury stock purchased
    
    
    (205,358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,557
    )
    
    
    (2,557
    )Treasury stock delivered under employee stock plan
    
    
    8,000
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    107Treasury stock delivered under
reinvestment plan
    
    
    31,122
    
    
    
    
    
    
    
    (78
    )
    
    
    
    
    
    
    
    
    
    
    487
    
    
    
    409Employee options exercised
    
    
    2,250
    
    
    
    
    
    
    
    (19
    )
    
    
    
    
    
    
    
    
    
    
    38
    
    
    
    19Change in unrealized holding loss
on available-for-sale securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )
    
    
    
    
    
    
    (107
    )Balance at June 30, 2008
    
    
    3,553,533
    
    
    $
    39
    
    
    $
    8,009
    
    
    $
    43,366
    
    
    $
    (196
    )
    
    $
    (5,215
    )
    
    $
    46,003
 See notes to unaudited consolidated financial statements.
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Harleysville Savings Financial Corporation
 
 Unaudited Consolidated Statements of Cash Flows
 Nine Months EndedJune 30,(In thousands)
    
    2009
    
    
    2008Operating Activities:Net Income
    
    $
    3,435
    
    
    $
    2,871Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    347
    
    
    
    387Provision for loan losses
    
    
    290
    
    
    
    40Gain on sales of investments
    
    
    (20
    )
    
    
    (4
    )Loss on sales of investments
    
    
    11
    
    
    
    Loss on impairment of equity securities
    
    
    449
    
    
    
    252Amortization of deferred loan fees
    
    
    47
    
    
    
    12Net amortization of premiums and discounts
    
    
    107
    
    
    
    122Increase in cash surrender value
    
    
    (364
    )
    
    
    (372
    )Compensation charge on stock options
    
    
    102
    
    
    
    88Changes in assets and liabilities which provided (used) cash:(Decrease) increase in accounts payable and accrued expenses
    
    
    (453
    )
    
    
    284Increase in prepaid expenses and other assets
    
    
    (1,063
    )
    
    
    (1,189
    )Decrease in accrued interest receivable
    
    
    458
    
    
    
    41(Decrease) increase in accrued interest payable
    
    
    (71
    )
    
    
    11Net cash provided by operating activities
    
    
    3,275
    
    
    
    2,543Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    
    
    
    
    (61,396
    )Purchase of investment securities held to maturity
    
    
    (25,000
    )
    
    
    (20,997
    )Purchase of investment securities available-for-sale
    
    
    (19,478
    )
    
    
    Net redemption of FHLB stock
    
    
    478
    
    
    
    (1,012
    )Proceeds from the sale of investment securities available-for-sale
    
    
    
    
    
    
    422Proceeds from maturities of investment securities held to maturity
    
    
    1,365
    
    
    
    31,818Principal collected on mortgage-backed securities
    
    
    64,112
    
    
    
    39,172Principal collected on long-term loans
    
    
    101,726
    
    
    
    66,039Long-term loans originated or acquired
    
    
    (108,870
    )
    
    
    (103,170
    )Purchases of premises and equipment
    
    
    (317
    )
    
    
    (212
    )Net cash provided by (used in) investing activities
    
    
    14,016
    
    
    
    (49,336
    )Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    17,606
    
    
    
    5,302Net increase in certificates of deposit
    
    
    7,878
    
    
    
    11,584Cash dividends
    
    
    (1,505
    )
    
    
    (1,459
    )Net decrease in short-term borrowings
    
    
    (21,800
    )
    
    
    (19,000
    )Proceeds from long-term debt
    
    
    24,500
    
    
    
    93,000Repayment of long-term debt
    
    
    (34,458
    )
    
    
    (43,455
    )Acquisition of treasury stock
    
    
    
    
    
    
    (2,557
    )Treasury stock delivered under employee stock plans
    
    
    140
    
    
    
    126Net increase in advances from borrowers for taxes and insurance
    
    
    4,100
    
    
    
    4,423Net cash (used in) provided by financing activities
    
    
    (3,539
    )
    
    
    47,964INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    13,752
    
    
    
    1,171CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,374
    
    
    
    8,317CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    23,126
    
    
    $
    9,488Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    12,887
    
    
    $
    22,195Income taxes
    
    
    1,203
    
    
    
    683Non  cash transfer of loans to real estate owned
    
    
    567
    
    
    
