----

----

| x                                                                                                                                 | Annual                  report pursuant to                  Section 13 or 15(d) of the Securities Exchange                  Act of 1934 |
|-----------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                              |
| For                  the fiscal year ended                  SEPTEMBER 30, 2007                                                    |
|                                                                                                                              |
| -or-                                                                                                                              |
|                                                                                                                              |                                                                                                                                                   |
| o                                                                                                                                 | Transition                  report pursuant to                  Section 13 or 15(d) of the Securities Exchange Act of                  1934       |
|                                                                                                                              |                                                                                                                                                   |
| For                  the transition period                  from  ________________ to                  ________________ |

| PENNSYLVANIA                                                                    | 68-0593604                                         |
|---------------------------------------------------------------------------------|----------------------------------------------------|
| (State                  or other jurisdiction of incorporation or organization) | (IRS                  Employer Identification No.) |

| Title                  of Each                  Class                      | Name                  of Each Exchange on Which                  Registered |
|----------------------------------------------------------------------------|-----------------------------------------------------------------------------|
|                                                                       |                                                                        |
| Common                  Stock (par                  value $0.01 per share) | The                  Nasdaq Stock                  Market, LLC              |

| Large                  Accelerated Filer  o | Accelerated                  Filer  o | Non-Accelerated                  Filer x |
|-------------------------------------------------------|-------------------------------------------------|------------------------------------------|

----

| 1. | Portions                  of the Definitive Proxy Statement for the 2008 Annual Meeting of                  Stockholders are incorporated by reference in                  Part III. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| PART                  I   | Page                                                                                                                                                            |
|---------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                      |                                                                                                                                                            |   |
| Item                  1.  | Business                                                                                                                                                        | 1 |
|                      |                                                                                                                                                            |   |
| Item                  1A. | Risk                  Factors                                                                                                                                   | 35 |
|                      |                                                                                                                                                            |   |
| Item                  1B. | Unresolved                  Staff Comments                                                                                                                      | 37 |
|                      |                                                                                                                                                            |   |
| Item                  2.  | Properties                                                                                                                                                      | 37 |
|                      |                                                                                                                                                            |   |
| Item                  3.  | Legal                  Proceedings                                                                                                                              | 38 |
|                      |                                                                                                                                                            |   |
| Item                  4.  | Submission                  of Matters to a Vote of Security Holders                                                                                            | 39 |
|                      |                                                                                                                                                            |   |
| PART                  II  |                                                                                                                                                            |
|                      |                                                                                                                                                            |
| Item                  5.  | Market                  for Registrant's Common Equity, Related Stockholder Matters and                  Issuer                  Purchases of Equity Securities | 40 |
|                      |                                                                                                                                                            |   |
| Item                  6.  | Selected                  Financial Data                                                                                                                        | 42 |
|                      |                                                                                                                                                            |   |
| Item                  7.  | Management's                  Discussion and Analysis of Financial Condition and Results of                  Operations                                         | 44 |
|                      |                                                                                                                                                            |   |
| Item                  7A. | Quantitative                  and Qualitative Disclosures about Market Risk                                                                                     | 55 |
|                      |                                                                                                                                                            |   |
| Item                  8.  | Financial                  Statements and Supplementary Data                                                                                                    | 59 |
|                      |                                                                                                                                                            |   |
| Item                  9.  | Changes                  in and Disagreements with Accountants on Accounting and Financial                  Disclosure                                          | 92 |
|                      |                                                                                                                                                            |   |
| Item                  9A. | Controls                  and Procedures                                                                                                                        | 92 |
|                      |                                                                                                                                                            |   |
| Item                  9B. | Other                  Information                                                                                                                              | 92 |
|                      |                                                                                                                                                            |   |
| PART                  III |                                                                                                                                                            |
|                      |                                                                                                                                                            |
| Item                  10. | Directors,                  Executive Officers and Corporate Governance                                                                                         | 92 |
|                      |                                                                                                                                                            |   |
| Item                  11. | Executive                  Compensation                                                                                                                         | 92 |
|                      |                                                                                                                                                            |   |
| Item                  12. | Security                  Ownership of Certain Beneficial Owners and Management and Related                  Stockholder Matters                                | 93 |
|                      |                                                                                                                                                            |   |
| Item                  13. | Certain                  Relationships and Related Transactions and Director                  Independence                                                      | 93 |
|                      |                                                                                                                                                            |   |
| Item                  14. | Principal                  Accounting Fees and Services                                                                                                         | 93 |
|                      |                                                                                                                                                            |   |
| PART                  IV  |                                                                                                                                                            |
|                      |                                                                                                                                                            |
| Item                  15. | Exhibits                  and Financial Statement Schedules                                                                                                     | 93 |
|                      |                                                                                                                                                            |   |
|                      | Signatures                                                                                                                                                      |   |

----

----

----

|                                                                                                                                                                                                                                             |   | September                    30,          |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                                                                                                                                                                                             |   | 2007                                      |    |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                                                                                                                                                             |   | Amount                                    |    |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |   | Amount |   |   | % |   |
|                                                                                                                                                                                                                                             |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                             |   | (Dollars                    in thousands) |    |
| Real                    estate loans:                                                                                                                                                                                                            |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-                    to four-family residential(1)                                                                                                                                                                                            |   | $                                         | 159,945 |   |   |   | 67.85 | % |   | $ | 155,454 |   |   |   | 60.69 | % |   | $ | 135,394 |   |   |   | 67.22 | % |   | $ | 124,085 |   |   |   | 71.54 | % |   | $ | 115,880 |   |   |   | 75.98 | % |
| Multi-family                    residential                                                                                                                                                                                                      |   |                                      | 4,362   |   |   |   | 1.85 | % |   |   | 5,074 |   |   |   | 1.98 | % |   |   | 2,541 |   |   |   | 1.26 | % |   |   | 3,181 |   |   |   | 1.84 | % |   |   | 3,539 |   |   |   | 2.32 | % |
| Commercial                    real estate                                                                                                                                                                                                        |   |                                      | 18,019  |   |   |   | 7.64 | % |   |   | 11,339 |   |   |   | 4.42 | % |   |   | 9,875 |   |   |   | 4.90 | % |   |   | 5,608 |   |   |   | 3.23 | % |   |   | 7,457 |   |   |   | 4.89 | % |
| Construction                    and land development                                                                                                                                                                                             |   |                                      | 52,429  |   |   |   | 22.24 | % |   |   | 82,800 |   |   |   | 32.33 | % |   |   | 52,093 |   |   |   | 25.86 | % |   |   | 39,217 |   |   |   | 22.61 | % |   |   | 24,199 |   |   |   | 15.87 | % |
| Total                    real estate loans                                                                                                                                                                                                       |   |                                      | 234,755 |   |   |   | 99.58 | % |   |   | 254,667 |   |   |   | 99.42 | % |   |   | 199,903 |   |   |   | 99.24 | % |   |   | 172,091 |   |   |   | 99.22 | % |   |   | 151,075 |   |   |   | 99.06 | % |
| Commercial                    business loans                                                                                                                                                                                                     |   |                                      | 155     |   |   |   | 0.07 | % |   |   | 234 |   |   |   | 0.09 | % |   |   | 188 |   |   |   | 0.09 | % |   |   | 145 |   |   |   | 0.08 | % |   |   | 145 |   |   |   | 0.10 | % |
| Consumer                    loans                                                                                                                                                                                                                |   |                                      | 832     |   |   |   | 0.35 | % |   |   | 1,239 |   |   |   | 0.49 | % |   |   | 1,347 |   |   |   | 0.67 | % |   |   | 1,206 |   |   |   | 0.70 | % |   |   | 1,283 |   |   |   | 0.84 | % |
| Total                    loans                                                                                                                                                                                                                   |   |                                      | 235,742 |   |   |   | 100.00 | % |   |   | 256,140 |   |   |   | 100.00 | % |   |   | 201,438 |   |   |   | 100.00 | % |   |   | 173,442 |   |   |   | 100.00 | % |   |   | 152,503 |   |   |   | 100.00 | % |
| Less:                                                                                                                                                                                                                                            |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Undisbursed                    portion of construction                                                                                                                                                                                           |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   loans                    in process                                                                                                                                                                                                  |   |                                      | 15,897  |   |   |   |   |   |   |   | 36,257 |   |   |   |   |   |   |   | 25,824 |   |   |   |   |   |   |   | 21,338 |   |   |   |   |   |   |   | 13,737 |   |   |   |   |   |
| Deferred                    loan fees                                                                                                                                                                                                            |   |                                      | (315    | ) |   |   |   |   |   |   | (153 | ) |   |   |   |   |   |   | (35 | ) |   |   |   |   |   |   | (19 | ) |   |   |   |   |   |   | 287 |   |   |   |   |   |
| Allowance                    for loan losses                                                                                                                                                                                                     |   |                                      | 1,011   |   |   |   |   |   |   |   | 618 |   |   |   |   |   |   |   | 558 |   |   |   |   |   |   |   | 558 |   |   |   |   |   |   |   | 553 |   |   |   |   |   |
| Net                    loans                                                                                                                                                                                                                     |   | $                                         | 219,149 |   |   |   |   |   |   | $ | 219,418 |   |   |   |   |   |   | $ | 175,091 |   |   |   |   |   |   | $ | 151,565 |   |   |   |   |   |   | $ | 137,926 |   |   |   |   |   |
|                                          |   |

| (1) | Includes                  home equity loans and lines of                  credit. |
|-----|-----------------------------------------------------------------------------------|

----

|                                                                    |   | One-to-Four                       |    |   |         |   |   |                           |   |   |         |   |   | Commercial |   |   |     |   |   |   |   |
|-------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|--------------|--------|--------|--------------------------------|--------|--------|--------------|--------|--------|------------|--------|--------|----------|--------|--------|--------|--------|
|                                                                    |   | Family                            |    |   | Multi-family |   |   | Commercial                     |   |   |         |   |   | Business   |   |   |     |   |   |   |   |
|                                                                    |   | Residential                       |    |   | Residential  |   |   | Real                    Estate |   |   | Construction |   |   | Loans      |   |   | Consumer |   |   | Total  |   |
|                                                                    |   | (In                    Thousands) |    |
| Amounts                    due after September 30, 2007 in:   |   |                              |    |   |         |   |   |                           |   |   |         |   |   |       |   |   |     |   |   |
|   One                    year or less                         |   | $                                 | 1,319   |   |         | $      | 1,180  |                           |   | $      | 871          |   |   | $          | 46,328 |   |     | $      | 145    |   |   | $ | 59 |   |   | $ | 49,902 |   |
|   After                    one year through two years         |   |                              | 1,427   |   |         |   | 147    |                           |   |   | 738          |   |   |       | 6,101  |   |     |   | -      |   |   |   | 39 |   |   |   | 8,452 |   |
|   After                    two years through three years      |   |                              | 3,144   |   |         |   | 166    |                           |   |   | 335          |   |   |       | -      |   |     |   | -      |   |   |   | 69 |   |   |   | 3,714 |   |
|   After                    three years through five years     |   |                              | 4,930   |   |         |   | 36     |                           |   |   | 1,635        |   |   |       | -      |   |     |   | -      |   |   |   | 330 |   |   |   | 6,931 |   |
|   After                    five years through ten years       |   |                              | 19,724  |   |         |   | 1,592  |                           |   |   | 11,480       |   |   |       | -      |   |     |   | 10     |   |   |   | 170 |   |   |   | 32,976 |   |
|   After                    ten years through fifteen years    |   |                              | 84,015  |   |         |   | 1,203  |                           |   |   | 2,960        |   |   |       | -      |   |     |   | -      |   |   |   | 165 |   |   |   | 88,343 |   |
|   After                    fifteen years                      |   |                              | 45,386  |   |         |   | 38     |                           |   |   | -            |   |   |       | -      |   |     |   | -      |   |   |   | - |   |   |   | 45,424 |   |
|     Total                                           |   | $                                 | 159,945 |   |         | $      | 4,362  |                           |   | $      | 18,019       |   |   | $          | 52,429 |   |     | $      | 155    |   |   | $ | 832 |   |   | $ | 235,742 |   |

|                                                 |   |                              |         |            | Floating                    or |   |         |   |    |
|------------------------------------------------------|--------|-----------------------------------|--------------|-----------------|--------------------------------|--------|--------------|--------|---------|
|                                                 |   | Fixed-Rate                        |    | Adjustable-Rate |                      | Total  |         |
|                                                 |   | (In                    Thousands) |         |
|                                                 |   |                              |         |            |                           |   |         |   |    |
| One-                    to four-family residential   |   | $                                 | 140,108      |            |                           | $      | 18,518       |   |    | $ | 158,626 |   |
| Multi-family                    residential          |   |                              | 2,990        |            |                           |   | 192          |   |    |   | 3,182 |   |
| Commercial                    real estate            |   |                              | 15,054       |            |                           |   | 2,094        |   |    |   | 17,148 |   |
| Construction                    and land development |   |                              | 143          |            |                           |   | 5,958        |   |    |   | 6,101 |   |
| Commercial                    business               |   |                              | 10           |            |                           |   | -            |   |    |   | 10 |   |
| Consumer                                             |   |                              | 730          |       |                           | 43     |    |   | 773     |   |
|   Total                                    |   | $                                 | 159,035      |       | $                              | 26,805 |    | $      | 185,840 |   |

----

|                                                                                   |   | Year                    Ended September 30, |         |
|----------------------------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                                   |   |                                        |         |   |   |   |   |
|                                                                                   |   | 2007                                        |    | 2006 |    | 2005 |   |
|                                                                                   |   | (In                    Thousands)           |         |
| Loan                    originations:                                                  |   |                                        |         |   |   |   |   |   |   |
| One-                    to four-family residential                                     |   | $                                           | 28,538       |   |   | $ | 46,368 |   |   | $ | 24,775 |   |
| Multi-family                    residential                                            |   |                                        | 2,167        |   |   |   | 2,631 |   |   |   | 802 |   |
| Commercial                    real estate                                              |   |                                        | 6,401        |   |   |   | 1,365 |   |   |   | 6,012 |   |
| Construction                    and land development                                   |   |                                        | 27,464       |   |   |   | 40,257 |   |   |   | 26,749 |   |
| Commercial                    business                                                 |   |                                        | 6,393        |   |   |   | 920 |   |   |   | 40 |   |
| Consumer                                                                               |   |                                        | 366          |    |   | 455 |    |   | 562 |   |
| Total                    loan originations                                             |   |                                        | 71,329       |   |   |   | 91,996 |   |   |   | 58,940 |   |
| Loans                    purchased                                                     |   |                                        | -            |    |   | - |    |   | 17,787 |   |
|      Total                    loans originated & acquired |   |                                        | 71,329       |   |   |   | 91,996 |   |   |   | 76,727 |   |
| Loans                    sold                                                          |   |                                        | -            |   |   |   | - |   |   |   | - |   |
| Loan                    principal repayments                                           |   |                                        | 71,550       |    |   | 47,943 |    |   | 53,455 |   |
| Total                    loans sold and principal repayments                           |   |                                        | 71,550       |   |   |   | 47,943 |   |   |   | 53,455 |   |
| (Decrease)                    or increase due to other items, net (1)                  |   |                                        | (48          | )  |   | 274 |    |   | 254 |   |
| Net                    increase in loan portfolio                                      |   | $                                           | (269         | )  | $ | 44,327 |    | $ | 23,526 |   |

|   | (1) | Other                  items consist of loans in process, deferred fees and the allowance                  for                  loan losses. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

----

----

----

----

|                                                   |   | September                    30, 2007     |    | September                    30, 2006 |                               |
|--------------------------------------------------------|--------|-------------------------------------------|--------------|---------------------------------------|------------------------------------|
|                                                   |   | 30-89                                     |         |                                  | 90                    or More Days |   |   | 30-89 |   |   | 90                    or More Days |   |
|                                                   |   | Days                    Overdue           |    | Overdue                               |                          | Days                    Overdue |    | Overdue |   |
|                                                   |   | Number                                    |         |                                  | Principal                          |   |   | Number |   |   | Principal |   |   | Number |   |   | Principal |   |   | Number |   |   | Principal |   |
|                                                   |   | of                    Loans               |    | Balance                               |                          | of                    Loans |    | Balance |    | of                    Loans |    | Balance |    | of                    Loans |    | Balance |   |
|                                                   |   | (Dollars                    in thousands) |         |
|                                                   |   |                                      |         |                                  |                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| One-                    to four-family residential     |   |                                      | 10           |                                  |                               | $ | 433 |   |   |   | 8 |   |   | $ | 502 |   |   |   | 15 |   |   | $ | 1,502 |   |   |   | 4 |   |   | $ | 151 |   |
| Multi-family                    residential            |   |                                      | -            |                                  |                               |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                    real estate              |   |                                      | -            |                                  |                               |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Construction                    and land development   |   |                                      | -            |                                  |                               |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Commercial                    business                 |   |                                      | -            |                                  |                               |   | - |   |   |   | 1 |   |   |   | 69 |   |   |   | 1 |   |   |   | 1 |   |   |   | - |   |   |   | - |   |
| Consumer                    loans                      |   |                                      | -            |                             |                               | - |    |   | - |    |   | - |    |   | - |    |   | - |    |   | - |    |   | - |   |
| Total                    delinquent loans              |   |                                      | 10           |                             | $                                  | 433 |    |   | 9 |    | $ | 571 |    |   | 16 |    | $ | 1,503 |    |   | 4 |    | $ | 151 |   |
| Delinquent                    loans to total net loans |   |                                      | 0.20         | %                                     |                               |   |   |   |   |   | 0.26 | % |   |   |   |   |   |   |   |   |   |   | 0.68 | % |   |   |   |   |   |   | 0.07 | % |
| Delinquent                    loans to total loans     |   |                                      | 0.18         | %                                     |                               |   |   |   |   |   | 0.24 | % |   |   |   |   |   |   |   |   |   |   | 0.59 | % |   |   |   |   |   |   | 0.06 | % |

----

|                                                                                                   |   | September                    30,          |         |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------------------|--------------|
|                                                                                                   |   | 2007                                      |    | 2006 |    | 2005 |    | 2004 |    | 2003 |   |
|                                                                                                   |   | (Dollars                    in thousands) |         |
| Non-accruing                    loans:                                                                 |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |
|   One-                    to four-family residential                                         |   | $                                         | -            |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|   Multi-family                    residential                                                |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Commercial                    real estate                                                  |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Construction                    and land development                                       |   |                                      | 2,022        |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 500 |   |
|   Commercial                    business                                                     |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Consumer                                                                                   |   |                                      | -            |    |   | - |    |   | - |    |   | - |    |   | - |   |
|      Total                    non-accruing loans                              |   |                                      | 2,022        |    |   | - |    |   | - |    |   | - |    |   | 500 |   |
| Accruing                    loans 90 days or more past due:                                            |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   One-                    to four-family residential                                         |   |                                      | 502          |   |   |   | 151 |   |   |   | 240 |   |   |   | 478 |   |   |   | 386 |   |
|   Multi-family                    residential                                                |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Commercial                    real estate                                                  |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Construction                                                                               |   |                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Commercial                    business                                                     |   |                                      | 69           |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Consumer                                                                                   |   |                                      | -            |    |   | - |    |   | - |    |   | 1 |    |   | 4 |   |
|      Total                    accruing loans 90 days or more past due         |   |                                      | 571          |    |   | 151 |    |   | 240 |    |   | 479 |    |   | 390 |   |
|          Total                    non-performing loans(1) |   |                                      | 2,593        |    |   | 151 |    |   | 240 |    |   | 479 |    |   | 890 |   |
| Real                    estate owned, net(2)                                                           |   |                                      | -            |    |   | - |    |   | 360 |    |   | 548 |    |   | 626 |   |
|       Total                    non-performing assets                     |   | $                                         | 2,593        |    | $ | 151 |    | $ | 600 |    | $ | 1,027 |    | $ | 1,516 |   |
| Total                    non-performing loans as a percentage                                          |   |                                      | 1.18         | %  |   | 0.07 | %  |   | 0.14 | %  |   | 0.32 | %  |   | 0.65 | % |
|         of                    loans, net                       |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    non-performing loans as a  percentage                               |   |                                      | 0.55         | %  |   | 0.03 | %   | 0.05 | %  |   | 0.12 | %  |   | 0.22 | % |
|         of                    total assets                     |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    non-performing assets as a  percentage                              |   |                                      | 0.55         | %  |   | 0.03 | %  |   | 0.13 | %  |   | 0.25 | %  |   | 0.38 | % |
|         of                    total assets                     |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|   | (1) | Non-performing                  loans consist of non-accruing loans plus accruing loans 90 days                  or more                  past due.          |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (2) | Real                  estate owned balances are shown net of related loss allowances                  and                  consists solely of real property. |

----

----

|                                                                         |   | At                    or For the Year Ended September 30, |         |
|------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------------|
|                                                                         |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   | 2007                                                      |    | 2006 |    | 2005 |    | 2004 |    | 2003 |   |
|                                                                         |   | (Dollars                    in thousands)                 |         |
| Total                    loans outstanding at end of period                  |   | $                                                         | 235,742      |   |   | $ | 256,140 |   |   | $ | 201,438 |   |   | $ | 173,442 |   |   | $ | 152,503 |   |
| Average                    loans outstanding                                 |   |                                                      | 221,262      |   |   |   | 197,913 |   |   |   | 163,166 |   |   |   | 142,348 |   |   |   | 156,894 |   |
| Allowance                    for loan losses, beginning of period            |   |                                                      | 618          |   |   |   | 558 |   |   |   | 558 |   |   |   | 553 |   |   |   | 621 |   |
| Provision                    (recovery) for loan losses                      |   |                                                      | 395          |    |   | 60 |    |   | - |    |   | 50 |    |   | 180 |   |
| Charge-offs:                                                                 |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   One-                    to four-family residential               |   |                                                      | 2            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Multi-family                    residential and                  |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|    Commercial                    real estate                  |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | 50 |   |   |   | 172 |   |
|   Construction                                                     |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | 28 |   |   |   | 50 |   |
|   Commercial                    business                           |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|   Consumer                                                         |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 51 |   |
|     Total                    charge-offs                 |   |                                                      | 2            |   |   |   | - |   |   |   | - |   |   |   | 78 |   |   |   | 273 |   |
| Recoveries                    on loans previously charged off                |   |                                                      | -            |   |   |   | - |   |   |   | - |   |   |   | 33 |   |   |   | 25 |   |
| Allowance                    for loan losses, end of period                  |   | $                                                         | 1,011        |    | $ | 618 |    | $ | 558 |    | $ | 558 |    | $ | 553 |   |
|                                                                         |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                    for loan losses as a percent of                 |   |                                                      | 0.43         | %  |   | 0.24 | %  |   | 0.28 | %  |   | 0.32 | %  |   | 0.36 | % |
|    total                    loans                             |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allowance                    for loan losses as a percent of                 |   |                                                      | 38.97        | %  |   | 409.66 | %  |   | 223.47 | %  |   | 116.49 | %  |   | 62.13 | % |
|    non-performing                    loans                    |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ratio                    of net charge-offs during the period                |   |                                                      | *            |    |   | * |    |   | * |    |   | 0.03 | %  |   | 0.16 | % |
|    to                    average loans outstanding during the |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    period                                                     |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                         |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *  Not                    meaningful                               |   |                                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                           |   | September                    30,          |         |
|----------------------------------------------------------------|--------|-------------------------------------------|--------------|
|                                                           |   | 2007                                      |    | 2006 |    | 2005 |    | 2004 |    | 2003 |   |
|                                                           |   |                                      |         |   | Loan |   |   |   |   |   | Loan |   |   |   |   |   | Loan |   |   |   |   |   | Loan |   |   |   |   |   | Loan |   |
|                                                           |   |                                      |         |   | Category |   |   |   |   |   | Category |   |   |   |   |   | Category |   |   |   |   |   | Category |   |   |   |   |   | Category |   |
|                                                           |   | Amount                                    |         |   | as                    a % |   |   | Amount |   |   | as                    a % |   |   | Amount |   |   | as                    a % |   |   | Amount |   |   | as                    a % |   |   | Amount |   |   | as                    a % |   |
|                                                           |   | of                                        |         |   | of                    Total |   |   | of |   |   | of                    Total |   |   | of |   |   | of                    Total |   |   | of |   |   | of                    Total |   |   | of |   |   | of                    Total |   |
|                                                           |   | Allowance                                 |    | Loans |    | Allowance |    | Loans |    | Allowance |    | Loans |    | Allowance |    | Loans |    | Allowance |   |   | Loans |   |
|                                                           |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                           |   | (Dollars                    in thousands) |         |
| One-                    to four-family residential             |   | $                                         | 186          |   |   |   | 67.85 | % |   | $ | 148 |   |   |   | 60.69 | % |   | $ | 163 |   |   |   | 67.22 | % |   | $ | 182 |   |   |   | 70.92 | % |   | $ | 137 |   |   |   | 75.32 | % |
| Multi-family                    residential                    |   |                                      | 22           |   |   |   | 1.85 | % |   |   | 23 |   |   |   | 1.98 | % |   |   | 13 |   |   |   | 1.26 | % |   |   | 16 |   |   |   | 1.83 | % |   |   | 18 |   |   |   | 2.32 | % |
| Commercial                    real estate                      |   |                                      | 179          |   |   |   | 7.64 | % |   |   | 102 |   |   |   | 4.42 | % |   |   | 98 |   |   |   | 4.90 | % |   |   | 44 |   |   |   | 2.53 | % |   |   | 69 |   |   |   | 4.22 | % |
| Construction                    and land development           |   |                                      | 610          |   |   |   | 22.24 | % |   |   | 343 |   |   |   | 32.33 | % |   |   | 227 |   |   |   | 25.86 | % |   |   | 197 |   |   |   | 22.69 | % |   |   | 226 |   |   |   | 15.87 | % |
| Commercial                    business                         |   |                                      | 12           |   |   |   | 0.07 | % |   |   | 2 |   |   |   | 0.09 | % |   |   | 2 |   |   |   | 0.09 | % |   |   | 29 |   |   |   | 1.70 | % |   |   | 21 |   |   |   | 1.83 | % |
| Consumer                                                       |   |                                      | 2            |   |   |   | 0.35 | % |   |   | - |   |   |   | 0.49 | % |   |   | 1 |   |   |   | 0.67 | % |   |   | 1 |   |   |   | 0.33 | % |   |   | 10 |   |   |   | 0.44 | % |
| Unallocated                                                    |   |                                      | -            |    |   | - |    |   | - |    |   | - |    |   | 54 |    |   | - |    |   | 89 |    |   | - |    |   | 72 |    |   | - |   |
|   Total                    allowance for loan losses |   | $                                         | 1,011        |    |   | 100.00 | %  | $ | 618 |    |   | 100.00 | %  | $ | 558 |    |   | 100.00 | %  | $ | 558 |    |   | 100.00 | %  | $ | 553 |    |   | 100.00 | % |

