----

----

| x       | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES                                                                                                                                                                                                                                                |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | EXCHANGE      ACT OF 1934                                                                                                                                                                                                                                                                                                      |
|    | For      the quarterly period ended June 30, 2008                                                                                                                                                                                                                                                                         |
|    | OR                                                                                                                                                                                                                                                                                                                             |
| o  | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE    SECURITIES                                                                                                                                                                                                                                               |
|    | EXCHANGE      ACT OF 1934                                                                                                                                                                                                                                                                                                      |
|    | For      the transition period      from                     to                          |
|    | Commission      file number: 000-51214                                                                                                                                                                                                                                                                                         |

| Prudential      Bancorp, Inc. of Pennsylvania                       |
|---------------------------------------------------------------------|
| (Exact      Name of Registrant as Specified in Its Charter)         |
| Pennsylvania                                                        |   | 68-0593604 |
| (State      or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.      Employer Identification No.) |
| 1834      Oregon AvenuePhiladelphia,      Pennsylvania              |   | 19145 |
| (Address      of Principal Executive Offices)                       |   | (Zip      Code) |
| (215)      755-1500                                                 |
| (Registrant’s      Telephone Number, Including AreaCode)      |

| Large accelerated      filer o                                                            |   | Accelerated filer      o         |
|-------------------------------------------------------------------------------------------|--------|----------------------------------|
| Non-accelerated      filer   o      (Do not check if smaller reporting company) |   | Smaller reporting      company x |

o Yes            x  No

----

|                               |                                                                                                             | PAGE   |
|------------------------------------|------------------------------------------------------------------------------------------------------------------|--------|
|                               |                                                                                                             |   |
| PART      I FINANCIAL INFORMATION: |
|                               |                                                                                                             |   |
| Item      1.                       | Condensed      Financial Statements                                                                              |   |
|                               |                                                                                                             |   |
|                               | Unaudited      Consolidated Statements of Financial Condition at June 30, 2008 and      September 30, 2007       | 2      |
|                               |                                                                                                             |   |
|                               | Unaudited      Consolidated Statements of Income for the Three and Nine Months      Ended                        |   |
|                               | June      30, 2008 and 2007                                                                                      | 3      |
|                               |                                                                                                             |   |
|                               | Unaudited      Consolidated Statement of Changes in Stockholders’ Equity and      Comprehensive Income for |   |
|                               | the      Nine Months Ended June 30, 2008 and 2007                                                                | 4      |
|                               |                                                                                                             |   |
|                               | Unaudited      Consolidated Statements of Cash Flows for the Nine Months Ended June 30,      2008 and 2007       | 5      |
|                               |                                                                                                             |   |
|                               | Notes      to Consolidated Unaudited Financial Statements                                                        | 6      |
|                               |                                                                                                             |   |
|                               |                                                                                                             |   |
| Item      2.                       | Management's      Discussion and Analysis of Financial Condition and Results of      Operations                  | 19     |
|                               |                                                                                                             |   |
| Item      3.                       | Quantitative      and Qualitative Disclosures About Market Risk                                                  | 27     |
|                               |                                                                                                             |   |
| Item      4T.                      | Controls      and Procedures                                                                                     | 30     |
|                               |                                                                                                             |   |
| PART      II OTHER INFORMATION     |
|                               |                                                                                                             |   |
| Item      1.                       | Legal      Proceedings                                                                                           | 31     |
|                               |                                                                                                             |   |
| Item      1A.                      | Risk      Factors                                                                                                | 32     |
|                               |                                                                                                             |   |
| Item      2.                       | Unregistered      Sales of Equity Securities and Use of Proceeds                                                 | 32     |
|                               |                                                                                                             |   |
| Item      3.                       | Defaults      Upon Senior Securities                                                                             | 33     |
|                               |                                                                                                             |   |
| Item      4.                       | Submission      of Matters to a Vote of Security Holders                                                         | 33     |
|                               |                                                                                                             |   |
| Item      5.                       | Other      Information                                                                                           | 33     |
|                               |                                                                                                             |   |
| Item      6.                       | Exhibits                                                                                                         | 34     |
|                               |                                                                                                             |   |
| SIGNATURES                         | 35                                                                                                               |

----

| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES                                                                 |   |                        |    |   |               |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------|--------|
|                                                                                                                           |   |                        |    |   |               |   |
| UNAUDITED      CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                                                                  |   |
|                                                                                                                           |   |                        |    |   |               |   |
|                                                                                                                           |   | June      30                |    |   | September      30, |   |
|                                                                                                                           |   | 2008                        |    |   | 2007               |   |
|                                                                                                                           |   | (Dollars      in thousands) |    |
| ASSETS                                                                                                                         |   |                        |    |   |               |   |
|                                                                                                                           |   |                        |    |   |               |   |
| Cash      and amounts due from depository institutions                                                                         |   | $                           | 4,882   |   |               | $      | 4,133 |   |
| Interest-bearing      deposits                                                                                                 |   |                        | 8,949   |   |               |   | 8,136 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
|            Total      cash and cash equivalents                         |   |                        | 13,831  |   |               |   | 12,269 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| Investment      securities held to maturity (estimated fair value—June 30, 2008,      $122,959;                          |   |                        |    |   |               |   |   |   |
|   September      30, 2007, $133,693)                                                                                 |   |                        | 124,018 |   |               |   | 134,782 |   |
| Investment      securities available for sale (amortized cost—June 30, 2008,      $3,026;                                |   |                        |    |   |               |   |   |   |
|   September      30, 2007, $38,007)                                                                                  |   |                        | 3,351   |   |               |   | 38,343 |   |
| Mortgage-backed      securities held to maturity (estimated fair value—                                                  |   |                        |    |   |               |   |   |   |
|   June      30, 2008, $40,325; September 30, 2007, $44,213)                                                          |   |                        | 41,533  |   |               |   | 45,534 |   |
| Mortgage-backed      securities available for sale (amortized cost—                                                      |   |                        |    |   |               |   |   |   |
|   June      30, 2008, $48,264; September 30, 2007, $8,492)                                                           |   |                        | 47,858  |   |               |   | 8,549 |   |
| Loans      receivable—net of allowance for loan losses (June 30, 2008,      $770;                                        |   |                        |    |   |               |   |   |   |
|   September      30, 2007, $1,011)                                                                                   |   |                        | 233,481 |   |               |   | 219,149 |   |
| Accrued      interest receivable:                                                                                              |   |                        |    |   |               |   |   |   |
|   Loans      receivable                                                                                              |   |                        | 1,239   |   |               |   | 1,264 |   |
|   Mortgage-backed      securities                                                                                    |   |                        | 369     |   |               |   | 234 |   |
|   Investment      securities                                                                                         |   |                        | 1,918   |   |               |   | 2,006 |   |
| Real      estate owned                                                                                                         |   |                        | 1,651   |   |               |   | - |   |
| Federal      Home Loan Bank stock—at cost                                                                                |   |                        | 2,507   |   |               |   | 2,397 |   |
| Office      properties and equipment—net                                                                                 |   |                        | 2,212   |   |               |   | 2,363 |   |
| Prepaid      expenses and other assets                                                                                         |   |                        | 7,371   |   |               |   | 7,274 |   |
| Deferred      tax asset-net                                                                                                    |   |                        | 181     |   |               |   | 28 |   |
| TOTAL      ASSETS                                                                                                              |   | $                           | 481,520 |   |               | $      | 474,192 |   |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                                                                                      |   |                        |    |   |               |   |   |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| LIABILITIES:                                                                                                                   |   |                        |    |   |               |   |   |   |
|   Deposits:                                                                                                          |   |                        |    |   |               |   |   |   |
|      Noninterest-bearing                                                                              |   | $                           | 4,782   |   |               | $      | 4,480 |   |
|      Interest-bearing                                                                                 |   |                        | 369,707 |   |               |   | 349,558 |   |
|            Total      deposits                                          |   |                        | 374,489 |   |               |   | 354,038 |   |
|   Advances      from Federal Home Loan Bank                                                                          |   |                        | 30,711  |   |               |   | 33,743 |   |
|   Accrued      interest payable                                                                                      |   |                        | 2,720   |   |               |   | 2,868 |   |
|   Advances      from borrowers for taxes and insurance                                                               |   |                        | 1,944   |   |               |   | 1,117 |   |
|   Accounts      payable and accrued expenses                                                                         |   |                        | 627     |   |               |   | 913 |   |
|   Accrued      dividend payable                                                                                      |   |                        | 531     |   |               |   | 552 |   |
|            Total      liabilities                                       |   |                        | 411,022 |   |               |   | 393,231 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| COMMITMENTS      AND CONTINGENCIES (Note 8)                                                                                    |   |                        |    |   |               |   |   |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| 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      - 11,069,866 at June 30, 2008;  11,478,366 at September 30,      2007 |   |                        | 126     |   |               |   | 126 |   |
|    Additional      paid-in capital                                                                              |   |                        | 54,923  |   |               |   | 54,880 |   |
|    Unearned      ESOP shares                                                                                    |   |                        | (3,736  | )      |               |   | (3,903 | ) |
|    Treasury      stock, at cost:  1,493,884 shares at June 30,    2008;                               |   |                        |    |   |               |   |   |   |
|      1,085,384      shares at September 30, 2007                                                      |   |                        | (19,481 | )      |               |   | (14,372 | ) |
|    Retained      earnings                                                                                       |   |                        | 38,719  |   |               |   | 43,971 |   |
|    Accumulated      other comprehensive income                                                                  |   |                        | (53     | )      |               |   | 259 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
|            Total      stockholders' equity                              |   |                        | 70,498  |   |               |   | 80,961 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                |   | $                           | 481,520 |   |               | $      | 474,192 |   |
|                                                                                                                           |   |                        |    |   |               |   |   |   |
| See      notes to unaudited consolidated financial statements.                                                                 |   |                        |    |   |               |   |   |   |