    
 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
  Recent Accounting Pronouncements 
  page -6-




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Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly Fair Value Measurements
    page -9-




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Recognition and Presentation of
Other-Than-Temporary Impairments
   Interim Disclosures about Fair Value
of Financial Instruments Disclosures about Fair Value of Financial Instruments Interim Financial Reporting
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Accounting for Transfers of Financial Assets, an
amendment of FASB Statement No. 140. Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R). Consolidation of Variable Interest Entities (revised
December 2003)  an interpretation of ARB No. 51
 The FASB Accounting Standards Codification and the
Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162. , The Hierarchy of Generally Accepted Accounting Principles, FASB Accounting Standards Codification
  page -11-




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2. INVESTMENT SECURITIES HELD TO MATURITY
  June 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue after 1 year through 5 years
    
    $
    13,000
    
    
    $
    149
    
    
    $
    (53
    )
    
    $
    13,096Due after 5 years through 10 years
    
    
    6,000
    
    
    
    
    
    
    
    (85
    )
    
    
    5,915Due after 10 years through 15
years
    
    
    32,000
    
    
    
    252
    
    
    
    (172
    )
    
    
    32,080Due after 15 years
    
    
    2,430
    
    
    
    181
    
    
    
    
    
    
    
    2,611Tax Exempt ObligationsDue after 5 years through 10 years
    
    
    2,668
    
    
    
    85
    
    
    
    
    
    
    
    2,753Due after 10 years through 15
years
    
    
    18,848
    
    
    
    509
    
    
    
    (208
    )
    
    
    19,149Due after 15 years
    
    
    2,391
    
    
    
    
    
    
    
    (323
    )
    
    
    2,068Total Investment Securities
    
    $
    77,337
    
    
    $
    1,176
    
    
    $
    (841
    )
    
    $
    77,672
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue after 1 year through 5 years
    
    $
    5,000
    
    
    $
    67
    
    
    $
    
    
    
    $
    5,067Due after 5 years through 10 years
    
    
    2,000
    
    
    
    5
    
    
    
    
    
    
    
    2,005Due after 10 years through 15
years
    
    
    38,497
    
    
    
    11
    
    
    
    (341
    )
    
    
    38,167Due after 15 years
    
    
    8,818
    
    
    
    64
    
    
    
    (44
    )
    
    
    8,838Tax Exempt ObligationsDue after 10 years through 15
years
    
    
    21,544
    
    
    
    592
    
    
    
    (109
    )
    
    
    22,027Due after 15 years
    
    
    3,395
    
    
    
    
    
    
    
    (526
    )
    
    
    2,869Total Investment Securities
    
    $
    79,254
    
    
    $
    739
    
    
    $
    (1,020
    )
    
    $
    78,973
  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
    
    $
    24,690
    
    
    $
    (310
    )
    
    $
    
    
    
    $
    
    
    
    $
    24,690
    
    
    $
    (310
    )Tax exempt obligations
    
    
    4,453
    
    
    
    (208
    )
    
    
    2,068
    
    
    
    (323
    )
    
    
    6,521
    
    
    
    (531
    )Total
    
    $
    29,143
    
    
    $
    (518
    )
    
    $
    2,068
    
    
    $
    (323
    )
    
    $
    31,211
    
    
    $
    (841
    )
   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
    
    $
    34,501
    
    
    $
    (385
    )
    
    $
    
    
    
    $
    
    
    
    $
    34,501
    
    
    $
    (385
    )Tax exempt obligations
    
    
    4,502
    
    
    
    (298
    )
    
    
    1,675
    
    
    
    (337
    )
    
    
    6,177
    
    
    
    (635
    )Total
    
    $
    39,003
    
    
    $
    (683
    )
    
    $
    1,675
    
    
    $
    (337
    )
    
    $
    40,678
    
    
    $
    (1,020
    )
  page -12-




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3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  June 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    452
    
    
    $
    21
    
    
    $
    (111
    )
    
    $
    362Money Market Mutual Funds
    
    
    19,465
    
    
    
    
    
    
    
    
    
    
    
    19,465Total Investment Securities
    
    $
    19,917
    
    
    $
    21
    
    
    $
    (111
    )
    
    $
    19,827
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    877
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    842Money Market Mutual Funds
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Total Investment Securities
    
    $
    889
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    854
  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
    
    $
    131
    
    
    $
    (32
    )
    