----

----

|                                                            |   | September                    30,  |         |
|-----------------------------------------------------------------|--------|-----------------------------------|--------------|
|                                                            |   | 2007                              |    | 2006 |    | 2005 |   |
|                                                            |   | Amortized                         |         |   | Market |   |   | Amortized |   |   | Market |   |   | Amortized |   |   | Market |   |
|                                                            |   | Cost                              |    | Value |    | Cost |    | Value |    | Cost |    | Value |   |
|                                                            |   |                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                            |   | (In                    Thousands) |         |
| Mortgage-backed                    securities                   |   | $                                 | 54,026       |   |   | $ | 52,762 |   |   | $ | 54,894 |   |   | $ | 54,142 |   |   | $ | 66,828 |   |   | $ | 67,124 |   |
| U.S.                    Governnment and agency obligations      |   |                              | 135,331      |   |   |   | 134,251 |   |   |   | 132,198 |   |   |   | 129,675 |   |   |   | 129,954 |   |   |   | 128,163 |   |
| Municipal                    obligations                        |   |                              | 2,450        |   |   |   | 2,411 |   |   |   | 2,884 |   |   |   | 2,853 |   |   |   | 2,884 |   |   |   | 2,847 |   |
| Mutual                    funds                                 |   |                              | 34,982       |    |   | 33,807 |    |   | 34,982 |    |   | 34,052 |    |   | 34,982 |    |   | 34,123 |   |
|    Total                                         |   |                              | 226,789      |    |   | 223,231 |    |   | 224,958 |    |   | 220,722 |    |   | 234,648 |    |   | 232,257 |   |
| FHLB                    stock                                   |   |                              | 2,397        |   |   |   | 2,397 |   |   |   | 2,217 |   |   |   | 2,217 |   |   |   | 1,811 |   |   |   | 1,811 |   |
| FHLMC                    stock                                  |   |                              | 26           |   |   |   | 1,560 |   |   |   | 26 |   |   |   | 1,754 |   |   |   | 26 |   |   |   | 1,493 |   |
| FNMA                    stock                                   |   |                              | 1            |    |   | 7 |    |   | 1 |    |   | 7 |    |   | 1 |    |   | 5 |   |
| Total                    investment and                         |   | $                                 | 229,213      |    | $ | 227,195 |    | $ | 227,202 |    | $ | 224,700 |    | $ | 236,486 |    | $ | 235,566 |   |
|    mortgage-backed                    securities |   |                              |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|                                                                  |   | Amounts                    at September 30, 2007 Which Mature In |         |
|-----------------------------------------------------------------------|--------|------------------------------------------------------------------|--------------|
|                                                                  |   |                                                             |         |   |   |   |   | Over                    One |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                                                             |         |   | Weighted |   |   | Year |   |   | Weighted |   |   | Over                    Five |   |   | Weighted |   |   | Over |   |   | Weighted |   |
|                                                                  |   | One                    Year                                      |         |   | Average |   |   | Through |   |   | Average |   |   | Through |   |   | Average |   |   | Ten |   |   | Average |   |
|                                                                  |   | or                    Less                                       |    | Yield |    | Five                    Years |    | Yield |    | Ten                    Years |    | Yield |    | Years |    | Yield |   |
|                                                                  |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   | (Dollars                    in Thousands)                        |         |
|                                                                  |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Bonds                    and other debt securities:                   |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     U.S.                    gov and agency oblig  |   | $                                                                | 6,000        |   |   |   | 4.30 | % |   | $ | 25,002 |   |   |   | 4.56 | % |   | $ | 38,142 |   |   |   | 5.18 | % |   | $ | 66,187 |   |   |   | 5.54 | % |
|     Municipal                    obligations      |   |                                                             | -            |   |   |   | - |   |   |   |   |   |   |   | - |   |   |   | 2,450 |   |   |   | 3.52 | % |   |   | - |   |   |   | - |   |
|     Mortgage-backed                    securities |   |                                                             | -            |   |   |   | - |   |   |   | 1,693 |   |   |   | 4.50 | % |   |   | 22 |   |   |   | 6.75 | % |   |   | 52,311 |   |   |   | 5.18 | % |
|     Total                                         |   | $                                                                | 6,000        |    |   | 4.30 | %  | $ | 26,695 |    |   | 4.56 | %  | $ | 40,614 |    |   | 5.08 | %  | $ | 118,498 |    |   | 5.38 | % |

----

|                                                |   | September                    30,  |         |
|-----------------------------------------------------|--------|-----------------------------------|--------------|
|                                                |   | 2007                              |    | 2006 |    | 2005 |   |
|                                                |   | (In                    Thousands) |         |
| GNMA                                                |   | $                                 | 42,471       |   |   | $ | 46,991 |   |   | $ | 62,449 |   |
| FHLMC                                               |   |                              | 1,693        |   |   |   | 1,920 |   |   |   | 2,541 |   |
| FNMA                                                |   |                              | 9,862        |    |   | 5,983 |    |   | 1,838 |   |
| Total                    mortgage-backed securities |   | $                                 | 54,026       |    | $ | 54,894 |    | $ | 66,828 |   |

|   |   | Amounts                    at September 30, 2007 Which Mature In |         |
|--------|--------|------------------------------------------------------------------|--------------|
|   |   |                                                             |         |   | Weighted |   |   | Over                    One |   |   | Weighted |   |   |   |   |   | Weighted |   |
|   |   | One                    Year                                      |         |   | Average |   |   | through |   |   | Average |   |   | Over                    Five |   |   | Average |   |
|   |   | or                    Less                                       |    | Yield |    | Five                    Years |    | Yield |    | Years |    | Yield |   |
|   |   | (Dollars                    in Thousands)                        |         |
| GNMA   |   | $                                                                | -            |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | 42,471 |   |   |   | 5.05 | % |
| FHLMC  |   |                                                             | -            |   |   |   | - |   |   |   | 1,693 |   |   |   | 4.50 | % |   |   | - |   |   |   | - |   |
| FNMA   |   |                                                             | -            |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 9,862 |   |   |   | 5.74 | % |
| Total  |   | $                                                                | -            |   |   |   | - |   |   | $ | 1,693 |   |   |   | 4.50 | % |   | $ | 52,333 |   |   |   | 5.18 | % |

|                                                                 |   | At                    or For the            |         |
|----------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                 |   | Year                    Ended September 30, |         |
|                                                                 |   |                                        |         |   |   |   |   |   |   |
|                                                                 |   | 2007                                        |    | 2006 |    | 2005 |   |
|                                                                 |   | (Dollars                    in Thousands)   |         |
| Mortgage-backed                    securities at beginning of period |   | $                                           | 54,894       |   |   | $ | 66,828 |   |   | $ | 80,932 |   |
| Purchases                                                            |   |                                        | 6,762        |   |   |   | 4,610 |   |   |   | 4,481 |   |
| Maturities                    and repayments                         |   |                                        | (8,009       | ) |   |   | (12,011 | ) |   |   | (18,615 | ) |
| Sales                                                                |   |                                        | -            |   |   |   | (4,564 | ) |   |   | - |   |
| Amortizations                    of premiums and discounts, net      |   |                                        | 379          |    |   | 31 |    |   | 30 |   |
| Mortgage-backed                    securities at end of period       |   | $                                           | 54,026       |    | $ | 54,894 |    | $ | 66,828 |   |
| Weighted                    average yield at end of period           |   |                                        | 5.16         | %  |   | 5.09 | %  |   | 5.16 | % |

----

|                                                                  |   | September                    30,          |         |
|-----------------------------------------------------------------------|--------|-------------------------------------------|--------------|
|                                                                  |   | 2007                                      |    | 2006 |    | 2005 |   |
|                                                                  |   | Amount                                    |    | % |    | Amount |    | % |    | Amount |    | % |   |
|                                                                  |   | (Dollars                    in thousands) |         |
| Certificate                    accounts:                              |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1.00%                    - 1.99%                                      |   | $                                         | -            |   |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | 618 |   |   |   | 0.18 | % |
| 2.00%                    - 2.99%                                      |   |                                      | -            |   |   |   | - |   |   |   | 617 |   |   |   | 0.18 | % |   |   | 45,973 |   |   |   | 13.66 | % |
| 3.00%                    - 3.99%                                      |   |                                      | 14,745       |   |   |   | 4.16 | % |   |   | 30,933 |   |   |   | 8.91 | % |   |   | 52,903 |   |   |   | 15.72 | % |
| 4.00%                    - 4.99%                                      |   |                                      | 36,827       |   |   |   | 10.40 | % |   |   | 70,410 |   |   |   | 20.27 | % |   |   | 30,212 |   |   |   | 8.98 | % |
| 5.00%                    - 5.99%                                      |   |                                      | 138,993      |    |   | 39.26 | %  |   | 69,642 |    |   | 20.05 | %  |   | 14,611 |    |   | 4.35 | % |
| Total                    certificate accounts                         |   |                                      | 190,565      |    |   | 53.82 | %  |   | 171,602 |    |   | 49.41 | %  |   | 144,317 |    |   | 42.89 | % |
| Transaction                    accounts:                              |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                                                               |   |                                      | 70,903       |   |   |   | 20.03 | % |   |   | 76,989 |   |   |   | 22.17 | % |   |   | 87,709 |   |   |   | 26.07 | % |
| Checking:                                                             |   |                                      |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Interest                    bearing     |   |                                      | 26,806       |   |   |   | 7.57 | % |   |   | 29,675 |   |   |   | 8.55 | % |   |   | 41,094 |   |   |   | 12.21 | % |
|      Non-interest                    bearing |   |                                      | 2,089        |   |   |   | 0.59 | % |   |   | 4,528 |   |   |   | 1.30 | % |   |   | 3,441 |   |   |   | 1.02 | % |
| Money                    market                                       |   |                                      | 63,675       |    |   | 17.99 | %  |   | 64,498 |    |   | 18.57 | %  |   | 59,907 |    |   | 17.81 | % |
| Total                    transaction accounts                         |   |                                      | 163,473      |    |   | 46.18 | %  |   | 175,690 |    |   | 50.59 | %  |   | 192,151 |    |   | 57.11 | % |
| Total                    deposits                                     |   | $                                         | 354,038      |    |   | 100.00 | %  | $ | 347,292 |    |   | 100.00 | %  | $ | 336,468 |    |   | 100.00 | % |

----

|                                                                   |   | Year                    Ended September 30, |         |
|------------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                   |   | 2007                                        |    | 2006 |    | 2005 |   |
|                                                                   |   | Average                                     |         |   | Interest |   |   | Average                    Rate |   |   | Average |   |   | Interest |   |   | Average                    Rate |   |   | Average |   |   | Interest |   |   | Average                    Rate |   |
|                                                                   |   | Balance                                     |    | Expense |    | Paid |    | Balance |    | Expense |    | Paid |    | Balance |    | Expense |    | Paid |   |
|                                                                   |   | (Dollars                    in Thousands)   |         |
| Savings                                                                |   | $                                           | 71,815       |   |   | $ | 1,986 |   |   |   | 2.77 | % |   | $ | 81,472 |   |   | $ | 2,458 |   |   |   | 3.02 | % |   | $ | 91,821 |   |   | $ | 1,728 |   |   |   | 1.88 | % |
|                                                                   |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                    checking and money market accounts | 93,701 |                                        |         |   | 3,321 |   |   |   | 3.54 | % |   |   | 98,112 |   |   |   | 3,081 |   |   |   | 3.14 | % |   |   | 101,146 |   |   |   | 2,273 |   |   |   | 2.25 | % |
|                                                                   |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificate                    accounts                                |   |                                        | 181,604      |    |   | 7,944 |   |   |   | 4.37 | % |   |   | 156,869 |    |   | 5,304 |   |   |   | 3.38 | % |   |   | 144,445 |    |   | 4,521 |   |   |   | 3.13 | % |
|                                                                   |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    interest-bearing  deposits          |   |                                        | 347,120      |   |   | $ | 13,251 |   |   |   | 3.82 | % |   |   | 336,453 |   |   | $ | 10,843 |   |   |   | 3.22 | % |   |   | 337,412 |   |   | $ | 8,522 |   |   |   | 2.53 | % |
|                                                                   |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest                    bearing deposits                       |   |                                        | 5,009        |   |   |   |   |   |   |   |   |   |   |   | 3,789 |   |   |   |   |   |   |   |   |   |   |   | 10,066 |   |   |   |   |   |   |   |   |   |
|                                                                   |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    deposits                                      |   | $                                           | 352,129      |   |   |   |   |   |   |   | 3.76 | %  | $ | 340,242 |   |   |   |   |   |   |   | 3.19 | %  | $ | 347,478 |   |   |   |   |   |   |   | 2.45 | % |

|                                                                 |   | Year                    Ended September                    30, |         |
|----------------------------------------------------------------------|--------|----------------------------------------------------------------|--------------|
|                                                                 |   | 2007                                                           |    | 2006 |    | 2005 |   |
|                                                                 |   | (In                    Thousands)                              |         |
| Total                    deposits                                    |   | $                                                              | 516,548      |   |   | $ | 488,409 |   |   | $ | 504,735 |   |
| Total                    withdrawals                                 |   |                                                           | (518,719     | ) |   |   | (485,532 | ) |   |   | (524,140 | ) |
| Interest                    credited                                 |   |                                                           | 8,916        |    |   | 7,948 |    |   | 6,714 |   |
|   Total                    increase (decrease) in deposits |   | $                                                              | 6,745        |    | $ | 10,825 |    | $ | (12,691 | ) |

|                                                          |   | Balance                    at September 30,                    2007                  |         |
|---------------------------------------------------------------|--------|--------------------------------------------------------------------------------------|--------------|
|                                                          |   | Maturing                    in the 12 Months                    Ending September 30, |         |
| Certificates                    of                    Deposit |   | 2008                                                                                 |    | 2009 |    | 2010 |    | Thereafter |    | Total |   |
|                                                          |   | (In                    Thousands)                                                    |         |
|                                                          |   |                                                                                 |         |   |   |   |   |   |   |   |   |   |   |   |   |
| 3.00%                    - 3.99%                              |   | $                                                                                    | 11,674       |   |   | $ | 3,071 |   |   | $ | - |   |   | $ | - |   |   | $ | 14,745 |   |
| 4.00%                    - 4.99%                              |   |                                                                                 | 26,750       |   |   |   | 4,898 |   |   |   | 4,641 |   |   |   | 537 |   |   |   | 36,826 |   |
| 5.00%                  - 5.99%                                |   |                                                                                 | 98,458       |    |   | 21,063 |    |   | 401 |    |   | 19,072 |    |   | 138,994 |   |
|   Total                    certificate accounts     |   | $                                                                                    | 136,882      |    | $ | 29,032 |    | $ | 5,042 |    | $ | 19,609 |    | $ | 190,565 |   |

----

|                                                                    |   |                                      |         |                        | Weighted |   |
|-------------------------------------------------------------------------|--------|-------------------------------------------|--------------|-----------------------------|----------|--------|
| Quarter                    Ending:                                      |   | Amount                                    |    | Avg                    Rate |     |
|                                                                    |   | (Dollars                    in Thousands) |         |
| December                    31, 2007                                    |   | $                                         | 13,390       |                        |     |   | 5.04 | % |
| March                    31, 2008                                       |   |                                      | 19,081       |                        |     |   | 5.08 | % |
| June                    30, 2008                                        |   |                                      | 4,580        |                        |     |   | 4.79 | % |
| September                    30, 2008                                   |   |                                      | 4,266        |                        |     |   | 5.10 | % |
| After                    September 30, 2008                             |   |                                      | 15,096       |                        |     |   | 4.98 | % |
|   Total                    certificates of deposit with       |   |                                      |         |                        |     |   |   |   |
|     balances                    of $100,000 or more |   | $                                         | 56,413       |                        |     |   | 5.02 | % |

|                                                               |   | At                    or For the Year Ended                    September 30, |         |
|--------------------------------------------------------------------|--------|------------------------------------------------------------------------------|--------------|
|                                                               |   | 2007                                                                         |    | 2006 |    | 2005 |   |
|                                                               |   | (Dollars                    in Thousands)                                    |         |
| FHLB                    advances:                                  |   |                                                                         |         |   |   |   |   |   |   |
| Average                    balance outstanding                     |   |                                                                         | 27,686       |   |   |   | 19,628 |   |   |   | 13,841 |   |
| Maximum                    amount outstanding at any               |   |                                                                         |         |   |   |   |   |   |   |   |   |   |
|   month-end                    during the period         |   |                                                                         | 33,743       |   |   |   | 31,784 |   |   |   | 13,859 |   |
| Balance                    outstanding at end of period            |   |                                                                         | 33,743       |   |   |   | 31,784 |   |   |   | 13,823 |   |
| Average                    interest rate during the period         |   |                                                                         | 5.54         | % |   |   | 5.57 | % |   |   | 3.57 | % |
| Weighted                    average interest rate at end of period |   |                                                                         | 5.26         | % |   |   | 5.49 | % |   |   | 5.53 | % |

----

----

|   | · | banking                  or managing or controlling banks and other subsidiaries authorized                  under                  the Bank Holding Company Act; and                                                                                           |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                            |
|   | · | any                  Bank Holding Company Act activity the Federal Reserve Board has                  determined                  to be so closely related that it is incidental to banking or managing                  or                  controlling banks. |

----

----

|   | · | investing                  in the stock of one or more financial institution                  subsidiaries;                                                                                                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                         |
|   | · | acquiring                  one or more additional financial institution subsidiaries into                  a                  subsidiary of the holding company;                                                                                             |
|   |   |                                                                                                                                                                                                                                                         |
|   | · | merging                  with or acquiring another holding company, one of whose subsidiaries                  is a                  financial institution subsidiary;                                                                                       |
|   |   |                                                                                                                                                                                                                                                         |
|   | · | investing                  in a corporation the capital stock of which is available for purchase                  by a                  savings bank under federal law or under the Pennsylvania Banking                  Code;                              |
|   |   |                                                                                                                                                                                                                                                         |
|   | · | engaging                  in such activities as are permitted, by statute or regulation,                  to a                  holding company of a federally chartered insured mutual institution                  under                  federal law; and |
|   |   |                                                                                                                                                                                                                                                         |
|   | · | engaging                  in such other activities as may be permitted by the Pennsylvania                  Department of Banking.                                                                                                                           |

----

|   | · | the                  Federal Deposit Insurance Corporation determines the activity or                  investment does not pose a significant risk of loss to the Deposit                  Insurance Fund; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                           |
|   | · | Prudential                  Savings Bank meets all applicable capital                  requirements.                                                                                                           |

----

|   | · | merging                  the Savings Association Insurance Fund and Bank Insurance Fund,                  which                  became effective March 31, 2006;                                                                                                                                                                                                                                                                                              |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | · | maintaining                  basic deposit and municipal account insurance coverage at $100,000                  but                  providing for a new basic insurance coverage for retirement accounts                  of                  $250,000.  Insurance coverage for basic deposit and retirement                  accounts could be increased for inflation every five years in $10,000                  increments beginning in 2011; |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | · | providing                  the Federal Deposit Insurance Corporation with the ability to set                  the                  designated reserve ratio within a range of between 1.15% and 1.50%,                  rather                  than maintaining 1.25% at all times regardless of prevailing economic                  conditions;                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | · | providing                  a one-time assessment credit of $4.7 billion to banks and savings                  associations in existence on December 31, 1996, which may be used                  to                  offset future premiums with certain limitations; and                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | · | requiring                  the payment of dividends of 100% of the amount that the insurance                  fund                  exceeds 1.5% of the estimated insured deposits and the payment                  of 50% of                  the amount that the insurance fund exceeds 1.35% of the estimated                  insured                  deposits (when the reserve is greater than 1.35% but no more than                  1.5%).           |

----

----

|  Capital                    Category       |   | TotalRisk-Based                    Capital |   | Tier                  1Risk-Based                    Capital |   | Tier                  1Leverage                    Capital |
|-------------------------------------------------|--------|--------------------------------------------|--------|--------------------------------------------------------------|--------|------------------------------------------------------------|
| Well                  capitalized               |   | 10%                  or more               |   | 6%                  or more                                  |   | 5%                  or more                                |
| Adequately                  capitalized         |   | 8%                  or more                |   | 4%                  or more                                  |   | 4%                  or more                                |
| Undercapitalized                                |   | Less                  than 8%              |   | Less                  than 4%                                |   | Less                  than 4%                              |
| Significantly                  undercapitalized |   | Less                  than 6%              |   | Less                  than 3%                                |   | Less                  than 3%                              |
|                                            |   |                                       |   |                                                         |   |                                                       |

----

|                                         |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         | To                    Be            |   |   |                           |         |   |   |   |
|----------------------------------------------|--------|--------------------------------------------------------------|--------------|--------|--------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------------|-------------------------------------|--------|--------|--------------------------------|--------------|--------|--------|--------|
|                                         |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         | Well                    Capitalized |   |   |                           |         |   |   |   |
|                                         |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         | Under                    Prompt     |   |   | Excess                    Over |         |
|                                         |   |                                                         |         |   |                                 |   |   | Required                    for                    Capital |   |   | Corrective                    Action |   |         | Well                    Capitalized |   |
|                                         |   | Actual                                        |         |   | Adequacy                    Purposes |   |   | Provisions                                                 |   |   | Provisions                           |   |
|                                         |   | Amount                                                       |    | Ratio  |                                 |   | Amount |                                                  | Ratio  |   |                                 | Amount |    | Ratio                               |   |   | Amount                         |    | Ratio  |   |
|                                         |   | (Dollars                    in                    Thousands) |         |
| Total                    risk-based capital  |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         |                                |   |   |                           |         |   |   |   |   |   |   |
|      Company        |   | $                                                            | 81,877       |   |                                 |   | 38.43  | %                                                          |   | $      | 17,044                               |   |         |                                | 8.00   | %      |                           | N/A          |   |   | N/A    |   |   | N/A |   |   | N/A |   |
|       Bank     |   |                                                         | 74,081       |   |                                 |   | 34.77  |                                                       |   |   | 17,044                               |   |         |                                | 8.00   |   |                           | $            | 21,305 |   |   |   | 10.00 | % |   | $ | 52,776 |   |   |   | 24.77 | % |
| Tier                    1 risk-based capital |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         |                                |   |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Company        |   |                                                         | 80,702       |   |                                 |   | 37.88  |                                                       |   |   | 8,522                                |   |         |                                | 4.00   |   |                           | N/A          |   |   | N/A    |   |   | N/A |   |   | N/A |   |
|       Bank     |   |                                                         | 72,906       |   |                                 |   | 34.22  |                                                       |   |   | 8,522                                |   |         |                                | 4.00   |   |                           |         | 12,783 |   |   |   | 6.00 |   |   |   | 60,123 |   |   |   | 28.22 |   |
| Tier                    1 leverage capital   |   |                                                         |         |   |                                 |   |   |                                                       |   |   |                                 |   |         |                                |   |   |                           |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Company        |   |                                                         | 80,702       |   |                                 |   | 17.08  |                                                       |   |   | 18,900                               |   |         |                                | 4.00   |   |                           | N/A          |   |   | N/A    |   |   | N/A |   |   | N/A |   |
|       Bank     |   |                                                         | 72,906       |   |                                 |   | 15.52  |                                                       |   |   | 18,785                               |   |         |                                | 4.00   |   |                           |         | 23,482 |   |   |   | 5.00 |   |   |   | 49,424 |   |   |   | 10.52 |   |

----

----

----

----

----

----

|                                                                                                                                   |   |         |   | Date                  of |   | Net                  Book       |   |   |                       |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------------------------|--------|---------------------------------|--------|--------|----------------------------|--------|
|                                                                                                                                   |   |         |   | Lease                    |   | Value                           |   |   | Amount                  of |   |
| Description/Address                                                                                                                    |   | Leased/Owned |   | Expiration               |   | of                  Property    |   |   | Deposits                   |   |
|                                                                                                                                   |   |         |   |                     |   | (In                  Thousands) |   |
| Main                  Office1834                  Oregon AvenuePhiladelphia,                  PA 19145-4725                            |   | Owned        |   | N/A                      |   | $                               | 540    |   |                       | $      | 188,526 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Snyder                  Branch2101                  South 19th                  StreetPhiladelphia,                  PA 19145-3709     |   | Owned        |   | N/A                      |   |                            | 6      |   |                       |   | 24,745 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Center                  City Branch112                  South 19th                  StreetPhiladelphia,                  PA 19103-4667 |   | Owned        |   | N/A                      |   |                            | 18     |   |                       |   | 27,059 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Broad                  Street Branch1722                  South Broad StreetPhiladelphia,                  PA 19145-2388               |   | Owned        |   | N/A                      |   |                            | 239    |   |                       |   | 48,368 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Pennsport                  Branch238A                  Moore StreetPhiladelphia,                  PA 19148-1925                        |   | Owned        |   | N/A                      |   |                            | 62     |   |                       |   | 37,038 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Drexel                  Hill Branch601                  Morgan AvenueDrexel                  Hill, PA 19026-3105                       |   | Owned        |   | N/A                      |   |                            | 94     |   |                       |   | 27,809 |   |
|                                                                                                                                   |   |         |   |                     |   |                            |   |   |                       |   |   |   |
| Old                  City Branch28                  North 3rd                  StreetPhiladelphia,                  PA 19106-2108      |   | Leased       |   | September2010            |   |                            | 503    |   |                       |   | 493 |   |