----

|                                                                                                 |   | Three      Months EndedJune      30,                 |   |   | Nine      Months EndedJune      30,                  |   |
|------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|------------------------------------------------------|--------|
|                                                                                                 |   | 2008                                                 |   |   | 2007                                                 |   |   | 2008 |   |   | 2007 |   |
|                                                                                                 |   | (Dollars      in Thousands Except Per Share Amounts) |   |   | (Dollars      in Thousands Except Per Share Amounts) |   |
| INTEREST      INCOME:                                                                                |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |
|   Interest      on loans                                                                   |   | $                                                    | 3,539  |   |                                                 | $      | 3,792 |   |   | $ | 10,764 |   |   | $ | 11,402 |   |
|   Interest      on mortgage-backed securities                                              |   |                                                 | 895    |   |                                                 |   | 692 |   |   |   | 2,375 |   |   |   | 2,105 |   |
|   Interest      and dividends on investments                                               |   |                                                 | 2,031  |   |                                                 |   | 2,262 |   |   |   | 6,552 |   |   |   | 6,613 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|           Total      interest income               |   |                                                 | 6,465  |   |                                                 |   | 6,746 |   |   |   | 19,691 |   |   |   | 20,120 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST      EXPENSE:                                                                               |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|   Interest      on deposits                                                                |   |                                                 | 3,247  |   |                                                 |   | 3,355 |   |   |   | 10,220 |   |   |   | 9,807 |   |
|   Interest      on borrowings                                                              |   |                                                 | 256    |   |                                                 |   | 387 |   |   |   | 945 |   |   |   | 1,102 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|           Total      interest expense              |   |                                                 | 3,503  |   |                                                 |   | 3,742 |   |   |   | 11,165 |   |   |   | 10,909 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET      INTEREST INCOME                                                                             |   |                                                 | 2,962  |   |                                                 |   | 3,004 |   |   |   | 8,526 |   |   |   | 9,211 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| PROVISION      (RECOVERY) FOR LOAN LOSSES                                                            |   |                                                 | 112    |   |                                                 |   | (20 | ) |   |   | 262 |   |   |   | 55 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET      INTEREST  INCOME AFTER PROVISION                                                  |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|   FOR      LOAN LOSSES                                                                     |   |                                                 | 2,850  |   |                                                 |   | 3,024 |   |   |   | 8,264 |   |   |   | 9,156 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST      INCOME:                                                                            |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|   Fees      and other service charges                                                      |   |                                                 | 136    |   |                                                 |   | 165 |   |   |   | 411 |   |   |   | 463 |   |
|   Impairment      charge on investment securities                                          |   |                                                 | -      |   |                                                 |   | - |   |   |   | (1,492 | ) |   |   | - |   |
|   Loss      on redemption of investment securities, net                                    |   |                                                 | (4,016 | )      |                                                 |   | - |   |   |   | (4,016 | ) |   |   | - |   |
|   Other                                                                                    |   |                                                 | 82     |   |                                                 |   | 97 |   |   |   | 242 |   |   |   | 331 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|           Total      non-interest income (charges) |   |                                                 | (3,798 | )      |                                                 |   | 262 |   |   |   | (4,855 | ) |   |   | 794 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NON-INTEREST      EXPENSE:                                                                           |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|   Salaries      and employee benefits                                                      |   |                                                 | 1,115  |   |                                                 |   | 1,173 |   |   |   | 3,426 |   |   |   | 3,436 |   |
|   Data      processing                                                                     |   |                                                 | 124    |   |                                                 |   | 117 |   |   |   | 377 |   |   |   | 370 |   |
|   Professional      services                                                               |   |                                                 | (130   | )      |                                                 |   | 17 |   |   |   | 427 |   |   |   | 460 |   |
|   Office      occupancy                                                                    |   |                                                 | 90     |   |                                                 |   | 85 |   |   |   | 275 |   |   |   | 267 |   |
|   Depreciation                                                                             |   |                                                 | 84     |   |                                                 |   | 54 |   |   |   | 250 |   |   |   | 173 |   |
|   Payroll      taxes                                                                       |   |                                                 | 62     |   |                                                 |   | 61 |   |   |   | 209 |   |   |   | 208 |   |
|   Director      compensation                                                               |   |                                                 | 77     |   |                                                 |   | 60 |   |   |   | 206 |   |   |   | 198 |   |
|   Other                                                                                    |   |                                                 | 491    |   |                                                 |   | 286 |   |   |   | 1,268 |   |   |   | 885 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|            Total      non-interest expense    |   |                                                 | 1,913  |   |                                                 |   | 1,853 |   |   |   | 6,438 |   |   |   | 5,997 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| (LOSS)      INCOME BEFORE INCOME TAXES                                                               |   |                                                 | (2,861 | )      |                                                 |   | 1,433 |   |   |   | (3,029 | ) |   |   | 3,953 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| INCOME      TAXES:                                                                                   |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|   Current      expense                                                                     |   |                                                 | 339    |   |                                                 |   | 501 |   |   |   | 599 |   |   |   | 1,065 |   |
|   Deferred      expense (benefit)                                                          |   |                                                 | 364    |   |                                                 |   | (45 | ) |   |   | 8 |   |   |   | 50 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
|           Total      income tax expense            |   |                                                 | 703    |   |                                                 |   | 456 |   |   |   | 607 |   |   |   | 1,115 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| NET      (LOSS) INCOME                                                                               |   | $                                                    | (3,564 | )      |                                                 | $      | 977 |   |   | $ | (3,636 | ) |   | $ | 2,838 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| BASIC      (LOSS) EARNINGS PER SHARE                                                                 |   | $                                                    | (0.33  | )      |                                                 | $      | 0.09 |   |   | $ | (0.33 | ) |   | $ | 0.25 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| DILUTED      (LOSS) EARNINGS PER SHARE                                                               |   | $                                                    | (0.33  | )      |                                                 | $      | 0.09 |   |   | $ | (0.33 | ) |   | $ | 0.25 |   |
|                                                                                                 |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                                       |   |                                                 |   |   |                                                 |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   | Accumulated   |   |   |          |   |        |          |   |
|-----------------------------------------------------------------|--------|-----------------------------|--------|--------|------------|------------|--------|----------|----------|--------|----------|--------|--------|----------|---------|--------|---------------|--------|--------|---------------|--------|-------------|---------------|--------|
|                                                            |   |                        |   |   | Additional |       |   | Unearned |     |   |     |   |   |     |    |   | Other         |   |   | Total         |   |        |          |   |
|                                                            |   | Common                      |   |   | Paid-In    |       |   | ESOP     |     |   | Treasury |   |   | Retained |    |   | Comprehensive |   |   | Stockholders' |   |        | Comprehensive |   |
|                                                            |   | Stock                       |   |   | Capital    |       |   | Shares   |     |   | Stock    |   |   | Earnings |    |   | Income        |   |   | Equity        |   |        | Income        |   |
|                                                            |   | (Dollars      in Thousands) |   |
| BALANCE,      OCTOBER 1, 2007                                   |   | $                           | 126    |   |       | $          | 54,880 |     |     | $      | (3,903   | )      |   | $        | (14,372 | )      |          | $      | 43,971 |          |   | $           | 259           |   |   | $ | 80,961 |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |
| Comprehensive      income and loss:                             |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |
| Net      loss                                                   |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   | (3,636 | )             |   |        |          |   |   |   | (3,636 | ) |   |   | (3,636 | ) |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Net      unrealized holding loss on                             |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| available      for sale securities                              |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| arising      during the period, net                             |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| of      income tax benefit of $669                              |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        | (1,297        | )      |   |   | (1,297 | ) |   |   | (1,297 | ) |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Reclassification      adjustment for                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| other-than-temporary      impairment                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| net      of tax of $507                                         |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        | 985           |   |   |   | 985 |   |   |   | 985 |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Comprehensive      loss                                         |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   | $ | (3,948 | ) |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Treasury      stock purchased                                   |   |                        |   |   |       |       |   |     |     |   |     |   |   |     | (5,109  | )      |          |   |   |          |   |        |          |   |   |   | (5,109 | ) |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Cash      dividend declared                                     |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|        ($.15      per share) |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   | (1,616 | )             |   |        |          |   |   |   | (1,616 | ) |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| ESOP      shares committed to                                   |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| be      released                                                |   |                        | -      |   |       |       | 43     |     |     |   | 167      |   |   |     | -       |   |          |   | -      |          |   |        | -             |   |   |   | 210 |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| BALANCE,      June 30, 2008                                     |   | $                           | 126    |   |       | $          | 54,923 |     |     | $      | (3,736   | )      |   | $        | (19,481 | )      |          | $      | 38,719 |          |   | $           | (53           | )      |   | $ | 70,498 |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   | Accumulated |          |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       | Additional |   |     | Unearned |   |     |   |   |     |    |   |          |   |   | Other         |   |        | Total         |   |   |   |   |   |
|                                                            |   | Common                      |   |   | Paid-In    |       |   | ESOP     |     |   | Treasury |   |   | Retained |    |   | Comprehensive |   |   | Stockholders' |   |        | Comprehensive |   |
|                                                            |   | Stock                       |   |   | Capital    |       |   | Shares   |     |   | Stock    |   |   | Earnings |    |   | Income        |   |   | Equity        |   |        | Income        |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   | (Dollars      in thousands) |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| BALANCE,      OCTOBER 1, 2006                                   |   | $                           | 126    |   |       | $          | 54,798 |     |     | $      | (4,127   | )      |   | $        | (6,422  | )      |          | $      | 42,539 |          |   | $           | 534           |   |   | $ | 87,448 |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                      |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Net      income                                                 |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   | 2,838  |          |   |        |          |   |   |   | 2,838 |   |   |   | 2,838 |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Net      unrealized holding loss on                             |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| available      for sale securities                              |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| arising      during the period, net                             |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| of      income tax benefit of $166                              |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        | (301          | )      |   |   | (301 | ) |   |   | (301 | ) |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                       |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   | $ | 2,537 |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Treasury      stock purchased                                   |   |                        |   |   |       |       |   |     |     |   |     |   |   |     | (6,148  | )      |          |   |   |          |   |        |          |   |   |   | (6,148 | ) |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Cash      dividends declared                                    |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| ($.14      per share)                                           |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   | (1,586 | )             |   |        |          |   |   |   | (1,586 | ) |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| Cumulative      adjustment related to                           |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| the      adoption of SAB 108                                    |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   | 172    |          |   |        |          |   |   |   | 172 |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| ESOP      shares committed to                                   |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| be      released                                                |   |                        | -      |   |       |       | 62     |     |     |   | 168      |   |   |     | -       |   |          |   | -      |          |   |        | -             |   |   |   | 230 |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
|                                                            |   |                        |   |   |       |       |   |     |     |   |     |   |   |     |    |   |          |   |   |          |   |        |          |   |   |   |   |   |   |   |   |   |
| BALANCE,      June 30, 2007                                     |   | $                           | 126    |   |       | $          | 54,860 |     |     | $      | (3,959   | )      |   | $        | (12,570 | )      |          | $      | 43,963 |          |   | $           | 233           |   |   | $ | 82,653 |   |   |   |   |   |