    $
    211
    
    
    $
    (79
    )
    
    $
    342
    
    
    $
    (111
    )
    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
    
    $
    258
    
    
    $
    (14
    )
    
    $
    339
    
    
    $
    (67
    )
    
    $
    597
    
    
    $
    (81
    )
  page -13-




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4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
  June 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    ApproximateCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    12,419
    
    
    $
    120
    
    
    $
    (486
    )
    
    $
    12,053FHLMC pass-through certificates
    
    
    70,452
    
    
    
    2,200
    
    
    
    
    
    
    
    72,652FNMA pass-through certificates
    
    
    92,404
    
    
    
    2,724
    
    
    
    
    
    
    
    95,128Total mortgage-backed securities
    
    $
    175,275
    
    
    $
    5,044
    
    
    $
    (486
    )
    
    $
    179,833
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    ApproximateCost
    
    
    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
  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
    
    $
    
    
    
    $
    
    
    
    $
    7,999
    
    
    $
    (486
    )
    
    $
    7,999
    
    
    $
    (486
    )
   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
    
    $
    159,415
    
    
    $
    (2,412
    )
    
    $
    4,615
    
    
    $
    (99
    )
    
    $
    164,030
    
    
    $
    (2,511
    )
  page -14-




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5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
  June 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    31
    
    
    $
    
    
    
    $
    816Total Mortgage-Backed Securities
    
    $
    785
    
    
    $
    31
    
    
    $
    
    
    
    $
    816
 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)June 30, 2009
    
    
    September 30, 2008Residential Mortgages
    
    $
    336,923
    
    
    $
    337,316Commercial Mortgages
    
    
    54,201
    
    
    
    44,407Construction
    
    
    3,042
    
    
    
    8,346Savings Account
    
    
    1,075
    
    
    
    955Home Equity
    
    
    52,635
    
    
    
    66,280Automobile and other
    
    
    1,066
    
    
    
    1,000Home Equity Line of Credit
    
    
    38,264
    
    
    
    26,103Total
    
    
    487,206
    
    
    
    484,407Undisbursed portion of loans in process
    
    
    (1,164
    )
    
    
    (5,109
    )Deferred loan fees
    
    
    (672
    )
    
    
    (452
    )Allowance for loan losses
    
    
    (2,272
    )
    
    
    (1,988
    )Loans Receivable  net
    
    $
    483,098
    
    
    $
    476,858
   Three Months Ended
    
    
    Nine Months EndedJune 30, 2009
    
    

June 30, 2008
    
    
    June 30, 2009
    
    

June 30, 2008(In thousands)
    
    
    (In thousands)Balance, beginning of period
    
    $
    2,193
    
    
    $
    1,924
    
    
    $
    1,988
    
    
    $
    1,933Provision for loan losses
    
    
    90
    
    
    
    35
    
    
    
    290
    
    
    
    40Recoveries
    
    
    9
    
    
    
    3
    
    
    
    26
    
    
    
    9Charge offs
    
    
    (20
    )
    
    
    (2
    )
    
    
    (32
    )
    
    
    (22
    )Balance, end of period
    
    $
    2,272
    
    
    $
    1,960
    
    
    $
    2,272
    
    
    $
    1,960
  page -15-




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7. Federal Home Loan Bank Stock
  Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to
or Finance the Activities of Others
  8. DEPOSITS
  (In thousands)June 30, 2009
    
    
    September 30, 2008Non-interest bearing checking accounts
    
    $
    11,820
    
    
    $
    10,963NOW accounts
    
    
    17,863
    
    
    
    14,315Interest bearing checking accounts
    
    
    30,422
    
    
    
    27,888Money market demand accounts
    
    
    62,455
    
    
    
    52,005Passbook and club accounts
    
    
    2,858
    
    
    
    2,641Certificate of deposit accounts
    
    
    325,579
    
    
    
    317,701Total deposits
    
    $
    450,997
    
    
    $
    425,513
  9. COMMITMENTS
  (In thousands)Letters of credit
    
    $
    534Commitments to originate loans
    
    
    21,383Unused portion of home equity lines of credits
    
    
    46,476Unused portion of commercial lines of credits
    
    
    4,347Undisbursed portion of construction loans in process
    
    
    842Total
    
    $
    73,582
  page -16-




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##### Table of Contents



10. EARNINGS PER SHARE
  For the Three Months Ended
    
    
    For the Nine Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Basic
    
    
    3,608,620
    
    
    