----

----

| Item                  5. | Market                  for Registrant's Common                  Equity, Related Stockholder Matters and Issuer Purchases of Equity                  Securities |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | Period                    Ending |   |
|-------------------------------------------------|--------|----------------------------------|--------|
| Index                                           |   | 03/30/05                         |   |   | 09/30/05 |   |   | 03/31/06 |   |   | 09/30/06 |   |   | 03/31/07 |   |   | 09/30/07 |   |
| Prudential                  Bancorp, Inc. of PA |   | $                                | 100.00 |   |   | $ | 121.75 |   |   | $ | 138.51 |   |   | $ | 135.95 |   |   | $ | 142.06 |   |   | $ | 129.51 |   |
| NASDAQ                  Composite               |   |                             | 100.00 |   |   |   | 152.46 |   |   |   | 161.84 |   |   |   | 183.58 |   |   |   | 192.69 |   |   |   | 230.49 |   |
| SNL                  MHC Thrift Index           |   |                             | 100.00 |   |   |   | 104.06 |   |   |   | 116.09 |   |   |   | 132.18 |   |   |   | 143.07 |   |   |   | 137.88 |   |
| SNL                  Thrift Index               |   |                             | 100.00 |   |   |   | 102.32 |   |   |   | 112.93 |   |   |   | 119.11 |   |   |   | 119.41 |   |   |   | 108.70 |   |
|                                            |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                          |   |                                           |   |   | Cash      |   |
|-----------------------------------------------|--------|------------------------------------------------|--------|--------|-----------|--------|
|                                          |   | Stock                  Price    |   |   | dividends |   |
| Quarter                  ended:               |   | High                                           |   |   | Low       |   |   | per                  share |   |
| September                  30, 2007           |   | $                                              | 13.75  |   |      | $      | 12.38 |   |   | $ | 0.05 |   |
| June                  30, 2007                |   |                                           | 13.85  |   |      |   | 13.36 |   |   |   | 0.05 |   |
| March                  31, 2007               |   |                                           | 13.89  |   |      |   | 13.38 |   |   |   | 0.05 |   |
| December  31,                  2006 |   |                                           | 13.88  |   |      |   | 13.15 |   |   |   | 0.04 |   |

|                                          |   |                                           |   |   |      |   |   | Cash                         |   |
|-----------------------------------------------|--------|------------------------------------------------|--------|--------|-----------|--------|--------|------------------------------|--------|
|                                          |   | Stock                  Price    |   |   | dividends |   |
| Quarter                  ended:               |   | High                                           |   |   | Low       |   |   | per                    share |   |
| September                  30, 2006           |   | $                                              | 13.45  |   |      | $      | 13.10  |                         |   | $ | 0.04 |   |
| June                  30, 2006                |   |                                           | 14.02  |   |      |   | 12.82  |                         |   |   | 0.04 |   |
| March                  31, 2006               |   |                                           | 13.96  |   |      |   | 11.70  |                         |   |   | 0.04 |   |
| December  31,                  2005 |   |                                           | 11.98  |   |      |   | 10.70  |                         |   |   | 0.04 |   |

| Period                                                                 |   | TotalNumber                    ofsharesPurchased |    |   | AveragePrice                    Paidper                    Share |   |   | Total                    Numberof                    SharesPurchased                    asPart                    of                    PubliclyAnnouncedPlans                    orPrograms |   |   | MaximumNumber                    ofShares                    thatMay                    Yet BePurchasedUnder                    thePlans                    orPrograms |   |
|------------------------------------------------------------------------|--------|--------------------------------------------------|---------|--------|------------------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Month                  #1 July 1, 2007 – July 31, 2007           |   |                                             | 42,300  |   |                                                             | $      | 13.50  |                                                                                                                                                                                         |   |   | 42,300                                                                                                                                                                 |   |   |   | 282,000 |   |
| Month                  #2 August 1, 2007 – August 31, 2007       |   |                                             | 93,500  |   |                                                             |   | 13.16  |                                                                                                                                                                                         |   |   | 93,500                                                                                                                                                                 |   |   |   | 188,500 |   |
| Month                  #3 September 1, 2007 – September 30, 2007 |   |                                             | -       |   |                                                             |   | -      |                                                                                                                                                                                         |   |   | -                                                                                                                                                                      |   |   |   | 188,500 |   |
| Total                                                                  |   |                                             | 135,800 |   |                                                             | $      | 13.27  |                                                                                                                                                                                         |   |   | 135,800                                                                                                                                                                |   |   |   | 188,500 |   |

|   | (1) | On                  August 15, 2007, the Company announced its fifth stock repurchase                  program                  to repurchase 230,500 shares or approximately 5% of the Company’s                  outstanding common stock held by shareholders other than Prudential                  Mutual                  Holding Company, such program commenced upon completion of the                  fourth                  program (which was completed in August                  2007). |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                     |   | At                    September                    30,     |     |
|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------|----------|
|                                                                                                                     |   | 2007                                                       |     |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                                     |   | (Dollars                  in Thousands)                    |     |
| Selected                  Financial and Other                  Data:                                                     |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                                                                                            |   | $                                                          | 474,192  |   |   | $ | 472,381 |   |   | $ | 446,592 |   |   | $ | 406,638 |   |   | $ | 395,825 |   |
| Cash                  and cash equivalents                                                                               |   |                                                       | 12,269   |   |   |   | 13,428 |   |   |   | 26,815 |   |   |   | 10,061 |   |   |   | 24,108 |   |
| Investment                  securities:                                                                                  |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Held-to-maturity                                                                                             |   |                                                       | 134,782  |   |   |   | 132,084 |   |   |   | 129,840 |   |   |   | 114,806 |   |   |   | 98,991 |   |
|   Available-for-sale                                                                                           |   |                                                       | 38,343   |   |   |   | 38,747 |   |   |   | 38,584 |   |   |   | 40,287 |   |   |   | 43,175 |   |
| Mortgage-backed                  securities:                                                                             |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Held-to-maturity                                                                                             |   |                                                       | 45,534   |   |   |   | 50,360 |   |   |   | 66,828 |   |   |   | 80,932 |   |   |   | 82,556 |   |
|   Available-for-sale                                                                                           |   |                                                       | 8,549    |   |   |   | 4,615 |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Loans                  receivable, net                                                                                   |   |                                                       | 219,149  |   |   |   | 219,418 |   |   |   | 175,091 |   |   |   | 151,565 |   |   |   | 137,926 |   |
| Deposits                                                                                                                 |   |                                                       | 354,038  |   |   |   | 347,292 |   |   |   | 336,468 |   |   |   | 349,159 |   |   |   | 340,777 |   |
| FHLB                  advances                                                                                           |   |                                                       | 33,743   |   |   |   | 31,784 |   |   |   | 13,823 |   |   |   | 13,862 |   |   |   | 13,900 |   |
| Total                  equity, substantially restricted                                                                  |   |                                                       | 80,961   |   |   |   | 87,448 |   |   |   | 90,825 |   |   |   | 39,099 |   |   |   | 36,548 |   |
| Banking                  offices                                                                                         |   |                                                       | 7        |   |   |   | 6 |   |   |   | 6 |   |   |   | 6 |   |   |   | 6 |   |
|                                                                                                                     |   |                                                       |     |
|                                                                                                                     |   |                                                       |     |
|                                                                                                                     |   | Year                  Ended September                  30, |     |
|                                                                                                                     |   | 2007                                                       |     |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
|                                                                                                                     |   | (Dollars                  in Thousands)                    |     |
| Selected                  Operating                  Data:                                                               |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  interest income                                                                                   |   | $                                                          | 26,907   |   |   | $ | 24,542 |   |   | $ | 21,077 |   |   | $ | 19,513 |   |   | $ | 18,813 |   |
| Total                  interest expense                                                                                  |   |                                                       | 14,784   |   |   |   | 11,935 |   |   |   | 9,297 |   |   |   | 9,002 |   |   |   | 9,707 |   |
| Net                  interest income                                                                                     |   |                                                       | 12,123   |   |   |   | 12,607 |   |   |   | 11,780 |   |   |   | 10,511 |   |   |   | 9,106 |   |
| Provision                  for loan losses                                                                               |   |                                                       | 395      |   |   |   | 60 |   |   |   | -- |   |   |   | 50 |   |   |   | 180 |   |
| Net                  interest income after provision for  loan                  losses                         |   |                                                       | 11,728   |   |   |   | 12,547 |   |   |   | 11,780 |   |   |   | 10,461 |   |   |   | 8,926 |   |
| Total                  non-interest income                                                                               |   |                                                       | 1,046    |   |   |   | 938 |   |   |   | 567 |   |   |   | 581 |   |   |   | 742 |   |
| Total                  non-interest expense                                                                              |   |                                                       | 7,990    |   |   |   | 7,875 |   |   |   | 7,069 |   |   |   | 7,323 |   |   |   | 6,047 |   |
| Income                  before income taxes                                                                              |   |                                                       | 4,784    |   |   |   | 5,610 |   |   |   | 5,278 |   |   |   | 3,719 |   |   |   | 3,621 |   |
| Income                  taxes                                                                                            |   |                                                       | 1,387    |   |   |   | 1,773 |   |   |   | 1,886 |   |   |   | 1,246 |   |   |   | 1,253 |   |
| Net                  income                                                                                              |   | $                                                          | 3,397    |   |   | $ | 3,837 |   |   | $ | 3,392 |   |   | $ | 2,473 |   |   | $ | 2,368 |   |
| Basic                  earnings per share (1)Diluted                  earnings per share (1)                             |   |                                                       | 0.300.30 |   |   |   | 0.320.32 |   |   |   | 0.150.15 |   |   |   | -- -- |   |   |   | ---- |   |
|                                                                                                                     |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selected                  Operating                  Ratios(2):                                                          |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average                  yield on interest-earning assets                                                                |   |                                                       | 5.92     | % |   |   | 5.58 | % |   |   | 5.03 | % |   |   | 4.97 | % |   |   | 5.18 | % |
| Average                  rate on interest-bearing liabilities                                                            |   |                                                       | 3.93     |   |   |   | 3.34 |   |   |   | 2.64 |   |   |   | 2.48 |   |   |   | 2.91 |   |
| Average                  interest rate spread(3)                                                                         |   |                                                       | 1.99     |   |   |   | 2.24 |   |   |   | 2.39 |   |   |   | 2.49 |   |   |   | 2.27 |   |
| Net                  interest margin(3)                                                                                  |   |                                                       | 2.67     |   |   |   | 2.87 |   |   |   | 2.81 |   |   |   | 2.68 |   |   |   | 2.51 |   |
| Average                  interest-earning assets to average  interest-bearing                  liabilities     |   |                                                       | 120.64   |   |   |   | 122.94 |   |   |   | 118.81 |   |   |   | 108.13 |   |   |   | 108.67 |   |
| Net                  interest income after provision  for                  loan losses to non-interest expense |   |                                                       | 146.78   |   |   |   | 159.33 |   |   |   | 166.64 |   |   |   | 142.85 |   |   |   | 147.61 |   |
| Total                  non-interest expense to average assets                                                            |   |                                                       | 1.70     |   |   |   | 1.73 |   |   |   | 1.64 |   |   |   | 1.80 |   |   |   | 1.61 |   |
| Efficiency                  ratio(4)                                                                                     |   |                                                       | 60.67    |   |   |   | 58.14 |   |   |   | 57.25 |   |   |   | 66.02 |   |   |   | 61.40 |   |
| Return                  on average assets                                                                                |   |                                                       | 0.72     |   |   |   | 0.84 |   |   |   | 0.79 |   |   |   | 0.61 |   |   |   | 0.63 |   |
| Return                  on average equity                                                                                |   |                                                       | 3.98     |   |   |   | 4.26 |   |   |   | 5.14 |   |   |   | 6.50 |   |   |   | 6.64 |   |
| Average                  equity to average assets                                                                        |   |                                                       | 18.15    |   |   |   | 19.82 |   |   |   | 15.30 |   |   |   | 9.36 |   |   |   | 9.52 |   |
|                                                                                                                     |   |                                                       |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                     |   |                                                       |     |   |   |   |   |   |   |   |   |   |   | (Footnotes                  on next                  page) |   |

----

|                                                         |   | At                  or For                  theYear                    Ended September                    30, |   |
|--------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
|                                                         |   | 2007                                                                                                          |   |   | 2006 |   |   | 2005 |   |   | 2004 |   |   | 2003 |   |
| Asset                  Quality                  Ratios(5):   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-performing                  loans as a percent of        |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   total                  loans receivable(6)       |   |                                                                                                          | 1.18   | % |   |   | 0.07 | % |   |   | 0.14 | % |   |   | 0.32 | % |   |   | 0.65 | % |
| Non-performing                  assets as a percent of       |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   total                  assets(6)                 |   |                                                                                                          | 0.55   |   |   |   | 0.03 |   |   |   | 0.13 |   |   |   | 0.25 |   |   |   | 0.38 |   |
| Allowance                  for loan losses as a percent of   |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   non-performing                  loans            |   |                                                                                                          | 38.97  |   |   |   | 409.66 |   |   |   | 233.47 |   |   |   | 116.49 |   |   |   | 62.13 |   |
| Net                  charge-offs to average loans receivable |   |                                                                                                          | --     |   |   |   | -- |   |   |   | -- |   |   |   | 0.03 |   |   |   | 0.16 |   |
|                                                         |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital                  Ratios(5):                          |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Tier                  1 leverage ratio                       |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                                      |   |                                                                                                          | 17.08  | % |   |   | 18.64 | % |   |   | 20.98 | % |   | N/A |   |   | N/A |   |
| Bank                                                         |   |                                                                                                          | 15.52  |   |   |   | 14.74  |   |   |   | 14.55  |   |   | 9.39 | % |   | 9.03 | % |
| Tier                  1 risk-based capital ratio             |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                                      |   |                                                                                                          | 37.88  | % |   |   | 39.23 | % |   |   | 48.54 | % |   | N/A |   |   | N/A |   |
| Bank                                                         |   |                                                                                                          | 34.22  |   |   |   | 31.12 |   |   |   | 34.71 |   |   | 24.50 |   |   | 21.95 |   |
| Total                  risk-based capital ratio              |   |                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Company                                                      |   |                                                                                                          | 38.43  | % |   |   | 39.68 | % |   |   | 48.98 | % |   | N/A |   |   | N/A |   |
| Bank                                                         |   |                                                                                                          | 34.77  |   |   |   | 31.56 |   |   |   | 35.16  |   |   | 25.22 |   |   | 22.29 |   |

| (1)    | Due                  to the timing of the Bank’s reorganization into the mutual holding company                  form and the completion of the Company’s initial public offering on March                  29, 2005, earnings per share for the year ended September 30, 2005                  is for                  the six month period ended September 30, 2005.  There were no                  shares of common stock of the Company outstanding prior to the                  reorganization on March 29, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (2)    | With                  the exception of end of period ratios, all ratios are based on                  average                  monthly balances during the indicated periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (3)    | Average                  interest rate spread represents the difference between the average                  yield                  on interest-earning assets and the average rate paid on interest-bearing                  liabilities, and net interest margin represents net interest income                  as a                  percentage of average interest-earning assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (4)    | The                  efficiency ratio represents the ratio of non-interest expense divided                  by                  the sum of net interest income and non-interest income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (5)    | Asset                  quality ratios and capital ratios are end of period ratios, except                  for net                  charge-offs to average loans receivable.  The Bank converted to                  a Pennsylvania-chartered savings bank in August 2004 and thus became                  subject to the Federal Deposit Insurance Corporation regulatory                  capital                  regulations.  Prior thereto, the Bank was a                  Pennsylvania-chartered savings association subject to regulations                  by the                  Office of Thrift Supervision.  Under Federal Deposit Insurance                  Corporation regulations, capital ratios for the Bank are based                  on average                  assets rather than assets, as adjusted, at the relevant date as                  required                  by the regulations of the Office of Thrift Supervision.  Since                  the Company did not have any capital stock outstanding prior to                  March 29,                  2005, no capital ratios are presented for the pre-2005                  periods. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| (6)    | Non-performing                  assets consist of non-performing loans and real estate                  owned.  Non-performing loans consist of all loans 90 days or                  more past due and loans in excess of 90 days delinquent and still                  accruing                  interest.  It is our policy to cease accruing interest on all                  loans, other than single-family residential mortgage loans, 90                  days or                  more past due.  Real estate owned consists of real estate                  acquired through foreclosure and real estate acquired by acceptance                  of a                  deed-in-lieu of foreclosure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

----

----

----

----

|                                                                     |   | Total                             |         |                      | Amount                    of Commitment Expiration - Per Period |   |
|--------------------------------------------------------------------------|--------|-----------------------------------|--------------|---------------------------|-----------------------------------------------------------------|--------|
|                                                                     |   | Amounts                           |         |                      | To                                                              |   |   | 1-3 |   |   | 4-5 |   |   | After                    5 |   |
|                                                                     |   | Committed                         |    | 1                    Year |                                                       | Years  |    | Years |    | Years |   |
|                                                                     |   | (In                    Thousands) |         |
|                                                                     |   |                              |         |                      |                                                            |   |   |   |   |   |   |   |   |   |   |   |   |
| Letters                    of credit                                     |   | $                                 | 95           |                      |                                                            | $      | - |   |   | $ | 95 |   |   | $ | - |   |   | $ | - |   |
| Lines                    of credit (2)                                   |   |                              | 7,194        |                      |                                                            |   | - |   |   |   | - |   |   |   | - |   |   |   | 7,194 |   |
| Undisbursed                    portions of loans in process (1)          |   |                              | 15,897       |                      |                                                            |   | 12,214 |   |   |   | 3,683 |   |   |   | - |   |   |   | - |   |
| Commitments                    to originate loans                        |   |                              | 10,361       |                 |                                                            | 10,361 |    |   | - |    |   | - |    |   | - |   |
|       Total                    commitments |   | $                                 | 33,547       |                 | $                                                               | 22,575 |    | $ | 3,778 |    | $ | - |    | $ | 7,194 |   |

| (1) | Includes                  participation interests sold to other financial institutions totaling                  $2.1                  million; Prudential Savings Bank will fund such amount and be reimbursed                  by the participants. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The                  majority of available lines of credit are for home equity                  loans.                                                                                                                                                |

|                                                               |   |                              |         |                      | Payments                    Due By Period    |    |
|--------------------------------------------------------------------|--------|-----------------------------------|--------------|---------------------------|-------------------------------------------------------------|---------|
|                                                               |   |                              |         |                      | To                                                          |    |   | 1-3 |   |   | 4-5 |   |   | After                    5 |   |
|                                                               |   | Total                             |    | 1                    Year |                                                   | Years   |    | Years |    | Years |   |
|                                                               |   | (In                    Thousands) |         |
| Certificates                    of deposit                         |   | $                                 | 190,565      |                      |                                                        | $       | 136,882 |   |   | $ | 34,074 |   |   | $ | 19,609 |   |   |   |   |
| FHLB                    advances(1)                                |   |                              | 33,743       |                 |                                                        | 20,042  |    |   | 13,086 |    |   | 109 |    |   | 506 |   |
| Total                    long-term debt                            |   |                              | 224,308      |                      |                                                        |    | 156,924 |   |   |   | 47,160 |   |   |   | 19,718 |   |   |   | 506 |   |
| Operating                    lease obligations                     |   |                              | 145          |                 |                                                        | 76      |    |   | 67 |    |   | 2 |    |   | - |   |
|    Total                    contractual obligations |   | $                                 | 224,453      |                 | $                                                           | 157,000 |    | $ | 47,227 |    | $ | 19,720 |    | $ | 506 |   |

| (1) | Does                  not include interest due annually on FHLB                  advances. |
|-----|--------------------------------------------------------------------------------------------|

----

|                                                                                                        |   | Year                    Ended September 30, |         |
|-------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                                                        |   | 2007                                        |    | 2006 |    | 2005 |   |
|                                                                                                        |   |                                        |         |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |   |   |   |   |   |   |   | Average |   |
|                                                                                                        |   | Average                                     |         |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |   | Average |   |   |   |   |   | Yield/ |   |
|                                                                                                        |   | Balance                                     |         |   | Interest |   |   | Rate(1) |   |   | Balance |   |   | Interest |   |   | Rate |   |   | Balance |   |   | Interest |   |   | Rate |   |
|                                                                                                        |   | (Dollars                    in Thousands)   |         |
| Interest-earning                    assets:                                                                 |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                    securities                                                                    |   |                                        | 173,760      |   |   |   | 8,768 |   |   |   | 5.05 | % |   |   | 173,713 |   |   |   | 8,019 |   |   |   | 4.62 | % |   |   | 157,648 |   |   |   | 6,758 |   |   |   | 4.29 | % |
| Mortgage-backed                    securities                                                               |   |                                        | 53,759       |   |   |   | 2,820 |   |   |   | 5.25 | % |   |   | 60,750 |   |   |   | 3,147 |   |   |   | 5.18 | % |   |   | 72,771 |   |   |   | 3,783 |   |   |   | 5.20 | % |
| Loans                    receivable(1)                                                                      |   |                                        | 221,262      |   |   |   | 15,136 |   |   |   | 6.84 | % |   |   | 197,913 |   |   |   | 13,077 |   |   |   | 6.61 | % |   |   | 163,166 |   |   |   | 9,885 |   |   |   | 6.06 | % |
| Other                    interest-earning assets                                                            |   |                                        | 5,372        |    |   | 183 |   |   |   | 3.41 | % |   |   | 7,307 |    |   | 299 |   |   |   | 4.09 | % |   |   | 25,512 |    |   | 651 |   |   |   | 2.55 | % |
|    Total                    interest-earning assets                                          |   |                                        | 454,153      |   |   |   | 26,907 |    |   | 5.92 | % |   |   | 439,683 |   |   |   | 24,542 |    |   | 5.58 | % |   |   | 419,097 |   |   |   | 21,077 |    |   | 5.03 | % |
| Non-interest-earning                    assets                                                              |   |                                        | 15,864       |   |   |   |   |   |   |   |   |   |   |   | 14,786 |   |   |   |   |   |   |   |   |   |   |   | 12,073 |   |   |   |   |   |   |   |   |   |
|    Total                    assets                                                           |   |                                        | 470,017      |   |   |   |   |   |   |   |   |   |   |   | 454,469 |   |   |   |   |   |   |   |   |   |   |   | 431,170 |   |   |   |   |   |   |   |   |   |
| Interest-bearing                    liabilities:                                                            |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Savings                    accounts                                                                   |   |                                        | 71,815       |   |   |   | 1,977 |   |   |   | 2.75 | % |   |   | 81,472 |   |   |   | 2,449 |   |   |   | 3.01 | % |   |   | 91,821 |   |   |   | 1,719 |   |   |   | 1.87 | % |
|  Checking                    & money market accounts                                               |   |                                        | 93,701       |   |   |   | 3,321 |   |   |   | 3.54 | % |   |   | 98,112 |   |   |   | 3,081 |   |   |   | 3.14 | % |   |   | 101,146 |   |   |   | 2,273 |   |   |   | 2.25 | % |
|  Certificate                    accounts                                                               |   |                                        | 181,604      |    |   | 7,944 |   |   |   | 4.37 | % |   |   | 156,869 |    |   | 5,304 |   |   |   | 3.38 | % |   |   | 144,445 |    |   | 4,520 |   |   |   | 3.13 | % |
|    Total                    deposits                                                         |   |                                        | 347,120      |   |   |   | 13,242 |   |   |   | 3.81 | % |   |   | 336,453 |   |   |   | 10,834 |   |   |   | 3.22 | % |   |   | 337,412 |   |   |   | 8,512 |   |   |   | 2.52 | % |
| FHLB                    advances                                                                            |   |                                        | 27,686       |   |   |   | 1,533 |   |   |   | 5.54 | % |   |   | 19,628 |   |   |   | 1,092 |   |   |   | 5.56 | % |   |   | 13,842 |   |   |   | 775 |   |   |   | 5.60 | % |
| Real                    estate tax escrow accounts                                                          |   |                                        | 1,635        |   |   |   | 9 |   |   |   | 0.55 | % |   |   | 1,552 |   |   |   | 9 |   |   |   | 0.58 | % |   |   | 1,490 |   |   |   | 10 |   |   |   | 0.67 | % |
| Other                    interest-bearing liabilities                                                       |   |                                        | -            |    |   | - |   |   |   | 0.00 | % |   |   | - |    |   | - |   |   |   | 0.00 | % |   |   | - |    |   | - |   |   |   | 0.00 | % |
|    Total                    interest-bearing liabilities                                     |   |                                        | 376,441      |   |   |   | 14,784 |    |   | 3.93 | % |   |   | 357,633 |   |   |   | 11,935 |    |   | 3.34 | % |   |   | 352,744 |   |   |   | 9,297 |    |   | 2.64 | % |
| Non-interest-bearing                    liabilities                                                         |   |                                        | 8,259        |   |   |   |   |   |   |   |   |   |   |   | 6,762 |   |   |   |   |   |   |   |   |   |   |   | 12,459 |   |   |   |   |   |   |   |   |   |
|    Total                    liabilities                                                      |   |                                        | 384,700      |   |   |   |   |   |   |   |   |   |   |   | 364,395 |   |   |   |   |   |   |   |   |   |   |   | 365,203 |   |   |   |   |   |   |   |   |   |
| Stockholders'                    Equity                                                                     |   |                                        | 85,317       |   |   |   |   |   |   |   |   |   |   |   | 90,074 |   |   |   |   |   |   |   |   |   |   |   | 65,967 |   |   |   |   |   |   |   |   |   |
| Total                    liabilities and Stockholders' Equity                                               |   |                                        | 470,017      |   |   |   |   |   |   |   |   |   |   |   | 454,469 |   |   |   |   |   |   |   |   |   |   |   | 431,170 |   |   |   |   |   |   |   |   |   |
|  Net                    interest-earning assets                                                        |   |                                        | 77,712       |   |   |   |   |   |   |   |   |   |   |   | 82,050 |   |   |   |   |   |   |   |   |   |   |   | 66,353 |   |   |   |   |   |   |   |   |   |
|                                                                                                        |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  Net                    interest income; interest rate spread                                          |   |                                        |         |   |   |   | 12,123 |     | 1.99 | % |   |   |   |   |   |   | 12,607 |     | 2.24 | % |   |   |   |   |   |   | 11,780 |     | 2.39 | % |
|  Net                    interest margin (2)                                                            |   |                                        |         |   |   |   |   |   |   |   | 2.67 | % |   |   |   |   |   |   |   |   |   |   | 2.87 | % |   |   |   |   |   |   |   |   |   |   | 2.81 | % |
| Average                    interest-earning assets to average                                               |   |                                        |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|           interest-bearing                    liabilities |   |                                        |         |   |   |   |   |   |   |   | 120.64 | % |   |   |   |   |   |   |   |   |   |   | 122.94 | % |   |   |   |   |   |   |   |   |   |   | 118.81 | % |

| (1)    | Includes                  nonaccrual loans during the respective periods.  Calculated net                  of deferred fees and discounts, loans in process and allowance                  for loan                  losses. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                   |
| (2)    | Equals                  net interest income divided by average interest-earning                  assets.                                                                                                                               |