----

|                                                                                                                                     |   | Nine      Months Ended June 30, |    |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                                     |   | 2008                                 |    |   | 2007 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |
| OPERATING      ACTIVITIES:                                                                                                               |   | (Dollars      in Thousands)          |    |
|   Net      (loss) income                                                                                                       |   | $                                    | (3,636  | ) |   | $ | 2,838 |   |
|   Adjustments      to reconcile net income to net cash used in                                                                 |   |                                 |    |   |   |   |   |   |
|     operating      activities:                                                                                       |   |                                 |    |   |   |   |   |   |
|     Provision      for loan losses                                                                                   |   |                                 | 262     |   |   |   | 55 |   |
|     Depreciation                                                                                                     |   |                                 | 250     |   |   |   | 173 |   |
|     Net      accretion of premiums/discounts                                                                         |   |                                 | (80     | ) |   |   | (54 | ) |
|     Net      accretion of deferred loan fees and costs                                                               |   |                                 | (228    | ) |   |   | (269 | ) |
|     Impairment      charge on investment securities                                                                  |   |                                 | 1,492   |   |   |   | - |   |
|     Loss      on redemption of investment securities                                                                 |   |                                 | 4,016   |   |   |   | - |   |
|     Amortization      of ESOP                                                                                        |   |                                 | 210     |   |   |   | 230 |   |
|     Income      from bank owned life insurance                                                                       |   |                                 | (149    | ) |   |   | (158 | ) |
|     Deferred      income tax expense                                                                                 |   |                                 | 8       |   |   |   | 50 |   |
|     Changes      in assets and liabilities which used cash:                                                          |   |                                 |    |   |   |   |   |   |
|       Accounts      payable and accrued expenses                                                           |   |                                 | (286    | ) |   |   | 1,693 |   |
|       Accrued      interest payable                                                                        |   |                                 | (148    | ) |   |   | (419 | ) |
|       Prepaid      expenses and other assets                                                               |   |                                 | 345     |   |   |   | (1,239 | ) |
|       Accrued      interest receivable                                                                     |   |                                 | 38      |   |   |   | (436 | ) |
|                Net      cash provided by operating activities |   |                                 | 2,094   |   |   |   | 2,464 |   |
| INVESTING      ACTIVITIES:                                                                                                               |   |                                 |    |   |   |   |   |   |
|   Purchase      of investment securities held to maturity                                                                      |   |                                 | (74,923 | ) |   |   | (23,991 | ) |
|   Purchase      of investment available for sale                                                                               |   |                                 | (2,000  | ) |   |   | - |   |
|   Purchase      of mortgage-backed securities held to maturity                                                                 |   |                                 | -       |   |   |   | (1,992 | ) |
|   Purchase      of mortgage-backed securities available for sale                                                               |   |                                 | (16,634 | ) |   |   | (1,901 | ) |
|   Loans      originated or acquired                                                                                            |   |                                 | (53,384 | ) |   |   | (54,093 | ) |
|   Principal      collected on loans                                                                                            |   |                                 | 37,367  |   |   |   | 50,199 |   |
|   Principal      payments received on mortgage-backed securities:                                                              |   |                                 |    |   |   |   |   |   |
|      held-to-maturity                                                                                           |   |                                 | 4,035   |   |   |   | 5,550 |   |
|      available-for-sale                                                                                         |   |                                 | 1,656   |   |   |   | 507 |   |
|   Proceeds      from calls and maturities of investment securities held to      maturity                                       |   |                                 | 85,694  |   |   |   | 20,872 |   |
|   Proceeds      from calls and maturities of investment available for sale                                                     |   |                                 | 1,999   |   |   |   | - |   |
|   Proceeds      from redemption of investment available for sale                                                               |   |                                 | 4,367   |   |   |   | - |   |
|   Net      purchases of Federal Home Loan Bank stock                                                                           |   |                                 | (110    | ) |   |   | (221 | ) |
|   Purchases      of equipment                                                                                                  |   |                                 | (99     | ) |   |   | (555 | ) |
|                Net      cash used in investing activities     |   |                                 | (12,032 | ) |   |   | (5,625 | ) |
| FINANCING      ACTIVITIES:                                                                                                               |   |                                 |    |   |   |   |   |   |
|   Net      increase (decrease) in demand deposits, NOW accounts,                                                               |   |                                 |    |   |   |   |   |   |
|      and      savings accounts                                                                                  |   |                                 | 4,137   |   |   |   | (8,377 | ) |
|   Net      increase in certificates of deposit                                                                                 |   |                                 | 16,314  |   |   |   | 15,136 |   |
|   Net      (repayment) borrowings of advances from Federal Home Loan    Bank                                                   |   |                                 | (3,032  | ) |   |   | 969 |   |
|   Increase      in advances from borrowers for taxes and insurance                                                             |   |                                 | 827     |   |   |   | 696 |   |
|   Cash      dividend paid                                                                                                      |   |                                 | (1,637  | ) |   |   | (1,494 | ) |
|   Purchase      of treasury stock                                                                                              |   |                                 | (5,109  | ) |   |   | (6,148 | ) |
|                Net      provided by financing activities      |   |                                 | 11,500  |   |   |   | 782 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                                                |   |                                 | 1,562   |   |   |   | (2,379 | ) |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—Beginning of period                                                                                 |   |                                 | 12,269  |   |   |   | 13,428 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—End of period                                                                                       |   | $                                    | 13,831  |   |   | $ | 11,049 |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW                                                                                               |   |                                 |    |   |   |   |   |   |
|   INFORMATION:                                                                                                                 |   |                                 |    |   |   |   |   |   |
|   Interest      paid on deposits and advances from Federal                                                                     |   |                                 |    |   |   |   |   |   |
|      Home      Loan Bank                                                                                        |   | $                                    | 11,313  |   |   | $ | 11,329 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
|      Income      taxes paid                                                                                     |   | $                                    | 767     |   |   | $ | 978 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF NONCASH ITEMS:                                                                                          |   |                                 |    |   |   |   |   |   |
|   Real      estate acquired in settlement of loans                                                                             |   | $                                    | 1,651   |   |   | $ | - |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
|        Mortgage-backed securities received through redemption in    kind                                                            |   | $                                    | 24,755  |   |   | $ | - |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
|        Commitments to purchase investment securities                                                                                |   | $                                    | -       |   |   | $ | 1,000 |   |
|                                                                                                                                     |   |                                 |    |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                                                                      |   |                                 |    |   |   |   |   |   |