    3,555,039
    
    
    
    3,591,380
    
    
    
    3,669,262Diluted
    
    
    3,622,751
    
    
    
    3,598,927
    
    
    
    3,602,169
    
    
    
    3,713,388
  11. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
  June 30,
    
    
    September 30,2009
    
    
    2008(In thousands)Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    InterestMaturing Period
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    Rate1 to 12 months
    
    $
    25,778
    
    
    
    4.39
    %
    
    $
    35,855
    
    
    
    3.18
    %13 to 24 months
    
    
    15,000
    
    
    
    4.71
    %
    
    
    31,405
    
    
    
    4.36
    %25 to 36 months
    
    
    54,855
    
    
    
    4.56
    %
    
    
    17,739
    
    
    
    4.33
    %37 to 48 months
    
    
    36,062
    
    
    
    3.79
    %
    
    
    57,090
    
    
    
    4.48
    %49 to 60 months
    
    
    45,131
    
    
    
    4.23
    %
    
    
    39,282
    
    
    
    3.97
    %61 to 72 months
    
    
    4,196
    
    
    
    3.58
    %
    
    
    26,444
    
    
    
    4.05
    %73 to 84 months
    
    
    20,000
    
    
    
    4.13
    %
    
    
    19,683
    
    
    
    3.81
    %85 to 120 months
    
    
    115,066
    
    
    
    4.37
    %
    
    
    120,348
    
    
    
    4.25
    %Total
    
    $
    316,088
    
    
    
    4.31
    %
    
    $
    347,846
    
    
    
    4.12
    %
  12. REGULATORY CAPITAL REQUIREMENTS
    To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(In thousands)As of June 30, 2009Tier 1 Capital (to assets)
    
    $
    49,372
    
    
    
    6.04
    %
    
    $
    32,691
    
    
    
    4.00
    %
    
    $
    40,864
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    49,372
    
    
    
    11.31
    %
    
    
    17,466
    
    
    
    4.00
    %
    
    
    26,199
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    51,644
    
    
    
    11.83
    %
    
    
    34,932
    
    
    
    8.00
    %
    
    
    43,665
    
    
    
    10.00
    %As of September 30, 2008Tier 1 Capital (to assets)
    
    $
    47,191
    
    
    
    5.69
    %
    
    $
    33,167
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    47,191
    
    
    
    10.97
    %
    
    
    17,203
    
    
    
    4.00
    %
    
    
    25,804
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    49,179
    
    
    
    11.44
    %
    
    
    34,406
    
    
    
    8.00
    %
    
    
    43,007
    
    
    
    10.00
    %
  page -17-




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13. FAIR VALUES OF FINANCIAL INSTRUMENTS
          (Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantJune 30,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2009
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    19,827
    
    
    $
    19,827
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    816
    
    
    
    
    
    
    
    816
    
    
    
    $
    20,643
    
    
    $
    19,827
    
    
    $
    816
    
    
    $
    
  Fair Value Measurements UsingQuoted Prices
    
    
    Significantin Active
    
    
    Other
    
    
    SignificantMarkets for
    
    
    Observable
    
    
    UnobservableJune 30,
    
    
    Identical Assets
    
    
    Inputs
    
    
    InputsDescription
    
    2009
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Impaired Loans
    
    $
    998
    
    
    $
    
    
    
    $
    
    
    
    $
    998
   Cash and Cash Equivalents (Carried at Cost)
  Securities
   page -18-




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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)
    June 30,2009Carrying
    
    
    Estimated Fair(In Thousands)
    
    Amount
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    23,126
    
    
    $
    23,126Investment securities held to maturity
    
    
    77,337
    
    
    
    77,672Investment securities available-for-sale
    
    
    19,827
    
    
    
    19,827Mortgage-backed securities held to maturity
    
    
    175,275
    
    
    
    179,833Mortgage-backed securities
available-for-sale
    
    
    816
    
    
    
    816Loans receivable  net
    
    
    483,098
    
    
    
    493,793Federal Home Loan Bank Stock
    
    
    16,096
    
    
    
    16,096Accrued interest receivable
    
    
    3,341
    
    
    
    3,341Liabilities:Checking, Passbook, Club and NOW accounts
    
    
    63,055
    
    
    
    63,055Money Market Demand accounts
    
    
    62,463
    
    
    