----

|                                                          |   | 2007                    vs.                    2006                                                                                           |   |   | 2006                    vs.                    2005 |   |
|---------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------|--------|
|                                                          |   | Increase                    (Decrease) Due                    to                                                                              |   |   | Total                                               |   |   | Increase                    (Decrease) Due                    to |   |   | Total |   |
|                                                          |   |                                                                                                                                          |   |   |                                                |   |   | Rate/ |   |   | Increase |   |   |   |   |   |   |   |   | Rate/ |   |   | Increase |   |
|                                                          |   | Rate                                                                                                                                          |   |   | Volume                                              |   |   | Volume |   |   | (Decrease) |   |   | Rate |   |   | Volume |   |   | Volume |   |   | (Decrease) |   |
|                                                          |   | (In                    Thousands)                   |   |
| Interest                    income:                           |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                    securities                      |   | $                                                                                                                                             | 747    |   |                                                | $      | 2 |   |   | $ | - |   |   | $ | 749 |   |   | $ | 519 |   |   | $ | 689 |   |   | $ | 53 |   |   | $ | 1,261 |   |
| Mortgage-backed                    securities                 |   |                                                                                                                                          | 40     |   |                                                |   | (362 | ) |   |   | (5 | ) |   |   | (327 | ) |   |   | (13 | ) |   |   | (625 | ) |   |   | 2 |   |   |   | (636 | ) |
| Loans                    receivable, net                      |   |                                                                                                                                          | 462    |   |                                                |   | 1,543 |   |   |   | 54 |   |   |   | 2,059 |   |   |   | 896 |   |   |   | 2,105 |   |   |   | 191 |   |   |   | 3,192 |   |
| Other                    interest-earning assets              |   |                                                                                                                                          | (50    | )      |                                                |   | (79 | ) |   |   | 13 |   |   |   | (116 | ) |   |   | 393 |   |   |   | (465 | ) |   |   | (280 | ) |   |   | (352 | ) |
| Total                    interest-earning assets              |   |                                                                                                                                          | 1,199  |   |                                                |   | 1,104 |   |   |   | 62 |   |   |   | 2,365 |   |   |   | 1,795 |   |   |   | 1,704 |   |   |   | (34 | ) |   |   | 3,465 |   |
| Interest                    expense:                          |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                    accounts                           |   |                                                                                                                                          | (206   | )      |                                                |   | (290 | ) |   |   | 24 |   |   |   | (472 | ) |   |   | 1,041 |   |   |   | (194 | ) |   |   | (117 | ) |   |   | 730 |   |
| Checking                    accounts                          |   |                                                                                                                                          | 396    |   |                                                |   | (139 | ) |   |   | (17 | ) |   |   | 240 |   |   |   | 903 |   |   |   | (68 | ) |   |   | (27 | ) |   |   | 808 |   |
|    (interest-bearing                    and    |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    non-interest                    bearing)    |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Certificate                    accounts                       |   |                                                                                                                                          | 1,558  |   |                                                |   | 836 |   |   |   | 246 |   |   |   | 2,640 |   |   |   | 364 |   |   |   | 389 |   |   |   | 31 |   |   |   | 784 |   |
| Total                    deposits                             |   |                                                                                                                                          | 1,748  |   |                                                |   | 407 |   |   |   | 253 |   |   |   | 2,408 |   |   |   | 2,308 |   |   |   | 127 |   |   |   | (113 | ) |   |   | 2,322 |   |
| FHLB                    advances                              |   |                                                                                                                                          | (5     | )      |                                                |   | 448 |   |   |   | (2 | ) |   |   | 441 |   |   |   | (5 | ) |   |   | 324 |   |   |   | (2 | ) |   |   | 317 |   |
| Other                    interest-bearing                     |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   liabilities                                       |   |                                                                                                                                          | -      |   |                                                |   | - |   |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |   |   | (1 | ) |
| Total                    interest-bearing                     |   |                                                                                                                                          |   |   |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| liabilities                                                   |   |                                                                                                                                          | 1,743  |   |                                                |   | 855 |   |   |   | 251 |   |   |   | 2,849 |   |   |   | 2,302 |   |   |   | 451 |   |   |   | (115 | ) |   |   | 2,638 |   |
| Increase                    (decrease) in net interest income |   | $                                                                                                                                             | (544   | )      |                                                | $      | 249 |   |   | $ | (189 | ) |   | $ | (484 | ) |   | $ | (507 | ) |   | $ | 1,253 |   |   | $ | 81 |   |   | $ | 827 |   |

----

----

----

----

----

|   | · | we                  have increased our originations of shorter term loans and/or loans                  with                  adjustable rates of interest, particularly construction and land                  development loans;          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                        |
|   | · | we                  have invested in securities with “step-up” rate features providing for                  increased interest rates prior to maturity according to a pre-determined                  schedule and formula; and |
|   |   |                                                                                                                                                                                                                                        |
|   | · | we                  have maintained moderate levels of short-term liquid                  assets.                                                                                                                                           |

----

----

|                                                                          |   |                                      |         |                         | More                    than |                          |         | More                    than  |         |                       | More                    than |    |         |                         |    |         |
|-------------------------------------------------------------------------------|--------|-------------------------------------------|--------------|------------------------------|------------------------------|-------------------------------|--------------|-------------------------------|--------------|----------------------------|------------------------------|---------|--------------|------------------------------|---------|--------------|
|                                                                          |   | 3                    Months               |         |                         | 3                    Months  |                          |         | 1                    Year     |         |                       | 3                    Years   |    |         | More                    than |    |         | Total |   |
|                                                                          |   | or                    Less                |    | to                    1 Year |                    | to                    3 Years |    | to                    5 Years |    | 5                    Years |                    | Amount  |         |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |
|                                                                          |   | (Dollars                    in Thousands) |         |
| Interest-earning                    assets(1):                                |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |
| Investment                    securities                                      |   |                                      | 15,233       |                         |                         |                          | 31,833       |                          |         |                       | 20,376                       |    |         |                         | 8,497   |         |   |   | 96,850 |   |   |   | 172,789 |   |
| Mortgage-backed                    securities                                 |   |                                      | 1,922        |                         |                         |                          | 6,359        |                          |         |                       | 9,056                        |    |         |                         | 11,629  |         |   |   | 25,060 |   |   |   | 54,026 |   |
| Loans                    receivable(2)                                        |   |                                      | 55,065       |                         |                         |                          | 27,752       |                          |         |                       | 49,861                       |    |         |                         | 32,652  |         |   |   | 54,515 |   |   |   | 219,845 |   |
| Other                    interest earning assets                              |   |                                      | 10,533       |                    |                         | -                             |    |                          | -            |                  |                         | -       |    |                         | -       |    |   | 10,533 |   |
|     Total                    interest-earning assets(3)   |   |                                      | 82,753       |                    |                         | 65,944                        |    |                          | 79,293       |                  |                         | 52,778  |    |                         | 176,425 |    |   | 457,193 |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Interest-bearing                    liabilities:                              |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Savings                    accounts                                           |   |                                      | 730          |                         |                         |                          | 107          |                          |         |                       | 41,110                       |    |         |                         | 13,703  |         |   |   | 13,703 |   |   |   | 69,353 |   |
| Checking                    & money market accounts                       |   |                                      | -            |                         |                         |                          | 31,837       |                          |         |                       | 47,417                       |    |         |                         | 5,193   |         |   |   | 5,193 |   |   |   | 89,640 |   |
| Certificate                    accounts                                       |   |                                      | 49,238       |                         |                         |                          | 87,644       |                          |         |                       | 34,074                       |    |         |                         | 19,609  |         |   |   | - |   |   |   | 190,565 |   |
| FHLB                    advances                                              |   |                                      | 20,019       |                         |                         |                          | 58           |                          |         |                       | 13,161                       |    |         |                         | 156     |         |   |   | 349 |   |   |   | 33,743 |   |
| Real                    estate tax escrow accounts                            |   |                                      | 1,117        |                    |                         | -                             |    |                          | -            |                  |                         | -       |    |                         |    |    |   | 1,117 |   |
|     Total                    interest-bearing liabilities |   |                                      | 71,104       |                    |                         | 119,646                       |    |                          | 135,762      |                  |                         | 38,661  |    |                         | 19,245  |    |   | 384,418 |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Interest-earning                    assets                                    |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    less                    interest-bearing liabilities        |   |                                      | 11,649       |                    |                         | (53,702                       | )       |                          | (56,469      | )                     |                         | 14,117  |    |                         | 157,180 |    |   | 72,775 |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Cumulative                    interest-rate                                   |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    sensitivity                    gap(4)                       |   |                                      | 11,649       |                    |                         | (42,053                       | )       |                          | (98,522      | )                     |                         | (84,405 | )       |                         | 72,775  |         |   |   |   |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Cumulative                    interest-rate                                   |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    gap                    as a percentage                      |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    of                    total assets at Sept 30, 2007         |   |                                      | 2.46         | %                       |                         | -8.87                         | %       |                          | -20.78       | %                     |                         | -17.80  | %       |                         | 15.35   | %            |   |   |   |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
| Cumulative                    interest-earning                                |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    assets                    as a percentage of                |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    cumulative                    interest-bearing              |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |
|    liabilities                    at Sept 30, 2007             |   |                                      | 116.38       | %                       |                         | 77.95                         | %       |                          | 69.83        | %                     |                         | 76.89   | %       |                         | 118.93  | %            |   |   |   |   |
|                                                                          |   |                                      |         |                         |                         |                          |         |                          |         |                       |                         |    |         |                         |    |         |   |   |   |   |   |   |   |   |

| (1)    | Interest-earning                  assets are included in the period in which the balances are expected                  to be                  redeployed and/or repriced as a result of anticipated prepayments,                  scheduled rate adjustments and contractual maturities. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                      |
| (2)    | For                  purposes of the gap analysis, loans receivable includes non-performing                  loans gross of the allowance for loan losses, undisbursed loan                  funds,                  unamortized discounts and deferred loan fees.                        |
|   |                                                                                                                                                                                                                                                                                      |
| (3)    | Includes                  FHLB stock.                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                      |
| (4)    | Interest-rate                  sensitivity gap represents the difference between total interest-earning                  assets and total interest-bearing                  liabilities.                                                                                                  |

----

| Change                    in       |         |   |                                                                                            |                        |                               |                        |         |                         |         |   |   | NPV                    as % of Portfolio |   |
|------------------------------------|--------------|--------|-------------------------------------------------------------------------------------------------|-----------------------------|------------------------------------|-----------------------------|--------------|------------------------------|--------------|--------|--------|------------------------------------------|--------|
| Interest                    Rates  |         |   | Net                    Portfolio Value                                           |                   | Value                    of Assets |                        |
| In                    Basis Points |         |   |                                                                                            |                        |                               |                        |         |                         |         |   |   |                                     |   |   |   |   |
| (Rate                    Shock)    |    | Amount |                                                                                       | $                    Change |                          | %                    Change |    | NPV                    Ratio |    | Change |   |
|                               |         |   | (Dollars                    in Thousands)          |                        |
| 300                                |         |   |                                                                                            | 49,669                      |                               |                        |         | (35,971                      | )            |   |   | -42.00                                   | %      |   |   | 11.86 | % |   |   | -6.40 | % |
| 200                                |         |   |                                                                                            | 60,864                      |                               |                        |         | (24,776                      | )            |   |   | -28.93                                   | %      |   |   | 14.00 | % |   |   | -4.26 | % |
| 100                                |         |   |                                                                                            | 73,023                      |                               |                        |         | (12,617                      | )            |   |   | -14.73                                   | %      |   |   | 16.17 | % |   |   | -2.09 | % |
| Static                             |         |   |                                                                                            | 85,640                      |                               |                        |         | -                            |         |   |   | -                                        |   |   |   | 18.26 | % |   |   | - |   |
| (100)                              |         |   |                                                                                            | 91,284                      |                               |                        |         | 5,644                        |         |   |   | 6.59                                     | %      |   |   | 19.10 | % |   |   | 0.84 | % |
| (200)                              |         |   |                                                                                            | 89,294                      |                               |                        |         | 3,654                        |         |   |   | 4.00                                     | %      |   |   | 18.51 | % |   |   | 0.25 | % |
| (300)                              |         |   |                                                                                            | 86,566                      |                               |                        |         | 926                          |         |   |   | 1.04                                     | %      |   |   | 17.85 | % |   |   | -0.41 | % |

----

----

----

|                                                                                                                                                                                |   | September                        30,                                 |    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                                                                                                                                                |   | 2007                                                                 |    |   | 2006 |   |
|                                                                                                                                                                                |   | (Dollars                        in                        Thousands) |    |
| ASSETS                                                                                                                                                                              |   |                                                                 |    |   |   |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |
| Cash                        and amounts due from depository institutions                                                                                                            |   | $                                                                    | 4,133   |   |   | $ | 5,743 |   |
| Interest-bearing                        deposits                                                                                                                                    |   |                                                                 | 8,136   |   |   |   | 7,685 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
|            Total                        cash and cash equivalents                                                            |   |                                                                 | 12,269  |   |   |   | 13,428 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| Investment                        securities held to maturity (estimated fair value—                                                                                          |   |                                                                 |    |   |   |   |   |   |
|   September                        30, 2007, $133,693; September 30, 2006, $129,593)                                                                                      |   |                                                                 | 134,782 |   |   |   | 132,084 |   |
| Investment                        securities available for sale (amortized cost—                                                                                              |   |                                                                 |    |   |   |   |   |   |
|   September                        30, 2007, $38,007; September 30, 2006, $38,007)                                                                                        |   |                                                                 | 38,343  |   |   |   | 38,747 |   |
| Mortgage-backed                        securities held to maturity (estimated fair value—                                                                                     |   |                                                                 |    |   |   |   |   |   |
|   September                        30, 2007, $44,213; September 30, 2006, $49,526)                                                                                        |   |                                                                 | 45,534  |   |   |   | 50,360 |   |
| Mortgage-backed                        securities available for sale (amortized cost—                                                                                         |   |                                                                 |    |   |   |   |   |   |
|   September                        30, 2007, $8,492; September 30, 2006, $4,535)                                                                                          |   |                                                                 | 8,549   |   |   |   | 4,615 |   |
| Loans                        receivable—net of allowance for loan losses (September 30, 2007,                        $1,011;                                                  |   |                                                                 |    |   |   |   |   |   |
|   September                        30, 2006, $618)                                                                                                                        |   |                                                                 | 219,149 |   |   |   | 219,418 |   |
| Accrued                        interest receivable:                                                                                                                                 |   |                                                                 |    |   |   |   |   |   |
|   Loans                        receivable                                                                                                                                 |   |                                                                 | 1,264   |   |   |   | 1,251 |   |
|   Mortgage-backed                        securities                                                                                                                       |   |                                                                 | 234     |   |   |   | 236 |   |
|   Investment                        securities                                                                                                                            |   |                                                                 | 2,006   |   |   |   | 1,708 |   |
| Federal                        Home Loan Bank stock—at cost                                                                                                                   |   |                                                                 | 2,397   |   |   |   | 2,217 |   |
| Office                        properties and equipment—net                                                                                                                    |   |                                                                 | 2,363   |   |   |   | 1,721 |   |
| Prepaid                        expenses and other assets                                                                                                                            |   |                                                                 | 7,274   |   |   |   | 6,596 |   |
| Deferred                        income taxes, net                                                                                                                                   |   |                                                                 | 28      |   |   |   | - |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| TOTAL                        ASSETS                                                                                                                                                 |   | $                                                                    | 474,192 |   |   | $ | 472,381 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| LIABILITIES                        AND STOCKHOLDERS'                        EQUITY                                                                                                  |   |                                                                 |    |   |   |   |   |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| LIABILITIES:                                                                                                                                                                        |   |                                                                 |    |   |   |   |   |   |
|   Deposits:                                                                                                                                                               |   |                                                                 |    |   |   |   |   |   |
|      Noninterest-bearing                                                                                                                                   |   | $                                                                    | 4,480   |   |   | $ | 6,035 |   |
|      Interest-bearing                                                                                                                                      |   |                                                                 | 349,558 |   |   |   | 341,257 |   |
|            Total                        deposits                                                                             |   |                                                                 | 354,038 |   |   |   | 347,292 |   |
|   Advances                        from Federal Home Loan Bank                                                                                                             |   |                                                                 | 33,743  |   |   |   | 31,784 |   |
|   Accrued                        interest payable                                                                                                                         |   |                                                                 | 2,868   |   |   |   | 2,893 |   |
|   Advances                        from borrowers for taxes and insurance                                                                                                  |   |                                                                 | 1,117   |   |   |   | 1,230 |   |
|   Accounts                        payable and accrued expenses                                                                                                            |   |                                                                 | 913     |   |   |   | 1,117 |   |
|   Accrued                        dividend payable                                                                                                                         |   |                                                                 | 552     |   |   |   | 464 |   |
|   Deferred                        income taxes, net                                                                                                                       |   |                                                                 | -       |   |   |   | 153 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
|            Total                        liabilities                                                                          |   |                                                                 | 393,231 |   |   |   | 384,933 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| COMMITMENTS                        AND CONTINGENCIES (Note 13)                                                                                                                      |   |                                                                 |    |   |   |   |   |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| STOCKHOLDERS'                        EQUITY:                                                                                                                                        |   |                                                                 |    |   |   |   |   |   |
|   Preferred                        stock, $.01 par value, 10,000,000 shares authorized; none                        issued                                                |   |                                                                 | -       |   |   |   | - |   |
|   Common                        stock, $.01 par value, 40,000,000 shares authorized; issued                        12,563,750;                                            |   |                                                                 |    |   |   |   |   |   |
|      outstanding                        - 11,478,366 at September 30, 2007: 12,064,320 at September                        30,                        2006 |   |                                                                 | 126     |   |   |   | 126 |   |
|   Additional                        paid-in capital                                                                                                                       |   |                                                                 | 54,880  |   |   |   | 54,798 |   |
|   Unearned                        ESOP shares                                                                                                                             |   |                                                                 | (3,903  | ) |   |   | (4,127 | ) |
|   Treasury                        stock, at cost: 1,085,384 shares  at September 30,                        2007;                                               |   |                                                                 |    |   |   |   |   |   |
|      499,430                        shares at September 30, 2006                                                                                           |   |                                                                 | (14,372 | ) |   |   | (6,422 | ) |
|   Retained                        earnings                                                                                                                                |   |                                                                 | 43,971  |   |   |   | 42,539 |   |
|   Accumulated                        other comprehensive income                                                                                                           |   |                                                                 | 259     |   |   |   | 534 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
|            Total                        stockholders' equity                                                                 |   |                                                                 | 80,961  |   |   |   | 87,448 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| TOTAL                        LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                   |   | $                                                                    | 474,192 |   |   | $ | 472,381 |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
|                                                                                                                                                                                |   |                                                                 |    |   |   |   |   |   |
| See                        notes to consolidated financial statements.                                                                                                              |   |                                                                 |    |   |   |   |   |   |

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | Years                            Ended September                            30,                       |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | 2007                                                                                                  |   |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | (Dollars                            in Thousands Except                            Per Share Amounts) |   |
| INTEREST                            INCOME:                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                  |   |   |   |   |   |   |   |
|   Interest                            and fees on loans                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | $                                                                                                     | 15,136 |   |   | $ | 13,077 |   |   | $ | 9,885 |   |
|   Interest                            on mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                  | 2,820  |   |   |   | 3,147 |   |   |   | 3,782 |   |
|   Interest                            and dividends on investments                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                  | 8,951  |   |   |   | 8,318 |   |   |   | 7,410 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|           Total                            interest income                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                  | 26,907 |   |   |   | 24,542 |   |   |   | 21,077 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| INTEREST                            EXPENSE:                                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   Interest                            on deposits                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                                                                                                  | 13,251 |   |   |   | 10,843 |   |   |   | 8,522 |   |
|   Interest                            on borrowings                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                  | 1,533  |   |   |   | 1,092 |   |   |   | 775 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|           Total                            interest expense                                                                                                                                                                                                                                                                                                                                                                                          |   |                                                                                                  | 14,784 |   |   |   | 11,935 |   |   |   | 9,297 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| NET                            INTEREST INCOME                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                                                                                                  | 12,123 |   |   |   | 12,607 |   |   |   | 11,780 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| PROVISION                            FOR LOAN LOSSES                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  | 395    |   |   |   | 60 |   |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| NET                            INTEREST  INCOME AFTER PROVISION                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   FOR                            LOAN LOSSES                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                  | 11,728 |   |   |   | 12,547 |   |   |   | 11,780 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST                            INCOME:                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   Fees                            and other service charges                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                  | 613    |   |   |   | 549 |   |   |   | 470 |   |
|   Gain                            on sale of real estate owned                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                  | -      |   |   |   | 106 |   |   |   | - |   |
|   Gain                            on sale of mortgage-backed securities                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  | -      |   |   |   | 48 |   |   |   | - |   |
|   Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  | 433    |   |   |   | 235 |   |   |   | 97 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|           Total                            non-interest income                                                                                                                                                                                                                                                                                                                                                                                       |   |                                                                                                  | 1,046  |   |   |   | 938 |   |   |   | 567 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST                            EXPENSES:                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   Salaries                            and employee benefits                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                  | 4,536  |   |   |   | 4,466 |   |   |   | 4,060 |   |
|   Data                            processing                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                  | 489    |   |   |   | 468 |   |   |   | 477 |   |
|   Professional                            services                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                  | 608    |   |   |   | 600 |   |   |   | 353 |   |
|   Office                            occupancy                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                  | 356    |   |   |   | 328 |   |   |   | 306 |   |
|   Depreciation                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                  | 246    |   |   |   | 242 |   |   |   | 261 |   |
|   Payroll                            taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  | 262    |   |   |   | 256 |   |   |   | 236 |   |
|   Director                            compensation                                                                                                                                                                                                                                                                                                                                                                                                                                           |   |                                                                                                  | 264    |   |   |   | 260 |   |   |   | 257 |   |
|   Litigation                            expense                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                                                                                                  | -      |   |   |   | - |   |   |   | 120 |   |
|   Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  | 1,229  |   |   |   | 1,255 |   |   |   | 999 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|            Total                            non-interest expenses                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                  | 7,990  |   |   |   | 7,875 |   |   |   | 7,069 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| INCOME                            BEFORE INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |                                                                                                  | 4,784  |   |   |   | 5,610 |   |   |   | 5,278 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| INCOME                            TAXES:                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|   Current                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                  | 1,455  |   |   |   | 1,646 |   |   |   | 1,734 |   |
|   Deferred                            (benefit) expense                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  | (68    | ) |   |   | 127 |   |   |   | 152 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|           Total                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                                                                                                  | 1,387  |   |   |   | 1,773 |   |   |   | 1,886 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| NET                            INCOME                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | $                                                                                                     | 3,397  |   |   | $ | 3,837 |   |   | $ | 3,392 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| BASIC                            EARNINGS PER SHARE (1)                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | $                                                                                                     | 0.30   |   |   | $ | 0.32 |   |   | $ | 0.15 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| DILUTED                            EARNINGS PER SHARE (1)                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $                                                                                                     | 0.30   |   |   | $ | 0.32 |   |   | $ | 0.15 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| (1) Due                            to the timing of the Bank's reorganization into the mutual                            holding company                            form and the completion of the Company's initial public                            offering on March 29, 2005, earnings per share information                            for 2005 are                            for the period March 30, 2005 through September 30,                            2005.     |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                                                                                                  |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |
| See                            notes to consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                  |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   | Accumulated                          |   |   |          |   |   |          |   |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|------------|--------|--------|----------|--------|--------|----------|--------|--------|----------|---------|--------|--------------------------------------|--------|--------|---------------|--------|--------|---------------|--------|
|                                                                                                                                    |   |                                          |   |   | Additional |   |   | Unearned |   |   |     |   |   |     |    |   | Other                                |   |   | Total         |   |   |          |   |
|                                                                                                                                    |   | Common                                        |   |   | Paid-In    |   |   | ESOP     |   |   | Treasury |   |   | Retained |    |   | Comprehensive                        |   |   | Stockholders' |   |   | Comprehensive |   |
|                                                                                                                                    |   | Stock                                         |   |   | Capital    |   |   | Shares   |   |   | Stock    |   |   | Earnings |    |   | Income                        (Loss) |   |   | Equity        |   |   | Income        |   |
|                                                                                                                                    |   | (Dollars                        in Thousands) |   |
| BALANCE,                        OCTOBER 1, 2004                                                                                         |   | $                                             | -      |   |       | $      | -      |     |   | $      | -        |   |   | $        | -       |   |                                 | $      | 38,267 |          |   | $      | 832           |   |   | $ | 39,099 |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |
|    Comprehensive                        income:                                                                          |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |
|    Net                        income                                                                                     |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | 3,392  |          |   |   |          |   |   |   | 3,392 |   |   |   | 3,392 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net                        unrealized holding loss on                                                                 |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         available                        for sale securities                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         arising                        during the period, net                                   |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         of                        income tax benefit of $246                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   | (457          | )      |   |   | (457 | ) |   |   | (457 | ) |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|       Comprehensive                        income                                                         |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   | $ | 2,935 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   Capitalization                        of mutual                                                                             |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|       holding                        company                                                              |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | (100   | )             |   |   |          |   |   |   | (100 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   Cash                        dividends                                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | (964   | )             |   |   |          |   |   |   | (964 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Issuance                        of common stock                                                                       |   |                                          | 126    |   |       |   | 54,725 |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   | 54,851 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Treasury                        stock purchased                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     | (654    | )      |                                 |   |   |          |   |   |          |   |   |   | (654 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Purchase                        of ESOP shares                                                                        |   |                                          |   |   |       |   |   |     |   |   | (4,461   | )      |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   | (4,461 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    ESOP                        shares committed to                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|        be                        released                                                            |   |                                          |   |   |       |   | 9      |     |   |   | 111      |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   | 120 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
| BALANCE,                        SEPTEMBER 30, 2005                                                                                      |   | $                                             | 126    |   |       | $      | 54,734 |     |   | $      | (4,350   | )      |   | $        | (654    | )      |                                 | $      | 40,595 |          |   | $      | 375           |   |   | $ | 90,826 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Comprehensive                        income:                                                                          |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net                        income                                                                                     |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | 3,837  |          |   |   |          |   |   |   | 3,837 |   |   |   | 3,837 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net                        unrealized holding gain on                                                                 |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         available                        for sale securities                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         arising                        during the period, net                                   |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         of                        income tax expense of $84                                     |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   | 159           |   |   |   | 159 |   |   |   | 159 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|       Comprehensive                        income                                                         |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   | $ | 3,996 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   Cash                        dividends                                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | (1,893 | )             |   |   |          |   |   |   | (1,893 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   Treasury                        stock purchased                                                                             |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     | (5,768  | )      |                                 |   |   |          |   |   |          |   |   |   | (5,768 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   ESOP                        shares committed to                                                                             |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|        be                        released                                                            |   |                                          |   |   |       |   | 64     |     |   |   | 223      |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   | 287 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
| BALANCE,                        SEPTEMBER 30, 2006                                                                                      |   | $                                             | 126    |   |       | $      | 54,798 |     |   | $      | (4,127   | )      |   | $        | (6,422  | )      |                                 | $      | 42,539 |          |   | $      | 534           |   |   | $ | 87,448 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Cummulative                        adjustment related to                                                              |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|      the                        adoption of SAB 108                                                            |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |        |          |   |   |          |   |   |   |   |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Comprehensive                        income:                                                                          |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | 172    |          |   |   |          |   |   |   | 172 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net                        income                                                                                     |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | 3,397  |          |   |   |          |   |   |   | 3,397 |   |   |   | 3,397 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Net                        unrealized holding loss on                                                                 |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         available                        for sale securities                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         arising                        during the period, net                                   |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|         of                        income tax benefit of $153                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   | (275          | )      |   |   | (275 | ) |   |   | (275 | ) |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|       Comprehensive                        income                                                         |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   | $ | 3,122 |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|   Cash                        dividends                                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   | (2,137 | )             |   |   |          |   |   |   | (2,137 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    Treasury                        stock purchased                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     | (7,950  | )      |                                 |   |   |          |   |   |          |   |   |   | (7,950 | ) |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|    ESOP                        shares committed to                                                                       |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
|        be                        released                                                            |   |                                          |   |   |       |   | 82     |     |   |   | 224      |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   | 306 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
| BALANCE,                        SEPTEMBER 30, 2007                                                                                      |   | $                                             | 126    |   |       | $      | 54,880 |     |   | $      | (3,903   | )      |   | $        | (14,372 | )      |                                 | $      | 43,971 |          |   | $      | 259           |   |   | $ | 80,961 |   |   |   |   |   |
|                                                                                                                                    |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |   |          |   |   |   |   |   |   |   |   |   |
| See                        notes to consolidated financial statements            |   |                                          |   |   |       |   |   |     |   |   |     |   |   |     |    |   |                                 |   |   |          |   |

----

----

|                                                                                                                                                                     |   | Years                            Ended September                            30, |    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------|---------|
|                                                                                                                                                                     |   | 2007                                                                            |    |   | 2006 |   |   | 2005 |   |
|                                                                                                                                                                     |   | (Dollars                            in Thousands)                               |    |
| OPERATING                            ACTIVITIES:                                                                                                                         |   |                                                                            |    |   |   |   |   |   |   |
|   Net                            income                                                                                                                        |   | $                                                                               | 3,397   |   |   | $ | 3,837 |   |   | $ | 3,392 |   |
|   Adjustments                            to reconcile net income to net cash provided by                                                                       |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|     operating                            activities:                                                                                                 |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|     Provision                            for loan losses                                                                                             |   |                                                                            | 395     |   |   |   | 60 |   |   |   |   |   |
|     Depreciation                                                                                                                                     |   |                                                                            | 246     |   |   |   | 242 |   |   |   | 261 |   |
|     Net                            gain on sale of real estate owned                                                                                 |   |                                                                            | -       |   |   |   | (106 | ) |   |   | - |   |
|     Net                            gain on sale of mortgage-backed securities held to                            maturity                            |   |                                                                            | -       |   |   |   | (48 | ) |   |   | - |   |
|     Net                            accretion of premiums/discounts                                                                                   |   |                                                                            | (72     | ) |   |   | (48 | ) |   |   | (66 | ) |
|     Income                            from bank owned life insurance                                                                                 |   |                                                                            | (210    | ) |   |   | (165 | ) |   |   | - |   |
|     Amortization                            of deferred loan fees                                                                                    |   |                                                                            | (347    | ) |   |   | (333 | ) |   |   | (254 | ) |
|     Amortization                            of ESOP                                                                                                  |   |                                                                            | 306     |   |   |   | 287 |   |   |   | 121 |   |
|     Deferred                            income tax (benefit) expense                                                                                 |   |                                                                            | (68     | ) |   |   | 127 |   |   |   | 152 |   |
|     Changes                            in assets and liabilities which (used) provided cash:                                                         |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|       Accounts                            payable and accrued expenses                                                                     |   |                                                                            | (313    | ) |   |   | (838 | ) |   |   | 335 |   |
|       Accrued                            interest payable                                                                                  |   |                                                                            | (25     | ) |   |   | 967 |   |   |   | 73 |   |
|       Prepaid                            expenses and other assets                                                                         |   |                                                                            | (468    | ) |   |   | (3,773 | ) |   |   | (802 | ) |
|       Accrued                            interest receivable                                                                               |   |                                                                            | (309    | ) |   |   | (395 | ) |   |   | (152 | ) |
|                Net                            cash provided by (used in) operating activities |   |                                                                            | 2,532   |   |   |   | (186 | ) |   |   | 3,060 |   |
| INVESTING                            ACTIVITIES:                                                                                                                         |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|   Purchase                            of investment securities held to maturity                                                                                |   |                                                                            | (25,990 | ) |   |   | (6,227 | ) |   |   | (46,265 | ) |
|   Purchase                            of mortgage-backed securities held to maturity                                                                           |   |                                                                            | (1,992  | ) |   |   | - |   |   |   | (4,481 | ) |
|   Purchase                            of mortgage-backed available for sale                                                                                    |   |                                                                            | (4,770  | ) |   |   | (4,610 | ) |   |   | - |   |
|   Principal                            collected on loans                                                                                                      |   |                                                                            | 71,550  |   |   |   | 47,943 |   |   |   | 53,455 |   |
|   Principal                            payments received on mortgage-backed securities:                                                                        |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|      Held-to-maturity                                                                                                                           |   |                                                                            | 7,195   |   |   |   | 11,934 |   |   |   | 18,615 |   |
|      Available                            for sale                                                                                              |   |                                                                            | 814     |   |   |   | 77 |   |   |   | - |   |
|   Loans                            originated or acquired                                                                                                      |   |                                                                            | (71,329 | ) |   |   | (91,996 | ) |   |   | (76,727 | ) |
|   Proceeds                            from call/maturity or sale of investment securities:                                                                     |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|      Held                            to maturity                                                                                                |   |                                                                            | 23,307  |   |   |   | 4,000 |   |   |   | 31,268 |   |
|      Available                            for sale                                                                                              |   |                                                                            | -       |   |   |   | - |   |   |   | 1,000 |   |
|   Proceeds                            from sale of mortgage-backed securities                                                                                  |   |                                                                            | -       |   |   |   | 4,612 |   |   |   | - |   |
|   Net                            (purchase) redemption of Federal Home Loan Bank stock                                                                         |   |                                                                            | (180    | ) |   |   | (406 | ) |   |   | 262 |   |
|   Proceeds                            from sale of real estate owned                                                                                           |   |                                                                            | -       |   |   |   | 466 |   |   |   | 188 |   |
|   Purchases                            of equipment                                                                                                            |   |                                                                            | (888    | ) |   |   | (217 | ) |   |   | (128 | ) |
|                Net                            cash used in investing activities               |   |                                                                            | (2,283  | ) |   |   | (34,424 | ) |   |   | (22,813 | ) |
| FINANCING                            ACTIVITIES:                                                                                                                         |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|   Net                            decrease in demand deposits, NOW accounts,                                                                                    |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|      and                            savings accounts                                                                                            |   |                                                                            | (12,219 | ) |   |   | (16,460 | ) |   |   | (6,058 | ) |
|   Net                            increase (decrease) in certificates of deposit                                                                                |   |                                                                            | 18,964  |   |   |   | 27,285 |   |   |   | (6,633 | ) |
|   Net                            borrowing (repayment) with Federal Home Loan Bank                                                                             |   |                                                                            | 1,959   |   |   |   | 17,960 |   |   |   | (39 | ) |
|   (Decrease)                            increase in advances from borrowers for taxes                                                                          |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|      and                            insurance                                                                                                   |   |                                                                            | (113    | ) |   |   | 116 |   |   |   | 84 |   |
|   Proceeds                            from the issuance of stock                                                                                               |   |                                                                            | -       |   |   |   |   |   |   |   | 54,850 |   |
|   Capitalization                            of mutual holding company                                                                                          |   |                                                                            | -       |   |   |   |   |   |   |   | (100 | ) |
|   Cash                            dividends paid                                                                                                               |   |                                                                            | (2,049  | ) |   |   | (1,910 | ) |   |   | (482 | ) |
|   Purchase                            of stock for ESOP                                                                                                        |   |                                                                            | -       |   |   |   | - |   |   |   | (4,461 | ) |
|   Purchase                            of treasury stock                                                                                                        |   |                                                                            | (7,950  | ) |   |   | (5,768 | ) |   |   | (654 | ) |
|                Net                            cash (used in) provided by financing activities |   |                                                                            | (1,408  | ) |   |   | 21,223 |   |   |   | 36,507 |   |
| NET                            (DECREASE) INCREASE IN CASH AND                                                                                                           |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|    CASH                            EQUIVALENTS                                                                                                            |   |                                                                            | (1,159  | ) |   |   | (13,387 | ) |   |   | 16,754 |   |
|                                                                                                                                                                     |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
| CASH                            AND CASH EQUIVALENTS—Beginning of year                                                                                             |   |                                                                            | 13,428  |   |   |   | 26,815 |   |   |   | 10,061 |   |
|                                                                                                                                                                     |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
| CASH                            AND CASH EQUIVALENTS—End of year                                                                                                   |   | $                                                                               | 12,269  |   |   | $ | 13,428 |   |   | $ | 26,815 |   |
| SUPPLEMENTAL                            DISCLOSURES OF CASH FLOW                                                                                                         |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|   INFORMATION:                                                                                                                                                 |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|   Interest                            paid on deposits and advances from Federal                                                                               |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|      Home                            Loan Bank                                                                                                  |   | $                                                                               | 14,806  |   |   | $ | 10,968 |   |   | $ | 9,224 |   |
|                                                                                                                                                                     |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
|   Income                            taxes paid                                                                                                                 |   | $                                                                               | 1,628   |   |   | $ | 1,616 |   |   | $ | 1,681 |   |
|                                                                                                                                                                     |   |                                                                            |    |   |   |   |   |   |   |   |   |   |
| See                            notes to consolidated financial statements.                                                                                               |   |                                                                            |    |   |   |   |   |   |   |   |   |   |

----

----

| 1.     | NATURE                  OF OPERATIONS AND BASIS                  OF PRESENTATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Prudential                  Bancorp, Inc. of Pennsylvania (the “Company”) is a Pennsylvania                  corporation, which was organized to be the mid-tier holding company                  for                  Prudential Savings Bank (the “Bank”), which is a Pennsylvania-chartered,                  FDIC-insured savings bank with seven full service branches in the                  Philadelphia area.  The Company was organized in conjunction                  with the Bank’s reorganization from a mutual savings bank to the mutual                  holding company structure in March 2005.  Financial statements                  prior to the reorganization were the financial statements of the                  Bank. The                  Bank is principally in the business of attracting deposits from                  its                  community through its branch offices and investing those deposits,                  together with funds from borrowings and operations, primarily in                  single-family residential loans. The Bank’s sole subsidiary as of                  September 30, 2007 was PSB Delaware, Inc. (“PSB”), a Delaware-chartered                  company established to hold certain investments of the Bank.  As                  of September 30, 2007, PSB had assets of $66.0 million primarily                  consisting of mortgage-backed securities. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Prudential                  Mutual Holding Company, a Pennsylvania corporation, is the mutual                  holding                  company parent of the Company.  As of September 30, 2007,                  Prudential Mutual Holding Company owns 60.2% (6,910,062 shares)                  of the                  Company’s outstanding common stock and must always own at least a majority                  of the voting stock of the Company.  In addition to the shares                  of the Company, Prudential Mutual Holding Company was capitalized                  with                  $100,000 in cash from the Bank in connection with the completion                  of the                  reorganization.  The consolidated financial statements of the                  Company include the accounts of the Company and the Bank.  All                  significant intercompany balances and transactions have been                  eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Prior                  to the reorganization described above, the Board of Directors approved                  a                  plan of charter conversion in May 2004 pursuant to which the Bank                  would                  convert its charter from a Pennsylvania-chartered mutual savings                  and loan                  association to a Pennsylvania-chartered mutual savings                  bank.  Such conversion was subject to receipt of both member and                  regulatory approval.  The members of the Bank approved the plan                  of conversion at a special meeting held on July 20, 2004 and the                  Pennsylvania Department of Banking approved the Bank’s application to                  convert its charter on July 21, 2004.  The conversion to a                  Pennsylvania-chartered mutual savings bank was completed on August                  20,                  2004.  As a result of the charter conversion, the Bank’s primary                  federal banking regulator changed from the Office of Thrift Supervision                  to                  the Federal Deposit Insurance Corporation.  The Pennsylvania                  Department of Banking remains as the Bank’s state banking                  regulator.                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 2.     | SUMMARY                  OF SIGNIFICANT                  ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Consolidation                  –The accompanying consolidated financial statements                  include                  the accounts of the Company and the Bank.  All significant                  intercompany accounts and transactions have been eliminated in                  consolidation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Use                  of Estimates in the                  Preparation of Financial Statements—The                  preparation of                  financial statements in conformity with accounting principles generally                  accepted in the United States of America requires management to                  make                  estimates and assumptions that affect the reported amounts of assets                  and                  liabilities and the disclosure of contingent assets and liabilities                  at the                  date of the financial statements and the reported amounts of income                  and                  expenses during the reporting period. The most significant estimates                  and                  assumptions in the Company’s financial statements are recorded in the                  allowance for loan losses and deferred income taxes. Actual results                  could                  differ from those estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

|   | Cash                  and Cash                  Equivalents—For                  purposes of                  reporting cash flows, cash and cash equivalents include cash and                  amounts                  due from depository institutions and interest-bearing deposits                  (maturing                  within 90 days).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Investment                  Securitiesand                  Mortgage-Backed                  Securities—The                  Bank classifies                  and accounts for debt and equity securities as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Held                  to                  Maturity—Debt securities that management has the positive                  intent and ability to hold until maturity are classified as held                  to                  maturity and are carried at their remaining unpaid principal balance,                  net                  of unamortized premiums or unaccreted discounts. Premiums are amortized                  and discounts are accreted using the interest method over the estimated                  remaining term of the underlying security.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Available                  for                  Sale—Debt and equity securities that will be held for                  indefinite periods of time, including securities that may be sold                  in                  response to changes in market interest or prepayment rates, needs                  for                  liquidity, and changes in the availability of and the yield of                  alternative                  investments, are classified as available for sale. These assets                  are                  carried at fair value. Fair value is determined using published                  and                  brokers’ quotes as of the close of business at the period-ends presented.                  Unrealized gains and losses are excluded from earnings and are                  reported                  net of tax as a separate component of stockholders’ equity until realized.                  Realized gains or losses on the sale of investment and mortgage-backed                  securities are reported in earnings as of the trade date and determined                  using the adjusted cost of the specific security sold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Management                  evaluates securities for other-than-temporary impairment at least                  on a                  quarterly basis, and more frequently when economic or market concerns                  warrant such evaluation.  For all securities that are in an                  unrealized loss position for an extended period of time and for                  all                  securities whose fair value is significantly below amortized cost,                  the                  Company performs an evaluation of the specific events attributable                  to the                  market decline of the security. The Company considers the length                  of time                  and extent to which the security’s market value has been below cost as                  well as the general market conditions, industry characteristics,                  and the                  fundamental operating results of the issuer to determine if the                  decline is                  other-than-temporary. The Company also considers as part of the                  evaluation                  its intent and ability to hold the security until its market value                  has                  recovered to a level at least equal to the amortized cost. When                  the                  Company determines that a security’s unrealized loss is                  other-than-temporary, a realized loss is recognized in the period                  in which                  the decline in value is determined to be other-than-temporary.                  The                  write-downs are measured based on public market prices of the security                  at                  the time the Company determines the decline in value was                  other-than-temporary. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Loans                  Receivable—Mortgage                  loans consist                  of loans secured primarily by first liens on 1-4 family residential                  properties and are stated at their unpaid principal balances net                  of                  unamortized net fees/costs. Other loans consist of residential                  construction loans, consumer loans, commercial real estate loans,                  commercial business loans, and loans secured by savings accounts                  which are                  likewise stated at their unpaid principal balances net of unamortized                  net                  fees/costs. Generally, the intent of management is to hold loans                  originated and purchased to maturity. The Bank defers all loan                  fees, net                  of certain direct loan origination costs. The balance is accreted                  into                  interest income as a yield adjustment over the life of the loan                  using the                  interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|   | Allowance                  for Loan                  Losses—The                  allowance for loan                  losses is increased by charges to income and decreased by charge-offs                  (net                  of recoveries). Management’s periodic evaluation of the adequacy of the                  allowance is based on the Bank’s past loan loss experience, known and                  inherent losses in the portfolio, adverse situations that may affect                  a                  borrower’s ability to repay, the estimated value of any underlying                  collateral and current economic conditions.                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The                  allowance consists of specific and general components. The specific                  component relates to loans that are classified as either doubtful,                  substandard or special mention. The general component covers nonclassified                  loans and is based on historical loss experience adjusted for qualitative                  factors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | A                  loan is considered to be impaired when, based upon current information                  and                  events, it is probable that the Bank will be unable to collect                  all amounts                  due according to the contractual terms of the loan. The Bank measures                  impaired loans based on the present value of expected future cash                  flows                  discounted at the loan’s effective interest rate, or the loan’s observable                  market price, or the fair value of the collateral if the loan is                  collateral-dependent. Impairment losses are included in the provision                  for                  loan losses.                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Mortgage                  Servicing                  Rights—The                  Bank originates                  mortgage loans held for investment and held for sale. At origination,                  the                  mortgage loan is identified as either held for sale or for investment.                  Mortgage loans held for sale are carried at the lower of cost or                  the value                  of forward committed contracts (which approximates market), determined                  on                  a net aggregate basis. The Bank had no loans classified as held                  for sale                  at September 30, 2007 and 2006.                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The                  Bank assesses the retained interest in the servicing asset or liability                  associated with the sold loans based on the relative fair values.                  The                  servicing asset or liability is amortized in proportion to and                  over the                  period during which estimated net servicing income or net servicing                  loss,                  as appropriate, will be received. Assessment of the fair value                  of the                  retained interest is performed on a continual basis. At September                  30, 2007                  and 2006, mortgage servicing rights of $23,000 and $29,000, respectively,                  were included in prepaid expenses and other assets. No valuation                  allowance                  was deemed necessary at the periods presented.                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Amortization                  of the servicing asset totaled $5,000, $7,000 and $8,000 for the                  years                  ended September 2007, 2006 and 2005, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Unamortized                  Premiums and                  Discounts—Unamortized                  premiums                  and discounts on loans receivable, mortgage-backed securities and                  investment securities are amortized over the estimated average                  lives of                  the loans, certificates or securities purchased using a method                  which                  approximates the interest method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Real                  Estate                  Owned—Real                  estate acquired                  through, or in lieu of, loan foreclosure is initially recorded                  at the                  lower of book value or the estimated fair value at the date of                  acquisition, less estimated selling costs, establishing a new cost                  basis.                  Costs related to the development and improvement of real estate                  owned                  properties are capitalized and those relating to holding the properties                  are charged to expense.  After foreclosure, valuations are                  periodically performed by management and write-downs are recorded,                  if                  necessary, by a charge to operations if the carrying value of a                  property                  exceeds its estimated fair value minus estimated costs to                  sell. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | FHLB                  Stock –                  FHLB stock is classified as a restricted equity security                  because ownership is restricted and there is not an established                  market for                  its resale.  FHLB stock is carried at cost and is evaluated for                  impairment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |

----

|   | Office                  Properties and                  Equipment—Land                  is carried at                  cost. Office properties and equipment are recorded at cost less                  accumulated depreciation. Depreciation is computed using the straight-line                  method over the expected useful lives of the assets. The costs                  of                  maintenance and repairs are expensed as they are incurred, and                  renewals                  and betterments are capitalized and depreciated over their useful                  lives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Cash                  Surrender Value of Life                  Insurance—The Bank funds the premiums for insurance policies                  on the lives of certain directors of the Bank. The cash surrender                  value of                  the insurance policies, up to the total amount of premiums paid,                  is                  recorded as an asset in the statements of financial condition and                  included                  in other assets.  In fiscal 2006, the Company purchased $5.0                  million of bank owned life insurance (“BOLI”).  The BOLI                  provides an attractive tax-exempt return to the Company and is                  being used                  by the Company to fund various employee benefit plans.  The BOLI                  is included in other assets at its cash surrender                  value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Dividend                  Payable– On September 19, 2007, the Company’s Board of                  Directors declared a quarterly cash dividend of $.05 per share                  on the                  common stock of the Company payable on October 26, 2007 to the                  shareholders of record at the close of business on October 12,                  2007.  The Company had 11,478,366 shares outstanding at the time                  of the dividend declaration resulting in a payable of $552,000                  at                  September 30, 2007.  A portion of the cash dividend was payable                  to Prudential Mutual Holding Company on its shares of the Company’s common                  stock and totaled $346,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Employee                  Stock Ownership Plan                  – In fiscal year 2005, the Bank established an employee                  stock ownership plan (“ESOP”) for substantially all of its full-time                  employees.  The ESOP purchased 452,295 shares of the Company’s common                  stock on the open market for approximately $4.5 million.  The                  Bank accounts for its ESOP in accordance with Statement of Position                  (“SOP”) 93-6, Employers’                  Accounting for Employee Stock Ownership Plans.  Shares of                  the Company’s common stock purchased by the ESOP are held in a suspense                  account until released for allocation to participants. Shares released                  will be allocated to each eligible participant based on the ratio                  of each                  such participant’s compensation, as defined in the ESOP, to the total                  compensation of all eligible plan participants. As the unearned                  shares are                  released from suspense, the Company recognizes compensation expense                  equal                  to the fair value of the ESOP shares during the periods in which                  they                  become committed to be released.  To the extent that the fair                  value of the ESOP shares released differs from the cost of such                  shares,                  the difference is recorded to equity as additional paid-in                  capital.  As of September 30, 2007 the Company had allocated a                  total of 39,585 shares from the suspense account to participants                  and                  committed to release an additional 16,965 shares.  For the year                  ended September 30, 2007, the Company recognized $306,000 in compensation                  expense related to the ESOP. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Treasury                  Stock                  – Stock                  held in                  treasury by the Company is accounted for using the cost method,                  which                  treats stock held in treasury as a reduction to total stockholders’                  equity.  During fiscal 2007,  the Company announced                  the commencement of its third, fourth, and fifth stock repurchase                  programs.  Each program called for the purchase                  of  additional shares up to approximately 5% of the Company's                  outstanding common stock held by other than Prudential Mutual Holding                  Company. The Company's third repurchase program commenced during                  February                  2007 and the fifth repurchase program commenced August 2007. The                  average                  cost per share of the 1,085,384 shares which have been repurchased                  as of                  September 30, 2007 was $13.57, $13.32 and $9.87 per share during                  fiscal                  2007, 2006 and 2005, respectively.  The repurchased shares are                  available for general corporate                  purposes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|   | Comprehensive                  Income—The Company presents in the statement of                  comprehensive income those amounts from transactions and other                  events                  which currently are excluded from the statement of income and are                  recorded                  directly to stockholders’ equity.  For the years ended September                  30, 2007,  2006 and 2005,  the only components of                  comprehensive income were net income and unrealized holding gains                  and                  losses, net of income tax expense and benefit, on available for                  sale                  securities.  Comprehensive income totaled $3.1 million, $4.0                  million and $2.9 million for the years ended September 30, 2007,                  2006 and                  2005, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Loan                  Origination and                  Commitment Fees—The                  Bank defers loan                  origination and commitment fees, net of certain direct loan origination                  costs. The balance is accreted into income as a yield adjustment                  over the                  life of the loan using the level-yield method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Interest                  on                  Loans—The                  Bank recognizes                  interest on loans on the accrual basis. Income recognition is generally                  discontinued when a loan becomes 90 days or more delinquent. Any                  interest                  previously accrued is deducted from interest income. Such interest                  ultimately collected is credited to income when collection of principal                  and interest is no longer in doubt.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Income                  Taxes—Deferred                  income taxes                  are recognized for the tax consequences of “temporary differences” by                  applying enacted statutory tax rates applicable to future years                  to                  differences between the financial statement carrying amounts and                  the tax                  bases of existing assets and liabilities. The effect on deferred                  taxes of                  a change in tax rates is recognized in income in the period that                  includes                  the enactment date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Accounting                  for Derivative                  Instruments and Hedging Activities—The                  Company adopted                  the provisions of Statement of Financial Accounting Standards (“SFAS”) No.                  133, Accounting for                  Derivative Instruments and Hedging Activities, as amended by                  SFAS Nos. 137 and 138, and as interpreted by the FASB and the                  Derivatives Implementation Group through “Statement 133 Implementation                  Issues,” as of October 1, 2000. Currently, the Company has no instruments                  with embedded derivatives. The Company currently does not employ                  hedging                  activities that require designation as either fair value or cash                  flow                  hedges, or hedges of a net investment in a foreign                  operation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Transfers                  and Servicing of                  Financial Assets and Extinguishments of Liabilities—The                  Company accounts                  for transfers and servicing of financial assets in accordance with                  SFAS                  No. 140, Accounting for                  Transfers and Servicing of Financial Assets and Extinguishments                  of                  Liabilities (a replacement of SFAS No. 125). This statement revises                  the standards for accounting for securitizations and other transfers                  of                  financial assets and collateral and requires certain disclosures,                  but it                  carries over most of the provisions of SFAS No. 125 without                  reconsideration. The statement requires an entity to recognize                  the                  financial and servicing assets it controls and the liabilities                  it has                  incurred, derecognize financial assets when control has been surrendered,                  and derecognize liabilities when extinguished. It requires that                  servicing                  assets and other retained interests in the transferred assets be                  measured                  by allocating the previous carrying amount between the asset sold,                  if any,                  and retained interests, if any, based on their relative fair values                  at the                  date of transfer. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Recent                  Accounting                  Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | On                  July 13, 2006, the Financial Accounting Standards Board (“FASB”) issued                  Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"                  ("FIN                  48"), which is effective for fiscal years beginning after December                  15,                  2006. FIN 48 clarifies the accounting for uncertainty in income                  taxes                  recognized in the financial statements in accordance with FASB                  Statement                  No. 109, "Accounting for Income Taxes." This Interpretation prescribes                  a                  comprehensive model for how a company should recognize, measure,                  present                  and disclose in its financial statements uncertain tax positions                  that the                  company  has taken or expects to take on a tax return. The                  Company adopted FIN 48 on October 1, 2007, and the adoption did                  not have a                  significant impact of on the Company’s financial                  statements.                                                                                                                                                                                                                                                                                                                                                                                                                |

----

|   | In                  September 2006, the Emerging Issues Task Force (“EITF”) of FASB issued                  EITF Issue No. 06-4, “Accounting for Deferred Compensation and                  Postretirement Benefit Aspects of Endorsement Split Dollar Life                  Insurance                  Arrangements” (EITF 06-04).  EITF 06-4 requires the recognition of a                  liability related to the postretirement benefits covered by an                  endorsement                  split-dollar life insurance arrangement.  EITF 06-4 is effective                  for fiscal years beginning after December 15, 2007, with earlier                  application permitted.  The Company is currently assessing the                  impact of the adoption of EITF 06-04 on its financial                  statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | On                  September 2006, the Task Force reached a conclusion on EITF Issue                  No.                  06-5, “Accounting for Purchases of Life Insurance-Determining the Amount                  That Could Be Realized in Accordance with FASB Technical Bulletin                  No.                  85-4, Accounting for Purchases of Life Insurance” (“EITF 06-5”).  The                  EITF clarifies certain factors that should be considered in the                  determination of the realizable asset to be reported in the statement                  of                  financial condition. EITF 06-5 is effective for fiscal years beginning                  after December 15, 2006.  The guidance did not have a material impact                  on the Company’s consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In                  September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement.”                  SFAS No. 157 defines fair value, establishes a framework for measuring                  fair value in generally accepted accounting principles, and expands                  disclosures about fair value measurements. This Statement does                  not require                  any new fair value measurements. SFAS No. 157 is effective for                  fiscal                  years beginning after November 15, 2007 and interim periods within                  those                  fiscal years. The Company is currently assessing the impact of                  SFAS No.                  157 on its financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In                  September 2006, the Securities and Exchange Commission (“SEC”) issued SAB                  No. 108 expressing the SEC staff’s views regarding the process of                  quantifying financial statement misstatements and the build up                  of improper                  amounts on the balance sheet.  SAB No. 108 requires that                  registrants quantify errors using both a balance sheet and income                  statement approach and evaluate whether either approach results                  in a                  misstated amount that, when all relevant quantitative and qualitative                  factors are considered, is material.  The built up                  misstatements, while not considered material in the individual                  years in                  which the misstatements were built up, may be considered material                  in a                  subsequent year if a company were to correct those misstatements                  through                  current period earnings.  Initial application of SAB No. 108                  allows registrants to elect not to restate prior periods but to                  reflect                  the initial application in their annual financial statements covering                  the                  first fiscal year ending after November 15, 2006.  The                  cumulative effect of the initial application should be reported                  in the                  carrying amounts of assets and liabilities as of the beginning                  of that                  fiscal year and the offsetting adjustment, net of tax, should be                  made to                  the opening balance of retained earnings for that year. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The                  Company implemented SAB No. 108 on October 1, 2006 which resulted                  in an                  increase in mortgage-backed securities held to maturity of approximately                  $321,000, an increase in income tax liabilities of approximately                  $149,000                  and a cumulative adjustment to increase retained earnings as of                  that date                  by approximately $172,000.  The adjustment relates to two                  separate accounting entries.  The first entry pertains to the                  method of accounting that was utilized in past years for the recognition                  of investment income on mortgage-backed securities.  Prior to                  fiscal 2006, the Company used the straight line method over the                  contractual life of the securities rather than using the effective                  yield                  method prescribed by SFAS No. 91, “Accounting for Nonrefundable Fees and                  Costs Associated with Originating or Acquiring Loans and Initial                  Direct                  Costs of Leases”.  The impact of this entry was the correction                  of an understatement of mortgage-backed securities by approximately                  $321,000 and a corresponding understatement of income tax payable                  of                  $109,000. The second entry relates to a write off of a deferred                  tax asset                  of approximately $40,000 that was incorrectly accounted for in                  prior                  periods.                                                                                                                                                        |

----

|   | In                  prior periods, management performed a quantitative and qualitative                  analysis of the differences between these two methods of accounting                  and                  concluded that there was not a material impact on any past individual                  quarter or annual reporting periods.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In                  February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for                  Financial Assets and Financial Liabilities”.  The Statement                  provides companies with an option to report selected financial                  assets and                  liabilities at fair value.  This Statement is effective as of                  the beginning of an entity’s first fiscal year that begins after November                  15, 2007.  Early adoption is permitted under certain                  circumstances.  The Company is currently assessing the impact of                  SFAS No. 159 on its financial statements.                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In                  March 2007, the FASB ratified Emerging Issues Task Force Issue                  No. 06-10                  “Accounting for Collateral Assignment Split-Dollar Life Insurance                  Agreements: (EITF 06-10).  EITF 06-10 provides guidance for                  determining a liability for the postretirement benefit obligation                  as well                  as recognition and measurement of the associated asset on the basis                  of the                  terms of the collateral assignment agreement.  EITF 06-10 is                  effective for fiscal years beginning after December 15, 2007.  The                  Company is currently assessing the impact of the adoption of EITF                  06-10 on                  its financial statements.                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 3.     | EARNINGS                  PER                  SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Basic                  earnings per common share is computed based on the weighted average                  number                  of shares outstanding. Diluted earnings per share is computed based                  on the                  weighted average number of shares outstanding and common share                  equivalents                  ("CSEs") that would arise from the exercise of dilutive                  securities.  As of September 30, 2007, the Company had not                  issued and did not have outstanding any CSEs.  Due to the timing                  of the Bank's reorganization into the mutual holding company form                  and the                  completion of the Company's initial public offering on March 29,                  2005,                  earnings per share for 2005 is for the period March 30, 2005 through                  September 30, 2005. The                  calculated basic and diluted earnings per share are as                  follows: |

|                                                                              |   | Year                    Ended September                    30,                     |       |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|------------|
|                                                                              |   | 2007                                                                               |       |   | 2006 |   |   | 2005 |   |
|                                                                              |   | (Dollars                    in Thousands Except                    Per Share Data) |       |
| Net                    income                                                     |   | $                                                                                  | 3,397      |   |   | $ | 3,837 |   |   | $ | 1,800 |   |
|                                                                              |   |                                                                               |       |   |   |   |   |   |   |   |   |   |
| Weighted                    average shares outstanding used in                    |   |                                                                               |       |   |   |   |   |   |   |   |   |   |
|     basic                    earnings per share computation   |   |                                                                               | 11,404,314 |   |   |   | 11,919,101 |   |   |   | 12,076,315 |   |
| Effect                    of CSEs                                                 |   |                                                                               | -          |   |   |   | - |   |   |   | - |   |
| Adjusted                    weighted average shares used in                       |   |                                                                               |       |   |   |   |   |   |   |   |   |   |
|     diluted                    earnings per share computation |   |                                                                               | 11,404,314 |   |   |   | 11,919,101 |   |   |   | 12,076,315 |   |
|                                                                              |   |                                                                               |       |   |   |   |   |   |   |   |   |   |
| Earnings                    per share - basic and diluted                         |   | $                                                                                  | 0.30       |   |   | $ | 0.32 |   |   | $ | 0.15 |   |

----

| 4.     | INVESTMENT                  SECURITIES                                                                                                                      |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                        |
|   | The                  amortized cost and fair value of securities, with gross unrealized                  gains                  and losses, are as follows: |

|                                                                                                                     |   | September                    30,                    2007 |    |
|--------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                                                                                     |   |                                                     |    |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                                                                     |   | Amortized                                                |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                                                     |   | Cost                                                     |    |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                                                                     |   | (Dollars                    in Thousands)                |    |
| Securities                    Held to Maturity:                                                                          |   |                                                     |    |   |   |   |   |   |   |   |   |   |
|   Debt                    securities - U.S. Treasury securities                                                |   |                                                     |    |   |   |   |   |   |   |   |   |   |
|    and                    securities of U.S. Government agencies                                          |   | $                                                        | 132,332 |   |   | $ | 109 |   |   | $ | (1,159 | ) |   | $ | 131,282 |   |
|   Debt                    securities - Municipal bonds                                                         |   |                                                     | 2,450   |   |   |   | 1 |   |   |   | (40 | ) |   |   | 2,411 |   |
|                                                                                                                     |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities held to maturity   |   | $                                                        | 134,782 |   |   | $ | 110 |   |   | $ | (1,199 | ) |   | $ | 133,693 |   |
|                                                                                                                     |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    Available for Sale:                                                                        |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Debt                    securities - U.S. Treasury securities                                                |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     and                    securities of U.S. Government agencies                                    |   | $                                                        | 2,999   |   |   | $ | - |   |   | $ | (30 | ) |   | $ | 2,969 |   |
|   FNMA                    stock                                                                                |   |                                                     | -       |   |   |   | 7 |   |   |   | - |   |   |   | 7 |   |
|   Mutual                    fund                                                                               |   |                                                     | 34,982  |   |   |   | - |   |   |   | (1,175 | ) |   |   | 33,807 |   |
|   FHLMC                    preferred stock                                                                     |   |                                                     | 26      |   |   |   | 1,534 |   |   |   | - |   |   |   | 1,560 |   |
|                                                                                                                     |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities available for sale |   | $                                                        | 38,007  |   |   | $ | 1,541 |   |   | $ | (1,205 | ) |   | $ | 38,343 |   |

|                                                                                                                       |   | September                      30,                      2006 |    |
|----------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|
|                                                                                                                       |   |                                                         |    |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                                                                       |   | Amortized                                                    |    |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                                                       |   | Cost                                                         |    |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                                                                       |   | (Dollars                      in Thousands)                  |    |
| Securities                      Held to Maturity:                                                                          |   |                                                         |    |   |   |   |   |   |   |   |   |   |
|   Debt                      securities - U.S. Treasury securities                                                |   |                                                         |    |   |   |   |   |   |   |   |   |   |
|    and                      securities of U.S. Government agencies                                          |   | $                                                            | 129,199 |   |   | $ | - |   |   | $ | (2,459 | ) |   | $ | 126,740 |   |
|   Debt                      securities - Municipal bonds                                                         |   |                                                         | 2,885   |   |   |   | 6 |   |   |   | (38 | ) |   |   | 2,853 |   |
|                                                                                                                       |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total                      securities held to maturity   |   | $                                                            | 132,084 |   |   | $ | 6 |   |   | $ | (2,497 | ) |   | $ | 129,593 |   |
|                                                                                                                       |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                      Available for Sale:                                                                        |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Debt                      securities - U.S. Treasury securities                                                |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     and                      securities of U.S. Government agencies                                    |   | $                                                            | 2,999   |   |   | $ | - |   |   | $ | (64 | ) |   | $ | 2,935 |   |
|   FNMA                      stock                                                                                |   |                                                         | -       |   |   |   | 6 |   |   |   | - |   |   |   | 6 |   |
|   Mutual                      fund                                                                               |   |                                                         | 34,982  |   |   |   | - |   |   |   | (930 | ) |   |   | 34,052 |   |
|   FHLMC                      preferred stock                                                                     |   |                                                         | 26      |   |   |   | 1,728 |   |   |   | - |   |   |   | 1,754 |   |
|                                                                                                                       |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total                      securities available for sale |   | $                                                            | 38,007  |   |   | $ | 1,734 |   |   | $ | (994 | ) |   | $ | 38,747 |   |

----

|   | There                  were no sales of investment securities during the years ended September                  30, 2007, 2006 or 2005.                                                                                                                                                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The                  following table shows the gross unrealized losses and related estimated                  fair values of the Company’s investment securities, aggregated by                  investment category and length of time that individual securities                  have                  been in a continuous loss position at September 30,                  2007: |

|                                                                                                                     |   | Less                    than 12                    months |   |   | More                    than 12                    months |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                                                                                                                     |   | Gross                                                     |   |   | Estimated                                                 |   |   | Gross |   |   | Estimated |   |
|                                                                                                                     |   | Unrealized                                                |   |   | Fair                                                      |   |   | Unrealized |   |   | Fair |   |
|                                                                                                                     |   | Losses                                                    |   |   | Value                                                     |   |   | Losses |   |   | Value |   |
|                                                                                                                     |   | (Dollars                    in Thousands)                 |   |
| Securities                    Held to Maturity:                                                                          |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |
|    U.S.                    Treasury and Government agencies                                               |   | $                                                         | 92     |   |                                                      | $      | 14,899 |   |   | $ | 1,067 |   |   | $ | 82,715 |   |
|    Municipal                    bonds                                                                     |   |                                                      | -      |   |                                                      |   | - |   |   |   | 40 |   |   |   | 1,599 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities held to maturity   |   |                                                      | 92     |   |                                                      |   | 14,899 |   |   |   | 1,107 |   |   |   | 84,314 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    Available for Sale:                                                                        |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|    U.S.                    Treasury and Government agencies                                               |   |                                                      | -      |   |                                                      |   | - |   |   |   | 30 |   |   |   | 2,969 |   |
|    Mutual                    fund                                                                         |   |                                                      | -      |   |                                                      |   | - |   |   |   | 1,175 |   |   |   | 33,807 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities available for sale |   |                                                      | -      |   |                                                      |   | - |   |   |   | 1,205 |   |   |   | 36,776 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                                    |   | $                                                         | 92     |   |                                                      | $      | 14,899 |   |   | $ | 2,312 |   |   | $ | 121,090 |   |

----

|   | The                  following table shows the gross unrealized losses and related estimated                  fair values of the Company’s investment securities, aggregated by                  investment category and length of time that individual securities                  have                  been in a continuous loss position at September 30,                  2006: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                     |   | Less                    than 12                    months |   |   | More                    than 12                    months |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                                                                                                                     |   | Gross                                                     |   |   | Estimated                                                 |   |   | Gross |   |   | Estimated |   |
|                                                                                                                     |   | Unrealized                                                |   |   | Fair                                                      |   |   | Unrealized |   |   | Fair |   |
|                                                                                                                     |   | Losses                                                    |   |   | Value                                                     |   |   | Losses |   |   | Value |   |
|                                                                                                                     |   | (Dollars                    in Thousands)                 |   |
| Securities                    Held to Maturity:                                                                          |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |
|    U.S.                    Treasury and Government agencies                                               |   | $                                                         | 76     |   |                                                      | $      | 8,919 |   |   | $ | 2,383 |   |   | $ | 114,821 |   |
|    Municipal                    bonds                                                                     |   |                                                      | -      |   |                                                      |   | - |   |   |   | 38 |   |   |   | 1,601 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities held to maturity   |   |                                                      | 76     |   |                                                      |   | 8,919 |   |   |   | 2,421 |   |   |   | 116,422 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    Available for Sale:                                                                        |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|    U.S.                    Treasury and Government agencies                                               |   |                                                      | -      |   |                                                      |   | - |   |   |   | 64 |   |   |   | 2,935 |   |
|    Mutual                    fund                                                                         |   |                                                      | -      |   |                                                      |   | - |   |   |   | 930 |   |   |   | 34,052 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|            Total                    securities available for sale |   |                                                      | -      |   |                                                      |   | - |   |   |   | 994 |   |   |   | 36,987 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                                    |   | $                                                         | 76     |   |                                                      | $      | 8,919 |   |   | $ | 3,415 |   |   | $ | 153,409 |   |
|                                                                                                                     |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |

|   | Management                  evaluates securities for other-than-temporary impairment at least                  on a                  quarterly basis, and more frequently when economic or market concerns                  warrant such evaluation.  For all securities that are in an                  unrealized loss position for an extended period of time and for                  all                  securities whose fair value is significantly below amortized cost,                  the                  Company performs an evaluation of the specific events attributable                  to the                  market decline of the security. The Company considers the length                  of time                  and extent to which the security’s market value has been below cost as                  well as the general market conditions, industry characteristics,                  and the                  fundamental operating results of the issuer to determine if the                  decline is                  other-than-temporary. The Company also considers as part of the                  evaluation                  its intent and ability to hold the security until its market value                  has                  recovered to a level at least equal to the amortized cost. When                  the                  Company determines that a security’s unrealized loss is                  other-than-temporary, a realized loss is recognized in the period                  in which                  the decline in value is determined to be other-than-temporary.                  The                  write-downs are measured based on public market prices of the security                  at                  the time the Company determines the decline in value was                  other-than-temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | At                  September 30, 2007, securities in a gross unrealized loss position                  for                  twelve months or longer consist of 91 securities having an aggregate                  depreciation of 1.9% from the Company’s amortized cost basis. Securities                  in a gross unrealized loss position for less than twelve months                  consist of                  14 securities having an aggregate depreciation of 0.6% from the                  Company’s                  amortized cost basis.  The unrealized losses disclosed above are                  primarily related to movement in market interest rates. Although                  the fair                  value will fluctuate as the market interest rates move, the majority                  of                  the Company’s investment portfolio consists of low-risk securities from                  U.S. government agencies or government sponsored                  enterprises.  If held to maturity, the contractual principal and                  interest payments of such securities are expected to be received                  in full.                  As such, no loss in value is expected over the lives of the securities.                  Although not all of the securities are classified as held to maturity,                  the                  Company has the ability to hold these securities until they mature                  and                  does not intend to sell the securities at a loss. The Company also                  has a                  significant investment in a mutual fund that invests in short-term                  adjustable-rate mortgage-backed securities.  Management believes                  that the estimated fair value of the mutual fund is also primarily                  dependent upon the movement in market interest rates.  Although                  the investment in the mutual fund is classified as available for                  sale, the                  Company has the intent and ability to hold the mutual fund until                  the fair                  value increases and does not intend to sell it at a loss.  Based                  on the above, management believes that the unrealized losses are                  temporary. The determination of whether a decline in market value                  is                  temporary is necessarily a matter of subjective judgment. The timing                  and                  amount of any realized losses reported in the Company’s financial                  statements could vary if conclusions other than those made by management                  were to determine whether an other-than-temporary impairment                  exists. |

----

|   | The                  amortized cost and estimated fair value of debt securities, by                  contractual                  maturity, are shown below. Expected maturities will differ from                  contractual maturities because borrowers may have the right to                  call or                  prepay obligations with or without call or prepayment                  penalties. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | September                    30,                    2007 |    |
|-----------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                |   | Held                    to                    Maturity   |    |   | Available                    for                    Sale |   |
|                                                |   |                                                     |    |   | Estimated |   |   |   |   |   | Estimated |   |
|                                                |   | Amortized                                                |    |   | Fair |   |   | Amortized |   |   | Fair |   |
|                                                |   | Cost                                                     |    |   | Value |   |   | Cost |   |   | Value |   |
|                                                |   | (Dollars                    in Thousands)                |    |
| Due                    within one year              |   | $                                                        | 6,000   |   |   | $ | 5,981 |   |   | $ | - |   |   | $ | - |   |
| Due                    after one through five years |   |                                                     | 25,002  |   |   |   | 24,950 |   |   |   | - |   |   |   | - |   |
| Due                    after five through ten years |   |                                                     | 39,592  |   |   |   | 39,427 |   |   |   | 1,000 |   |   |   | 999 |   |
| Due                    after ten years              |   |                                                     | 64,188  |   |   |   | 63,335 |   |   |   | 1,999 |   |   |   | 1,970 |   |
|                                                |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                               |   | $                                                        | 134,782 |   |   | $ | 133,693 |   |   | $ | 2,999 |   |   | $ | 2,969 |   |

|                                                |   | September                    30,                    2006 |    |
|-----------------------------------------------------|--------|----------------------------------------------------------|---------|
|                                                |   | Held                    to                    Maturity   |    |   | Available                    for                    Sale |   |
|                                                |   |                                                     |    |   | Estimated |   |   |   |   |   | Estimated |   |
|                                                |   | Amortized                                                |    |   | Fair |   |   | Amortized |   |   | Fair |   |
|                                                |   | Cost                                                     |    |   | Value |   |   | Cost |   |   | Value |   |
|                                                |   | (Dollars                    in Thousands)                |    |
| Due                    within one year              |   | $                                                        | 13,085  |   |   | $ | 13,034 |   |   | $ | - |   |   | $ | - |   |
| Due                    after one through five years |   |                                                     | 33,084  |   |   |   | 32,601 |   |   |   | - |   |   |   | - |   |
| Due                    after five through ten years |   |                                                     | 39,986  |   |   |   | 39,356 |   |   |   | 1,000 |   |   |   | 985 |   |
| Due                    after ten years              |   |                                                     | 45,929  |   |   |   | 44,602 |   |   |   | 1,999 |   |   |   | 1,950 |   |
|                                                |   |                                                     |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                               |   | $                                                        | 132,084 |   |   | $ | 129,593 |   |   | $ | 2,999 |   |   | $ | 2,935 |   |

----

| 5.     | MORTGAGE-BACKED                  SECURITIES                                             |
|--------|-----------------------------------------------------------------------------------------|
|   |                                                                                    |
|   | Mortgage-backed                  securities are summarized as                  follows: |

|                                                                                 |   | September                    30,                    2007 |   |
|--------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                                                 |   |                                                     |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                                 |   | Amortized                                                |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                 |   | Cost                                                     |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                                 |   | (Dollars                    in Thousands)                |   |
| Securities                    held to maturity                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
|    GNMA                    pass-through certificates                  |   | $                                                        | 42,471 |   |   | $ | 22 |   |   | $ | (1,261 | ) |   | $ | 41,232 |   |
|    FNMA                    pass-through certificates                  |   |                                                     | 1,370  |   |   |   | - |   |   |   | (60 | ) |   |   | 1,310 |   |
|    FHLMC                    pass-through certificates                 |   |                                                     | 1,693  |   |   |   | - |   |   |   | (22 | ) |   |   | 1,671 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total                    securities held to maturity   |   | $                                                        | 45,534 |   |   | $ | 22 |   |   | $ | (1,343 | ) |   | $ | 44,213 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    available for sale                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    FNMA                    pass-through certificates                  |   | $                                                        | 8,492  |   |   | $ | 66 |   |   | $ | (9 | ) |   | $ | 8,549 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total                    securities available for sale |   | $                                                        | 8,492  |   |   | $ | 66 |   |   | $ | (9 | ) |   | $ | 8,549 |   |

|                                                                                 |   | September                    30,                    2006 |   |
|--------------------------------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                                                 |   |                                                     |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                                 |   | Amortized                                                |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                 |   | Cost                                                     |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                                 |   | (Dollars                    in Thousands)                |   |
| Securities                    held to maturity                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
|    GNMA                    pass-through certificates                  |   | $                                                        | 46,992 |   |   | $ | 157 |   |   | $ | (896 | ) |   | $ | 46,253 |   |
|    FNMA                    pass-through certificates                  |   |                                                     | 1,448  |   |   |   | - |   |   |   | (53 | ) |   |   | 1,395 |   |
|    FHLMC                    pass-through certificates                 |   |                                                     | 1,920  |   |   |   | - |   |   |   | (42 | ) |   |   | 1,878 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total                    securities held to maturity   |   | $                                                        | 50,360 |   |   | $ | 157 |   |   | $ | (991 | ) |   | $ | 49,526 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    available for sale                                     |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    FNMA                    pass-through certificates                  |   | $                                                        | 4,535  |   |   | $ | 80 |   |   | $ |      |   |   | $ | 4,615 |   |
|                                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      Total                    securities available for sale |   | $                                                        | 4,535  |   |   | $ | 80 |   |   | $ |          |   |   | $ | 4,615 |   |

|   | There                  were no mortgage-backed securities sold during fiscal 2007 or                  2005.  During fiscal 2006, $4.6 million of mortgage-backed                  securities were sold at a pre-tax gain of $48,000.  Although                  these securities were classified under FASB Statement No. 115 as“Held to                  Maturity”, at the time of purchase, the sale was permissible because the                  remaining balances of the investments were 15% or less than their                  original                  purchased par value.  Simultaneously, we purchased $4.6 million                  in mortgage-backed securities classified as                  available-for-sale. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The                  following table shows the gross unrealized losses and related estimated                  fair values of the Company’s mortgage-backed securities and length of time                  that individual securities have been in a continuous loss position                  at                  September 30, 2007: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                         |   | Less                    than 12                    months |   |   | More                    than 12                    months |   |
|--------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                                                                                                         |   | Gross                                                     |   |   | Estimated                                                 |   |   | Gross |   |   | Estimated |   |
|                                                                                                         |   | Unrealized                                                |   |   | Fair                                                      |   |   | Unrealized |   |   | Fair |   |
|                                                                                                         |   | Losses                                                    |   |   | Value                                                     |   |   | Losses |   |   | Value |   |
|                                                                                                         |   | (Dollars                    in Thousands)                 |   |
| Securities                    held to maturity:                                                              |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |
|    GNMA                    pass-through certificates                                          |   | $                                                         | 129    |   |                                                      | $      | 7,968 |   |   | $ | 1,132 |   |   | $ | 31,050 |   |
|    FNMA                    pass-through certificates                                          |   |                                                      | -      |   |                                                      |   | - |   |   |   | 60 |   |   |   | 1,310 |   |
|    FHLMC                    pass-through certificates                                         |   |                                                      | -      |   |                                                      |   | - |   |   |   | 22 |   |   |   | 1,671 |   |
|                                                                                                         |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|          Total                    securities held to maturity   |   | $                                                         | 129    |   |                                                      | $      | 7,968 |   |   | $ | 1,214 |   |   | $ | 34,031 |   |
|                                                                                                         |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Securities                    available for sale:                                                            |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|    FNMA                    pass-through certificates                                          |   |                                                      | 9      |   |                                                      |   | 844 |   |   |   | - |   |   |   | - |   |
|          Total                    securities available for sale |   | $                                                         | 9      |   |                                                      | $      | 844 |   |   | $ | - |   |   | $ | - |   |

|   | The                  following table shows the gross unrealized losses and related estimated                  fair values of the Company’s mortgage-backed securities, aggregated by                  investment category and length of time that individual securities                  have                  been in a continuous loss position at September 30,                  2006: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                 |   | Less                    than 12                    months |   |   | More                    than 12                    months |   |
|----------------------------------------------------------------------|--------|-----------------------------------------------------------|--------|--------|-----------------------------------------------------------|--------|
|                                                                 |   | Gross                                                     |   |   | Estimated                                                 |   |   | Gross |   |   | Estimated |   |
|                                                                 |   | Unrealized                                                |   |   | Fair                                                      |   |   | Unrealized |   |   | Fair |   |
|                                                                 |   | Losses                                                    |   |   | Value                                                     |   |   | Losses |   |   | Value |   |
|                                                                 |   | (Dollars                    in thousands)                 |   |
| Securities                    held to maturity:                      |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |
|    GNMA                    pass-through certificates  |   | $                                                         | 526    |   |                                                      | $      | 25,602 |   |   | $ | 370 |   |   | $ | 11,200 |   |
|    FNMA                    pass-through certificates  |   |                                                      | 52     |   |                                                      |   | 1,395 |   |   |   | 1 |   |   |   | - |   |
|    FHLMC                    pass-through certificates |   |                                                      | 42     |   |                                                      |   | 1,877 |   |   |   | - |   |   |   | - |   |
|                                                                 |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
|                                                                 |   |                                                      |   |   |                                                      |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                |   | $                                                         | 620    |   |                                                      | $      | 28,874 |   |   | $ | 371 |   |   | $ | 11,200 |   |

|   | At                  September 30, 2006, all mortgage-backed-securities available-for-sale                  were                  in an unrealized gain position |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Management                  evaluates securities for other-than-temporary impairment at least                  on a                  quarterly basis, and more frequently when economic or market concerns                  warrant such evaluation.  For all securities that are in an                  unrealized loss position for an extended period of time and for                  all                  securities whose fair value is significantly below amortized cost,                  the                  Company performs an evaluation of the specific events attributable                  to the                  market decline of the security. The Company considers the length                  of time                  and extent to which the security’s market value has been below cost as                  well as the general market conditions, industry characteristics,                  and the                  fundamental operating results of the issuer to determine if the                  decline is                  other-than-temporary. The Company also considers as part of the                  evaluation                  its intent and ability to hold the security until its market value                  has                  recovered to a level at least equal to the amortized cost. When                  the                  Company determines that a security’s unrealized loss is                  other-than-temporary, a realized loss is recognized in the period                  in which                  the decline in value is determined to be other-than-temporary.                  The                  write-downs are measured based on public market prices of the security                  at                  the time the Company determines the decline in value was                  other-than-temporary.                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | At                  September 30, 2007, mortgage-backed securities in a gross unrealized                  loss                  position for twelve months or longer consist of 31 securities having                  an                  aggregate depreciation of 3.4% from the Company’s amortized cost basis.                  Mortgage-backed securities in a gross unrealized loss position                  for less                  than twelve months consist of 11 securities having an aggregate                  depreciation of 1.5% from the Company’s amortized cost                  basis.  The unrealized losses disclosed above are primarily                  related to movement in market interest rates. Although the fair                  value will                  fluctuate as the market interest rates move, the majority of the                  Company’s                  mortgage-backed securities portfolio consists of low-risk securities                  from                  U.S.  government sponsored enterprises.  If held to                  maturity, the contractual principal and interest payments of such                  securities are expected to be received in full. As such, no loss                  in value                  is expected over the lives of the securities. Although not all                  of the                  securities are classified as held to maturity, the Company has                  the ability                  to hold these securities until they mature and does not intend                  to sell the                  securities at a loss. Based on the above, management believes that                  the                  unrealized losses are temporary. The determination of whether a                  decline in                  market value is temporary is necessarily a matter of subjective                  judgment.                  The timing and amount of any realized losses reported in the Company’s                  financial statements could vary if conclusions other than those                  made by                  management were to determine whether an other-than-temporary impairment                  exists. |

----

| 6.     | LOANS                  RECEIVABLE                                            |
|--------|------------------------------------------------------------------------------|
|   |                                                                         |
|   | Loans                  receivable consist of the                  following: |

|                                                                                             |   | September                    30,          |    |   | September                    30, |   |
|--------------------------------------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|----------------------------------|--------|
|                                                                                             |   | 2007                                      |    |   | 2006                             |   |
|                                                                                             |   | (Dollars                    in thousands) |    |
| One-to-four                    family residential                                                |   | $                                         | 159,945 |   |                             | $      | 155,454 |   |
| Multi-family                    residential                                                      |   |                                      | 4,362   |   |                             |   | 5,074 |   |
| Commercial                    real estate                                                        |   |                                      | 18,019  |   |                             |   | 11,339 |   |
| Construction                    and land development                                             |   |                                      | 52,429  |   |                             |   | 82,801 |   |
| Commercial                    business                                                           |   |                                      | 155     |   |                             |   | 234 |   |
| Consumer                                                                                         |   |                                      | 832     |   |                             |   | 1,239 |   |
|                                                                                             |   |                                      |    |   |                             |   |   |   |
|            Total                    loans |   |                                      | 235,742 |   |                             |   | 256,141 |   |
|                                                                                             |   |                                      |    |   |                             |   |   |   |
|   Undisbursed                    portion of loans-in-process                           |   |                                      | (15,897 | )      |                             |   | (36,258 | ) |
|   Deferred                    loan fees                                                |   |                                      | 315     |   |                             |   | 153 |   |
|   Allowance                    for loan losses                                         |   |                                      | (1,011  | )      |                             |   | (618 | ) |
|                                                                                             |   |                                      |    |   |                             |   |   |   |
| Net                                                                                              |   | $                                         | 219,149 |   |                             | $      | 219,418 |   |

|   | The                  Bank originates loans to customers in its local market area. The                  ultimate                  repayment of these loans is dependent, to a certain degree, on                  the local                  economy and real estate market.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The                  Bank originates or purchases both adjustable and fixed interest                  rate                  loans. At September 30, 2007 and 2006, the Bank had $57.6 million                  and                  $67.7 million of adjustable-rate loans, respectively. The adjustable-rate                  loans have interest rate adjustment limitations and are generally                  indexed                  to the one-year U.S. Treasury note rate, Wall Street Journal prime                  rate or                  the Average Contract Interest Rate for previously occupied houses                  as                  reported by the Federal Housing Finance Board. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Certain                  officers of the Bank have loans with the Bank. Such loans were                  made in the                  ordinary course of business at the Bank’s normal credit terms, including                  interest rate and collateralization, and do not represent more                  than a                  normal risk of collection. The aggregate dollar amount of these                  loans                  outstanding to related parties along with an analysis of the activity                  is                  summarized as follows:                                                                                                                       |

|                                               |   | Year                    Ended September                    30, |   |
|----------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                               |   | 2007                                                           |   |   | 2006 |   |   | 2005 |   |
|                                               |   | (Dollars                    in Thousands)                      |   |
| Balance—beginning                    of year |   | $                                                              | 677    |   |   | $ | 543 |   |   | $ | 561 |   |
|    Additions                        |   |                                                           | 1,138  |   |   |   | 475 |   |   |   | - |   |
|    Repayments                       |   |                                                           | (181   | ) |   |   | (341 | ) |   |   | (18 | ) |
|                                               |   |                                                           |   |   |   |   |   |   |   |   |   |   |
| Balance—end                    of year       |   | $                                                              | 1,634  |   |   | $ | 677 |   |   | $ | 543 |   |

----

|   | The                  following schedule summarizes the changes in the allowance for                  loan                  losses: |
|--------|------------------------------------------------------------------------------------------------------------------------------------|

|                                          |   | Year                    Ended September                    30, |   |
|-----------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                          |   | 2007                                                           |   |   | 2006 |   |   | 2005 |   |
|                                          |   | (Dollars                    in Thousands)                      |   |
|                                          |   |                                                           |   |   |   |   |   |   |   |
| Balance,                    beginning of year |   | $                                                              | 618    |   |   | $ | 558 |   |   | $ | 558 |   |
| Provision                    for loan losses  |   |                                                           | 395    |   |   |   | 60 |   |   |   | - |   |
| Charge-offs                                   |   |                                                           | (2     | ) |   |   | - |   |   |   | - |   |
| Recoveries                                    |   |                                                           | -      |   |   |   | - |   |   |   | - |   |
|                                          |   |                                                           |   |   |   |   |   |   |   |   |   |   |
| Balance,                    end of year       |   | $                                                              | 1,011  |   |   | $ | 618 |   |   | $ | 558 |   |

|   | A                  loan is considered to be impaired when, based upon current information                  and                  events, it is probable that the Bank will be unable to collect                  all amounts                  due according to the contractual terms of the loan. During the                  periods                  presented, loan impairment was evaluated based on the fair value                  of the                  loan’s collateral. Impairment losses are included in the provision for                  loan losses.  Large groups of smaller balance, homogeneous loans                  are collectively evaluated for impairment, except for those loans                  restructured under a troubled debt restructuring.  Loans                  collectively evaluated for impairment include smaller balance commercial                  real estate loans, residential real estate loans and consumer                  loans. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | As                  of September 30, 2007 and 2006, the recorded investment in loans                  that are                  considered to be impaired was as                  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |

|                                                                            |   | Year                    Ended September 30, |         |
|---------------------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                            |   | 2007                                        |    | 2006 |   |
|                                                                            |   | (Dollars                    in thousands)   |         |
| Impaired                    colateral-dependent loans with related allowance    |   | $                                           | 2,022        |   |   | $ | - |   |
| Impaired                    colateral-dependent loans with no related allowance |   | $                                           | -            |   |   | $ | - |   |

|   | Other                  data for impaired loans as of September 30, 2007, 2006, and 2005                  is as                  follow: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|

|                                                                       |   | Year                    Ended September 30, |         |
|----------------------------------------------------------------------------|--------|---------------------------------------------|--------------|
|                                                                       |   | 2007                                        |    | 2006 |    | 2005 |   |
|                                                                       |   | (Dollars                    in thousands)   |         |
| Average                    Impaired Loans                                  |   | $                                           | 2,022        |   |   | $ | - |   |   | $ | - |   |
| Interest                    income recognized on impaired loans            |   | $                                           | -            |   |   | $ | - |   |   | $ | - |   |
| Cash                    basis interest income recognized on impaired loans |   | $                                           | -            |   |   | $ | - |   |   | $ | - |   |

|   | The                  impaired amount represents one construction loan in which the borrower                  has                  not satisfied the terms of the loan.  A current appraisal has                  been obtained of the underlying collateral properties, which shows                  a                  deterioration in the value of such properties consistent with the                  change                  in values in the region.  As a result of the Company’s                  measurement of impaired loans, a specific reserve of $370,000 was                  established at September 30, 2007. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Interest                  income on impaired loans other than nonaccrual loans is recognized                  on an                  accrual basis. Interest income on nonaccrual loans is recognized                  only as                  collected.  Interest income foregone on non accrual interest at                  September 30, 2007, 2006 and 2005 amounted to $28,000, $-0- and                  $-0-,                  respectively.                                                                                                                                                                                           |

----

|   | Nonperforming                  loans (which consist of nonaccrual loans and loans in excess of                  90 days                  delinquent and still accruing interest) at September 30, 2007 and                  2006                  amounted to approximately $2.6 million and $151,000,                  respectively. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7.     | OFFICE                  PROPERTIES AND                  EQUIPMENT                                                                      |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                   |
|   | Office                  properties and equipment are summarized by major classifications                  as                  follows: |

|                                                                             |   | September                    30,                             |   |
|----------------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                                                             |   | 2007                                                         |   |   | 2006 |   |
|                                                                             |   | (Dollars                    in                    Thousands) |   |
|                                                                             |   |                                                         |   |   |   |   |
| Land                                                                             |   | $                                                            | 247    |   |   | $ | 247 |   |
| Buildings                    and improvements                                    |   |                                                         | 2,565  |   |   |   | 2,081 |   |
| Furniture                    and equipment                                       |   |                                                         | 2,759  |   |   |   | 2,406 |   |
| Automobiles                                                                      |   |                                                         | 122    |   |   |   | 72 |   |
|                                                                             |   |                                                         |   |   |   |   |   |   |
|           Total                |   |                                                         | 5,693  |   |   |   | 4,806 |   |
| Accumulated                    depreciation                                      |   |                                                         | (3,330 | ) |   |   | (3,085 | ) |
|                                                                             |   |                                                         |   |   |   |   |   |   |
| Total                    office properties and equipment,                        |   |                                                         |   |   |   |   |   |   |
|      net                    of accumulated depreciation |   | $                                                            | 2,363  |   |   | $ | 1,721 |   |

|   | For                  the years ended September 30, 2007, 2006 and 2005, depreciation                  expense                  amounted to $246,000, $242,000 and $261,000,                  respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                       |
| 8.     | DEPOSITS                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                       |
|   | Deposits                  consist of the following major                  classifications:                                                                                                                 |

|                                                             |   | September                    30,          |    |   | September                    30, |   |
|------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|----------------------------------|--------|
|                                                             |   | 2007                                      |    |   | 2006                             |   |
|                                                             |   | Amount                                    |    |   | Percent                          |   |   | Amount |   |   | Percent |   |
|                                                             |   | (Dollars                    in thousands) |    |
|                                                             |   |                                      |    |   |                             |   |   |   |   |   |   |   |
| Money                    market deposit accounts                 |   | $                                         | 63,675  |   |                             |   | 18.0 | % |   | $ | 64,498 |   |   |   | 18.6 | % |
| Checking                    accounts                             |   |                                      | 28,895  |   |                             |   | 8.2 |   |   |   | 34,203 |   |   |   | 9.8 |   |
| Passbook,                    club and statement savings          |   |                                      | 70,903  |   |                             |   | 20.0 |   |   |   | 76,989 |   |   |   | 22.2 |   |
| Certificates                    maturing in six months or less   |   |                                      | 101,615 |   |                             |   | 28.7 |   |   |   | 77,904 |   |   |   | 22.4 |   |
| Certificates                    maturing in more than six months |   |                                      | 88,950  |   |                             |   | 25.1 |   |   |   | 93,698 |   |   |   | 27.0 |   |
|                                                             |   |                                      |    |   |                             |   |   |   |   |   |   |   |   |   |   |   |
|   Total                                                |   | $                                         | 354,038 |   |                             |   | 100.0 | % |   | $ | 347,292 |   |   |   | 100.0 | % |

|   | At                  September 30, 2007 and 2006 the weighted average cost of deposits                  was 3.9%                  and 3.5%, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | The                  amount of scheduled maturities of certificate accounts was as                  follows: |
|--------|--------------------------------------------------------------------------------------------------------------|

|                                        |   | September                    30,                    2007 |    |
|---------------------------------------------|--------|----------------------------------------------------------|---------|
|                                        |   | (Dollars                    in Thousands)                |    |
|                                        |   |                                                     |    |
| One                    year or less         |   | $                                                        | 136,881 |   |
| One                    through two years    |   |                                                     | 29,033  |   |
| Two                    through three years  |   |                                                     | 5,042   |   |
| Three                    through four years |   |                                                     | 7,733   |   |
| Four                    through five years  |   |                                                     | 11,876  |   |
|                                        |   |                                                     |    |   |
| Total                                       |   | $                                                        | 190,565 |   |

|   | The                  weighted average rate paid on certificates at September 30, 2007                  and 2006,                  was 4.9% and 4.6%, respectively. Certificates of deposit of $100,000                  or                  more at each of such dates were approximately $56.4 million and                  $44.9                  million, respectively. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                       |
|   | Interest                  expense on deposits was comprised of the                  following:                                                                                                                                                                                                                                                                             |

|                                                      |   | Year                    Ended September                    30, |   |
|-----------------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                                      |   | 2007                                                           |   |   | 2006 |   |   | 2005 |   |
|                                                      |   |                                                           |   |   |   |   |   |   |   |
|                                                      |   | (Dollars                    in Thousands)                      |   |
| NOW                    and money market deposits accounts |   | $                                                              | 3,321  |   |   | $ | 3,081 |   |   | $ | 2,273 |   |
| Passbook,                    club and statement           |   |                                                           |   |   |   |   |   |   |   |   |   |   |
|   savings                    accounts           |   |                                                           | 1,986  |   |   |   | 2,458 |   |   |   | 1,729 |   |
| Certificate                    accounts                   |   |                                                           | 7,944  |   |   |   | 5,304 |   |   |   | 4,520 |   |
|                                                      |   |                                                           |   |   |   |   |   |   |   |   |   |   |
| Total                                                     |   | $                                                              | 13,251 |   |   | $ | 10,843 |   |   | $ | 8,522 |   |

| 9.     | ADVANCES                  FROM FEDERAL HOME LOAN                  BANK                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Advances                  from Federal Home Loan Bank totaled $33.7 million and $31.8 million                  at                  September 30, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The                  following is a schedule of six advances made under the low-income                  housing                  program in which the Bank is a participant. Three of the advances                  are at                  an interest rate of 3.0%, one advance is at an interest rate of                  2.0% and                  two advances are non-interest bearing. Repayment of the advances                  is as                  follows: |

|                               |   | September                    30,                             |   |
|------------------------------------|--------|--------------------------------------------------------------|--------|
|                               |   | 2007                                                         |   |   | 2006 |   |
|                               |   | (Dollars                    in                    thousands) |   |
|                               |   |                                                         |   |   |   |   |
| 1                    to 12 months  |   | $                                                            | 42     |   |   | $ | 41 |   |
| 13                    to 24 months |   |                                                         | 43     |   |   |   | 42 |   |
| 25                    to 36 months |   |                                                         | 44     |   |   |   | 43 |   |
| Thereafter                         |   |                                                         | 614    |   |   |   | 658 |   |
|                               |   |                                                         |   |   |   |   |   |   |
| Total                              |   | $                                                            | 743    |   |   | $ | 784 |   |

----

|   | Advances                  from Federal Home Loan Bank not part of the low-income housing                  program at                  September 30, 2007 and 2006 consist of the                  following: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                              |   | September                    30,                             |   |
|-----------------------------------|--------|--------------------------------------------------------------|--------|
|                              |   | 2007                                                         |   |   | 2006 |   |
|                              |   |                                                         |   |   | Fixed |   |   |   |   |   | Fixed |   |
|                              |   |                                                         |   |   | Interest |   |   |   |   |   | Interest |   |
| Due                               |   | Amount                                                       |   |   | Rate |   |   | Amount |   |   | Rate |   |
|                              |   | (Dollars                    in                    Thousands) |   |
| October                    2007   |   | $                                                            | 20,000 |   |   |   | 5.07 | % |   | $ | 18,000 |   |   |   | 5.45 | % |
| July                    2010      |   |                                                         | 2,000  |   |   |   | 5.98 | % |   |   | 2,000 |   |   |   | 5.98 | % |
| August                    2010    |   |                                                         | 3,000  |   |   |   | 5.93 | % |   |   | 3,000 |   |   |   | 5.93 | % |
| September                    2010 |   |                                                         | 8,000  |   |   |   | 5.69 | % |   |   | 8,000 |   |   |   | 5.69 | % |
|                              |   |                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | $                                                            | 33,000 |   |   |   |   |   |   | $ | 31,000 |   |   |   |   |   |

|   | The                  advances are collateralized by all of the Federal Home Loan Bank                  stock and                  substantially all qualifying first mortgage loans. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                 |
| 10.    | INCOME                  TAXES                                                                                                                                                        |
|   |                                                                                                                                                                                 |
|   | The                  Company’s income tax provision consists of the                  following:                                                                                |

|                                                                                               |   | Year                    Ended September                    30, |   |
|----------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                                                                               |   | 2007                                                           |   |   | 2006 |   |   | 2005 |   |
|                                                                                               |   | (Dollars                    in thousands)                      |   |
| Current:                                                                                           |   |                                                           |   |   |   |   |   |   |   |
|    Federal                                                                          |   | $                                                              | 1,455  |   |   | $ | 1,596 |   |   | $ | 1,568 |   |
|    State                                                                            |   |                                                           | -      |   |   |   | 50 |   |   |   | 166 |   |
|           Total                    current taxes |   |                                                           | 1,455  |   |   |   | 1,646 |   |   |   | 1,734 |   |
|                                                                                               |   |                                                           |   |   |   |   |   |   |   |   |   |   |
| Deferred                    income tax (benefit) expense                                           |   |                                                           | (68    | ) |   |   | 127 |   |   |   | 152 |   |
| Total                    income tax provision                                                      |   | $                                                              | 1,387  |   |   | $ | 1,773 |   |   | $ | 1,886 |   |

----

|   | Items                  that gave rise to significant portions of deferred income taxes                  are as                  follows: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                            |   | September                    30,          |   |
|---------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                            |   |                                      |   |   |   |   |
|                                                                            |   | 2007                                      |   |   | 2006 |   |
|                                                                            |   |                                      |   |   |   |   |
|                                                                            |   | (Dollars                    in Thousands) |   |
| Deferred                    tax assets:                                         |   |                                      |   |   |   |   |
|   Deposit                    premium                                  |   | $                                         | 265    |   |   | $ | 314 |   |
|   Allowance                    for loan losses                        |   |                                      | 378    |   |   |   | 247 |   |
|   Employee                    stock ownership plan                    |   |                                      | 79     |   |   |   | - |   |
|   Other                                                               |   |                                      | -      |   |   |   | 40 |   |
|   Total                                                               |   | $                                         | 722    |   |   | $ | 601 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
| Deferred                    tax liabilities:                                    |   |                                      |   |   |   |   |   |   |
|   Unrealized                    gain on available for sale securities |   |                                      | 134    |   |   |   | 286 |   |
|   Property                                                            |   |                                      | 446    |   |   |   | 407 |   |
|   Mortgage                    servicing                               |   |                                      | 8      |   |   |   | 10 |   |
|   Deferred                    loan fees                               |   |                                      | 106    |   |   |   | 51 |   |
|   Total                                                               |   |                                      | 694    |   |   |   | 754 |   |
| Net                    deferred tax asset (liability)                           |   | $                                         | 28     |   |   | $ | (153 | ) |

|   | The                  income tax expense differs from that computed at the statutory                  federal                  corporate tax rate as follows: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                 |   | Year                    Ended September                    30, |   |
|----------------------------------------------------------------------|--------|----------------------------------------------------------------|--------|
|                                                                 |   | 2007                                                           |   |   | 2006 |   |   | 2005 |   |
|                                                                 |   |                                                           |   |   | Percentage |   |   |   |   |   | Percentage |   |   |   |   |   | Percentage |   |
|                                                                 |   |                                                           |   |   | of                    Pretax |   |   |   |   |   | of                    Pretax |   |   |   |   |   | of                    Pretax |   |
|                                                                 |   | Amount                                                         |   |   | Income |   |   | Amount |   |   | Income |   |   | Amount |   |   | Income |   |
|                                                                 |   | (Dollars                    in Thousands)                      |   |
| Tax                    at statutory rate                             |   | $                                                              | 1,627  |   |   |   | 34.0 | % |   | $ | 1,907 |   |   |   | 34.0 | % |   | $ | 1,794 |   |   |   | 34.0 | % |
| Adjustments                    resulting from:                       |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   State                    tax, net of federal tax effect  |   |                                                           | -      |   |   |   | - |   |   |   | 33 |   |   |   | 0.6 |   |   |   | 109 |   |   |   | 2.1 |   |
|   Income                    from bank owned life insurance |   |                                                           | (72    | ) |   |   | (1.5 | ) |   |   | (56 | ) |   |   | (1.0 | ) |   |   | - |   |   |   | - |   |
|   Income                    from muncipal obligations      |   |                                                           | (35    | ) |   |   | (0.7 | ) |   |   | (35 | ) |   |   | (0.6 | ) |   |   | (32 | ) |   |   | (0.6 | ) |
|   Other                                                    |   |                                                           | (133   | ) |   |   | (2.8 | ) |   |   | (76 | ) |   |   | (1.4 | ) |   |   | 15 |   |   |   | 0.3 |   |
|                                                                 |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income                    tax expense per                            |   |                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   statements                    of income                  |   | $                                                              | 1,387  |   |   |   | 29.0 | % |   | $ | 1,773 |   |   |   | 31.6 | % |   | $ | 1,886 |   |   |   | 35.8 | % |

----

|   | As                  of October 1, 1997, the Bank changed its method of computing reserves                  for                  bad debts to the experience method. The bad debt deduction allowable                  under                  this method is available to small banks with assets of less than                  $500                  million. Generally, this method allows the Bank to deduct an annual                  addition to the reserve for bad debts equal to the increase in                  the balance                  of the Bank’s reserve for bad debts at the end of the year to an amount                  equal to the percentage of total loans at the end of the year,                  computed                  using the ratio of the previous six years’ net charge-offs divided by the                  sum of the previous six years’ total outstanding loans at                  year-end.                                                                                                                                                                                                                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | A                  thrift institution required to change its method of computing reserves                  for                  bad debts treats such change as a change in a method of accounting                  determined solely with respect to the “applicable excess reserves” of the                  institution. The amount of the applicable excess reserves is being                  taken                  into account ratably over a six-taxable-year period. The timing                  of this                  recapture was delayed for a one-year period since certain residential                  loan                  requirements were met. For financial reporting purposes, the Bank                  has not                  incurred any additional tax expense. Stockholders’ equity includes                  approximately $6.6 million at both September 30, 2007and 2006 representing                  bad debt deductions for which no deferred income taxes have been                  provided.                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| 11.    | REGULATORY                  CAPITAL                  REQUIREMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The                  Company and the Bank are subject to various regulatory capital                  requirements administered by the federal banking agencies. Failure                  to meet                  minimum capital requirements can initiate certain mandatory – and possibly                  additional discretionary – actions by regulators that, if undertaken,                  could have a direct material effect on the Company’s consolidated                  financial statements. Under capital adequacy guidelines and the                  regulatory                  framework for prompt corrective action, the Company and the Bank                  must meet                  specific capital guidelines that involve quantitative measures                  of their                  assets, liabilities, and certain off-balance-sheet items as calculated                  under regulatory accounting practices. The Company’s and the Bank’s                  capital amounts and the Bank’s classification are also subject to                  qualitative judgments by the regulators about components, risk                  weightings,                  and other factors. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Quantitative                  measures established by regulation to ensure capital adequacy require                  the                  Company and the Bank to maintain minimum amounts and ratios (set                  forth in                  the table below) of Tier 1 capital (as defined in the regulations)                  to                  average assets (as defined) and risk-weighted assets (as defined),                  and of                  total capital (as defined) to risk-weighted assets. Management                  believes,                  as of September 30, 2007 and 2006, that the Company and the Bank                  met all                  regulatory capital adequacy requirements to which they are                  subject.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | As                  of September 30, 2007 and 2006, the most recent notification from                  the                  Federal Deposit Insurance Corporation categorized the Bank as well                  capitalized under the regulatory framework for prompt corrective                  action.                  To be categorized as well capitalized, the Bank must maintain the                  minimum                  Tier 1 capital, Tier 1 risk-based, and total risk-based ratios                  as set                  forth in the table. There are no conditions or events since that                  notification that management believes have changed the Bank’s                  category.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

----

|   | The                  Company’s and the Bank’s actual capital amounts and ratios are also                  presented in the following table: |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                    |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   | To                    Be            |   |
|-------------------------------------------------------------------------|--------|--------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------------------------|--------|
|                                                                    |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   | Well                    Capitalized |   |
|                                                                    |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   | Under                    Prompt     |   |
|                                                                    |   |                                                         |   |   |                                 |   |   | Required                    for                    Capital |   |   | Corrective                    Action |   |
|                                                                    |   | Actual                                                       |   |   | Adequacy                    Purposes |   |   | Provisions                                                 |   |
|                                                                    |   | Amount                                                       |   |   | Ratio                                |   |   | Amount                                                     |   |   | Ratio                                |   |   | Amount                              |   |   | Ratio |   |
|                                                                    |   | (Dollars                    in                    thousands) |   |
| September                    30, 2007:                                  |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |
|   Tier                    1 capital (to average assets)       |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |
|      Company                                   |   | $                                                            | 80,702 |   |                                 |   | 17.08  | %                                                          |   | $      | 18,900                               |   |   |                                | 4.0    | % |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 72,906 |   |                                 |   | 15.52  |                                                       |   |   | 18,785                               |   |   |                                | 4.0    |   |   | $ | 23,482 |   |   |   | 5.0 | % |
|   Tier                    1 capital (to risk weighted assets) |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|      Company                                   |   |                                                         | 80,702 |   |                                 |   | 37.88  |                                                       |   |   | 8,522                                |   |   |                                | 4.0    |   |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 72,906 |   |                                 |   | 34.22  |                                                       |   |   | 8,522                                |   |   |                                | 4.0    |   |   |   | 12,783 |   |   |   | 6.0 |   |
|   Total                    capital (to risk weighted assets)  |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|      Company                                   |   |                                                         | 81,877 |   |                                 |   | 38.43  |                                                       |   |   | 17,044                               |   |   |                                | 8.0    |   |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 74,081 |   |                                 |   | 34.77  |                                                       |   |   | 17,044                               |   |   |                                | 8.0    |   |   |   | 21,305 |   |   |   | 10.0 |   |
|                                                                    |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
| September                    30, 2006:                                  |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|   Tier                    1 capital (to average assets)       |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|      Company                                   |   | $                                                            | 86,914 |   |                                 |   | 18.64  | %                                                          |   | $      | 18,646                               |   |   |                                | 4.0    | % |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 68,937 |   |                                 |   | 14.74  |                                                       |   |   | 18,703                               |   |   |                                | 4.0    |   |   | $ | 23,379 |   |   |   | 5.0 | % |
|   Tier                    1 capital (to risk weighted assets) |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|      Company                                   |   |                                                         | 86,914 |   |                                 |   | 39.23  |                                                       |   |   | 8,861                                |   |   |                                | 4.0    |   |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 68,937 |   |                                 |   | 31.12  |                                                       |   |   | 8,861                                |   |   |                                | 4.0    |   |   |   | 13,292 |   |   |   | 6.0 |   |
|   Total                    capital (to risk weighted assets)  |   |                                                         |   |   |                                 |   |   |                                                       |   |   |                                 |   |   |                                |   |   |   |   |   |   |   |   |   |   |
|      Company                                   |   |                                                         | 87,894 |   |                                 |   | 39.68  |                                                       |   |   | 17,722                               |   |   |                                | 8.0    |   |   | N/A |   |   | N/A |   |
|       Bank                                |   |                                                         | 69,917 |   |                                 |   | 31.56  |                                                       |   |   | 17,722                               |   |   |                                | 8.0    |   |   |   | 22,153 |   |   |   | 10.0 |   |

| 12.    | EMPLOYEE                  BENEFITS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The                  Bank is a member of a multi-employer defined benefit pension plan                  covering                  all employees meeting certain eligibility requirements. The Bank’s policy                  is to fund pension costs accrued. Information regarding the actuarial                  present values of vested and nonvested benefits and fair value                  of plan                  assets for the separate employers in the plan is not available.                  The                  expense relating to this plan for the years ended September 30,                  2007, 2006                  and 2005 was $472,000, $550,000 and $438,000,                  respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The                  Bank also has a defined contribution plan for employees meeting                  certain                  eligibility requirements. The defined contribution plan may be                  terminated                  at any time at the discretion of the Bank. The expense relating                  to this                  plan for the years ended September 30, 2007, 2006 and 2005 was                  $-0-, $-0-                  and $71,000, respectively.  The elimination of the expense in                  2006 and 2007 reflected the Company’s decision to discontinue the employer                  match in conjunction with the establishment of the employee stock                  ownership plan (“ESOP”) discussed below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In                  fiscal 2005, the Bank established an ESOP for substantially all                  of its                  full-time employees meeting certain eligibility requirements. The                  purchase                  of shares of the Company's common stock by the ESOP was funded                  by a loan                  from the Company. The loan will be repaid principally from the                  Bank's                  contributions to the ESOP. Shares of the Company's common stock                  purchased                  by the ESOP are held in a suspense account and released for allocation                  to                  participants on a pro rata basis as debt service payments are made                  on the                  loan. Shares released are allocated to each eligible participant                  based on                  the ratio of each such participant's base compensation, as defined                  in the                  ESOP, to the total base compensation of all eligible plan participants.                  As                  the unearned shares are released and allocated among participants,                  the                  Bank recognizes compensation expense equal to the current market                  price of                  the shares released. The ESOP purchased 452,295 shares of the Company’s                  common stock on the open market for approximately $4.5                  million.  The average purchase price was $9.86 per                  share.  As of September 30, 2007 the Company had allocated a                  total of 39,585 shares from the suspense account to participants                  and                  committed to release an additional 16,965 shares.  The expense                  relating to this plan for the years ended September 30, 2007, 2006                  and                  2005 was $306,000, $287,000, and                  $121,000,  respectively. |

----

| 13.    | COMMITMENTS                  AND CONTINGENT                  LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | At                  September 30, 2007, the Bank had $10.4 million in outstanding                  commitments to originate fixed and variable-rate loans with market                  interest rates ranging from 6.625% to 9.25%.  At                  September 30, 2006, the Bank had $4.9 million in outstanding                  commitments to originate fixed and variable-rate loans with market                  interest rates ranging from 6.00% to 9.25%.                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The                  Bank also had commitments under unused lines of credit of $7.2                  million and                  $6.7 million and letters of credit outstanding of $95,000 and $110,000                  at                  September 30, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The                  Company is subject to various pending claims and contingent liabilities                  arising in the normal course of business which are not reflected                  in the                  accompanying consolidated financial statements. Management considers                  that                  the aggregate liability, if any, resulting from such matters will                  not be                  material.                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | Among                  the Bank’s contingent liabilities are exposures to limited recourse                  arrangements with respect to the Bank’s sales of whole loans and                  participation interests. At September 30, 2007, the exposure, which                  represents a portion of credit risk associated with the sold interests,                  amounted to $64,000. This exposure is for the life of the related                  loans                  and payables, on our proportionate share, as actual losses are                  incurred. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | The                  company leases certain property and equipment under non-cancelable                  operating leases.  Scheduled minimum payments are as follows for                  the fiscal years ended:                                                                                                                                                                                                                                                                                                                                                                |

|   | September                    30, |   | Lease                    Obligation       |   |
|--------|----------------------------------|--------|-------------------------------------------|--------|
|   |                             |   | (Dollars                    in thousands) |   |
|   | 2008                             |   | $                                         | 76     |   |
|   | 2009                             |   |                                      | 54     |   |
|   | 2010                             |   |                                      | 13     |   |
|   | 2011                             |   |                                      | 2      |   |
|   | 2012                             |   |                                      | -      |   |
|   | Thereafter                       |   |                                      | -      |   |
|   | Total                            |   | $                                         | 145    |   |

|   | Rent                  expense for all operating leases was approximately $73,000, $27,000,                  and                  $12,000 for fiscal years ending September 30, 2007, 2006, and 2005                  respectively. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 14.    | FAIR                  VALUE OF FINANCIAL                  INSTRUMENTS                                                                                                                                                                                                                                                                                                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The                  following disclosure of the estimated fair value of financial instruments                  is made in accordance with the requirements of SFAS No. 107, Disclosure about                  Fair Value of                  Financial Instruments.                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                            |
|   | The                  estimated fair value amounts have been determined by the Company                  using                  available market information and appropriate valuation methodologies.                  However, considerable judgment is necessarily required to interpret                  market                  data to develop the estimates of fair                  value. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Accordingly,                  the estimates presented herein are not necessarily indicative of                  the                  amounts the Company could realize in a current market exchange.                  The use of                  different market assumptions and/or estimation methodologies may                  have a                  material effect on the estimated fair value                  amounts. |

|                                                          |   | September                    30,          |    |
|---------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                          |   | 2007                                      |    |   | 2006 |   |
|                                                          |   |                                      |    |   | Estimated |   |   |   |   |   | Estimated |   |
|                                                          |   | Carrying                                  |    |   | Fair |   |   | Carrying |   |   | Fair |   |
|                                                          |   | Amount                                    |    |   | Value |   |   | Amount |   |   | Value |   |
|                                                          |   | (Dollars                    in thousands) |    |
| Assets:                                                       |   |                                      |    |   |   |   |   |   |   |   |   |   |
|   Cash                    and cash equivalents      |   | $                                         | 12,269  |   |   | $ | 12,269 |   |   | $ | 13,428 |   |   | $ | 13,428 |   |
|   Investment                    securities held     |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     to                    maturity        |   |                                      | 134,782 |   |   |   | 133,693 |   |   |   | 132,084 |   |   |   | 129,593 |   |
|   Investment                    securities          |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     available                    for sale |   |                                      | 38,343  |   |   |   | 38,343 |   |   |   | 38,747 |   |   |   | 38,747 |   |
|   Mortgage-backed                    securities     |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     held                    to maturity   |   |                                      | 45,534  |   |   |   | 44,213 |   |   |   | 50,360 |   |   |   | 49,526 |   |
|   Mortgage-backed                    securities     |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     available                    for sale |   |                                      | 8,549   |   |   |   | 8,549 |   |   |   | 4,615 |   |   |   | 4,615 |   |
|   Loans                    receivable, net          |   |                                      | 219,527 |   |   |   | 216,915 |   |   |   | 219,418 |   |   |   | 216,235 |   |
|   Federal                    Home Loan Bank stock   |   |                                      | 2,397   |   |   |   | 2,397 |   |   |   | 2,217 |   |   |   | 2,217 |   |
|                                                          |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                  |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   NOW                    accounts                   |   |                                      | 28,895  |   |   |   | 28,895 |   |   |   | 34,203 |   |   |   | 34,203 |   |
|   Money                    market deposit accounts  |   |                                      | 63,675  |   |   |   | 63,675 |   |   |   | 64,498 |   |   |   | 64,498 |   |
|   Passbook,                    club and statement   |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     savings                    accounts   |   |                                      | 70,903  |   |   |   | 70,903 |   |   |   | 76,989 |   |   |   | 76,989 |   |
|   Certificates                    of deposit        |   |                                      | 190,565 |   |   |   | 191,024 |   |   |   | 171,602 |   |   |   | 171,660 |   |
|   Advances                    from Federal Home     |   |                                      |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Loan                    Bank          |   |                                      | 33,743  |   |   |   | 34,199 |   |   |   | 31,784 |   |   |   | 32,053 |   |

|   | Cash                  and Cash                  Equivalents—For cash and cash equivalents, the carrying                  amount is a reasonable estimate of fair value.                                                                                                                                                                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                    |
|   | Investments                  and                  Mortgage-Backed Securities—The                  fair value of                  investment securities and mortgage-backed securities is based on                  quoted                  market prices, dealer quotes, and prices obtained from independent                  pricing                  services. |

----

|   | Loans                  Receivable—The                  fair value of                  loans is estimated based on present value using the current rates                  at which                  similar loans would be made to borrowers with similar credit ratings                  and                  for the same remaining maturities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Federal                  Home Loan Bank (FHLB)                  Stock—Although                  FHLB stock is                  an equity interest in an FHLB, it is carried at cost because it                  does not                  have a readily determinable fair value as its ownership is restricted                  and                  it lacks a market. The estimated fair value approximates the carrying                  amount.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | NOW                  Accounts, Money Market                  Deposit Accounts, Passbook Accounts, Club Accounts, Statement Savings                  Accounts, and Certificates of Deposit—The                  fair value of                  passbook accounts, club accounts, statement savings accounts, NOW                  accounts, and money market deposit accounts is the amount reported                  in the                  financial statements. The fair value of certificates of deposit                  is based                  on a present value estimate using rates currently offered for deposits                  of                  similar remaining maturity.                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Advances                  from Federal Home                  Loan Bank—The                  fair value of                  advances from FHLB is the amount payable on demand at the reporting                  date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Commitments                  to Extend Credit                  and Letters of Credit—The                  majority of the                  Bank’s commitments to extend credit and letters of credit carry current                  market interest rates if converted to loans. Because commitments                  to extend                  credit and letters of credit are generally unassignable by either                  the Bank                  or the borrower, they only have value to the Bank and the borrower.                  The                  estimated fair value approximates the recorded deferred fee amounts,                  which                  are not significant. As discussed in Note 13, the related amounts                  at                  September 30, 2007 and 2006 were, in the aggregate, $17.7 million                  and                  $11.7 million, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   | The                  fair value estimates presented herein are based on pertinent information                  available to management as of September 30, 2007 and 2006, respectively.                  Although management is not aware of any factors that would significantly                  affect the estimated fair value amounts, such amounts have not                  been                  comprehensively revalued for purposes of these financial statements                  since                  that date and, therefore, current estimates of fair value may differ                  significantly from the amounts presented                  herein.                                                                                                                                                                                                                                                                 |

----

| 15. | PRUDENTIAL                  BANCORP, INC. OF                  PENNSYLVANIA (PARENT COMPANY                  ONLY) |
|-----|-------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The                  condensed financial statements of Prudential Bancorp, Inc. of Pennsylvania                  (Parent Company) are as follows: |

| STATEMENT                    OF FINANCIAL CONDITION                   |   |                                      |    |   |   |   |
|-----------------------------------------------------------------------|--------|-------------------------------------------|---------|--------|--------|--------|
| At                    September 30,                              | 2007   |                                 | 2006    |   |
|                                                                  |   |                                      |    |   |   |   |
|                                                                  |   | (Dollars                    in thousands) |    |
| Assets:                                                               |   |                                      |    |   |   |   |
|   Cash                                                      |   | $                                         | 4,115   |   |   | $      | 14,159 |   |
|   ESOP                    loan receivable                   |   |                                      | 4,139   |   |   |   | 4,273 |   |
|   Investment                    in Bank                     |   |                                      | 73,165  |   |   |   | 69,471 |   |
|   Other                    assets                           |   |                                      | 116     |   |   |   | 27 |   |
| Total                    assets                                       |   | $                                         | 81,535  |   |   | $      | 87,930 |   |
|                                                                  |   |                                      |    |   |   |   |   |   |
| Liabilities:                                                          |   |                                      |    |   |   |   |   |   |
|   Accrued                    dividend payable               |   | $                                         | 574     |   |   | $      | 482 |   |
|   Total                    liabilities                      |   |                                      | 574     |   |   |   | 482 |   |
|                                                                  |   |                                      |    |   |   |   |   |   |
| Stockholders'                    equity:                              |   |                                      |    |   |   |   |   |   |
|   Preferred                    stock                        |   |                                      | -       |   |   |   | - |   |
|   Common                    stock                           |   |                                      | 126     |   |   |   | 126 |   |
|   Additional                    paid-in-capital             |   |                                      | 54,880  |   |   |   | 54,798 |   |
|   Unearned                    ESOP shares                   |   |                                      | (3,903  | )      |   |   | (4,127 | ) |
|   Treasury                    stock                         |   |                                      | (14,372 | )      |   |   | (6,422 | ) |
|   Retained                    earnings                      |   |                                      | 43,971  |   |   |   | 42,539 |   |
|   Accumulated                    other comprehensive income |   |                                      | 259     |   |   |   | 534 |   |
|                                                                  |   |                                      |    |   |   |   |   |   |
|   Total                    stockholders' equity             |   |                                      | 80,961  |   |   |   | 87,448 |   |
|                                                                  |   |                                      |    |   |   |   |   |   |
| Total                    liabilities and stockholders' equity         |   | $                                         | 81,535  |   |   | $      | 87,930 |   |

----

| INCOME                    STATEMENT                                             |   |                                      |   |   |   |   |
|---------------------------------------------------------------------------------|--------|-------------------------------------------|--------|--------|--------|--------|
| For                    the year ended September 30,                        | 2007   |                                 | 2006   |   |
|                                                                            |   |                                      |   |   |   |   |
|                                                                            |   | (Dollars                    in thousands) |   |
|   Interest                    on ESOP loan                            |   | $                                         | 242    |   |   | $      | 250 |   |
|   Equity                    in the undistributed earnings of the Bank |   |                                      | 3,492  |   |   |   | 3,967 |   |
|   Other                    income                                     |   |                                      | 55     |   |   |   | 1 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Total                    income                                     |   |                                      | 3,789  |   |   |   | 4,218 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Professional                    services                            |   |                                      | 296    |   |   |   | 302 |   |
|   Other                    expense                                    |   |                                      | 141    |   |   |   | 129 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Total                    expense                                    |   |                                      | 437    |   |   |   | 431 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Income                    before income taxes                       |   |                                      | 3,352  |   |   |   | 3,787 |   |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Income                    tax benefit                               |   |                                      | (45    | )      |   |   | (50 | ) |
|                                                                            |   |                                      |   |   |   |   |   |   |
|   Net                    income                                       |   | $                                         | 3,397  |   |   | $      | 3,837 |   |

| CASH                    FLOWS                                                   |   |                                                         |    |   |   |   |
|---------------------------------------------------------------------------------|--------|--------------------------------------------------------------|---------|--------|--------|--------|
| For                    the year ended September 30,                        | 2007   |                                                    | 2006    |   |
|                                                                            |   | (Dollars                    in                    thousands) |    |
| Operating                    activities:                                        |   |                                                         |    |   |   |   |
|   Net                    income                                       |   | $                                                            | 3,397   |   |   | $      | 3,837 |   |
|   Decrease                    in assets                               |   |                                                         | 90      |   |   |   | 54 |   |
|   Decease                    in liabilities                           |   |                                                         | (173    | )      |   |   | (31 | ) |
|   Equity                    in the undistributed earnings of the Bank |   |                                                         | (3,492  | )      |   |   | (3,967 | ) |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Net                    cash used in operating activities                        |   |                                                         | (178    | )      |   |   | (107 | ) |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Investing                    activities:                                        |   |                                                         |    |   |   |   |   |   |
|   Repayments                    received on ESOP loan                 |   |                                                         | 134     |   |   |   | 157 |   |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Net                    cash provided by  investing activities         |   |                                                         | 134     |   |   |   | 157 |   |
| Financing                    activities:                                        |   |                                                         |    |   |   |   |   |   |
|   Cash                    dividends paid                              |   |                                                         | (2,050  | )      |   |   | (1,910 | ) |
|   Payment                    to repurchase common stock               |   |                                                         | (7,950  | )      |   |   | (5,768 | ) |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Net                    cash used in financing activities                        |   |                                                         | (10,000 | )      |   |   | (7,678 | ) |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Net                    decrease in cash and cash equivalents                    |   |                                                         | (10,044 | )      |   |   | (7,628 | ) |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Cash                    and cash equivalents, beginning of year                 |   |                                                         | 14,159  |   |   |   | 21,787 |   |
|                                                                            |   |                                                         |    |   |   |   |   |   |
| Cash                    and cash equivalents, end of year                       |   | $                                                            | 4,115   |   |   | $      | 14,159 |   |

----

| 16.    | QUARTERLY                  FINANCIAL DATA                  (UNAUDITED)                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                 |
|   | Unaudited                  quarterly financial data for the years ended September 30, 2007                  and 2006                  is as follows: |

|                                                             |   | September                    30,                    2007 |   |   | September                    30,                    2006 |   |
|------------------------------------------------------------------|--------|----------------------------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                                             |   |                                                     |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                             |   | 1st                                                      |   |   | 2nd                                                      |   |   | 3rd |   |   | 4th |   |   | 1st |   |   | 2nd |   |   | 3rd |   |   | 4th |   |
|                                                             |   | Qtr                                                      |   |   | Qtr                                                      |   |   | Qtr |   |   | Qtr |   |   | Qtr |   |   | Qtr |   |   | Qtr |   |   | Qtr |   |
|                                                             |   | (In                    thousands)                        |   |   | (In                    thousands)                        |   |
|                                                             |   |                                                     |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                    income                               |   | $                                                        | 6,683  |   |                                                     | $      | 6,692 |   |   | $ | 6,746 |   |   | $ | 6,787 |   |   | $ | 5,786 |   |   | $ | 5,922 |   |   | $ | 6,235 |   |   | $ | 6,599 |   |
| Interest                    expenses                             |   |                                                     | 3,594  |   |                                                     |   | 3,574 |   |   |   | 3,742 |   |   |   | 3,874 |   |   |   | 2,620 |   |   |   | 2,754 |   |   |   | 3,110 |   |   |   | 3,451 |   |
| Net                    interest income                           |   |                                                     | 3,089  |   |                                                     |   | 3,118 |   |   |   | 3,004 |   |   |   | 2,913 |   |   |   | 3,166 |   |   |   | 3,168 |   |   |   | 3,125 |   |   |   | 3,148 |   |
| Provision                    for loan losses                     |   |                                                     | 60     |   |                                                     |   | 15 |   |   |   | (20 | ) |   |   | 340 |   |   |   | 0 |   |   |   | 0 |   |   |   | 30 |   |   |   | 30 |   |
| Net                    income after provision                    |   |                                                     |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      for                    loan losses |   |                                                     | 3,029  |   |                                                     |   | 3,103 |   |   |   | 3,024 |   |   |   | 2,573 |   |   |   | 3,166 |   |   |   | 3,168 |   |   |   | 3,095 |   |   |   | 3,118 |   |
| Non-interest                    income                           |   |                                                     | 310    |   |                                                     |   | 221 |   |   |   | 262 |   |   |   | 252 |   |   |   | 170 |   |   |   | 299 |   |   |   | 209 |   |   |   | 259 |   |
| Non-interest                    expense                          |   |                                                     | 2,021  |   |                                                     |   | 2,122 |   |   |   | 1,853 |   |   |   | 1,994 |   |   |   | 1,828 |   |   |   | 2,005 |   |   |   | 2,008 |   |   |   | 2,034 |   |
| Income                    before income taxes                    |   |                                                     | 1,318  |   |                                                     |   | 1,202 |   |   |   | 1,433 |   |   |   | 831 |   |   |   | 1,508 |   |   |   | 1,462 |   |   |   | 1,296 |   |   |   | 1,343 |   |
| Income                    tax expense                            |   |                                                     | 422    |   |                                                     |   | 237 |   |   |   | 456 |   |   |   | 271 |   |   |   | 422 |   |   |   | 507 |   |   |   | 414 |   |   |   | 430 |   |
| Net                    income                                    |   | $                                                        | 896    |   |                                                     | $      | 965 |   |   | $ | 977 |   |   | $ | 560 |   |   | $ | 1,086 |   |   | $ | 955 |   |   | $ | 882 |   |   | $ | 913 |   |
|                                                             |   |                                                     |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Per                    share:                                    |   |                                                     |   |   |                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Earnings                    for share - basic        |   | $                                                        | 0.08   |   |                                                     | $      | 0.08 |   |   | $ | 0.09 |   |   | $ | 0.05 |   |   | $ | 0.09 |   |   | $ | 0.08 |   |   | $ | 0.07 |   |   | $ | 0.08 |   |
|   Earnings                    per share - diluted      |   |                                                     | 0.08   |   |                                                     |   | 0.08 |   |   |   | 0.09 |   |   |   | 0.05 |   |   |   | 0.09 |   |   |   | 0.08 |   |   |   | 0.07 |   |   |   | 0.08 |   |
|   Dividends                    per share               |   |                                                     | 0.04   |   |                                                     |   | 0.05 |   |   |   | 0.05 |   |   |   | 0.05 |   |   |   | 0.04 |   |   |   | 0.04 |   |   |   | 0.04 |   |   |   | 0.04 |   |

| 17.    | SUBSEQUENT                  EVENTS                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The                  Company, at its Board of Directors meeting held on December 19,                  2007,                  declared a quarterly cash dividend of $0.05 per share on the common                  stock                  of the Company payable on January 28, 2008 to the shareholders                  of record                  at the close of business on January 14,                  2008. |

----

----

| (a)    | Documents                  Filed as Part of this Report.                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                    |
| (1)    | The                  following financial statements are incorporated by reference from                  Item 8                  hereof: |
|   |                                                                                                                                    |
|   | Consolidated                  Statements of Financial Condition                                                                         |
|   | Consolidated                  Statements of Income                                                                                      |
|   | Consolidated                  Statements of Changes in Stockholders' Equity and Comprehensive                  Income                   |
|   | Consolidated                  Statements of Cash Flows                                                                                  |
|   | Notes                  to Consolidated Financial                  Statements                                                            |

|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2)    | All                  schedules for which provision is made in the applicable accounting                  regulation of the SEC are omitted because of the absence of conditions                  under which they are required or because the required information                  is                  included in the consolidated financial statements and related notes                  thereto. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
| (3)    | The                  following exhibits are filed as part of this Form 10-K, and this list                  includes the Exhibit Index.                                                                                                                                                                                                                                                          |

|   | Exhibit                    No. |   | Description                                                                                                                                                                                         |
|--------|--------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.1                            |   | Articles                  of Incorporation of Prudential Bancorp, Inc. of                  Pennsylvania(1)                                                                                          |
|   | 3.2                            |   | Bylaws                  of Prudential Bancorp, Inc. of Pennsylvania(1)                                                                                                                              |
|   | 4.0                            |   | Form                  of Stock Certificate of Prudential Bancorp, Inc. of                  Pennsylvania(1)                                                                                          |
|   | 10.1                           |   | Employment                  Agreement by and between Thomas A. Vento, Prudential Bancorp, Inc.                  of                  Pennsylvania and Prudential Savings Bank(2)*                    |
|   | 10.2                           |   | Employment                  Agreement by and between Joseph R. Corrato, Prudential Bancorp,                  Inc. of                  Pennsylvania and Prudential Savings                  Bank(2)* |

----

|   | 10.3 |   | Form                  of Endorsement Split Dollar Insurance Agreement, dated January                  1, 2006, by                  and between, Thomas Vento, Joseph Corrato and David Krauter                  (3)* |
|--------|------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.4 |   | Prudential                  Savings Bank 2007 Bonus Program (4)*                                                                                                                                                     |
|   | 10.5 |   | Form                  of Split Dollar Agreement, dated June 22, 1994, by and between,                  Prudential                  Savings Bank, Joseph W. Packer Jr. and John P. Judge                              |
|   | 21.0 |   | Subsidiaries                  of the Registrant – Reference is made to "Item 1. Business – Subsidiaries"                  for the required information                                                   |
|   | 23.0 |   | Consent                  of Deloitte & Touche LLP                                                                                                                                                                |
|   | 31.1 |   | Section                  1350 Certification of the Chief Executive Officer                                                                                                                                           |
|   | 31.2 |   | Section                  1350 Certification of the Chief Financial Officer                                                                                                                                           |
|   | 32.0 |   | Section                  906 Certification                                                                                                                                                                           |

|   | *                                                             | Management                  contract or compensatory plan or arrangement required to be filed                  as an                  exhibit to this Form 10-K pursuant to Item 15(b)                  hereof.                                                     |
|--------|---------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                          |                                                                                                                                                                                                                                                                |
|   | (1)                                                           | Incorporated                  by reference from the Company's Registration Statement on Form                  S-1                  (Commission File No. 333-119130) filed with the Commission on September                  30, 2004.                               |
|   |                                                          |                                                                                                                                                                                                                                                                |
|   | (2)                                                           | Incorporated                  by reference from the Company's Current Report on Form 8-K, dated                  March                  29, 2005 and filed with the Commission on March 30, 2005 (Commission                  File                  No. 000-51214). |
|   |                                                          |                                                                                                                                                                                                                                                                |
|   | (3)                                                           | Incorporated                  by reference from the Company's Current Report on Form 8-K, filed                  with the                  Commission on December 31, 2006 (Commission File No.                  000-51214).                                        |
|   |                                                          |                                                                                                                                                                                                                                                                |
|   | (4)                                                           | Incorporated                  by reference from the Company's Current Report on Form 8-K, filed                  with the                  Commission on November 14, 2007 (Commission File No.                  000-51214).                                        |
|   |                                                          |                                                                                                                                                                                                                                                                |
| (b)    | Exhibits                                                      |
|   |                                                          |                                                                                                                                                                                                                                                                |
|   |                                                          | The                  exhibits listed under (a)(3) of this Item 15 are filed                  herewith.                                                                                                                                                              |
|   |                                                          |                                                                                                                                                                                                                                                                |
| (c)    | Reference                  is made to (a)(2) of this Item 15. |

----

|                               | Prudential                  Bancorp, Inc. of                  Pennsylvania |                                                   |
|------------------------------------|----------------------------------------------------------------------------|--------------------------------------------------------|
|                               |                                                                       |                                                   |
|                               |                                                                       |                                                   |
| December                  21, 2007 | By:                                                                        | /s/                    Thomas A. Vento                 |   |
|                               |                                                                       | Thomas                  A. Vento                       |   |
|                               |                                                                       | President                  and Chief Executive Officer |   |

| /s/                    Joseph W. Packer, Jr.                                                                     | December                  21, 2007  |
|------------------------------------------------------------------------------------------------------------------|-------------------------------------|
| Joseph                  W. Packer, Jr.                                                                           |                                |
| Chairman                  of the Board                                                                           |                                |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                  Thomas A. Vento                                                                             | December                  21, 2007  |
| Thomas                  A. Vento                                                                                 |                                |
| President                  and Chief Executive Officer                                                           |                                |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                  Jerome R. Balka, Esq.                                                                       | December                  21, 2007  |
| Jerome                  R. Balka, Esq.                                                                           |                                |
| Director                                                                                                         |                                |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                  A. J. Fanelli                                                                               | December                  21, 2007  |
| A.                  J. Fanelli                                                                                   |                                |
| Director                                                                                                         |                                |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                    John P. Judge                                                                             | Deceber                    21, 2007 |
| John                    P. Judge                                                                                 |                                |
| Director                                                                                                         |                                     |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                  Francis V. Mulcahy                                                                          | December                  21, 2007  |
| Francis                  V. Mulcahy                                                                              |                                |
| Director                                                                                                         |                                |
|                                                                                                             |                                |
|                                                                                                             |                                |
| /s/                    Joseph R. Corrato                                                                         | December                  21, 2007  |
| Joseph                  R. Corrato                                                                               |                                |
| Executive                  Vice President, Chief Financial Officer and Chief Accounting                  Officer |                                     |