----

----

| 1. | BASIS      OF PRESENTATION AND SIGNIFICANT ACCOUNTING  POLICIES |
|----|-----------------------------------------------------------------|

----

----

----

| 2. | EARNINGS      PER SHARE |
|----|-------------------------|

|                                                                |   | For      the Quarter EndedJune      30, 2008      |       |   | For      the Quarter EndedJune      30, 2007 |   |
|---------------------------------------------------------------------|--------|---------------------------------------------------|------------|--------|----------------------------------------------|--------|
|                                                                |   | Basic                                             |       |   | Diluted                                      |   |   | Basic |   |   | Diluted |   |
|                                                                |   | (Dollars      in thousands except per share data) |       |
| Net      (loss) income                                              |   | $                                                 | (3,564     | )      |                                         | $      | (3,564 | ) |   | $ | 977 |   |   | $ | 977 |   |
|                                                                |   |                                              |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding used in                    |   |                                              |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|     basic      earnings per share computation   |   |                                              | 10,812,296 |   |                                         |   | 10,812,296 |   |   |   | 11,325,265 |   |   |   | 11,325,265 |   |
| Effect      of CSEs                                                 |   |                                              | -          |   |                                         |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted      weighted average shares used in                       |   |                                              |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
|     diluted      earnings per share computation |   |                                              | 10,812,296 |   |                                         |   | 10,812,296 |   |   |   | 11,325,265 |   |   |   | 11,325,265 |   |
|                                                                |   |                                              |       |   |                                         |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      earnings per share - basic and diluted                  |   | $                                                 | (0.33      | )      |                                         | $      | (0.33 | ) |   | $ | 0.09 |   |   | $ | 0.09 |   |

|                                                                |   | For      the Nine Months EndedJune      30, 2008  |       |   | For      the Nine Months EndedJune      30, 2007 |   |
|---------------------------------------------------------------------|--------|---------------------------------------------------|------------|--------|--------------------------------------------------|--------|
|                                                                |   | Basic                                             |       |   | Diluted                                          |   |   | Basic |   |   | Diluted |   |
|                                                                |   | (Dollars      in thousands except per share data) |
| Net      (loss) income                                              |   | $                                                 | (3,636     | )      |                                             | $      | (3,636 | ) |   | $ | 2,838 |   |   | $ | 2,838 |   |
|                                                                |   |                                              |       |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding used in                    |   |                                              |       |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|     basic      earnings per share computation   |   |                                              | 10,879,946 |   |                                             |   | 10,879,946 |   |   |   | 11,498,527 |   |   |   | 11,498,527 |   |
| Effect      of CSEs                                                 |   |                                              | -          |   |                                             |   | - |   |   |   | - |   |   |   | - |   |
| Adjusted      weighted average shares used in                       |   |                                              |       |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
|     diluted      earnings per share computation |   |                                              | 10,879,946 |   |                                             |   | 10,879,946 |   |   |   | 11,498,527 |   |   |   | 11,498,527 |   |
|                                                                |   |                                              |       |   |                                             |   |   |   |   |   |   |   |   |   |   |   |
| (Loss)      earnings per share - basic and diluted                  |   | $                                                 | (0.33      | )      |                                             | $      | (0.33 | ) |   | $ | 0.25 |   |   | $ | 0.25 |   |

----

| 3. | INVESTMENT      SECURITIES |
|----|----------------------------|

|                                                                                                       |   | June      30, 2008          |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
|                                                                                                       |   |                        |   |   | 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                                          |   | $                           | 121,568 |   |   | $ | 243 |   |   | $ | (1,284 | ) |   | $ | 120,527 |   |
|   Debt      securities - Municipal bonds                                                         |   |                        | 2,450 |   |   |   | 1 |   |   |   | (19 | ) |   |   | 2,432 |   |
|                                                                                                       |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total      securities held to maturity   |   | $                           | 124,018 |   |   | $ | 244 |   |   | $ | (1,303 | ) |   | $ | 122,959 |   |
|                                                                                                       |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:                                                                        |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Debt      securities - U.S. Treasury securities                                                |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     and      securities of U.S. Government agencies                                    |   | $                           | 3,000 |   |   | $ | 1 |   |   | $ | (86 | ) |   | $ | 2,915 |   |
|   FNMA      stock                                                                                |   |                        | - |   |   |   | 2 |   |   |   | - |   |   |   | 2 |   |
|   FHLMC      preferred stock                                                                     |   |                        | 26 |   |   |   | 408 |   |   |   | - |   |   |   | 434 |   |
|                                                                                                       |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            Total      securities available for sale |   | $                           | 3,026 |   |   | $ | 411 |   |   | $ | (86 | ) |   | $ | 3,351 |   |

|                                                                                                       |   | September      30, 2007     |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
|                                                                                                       |   |                        |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                                                       |   | Amortized                   |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                                                       |   | Cost                        |   |   | Gains |   |   | Losses |   |   | Value |   |
| Securities      held to maturity:                                                                          |   | (Dollars      in Thousands) |
|        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 |   |

----

|                                                                                                       |   | 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                                               |   | $                           | 1,284  |   |                     | $      | 81,111 |   |   | $ | - |   |   | $ | - |   |
|    Municipal      bonds                                                                     |   |                        | 8      |   |                     |   | 807 |   |   |   | 11 |   |   |   | 339 |   |
|                                                                                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|            Total      securities held to maturity   |   |                        | 1,292  |   |                     |   | 81,918 |   |   |   | 11 |   |   |   | 339 |   |
|                                                                                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:                                                                        |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|    U.S.      Treasury and Government agencies                                               |   |                        | 86     |   |                     |   | 1,914 |   |   |   | - |   |   |   | - |   |
|                                                                                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|            Total      securities available for sale |   |                        | 86     |   |                     |   | 1,914 |   |   |   | - |   |   |   | - |   |
|                                                                                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                                                                      |   | $                           | 1,378  |   |                     | $      | 83,832 |   |   | $ | 11 |   |   | $ | 339 |   |

|                                                                                                       |   | 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 |   |

----

|                                  |   | June      30, 2008          |
|---------------------------------------|--------|-----------------------------|
|                                  |   | Held      to Maturity       |   |   | Available      for Sale |   |
|                                  |   |                        |   |   | Estimated |   |   |   |   |   | Estimated |   |
|                                  |   | Amortized                   |   |   | Fair |   |   | Amortized |   |   | Fair |   |
|                                  |   | Cost                        |   |   | Value |   |   | Cost |   |   | Value |   |
|                                  |   | (Dollars      in thousands) |
| Due      within one year              |   | $                           | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Due      after one through five years |   |                        | 2,440 |   |   |   | 2,491 |   |   |   | - |   |   |   | - |   |
| Due      after five through ten years |   |                        | 44,975 |   |   |   | 44,777 |   |   |   | 1,000 |   |   |   | 1,000 |   |
| Due      after ten years              |   |                        | 76,603 |   |   |   | 75,691 |   |   |   | 2,000 |   |   |   | 1,915 |   |
|                                  |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                 |   | $                           | 124,018 |   |   | $ | 122,959 |   |   | $ | 3,000 |   |   | $ | 2,915 |   |

----

|                                  |   | 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 |   |

| 4. | MORTGAGE-BACKED      SECURITIES |
|----|---------------------------------|

|                                                                               |   | June      30, 2008          |   |
|------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                               |   |                        |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|                                                                               |   | Amortized                   |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|                                                                               |   | Cost                        |   |   | Gains |   |   | Losses |   |   | Value |   |
|                                                                               |   | (Dollars      in Thousands) |
| Securities      held to maturity                                                   |   |                        |   |   |   |   |   |   |   |   |   |   |
|   GNMA      pass-through certificates                                    |   | $                           | 38,656 |   |   | $ | 34 |   |   | $ | (1,203 | ) |   | $ | 37,487 |   |
|   FNMA      pass-through certificates                                    |   |                        | 1,350  |   |   |   | - |   |   |   | (59 | ) |   |   | 1,291 |   |
|   FHLMC      pass-through certificates                                   |   |                        | 1,527  |   |   |   | 20 |   |   |   | - |   |   |   | 1,547 |   |
|        Total      securities held to maturity   |   | $                           | 41,533 |   |   | $ | 54 |   |   | $ | (1,262 | ) |   | $ | 40,325 |   |
|                                                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale                                                 |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   GNMA                                                                   |   | $                           | 11,629 |   |   | $ | - |   |   | $ | (244 | ) |   | $ | 11,385 |   |
|   FNMA                                                                   |   |                        | 18,504 |   |   |   | 186 |   |   |   | (137 | ) |   |   | 18,553 |   |
|   FHLMC                                                                  |   |                        | 1,874  |   |   |   | 41 |   |   |   | (1 | ) |   |   | 1,914 |   |
|   Non      agency                                                        |   |                        | 16,257 |   |   |   | 27 |   |   |   | (278 | ) |   |   | 16,006 |   |
|        Total      securities available for sale |   | $                           | 48,264 |   |   | $ | 254 |   |   | $ | (660 | ) |   | $ | 47,858 |   |

----

|                                                                               |   | 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 |   |

|                                   |   | Less      than 12 months          |   |   | More      than 12 months |   |
|----------------------------------------|--------|-----------------------------------|--------|--------|--------------------------|--------|
|                                   |   | Gross                             |   |   | Estimated                |   |   | Gross |   |   | Estimated |   |
|                                   |   | Unrealized                        |   |   | Fair                     |   | Unrealized |   |   | Fair |   |
|                                   |   | Losses                            |   |   | Value                    |   |   | Losses |   |   | Value |   |
| Securities      held to maturity:      |   |  (Dollars      in thousands) |
| GNMA      pass-through certificates    |   | $                                 | 755    |   |                     | $      | 29,120 |   |   | $ | 448 |   |   | $ | 5,782 |   |
| FNMA      pass-through certificates    |   |                              | 59     |   |                     |   | 1,291 |   |   |   |   |   |   |   |   |   |
| FHLMC      pass-through certificates   |   |                              | -      |   |                     |   | - |   |   |   | - |   |   |   | - |   |
|                                   |   |                              |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity |   | $                                 | 814    |   |                     | $      | 30,411 |   |   | $ | 448 |   |   | $ | 5,782 |   |
|                                   |   |                              |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |

| Securities      available for sale:      |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|    GNMA                   |   | $      | 244    |   |   | $      | 8,495  |   |   | $      | -      |   |   | $ | - |   |
|    FNMA                   |   |   | 137    |   |   |   | 5,681  |   |   |   | -      |   |   |   | - |   |
|    FHLMC                  |   |   | 1      |   |   |   | 439    |   |   |   | -      |   |   |   | - |   |
|    Non      agency        |   |   | 278    |   |   |   | 7,078  |   |   |   | -      |   |   |   | - |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale |   | $      | 660    |   |   | $      | 21,693 |   |   | $      | -      |   |   | $ | - |   |

----

|                                                   |   | 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    |   |   | $      | -      |   |   | $ | - |   |

----

|                                         |   | June      30,               |    |   | September      30, |   |
|----------------------------------------------|--------|-----------------------------|---------|--------|--------------------|--------|
|                                         |   | 2008                        |    |   | 2007               |   |
|                                         |   | (Dollars      in Thousands) |    |
| One-to-four      family residential          |   | $                           | 179,368 |   |               | $      | 159,945 |   |
| Multi-family      residential                |   |                        | 2,900   |   |               |   | 4,362 |   |
| Commercial      real estate                  |   |                        | 19,901  |   |               |   | 18,019 |   |
| Construction      and land development       |   |                        | 45,667  |   |               |   | 52,429 |   |
| Commercial      business                     |   |                        | 431     |   |               |   | 155 |   |
| Consumer                                     |   |                        | 953     |   |               |   | 832 |   |
| Total      loans                             |   |                        | 249,220 |   |               |   | 235,742 |   |
|                                         |   |                        |    |   |               |   |   |   |
| Undisbursed      portion of loans-in-process |   |                        | (15,360 | )      |               |   | (15,897 | ) |
| Deferred      loan fees                      |   |                        | 391     |   |               |   | 315 |   |
| Allowance      for loan losses               |   |                        | (770    | )      |               |   | (1,011 | ) |
| Net                                          |   | $                           | 233,481 |   |               | $      | 219,149 |   |

|                              |   | Nine      Months Ended June 30, |   |
|-----------------------------------|--------|---------------------------------|--------|
|                              |   | 2008                            |   |   | 2007 |   |
|                              |   | (Dollars      in thousands)     |   |
|                              |   |                            |   |   |   |   |
| Balance,      beginning of period |   | $                               | 1,011  |   |   | $ | 618 |   |
| Provision      for loan losses    |   |                            | 262    |   |   |   | 55 |   |
| Charge-offs                       |   |                            | (503   | ) |   |   | (2 | ) |
| Recoveries                        |   |                            | -      |   |   |   | - |   |
|                              |   |                            |   |   |   |   |   |   |
| Balance,      end of period       |   | $                               | 770    |   |   | $ | 671 |   |
|                              |   |                            |   |   |   |   |   |   |

----

|                                               |   | June      30                      |    |   | September      30, |   |
|----------------------------------------------------|--------|-----------------------------------|---------|--------|--------------------|--------|
|                                               |   | 2008                              |    |   | 2007               |   |
|                                               |   |                              |    |   |               |   |   |   |   |   |   |   |
|                                               |   | Amount                            |    |   | Percent            |   |   | Amount |   |   | Percent |   |
|                                               |   |  (Dollars      in Thousands) |    |
| Money      market deposit accounts                 |   | $                                 | 69,798  |   |               |   | 18.6 | % |   | $ | 63,675 |   |   |   | 18.0 | % |
| NOW      accounts                                  |   |                              | 28,330  |   |               |   | 7.6 |   |   |   | 28,895 |   |   |   | 8.2 |   |
| Passbook,      club and statement savings          |   |                              | 69,481  |   |               |   | 18.6 |   |   |   | 70,903 |   |   |   | 20.0 |   |
| Certificates      maturing in six months or less   |   |                              | 108,401 |   |               |   | 28.9 |   |   |   | 101,615 |   |   |   | 28.7 |   |
| Certificates      maturing in more than six months |   |                              | 98,479  |   |               |   | 26.3 |   |   |   | 88,950 |   |   |   | 25.1 |   |
|                                               |   |                              |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Total                                              |   | $                                 | 374,489 |   |               |   | 100.0 | % |   | $ | 354,038 |   |   |   | 100.0 | % |

| 7. | INCOME      TAXES |
|----|-------------------|

|                                                                   |   | June      30,               |   |   | September      30, |   |
|------------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------|--------|
|                                                                   |   | 2008                        |   |   | 2007               |   |
| Deferred      tax assets:                                              |   | (Dollars      in thousands) |   |
|   Unrealized      loss on available for sale securities      |   | $                           | 27     |   |               | $      | - |   |
|   Deposit      premium                                       |   |                        | 229    |   |               |   | 265 |   |
|   Allowance      for loan losses                             |   |                        | 242    |   |               |   | 378 |   |
|   Captial      loss carryforward                             |   |                        | 1,873  |   |               |   | - |   |
|   Real      estate owned expenses                            |   |                        | 20     |   |               |   | - |   |
|   Employee      stock ownership plan                         |   |                        | 102    |   |               |   | 79 |   |
|                                                                   |   |                        |   |   |               |   |   |   |
|   Total      deferred tax assets                             |   |                        | 2,493  |   |               |   | 722 |   |
|   Valuation      allowance                                   |   |                        | (1,696 | )      |               |   | - |   |
|   Total      deferred tax assets, net of valuation allowance |   |                        | 797    |   |               |   | 722 |   |
|                                                                   |   |                        |   |   |               |   |   |   |
| Deferred      tax liabilities:                                         |   |                        |   |   |               |   |   |   |
|   Unrealized      gain on available for sale securities      |   |                        | -      |   |               |   | 134 |   |
|   Property                                                   |   |                        | 477    |   |               |   | 446 |   |
|   Mortgage      servicing rights                             |   |                        | 7      |   |               |   | 8 |   |
|   Deferred      loan fees                                    |   |                        | 132    |   |               |   | 106 |   |
|                                                                   |   |                        |   |   |               |   |   |   |
| Total                                                                  |   |                        | 616    |   |               |   | 694 |   |
|                                                                   |   |                        |   |   |               |   |   |   |
| Net      deferred tax asset                                            |   | $                           | 181    |   |               | $      | 28 |   |

----

| 8. | COMMITMENTS      AND CONTINGENT LIABILITIES |
|----|---------------------------------------------|

----

----

----

----

|                                            |   | Three      Months           |    |
|-------------------------------------------------|--------|-----------------------------|---------|
|                                            |   | Ended      June 30,         |    |
|                                            |   | 2008                        |    |   | 2007 |   |
|                                            |   | Average                     |    |   |   |   |   | Average |   |   | Average |   |   |   |   |   | Average |   |
|                                            |   | Balance                     |    |   | Interest |   |   | Yield/Rate |   |   | Balance |   |   | Interest |   |   | Yield/Rate |   |
|                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                            |   | (Dollars      in Thousands) |    |
| Interest-earning      assets:                   |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities                      |   | $                           | 162,801 |   |   | $ | 2,018 |   |   |   | 4.96 | % |   | $ | 175,293 |   |   | $ | 2,231 |   |   |   | 5.09 | % |
| Mortgage-backed      securities                 |   |                        | 62,567  |   |   |   | 895 |   |   |   | 5.72 |   |   |   | 53,318 |   |   |   | 692 |   |   |   | 5.19 |   |
| Loans      receivable(1)                        |   |                        | 228,195 |   |   |   | 3,539 |   |   |   | 6.20 |   |   |   | 222,409 |   |   |   | 3,792 |   |   |   | 6.82 |   |
| Other      interest-earning assets              |   |                        | 6,354   |   |   |   | 13 |   |   |   | 0.82 |   |   |   | 4,246 |   |   |   | 31 |   |   |   | 2.92 |   |
| Total      interest-earning assets              |   |                        | 459,917 |   |   |   | 6,465 |   |   |   | 5.62 |   |   |   | 455,266 |   |   |   | 6,746 |   |   |   | 5.93 |   |
| Cash      and non-interest-bearing balances     |   |                        | 4,432   |   |   |   |   |   |   |   |   |   |   |   | 3,936 |   |   |   |   |   |   |   |   |   |
| Other      non-interest-earning assets          |   |                        | 14,734  |   |   |   |   |   |   |   |   |   |   |   | 11,520 |   |   |   |   |   |   |   |   |   |
| Total      assets                               |   | $                           | 479,083 |   |   |   |   |   |   |   |   |   |   | $ | 470,722 |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:              |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      accounts                           |   | $                           | 66,353  |   |   |   | 443 |   |   |   | 2.67 |   |   | $ | 70,847 |   |   |   | 469 |   |   |   | 2.65 |   |
| Money      market deposit and NOW accounts      |   |                        | 94,316  |   |   |   | 627 |   |   |   | 2.66 |   |   |   | 92,993 |   |   |   | 832 |   |   |   | 3.58 |   |
| Certificates      of deposit                    |   |                        | 208,196 |   |   |   | 2,175 |   |   |   | 4.18 |   |   |   | 184,617 |   |   |   | 2,052 |   |   |   | 4.45 |   |
| Total      deposits                             |   |                        | 368,865 |   |   |   | 3,245 |   |   |   | 3.52 |   |   |   | 348,457 |   |   |   | 3,353 |   |   |   | 3.85 |   |
| Advances      from Federal Home Loan Bank       |   |                        | 24,001  |   |   |   | 256 |   |   |   | 4.27 |   |   |   | 28,043 |   |   |   | 387 |   |   |   | 5.52 |   |
| Advances      from borrowers for taxes and      |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| insurance                                       |   |                        | 1,577   |   |   |   | 2 |   |   |   | 0.51 |   |   |   | 1,553 |   |   |   | 2 |   |   |   | 0.52 |   |
| Total      interest-bearing liabilities         |   |                        | 394,443 |   |   |   | 3,503 |   |   |   | 3.55 |   |   |   | 378,053 |   |   |   | 3,742 |   |   |   | 3.96 |   |
| Non-interest-bearing      liabilities:          |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts       |   |                        | 4,882   |   |   |   |   |   |   |   |   |   |   |   | 4,895 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                          |   |                        | 4,825   |   |   |   |   |   |   |   |   |   |   |   | 3,267 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                          |   |                        | 404,150 |   |   |   |   |   |   |   |   |   |   |   | 386,215 |   |   |   |   |   |   |   |   |   |
| Stockholders'      equity                       |   |                        | 74,933  |   |   |   |   |   |   |   |   |   |   |   | 84,507 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and stockholders' equity |   | $                           | 479,083 |   |   |   |   |   |   |   |   |   |   | $ | 470,722 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning assets                |   | $                           | 65,474  |   |   |   |   |   |   |   |   |   |   | $ | 77,213 |   |   |   |   |   |   |   |   |   |
| Net      interest income; interest rate spread  |   |                        |    |   |   | $ | 2,962 |   |   |   | 2.07 | % |   |   |   |   |   | $ | 3,004 |   |   |   | 1.97 | % |
| Net      interest margin(2)                     |   |                        |    |   |   |   |   |   |   |   | 2.58 | % |   |   |   |   |   |   |   |   |   |   | 2.64 | % |
|                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest-earning assets to average |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest-bearing      liabilities               |   |                        |    |   |   |   | 116.60 | % |   |   |   |   |   |   |   |   |   |   | 120.42 | % |   |   |   |   |
|                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |
|-------------------------------------------------|--------|-----------------------------------|---------|------------|----------|--------|--------|------------|--------|--------|---------|--------|--------|----------|---------|--------|------------|--------|
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |
|                                            |   |  Nine      Months            |    |
|                                            |   |  Ended      June 30,         |    |
|                                            |   |  2008                        |    |  2007 |     |
|                                            |   | Average                           |    |       |     |   |   | Average    |   |   | Average |   |   |     |    |   | Average    |   |
|                                            |   | Balance                           |    |       | Interest |   |   | Yield/Rate |   |   | Balance |   |   | Interest |    |   | Yield/Rate |   |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |
|                                            |   |  (Dollars      in Thousands) |    |
| Interest-earning      assets:                   |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |
| Investment      securities                      |   | $                                 | 167,463 |       |     | $      | 6,427  |       |   |   | 5.12    | %      |   | $        | 173,228 |   |       | $      | 6,490 |   |   |   | 5.00 | % |
| Mortgage-backed      securities                 |   |                              | 58,076  |       |     |   | 2,375  |       |   |   | 5.45    | %      |   |     | 53,796  |   |       |   | 2,105 |   |   |   | 5.22 | % |
| Loans      receivable(1)                        |   |                              | 224,195 |       |     |   | 10,764 |       |   |   | 6.40    | %      |   |     | 221,238 |   |       |   | 11,402 |   |   |   | 6.87 | % |
| Other      interest-earning assets              |   |                              | 7,476   |       |     |   | 125    |       |   |   | 2.23    | %      |   |     | 5,102   |   |       |   | 123 |   |   |   | 3.21 | % |
| Total      interest-earning assets              |   |                              | 457,210 |       |     |   | 19,691 |       |   |   | 5.74    | %      |   |     | 453,364 |   |       |   | 20,120 |   |   |   | 5.92 | % |
| Cash      and non-interest-bearing balances     |   |                              | 4,396   |       |     |   |   |       |   |   |    |   |   |     | 4,403   |   |       |   |   |   |   |   |   |   |
| Other      non-interest-earning assets          |   |                              | 13,132  |       |     |   |   |       |   |   |    |   |   |     | 11,419  |   |       |   |   |   |   |   |   |   |
| Total      assets                               |   | $                                 | 474,738 |       |     |   |   |       |   |   |    |   |   | $        | 469,186 |   |       |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:              |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
| Savings      accounts                           |   | $                                 | 66,788  |       |     |   | 1,219  |       |   |   | 2.43    | %      |   | $        | 72,727  |   |       |   | 1,582 |   |   |   | 2.90 | % |
| Money      market deposit and NOW accounts      |   |                              | 92,312  |       |     |   | 2,175  |       |   |   | 3.14    | %      |   |     | 94,371  |   |       |   | 2,505 |   |   |   | 3.54 | % |
| Certificates      of deposit                    |   |                              | 202,105 |       |     |   | 6,820  |       |   |   | 4.50    | %      |   |     | 179,202 |   |       |   | 5,714 |   |   |   | 4.25 | % |
| Total      deposits                             |   |                              | 361,205 |       |     |   | 10,214 |       |   |   | 3.77    | %      |   |     | 346,300 |   |       |   | 9,801 |   |   |   | 3.77 | % |
| Advances      from Federal Home Loan Bank       |   |                              | 26,304  |       |     |   | 945    |       |   |   | 4.79    | %      |   |     | 26,542  |   |       |   | 1,102 |   |   |   | 5.54 | % |
| Advances      from borrowers for taxes and      |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
| insurance                                       |   |                              | 1,620   |       |     |   | 6      |       |   |   | 0.74    | %      |   |     | 1,595   |   |       |   | 6 |   |   |   | 0.50 | % |
| Total      interest-bearing liabilities         |   |                              | 389,129 |       |     |   | 11,165 |       |   |   | 3.83    | %      |   |     | 374,437 |   |       |   | 10,909 |   |   |   | 3.88 | % |
| Non-interest-bearing      liabilities:          |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts       |   |                              | 4,857   |       |     |   |   |       |   |   |    |   |   |     | 5,099   |   |       |   |   |   |   |   |   |   |
| Other      liabilities                          |   |                              | 2,688   |       |     |   |   |       |   |   |    |   |   |     | 3,181   |   |       |   |   |   |   |   |   |   |
| Total      liabilities                          |   |                              | 396,674 |       |     |   |   |       |   |   |    |   |   |     | 382,717 |   |       |   |   |   |   |   |   |   |
| Stockholders'      equity                       |   |                              | 78,064  |       |     |   |   |       |   |   |    |   |   |     | 86,469  |   |       |   |   |   |   |   |   |   |
| Total      liabilities and Stockholders' equity |   | $                                 | 474,738 |       |     |   |   |       |   |   |    |   |   | $        | 469,186 |   |       |   |   |   |   |   |   |   |
| Net      interest-earning assets                |   | $                                 | 68,081  |       |     |   |   |       |   |   |    |   |   | $        | 78,927  |   |       |   |   |   |   |   |   |   |
| Net      interest income; interest rate spread  |   |                              |    |       |     | $      | 8,526  |       |   |   | 1.91    | %      |   |     |    |   |       | $      | 9,211 |   |   |   | 2.04 | % |
| Net      interest margin(2)                     |   |                              |    |       |     |   |   |       |   |   | 2.49    | %      |   |     |    |   |       |   |   |   |   |   | 2.71 | % |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
| Average      interest-earning assets to average |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
| interest-bearing      liabilities               |   |                              |    |       |     |   | 117.50 | %          |   |   |    |   |   |     |    |   |       |   | 121.08 | % |   |   |   |   |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |
|                                            |   |                              |    |       |     |   |   |       |   |   |    |   |   |     |    |   |       |   |   |   |   |   |   |   |

----

----

----

|                                                      |   |              |   |   |                  |   |   | To      Be             |   |
|-----------------------------------------------------------|--------|-------------------|--------|--------|-----------------------|--------|--------|------------------------|--------|
|                                                      |   |              |   |   |                  |   |   | Well      Capitalized  |   |
|                                                      |   |              |   |   | Required      for     |   |   | Under      Prompt      |   |
|                                                      |   |              |   |   | Capital      Adequacy |   |   | Corrective      Action |   |
|                                                      |   | Actual      Ratio |   |   | Purposes              |   |   | Provisions             |   |
|                                                      |   |              |   |   |                  |   |   |                   |   |
| June      30, 2008:                                       |   |              |   |   |                  |   |   |                   |   |
|   Tier      1 capital (to average assets)       |   |              |   |   |                  |   |   |                   |   |
|      The      Company            |   |              | 14.73  | %      |                  |   | 4.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 13.68  | %      |                  |   | 4.0    | %                      |   |   | 5.0 | % |
|                                                      |   |              |   |   |                  |   |   |                   |   |   |   |   |
|   Tier      1 capital (to risk weighted assets) |   |              |   |   |                  |   |   |                   |   |   |   |   |
|      The      Company            |   |              | 32.27  | %      |                  |   | 4.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 29.98  | %      |                  |   | 4.0    | %                      |   |   | 6.0 | % |
|                                                      |   |              |   |   |                  |   |   |                   |   |   |   |   |
|   Total      capital (to risk weighted assets)  |   |              |   |   |                  |   |   |                   |   |   |   |   |
|      The      Company            |   |              | 32.71  | %      |                  |   | 8.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 30.42  | %      |                  |   | 8.0    | %                      |   |   | 10.0 | % |
|                                                      |   |              |   |   |                  |   |   |                   |   |   |   |   |
| September      30, 2007:                                  |   |              |   |   |                  |   |   |                   |   |   |   |   |
|   Tier      1 capital (to average assets)       |   |              |   |   |                  |   |   |                   |   |   |   |   |
|      The      Company            |   |              | 17.08  | %      |                  |   | 4.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 15.52  | %      |                  |   | 4.0    | %                      |   |   | 5.0 | % |
|                                                      |   |              |   |   |                  |   |   |                   |   |   |   |   |
|   Tier      1 capital (to risk weighted assets) |   |              |   |   |                  |   |   |                   |   |   |   |   |
|      The      Company            |   |              | 37.88  | %      |                  |   | 4.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 34.22  | %      |                  |   | 4.0    | %                      |   |   | 6.0 | % |
|                                                      |   |              |   |   |                  |   |   |                   |   |   |   |   |
|   Total      capital (to risk weighted assets)  |   |              |   |   |                  |   |   |                   |   |   |   |   |
|      The      Company            |   |              | 38.43  | %      |                  |   | 8.0    | %                      |   |   | N/A |   |
|      The      Bank               |   |              | 34.77  | %      |                  |   | 8.0    | %                      |   |   | 10.0 | % |

----

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUTMARKET RISK

|   | · | 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(2)                                      |   |                        | 1,000   |   |           |   | 999     |            |   |   | 3,000           |   |   |           | 440      |   |   |   | 121,605 |   |   | $ | 127,044 |   |
| Mortgage-backed      securities                                    |   |                        | 11,195  |   |           |   | 13,451  |            |   |   | 11,732          |   |   |           | 16,962   |   |   |   | 36,457 |   |   |   | 89,797 |   |
| Loans      receivable(3)                                           |   |                        | 34,135  |   |           |   | 40,146  |            |   |   | 59,282          |   |   |           | 37,679   |   |   |   | 62,618 |   |   |   | 233,860 |   |
| Other      interest earning assets                                 |   |                        | 11,456  |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   | 11,456 |   |
|     Total      interest-earning assets         |   | $                           | 57,786  |   |           | $      | 54,596  |            |   | $      | 74,014          |   |   | $              | 55,081   |   |   | $      | 220,680 |   |   | $ | 462,157 |   |
|                                                               |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                 |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Savings      accounts                                              |   | $                           | 529     |   |           | $      | 54      |            |   | $      | 40,324          |   |   | $              | 13,441   |   |   | $      | 13,441 |   |   | $ | 67,789 |   |
| Money      market deposit and NOW accounts                         |   |                        | -       |   |           |   | 34,701  |            |   |   | 50,082          |   |   |           | 5,127    |   |   |   | 5,127 |   |   |   | 95,037 |   |
| Certificates      of deposits                                      |   |                        | 57,446  |   |           |   | 87,622  |            |   |   | 34,247          |   |   |           | 27,565   |   |   |   | - |   |   |   | 206,880 |   |
| Advances      from Federal Home Loan Bank                          |   |                        | 17,021  |   |           |   | 64      |            |   |   | 13,177          |   |   |           | 109      |   |   |   | 340 |   |   |   | 30,711 |   |
| Advances      from borrowers for taxes and insurance               |   |                        | 1,944   |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   | 1,944 |   |
|     Total      interest-bearing liabilities    |   | $                           | 76,940  |   |           | $      | 122,441 |            |   | $      | 137,830         |   |   | $              | 46,242   |   |   | $      | 18,908 |   |   | $ | 402,361 |   |
|                                                               |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Interest-earning      assets                                       |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
|    less      interest-bearing liabilities           |   | $                           | (19,154 | )      |           | $      | (67,845 | )               |   | $      | (63,816         | )      |   | $              | 8,839    |   |   | $      | 201,772 |   |   | $ | 59,796 |   |
|                                                               |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate sensitivity gap (4)                  |   | $                           | (19,154 | )      |           | $      | (86,999 | )               |   | $      | (150,815        | )      |   | $              | (141,976 | )      |   | $      | 59,796 |   |   |   |   |   |
|                                                               |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate gap as a                             |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
|    percentage      of total assets at June 30, 2008 |   |                        | -3.98   | %      |           |   | -18.07  | %               |   |   | -31.32          | %      |   |           | -29.48   | %      |   |   | 12.42 | % |   |   |   |   |
|                                                               |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-earning assets                            |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |   |   |   |
| as      a percentage of cumulative interest-                       |   |                        |    |   |           |   |    |            |   |   |            |   |   |           |     |   |   |   |   |   |   |
|    bearing      liabilities at June 30, 2008        |   |                        | 75.11   | %      |           |   | 56.37   | %               |   |   | 55.28           | %      |   |           | 62.97    | %      |   |   | 114.86 | % |   |   |   |   |

| (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, investment securities are stated at      amortized cost. |
|-----|-------------------------------------------------------------------------------------------------|

| (3) | For      purposes of the gap analysis, loans receivable includes non-performing      loans and is gross of the allowance for loan losses and unamortized      deferred loan fees, but net of undisbursed portion of      loans-in-process. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Interest-rate      sensitivity gap represents the difference between net interest-earning      assets and interest-bearingliabilities. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------|

----

|                 |   |                        |   |   |          |   |    |                 |   |   |                       |   |   |   |   |
|----------------------|--------|-----------------------------|--------|--------|---------------|--------|---------|----------------------|--------|--------|----------------------------|--------|--------|--------|--------|
| 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                  |   | $                           | 31,720 |   |          | $      | (45,433 | )                    |   |   | (58.89                     | )%     |   |   | 7.54   | % |   |   | (8.48 | )% |
| 200                  |   |                        | 45,181 |   |          |   | (31,972 | )                    |   |   | (41.44                     | )%     |   |   | 10.28  | % |   |   | (5.74 | )% |
| 100                  |   |                        | 60,401 |   |          |   | (16,752 | )                    |   |   | (21.71                     | )%     |   |   | 13.14  | % |   |   | (2.88 | )% |
| Static               |   |                        | 77,153 |   |          |   | -       |                 |   |   | -                          |   |   |   | 16.02  | % |   |   | - |   |
| (100)                |   |                        | 85,731 |   |          |   | 8,578   |                 |   |   | 11.12                      | %      |   |   | 17.29  | % |   |   | 1.27 | % |
| (200)                |   |                        | 84,147 |   |          |   | 6,994   |                 |   |   | 9.07                       | %      |   |   | 16.84  | % |   |   | 0.82 | % |
| (300)                |   |                        | 81,764 |   |          |   | 4,611   |                 |   |   | 5.98                       | %      |   |   | 16.25  | % |   |   | 0.23 | % |

----

ITEM 4T. CONTROLS ANDPROCEDURES

----

PART II

----

|   | (a) | Not      applicable |
|--------|-----|---------------------|

|   | (b) | Not      applicable |
|--------|-----|---------------------|

|   | (c) | Purchases      of Equity Securities |
|--------|-----|-------------------------------------|

| Period                              |   | Total      Numberof      SharesPurchased |    |   | Average      PricePaid      perShare |   |   | TotalNumber      ofSharesPurchased      asPart      ofPubliclyAnnouncedPlans      orPrograms |   |   | Maximum      Numberof      Shares that MayYet      be PurchasedUnder      the Plan or Programs(1) |   |
|-------------------------------------|--------|------------------------------------------|---------|--------|--------------------------------------|--------|--------|----------------------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------|--------|
| April      1 – April 30, 2008 |   |                                     | 2,170   |   |                                 | $      | 12.10  |                                                                                         |   |   | 2,170 -                                                                                      |   |   |   | 15,730 |   |
| May      1 – May 31, 2008     |   |                                     | 15,730  |   |                                 |   | 12.03  |                                                                                         |   |   | 15,730                                                                                            |   |   |   | - |   |
| June      1 - June 30, 2008         |   |                                     |  - |   |                                 |   | -      |                                                                                         |   |   |  -                                                                                           |   |   |   | - |   |
|                                |   |                                     |    |   |                                 |   |   |                                                                                         |   |   |                                                                                              |   |   |   |   |   |
| Total                               |   |                                     | 17,900  |   |                                 | $      | 12.04  |                                                                                         |   |   | 17,900                                                                                            |   |   |   | - |   |

|   | Notes      to the table |
|--------|-------------------------|

| (1) | On      January 22, 2008, the Company announced its sixth stock repurchase program      to repurchase up to 220,000 shares or approximately 5% of the Company’s      outstanding common stock held by shareholders other than Prudential Mutual      Holding Company (the “MHC”).  The program commenced upon      completion of the fifth stock repurchase program.  The program      was completed during May 2008.  In addition, the MHC announced      that its Board of Directors also approved the purchase of 220,000 shares      or approximately 5% of the Company’s common stock held by shareholders      other than the MHC.  As of June 30, 2008, The MHC had purchased      47,000 shares at an average cost of $12.12 per  share. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Item 3. Defaults Upon SeniorSecurities

----

Item 6. Exhibits

| Exhibit      No. | Description                                                               |
|------------------|---------------------------------------------------------------------------|
| 31.1             | Rule      13a-14(a)/15d-14(a) Certification of Chief Executive    Officer |
| 31.2             | Rule      13a-14(a)/15d-14(a) Certification of Chief Financial Officer    |
| 32.0             | Section      1350 Certifications                                          |

----

SIGNATURES

| Date:   August      14,2008 | By:    | /s/ Thomas      A. Vento              |   |
|--------------------------------------------|--------|--------------------------------------------|--------|
|                                       |   | Thomas A.    Vento                         |   |
|                                       |   | President and Chief Executive      Officer |   |
|                                       |   |                                       |   |

| Date:      August 14, 2008 | By:    | /s/ Joseph      R. Corrato                           |   |
|----------------------------|--------|-----------------------------------------------------------|--------|
|                       |   | Joseph R.    Corrato                                      |   |
|                       |   | Executive Vice President and      Chief Financial Officer |   |
|                       |   |                                                      |   |