    62,463Certificate accounts
    
    
    325,579
    
    
    
    330,538Borrowings
    
    
    316,088
    
    
    
    336,676Accrued interest payable
    
    
    1,615
    
    
    
    1,615
 Limitations
   14. EVENTS OR TRANSACTIONS SUBSEQUENT TO THE BALANCE SHEET DATE
 Subsequent Events.
  page -19-




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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 -20-




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##### Table of Contents



Other-than-Temporary Impairment of Investment Securities
  Changes in Financial Position for the Nine-Month Period Ended June 30, 2009
    Comparisons of Results of Operations for the Three Month and Nine Month Period Ended June 30,
2009 with the Three Month and Nine Month Period Ended June 30, 2008
 Net Interest Income
  Non-Interest Income
  Non-Interest Expenses
    page -21-




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##### Table of Contents



Income Taxes
   Liquidity
and Capital Resources
     
 Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
   page -22-




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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
    
    $
    56,495
    
    
    $
    56,325
    
    
    $
    44,842
    
    
    $
    179,261
    
    
    $
    336,923Commercial loans
    
    
    23,962
    
    
    
    5,746
    
    
    
    12,225
    
    
    
    12,268
    
    
    
    54,201Mortgage-backed securities
    
    
    58,028
    
    
    
    60,213
    
    
    
    29,503
    
    
    
    28,347
    
    
    
    176,091Consumer and other loans
    
    
    55,236
    
    
    
    19,752
    
    
    
    9,206
    
    
    
    11,888
    
    
    
    96,082Investment securities and other investments
    
    
    90,843
    
    
    
    18,759
    
    
    
    18,020
    
    
    
    6,119
    
    
    
    133,741Total interest-earning assets
    
    
    284,564
    
    
    
    160,795
    
    
    
    113,796
    
    
    
    237,883
    
    
    
    797,038Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,858
    
    
    
    2,858NOW and checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48,285
    
    
    
    48,285Consumer Money Market Deposit accounts
    
    
    14,057
    
    
    
    
    
    
    
    
    
    
    
    35,772
    
    
    
    49,829Business Money Market Deposit accounts
    
    
    9,470
    
    
    
    
    
    
    
    
    
    
    
    3,156
    
    
    
    12,626Certificate accounts
    
    
    209,842
    
    
    
    76,078
    
    
    
    39,659
    
    
    
    
    
    
    
    325,579Borrowed money
    
    
    32,358
    
    
    
    79,965
    
    
    
    70,219
    
    
    
    133,546
    
    
    
    316,088Total interest-bearing liabilities
    
    
    265,727
    
    
    
    156,043
    
    
    
    109,878
    
    
    
    223,617
    
    
    
    755,265Repricing GAP during the period
    
    $
    18,837
    
    
    $
    4,752
    
    
    $
    3,918
    
    
    $
    14,266
    
    
    $
    41,773Cumulative GAP
    
    $
    18,837
    
    
    $
    23,589
    
    
    $
    27,507
    
    
    $
    41,773Ratio of GAP during the period to total assets
    
    
    2.28
    %
    
    
    0.58
    %
    
    
    0.47
    %
    
    
    1.73
    %Ratio of cumulative GAP to total assets
    
    
    2.28
    %
    
    
    2.86
    %
    
    
    3.33
    %
    
    
    5.06
    %
  page -23-




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##### Table of Contents



Item 4.
    
    Controls and Procedures
    page -24-




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##### Table of Contents



Part II OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Defaults upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other information
  
 Item 6.
    
    Exhibits and Reports on Form 8-K
 No.31.1
    
    
    Certification of Chief
Executive Officer31.2
    
    
    Certification of Chief
Financial Officer32.0
    
    
    Section 1350
Certification of Chief
Executive Officer and
Chief Financial Officer
  page -25-




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##### Table of Contents



Signatures
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDate: August 14, 2009
    By:
    /s/ Ronald B. GeibRonald B. GeibChief Executive OfficerDate: August 14, 2009
    By:
    /s/ Brendan J. McGillBrendan J. McGillSenior Vice President
Treasurer and Chief Financial Officer  page -26-




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##### Table of Contents



Exhibit Index
 Exhibit No.
    
    Description31.1
    
    
    Certification of Chief Executive Officer31.2
    
    
    Certification of Chief Financial Officer32.0
    
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer