----

----

|            |                                                                                                                                                               |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (Mark      One) |
|            |                                                                                                                                                               |
| x               | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                                  |
|            | For      the quarterly period ended December 31, 2008                                                                                                              |
|            | OR                                                                                                                                                                 |
| o               | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934                                                                 |
|            | For      the transition period      from                    to |
|            | Commission      file number: 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 Avenue                                             | 19145                                     |
| Philadelphia,      Pennsylvania                                     |                                      |
| (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 is smaller reporting company                                                                                                                                                                                                                            | Smaller Reporting      Company x |
|                                                                                                                                                                                                                                                                                                    |                             |
| Indicate      by check mark whether the registrant is a shell company (as defined in      Rule 12b-2 of the Exchange Act).                                                                                                                                                                              |
| o      Yes    x      No                                           |

----

----

|         |                        |                                                                                                                                                                                           |   |   |
|--------------|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|         |                        |                                                                                                                                                                                           | PAGE   |
| PART      I  | FINANCIAL      INFORMATION: |                                                                                                                                                                                           |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      1.                | Condensed      Consolidated Financial Statements                                                                                                                                               |   |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         |                        | Unaudited      Condensed Consolidated Statements of Financial ConditionDecember      31, 2008 and September 30, 2008 (as restated)                                                             | 2      |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         |                        | Unaudited      Condensed Consolidated Statements of Operations for the ThreeMonths      Ended December 31, 2008 and 2007 (as restated)                                                         | 3      |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         |                        | Unaudited      Condensed Consolidated Statements of Changes inStockholders’      Equity and Comprehensive Income for the Three MonthsEnded      December 31, 2008 and 2007 (as restated) | 4      |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         |                        | Unaudited      Condensed Consolidated Statements of Cash Flows for the ThreeMonths      Ended December 31, 2008 and 2007 (as restated)                                                         | 5      |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         |                        | Notes      to Unaudited Condensed Consolidated Financial Statements                                                                                                                            | 6      |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      2.                | Management’s      Discussion and Analysis of Financial Condition andResults      of Operations                                                                                           | 24     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      3.                | Quantitative      and Qualitative Disclosures About Market Risk                                                                                                                                | 33     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      4T.               | Controls      and Procedures                                                                                                                                                                   | 36     |   |
|         |                        |                                                                                                                                                                                           |   |   |
| PART      II | OTHER      INFORMATION      |                                                                                                                                                                                           |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      1.                | Legal      Proceedings                                                                                                                                                                         | 37     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      1A.               | Risk      Factors                                                                                                                                                                              | 37     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      2.                | Unregistered      Sales of Equity Securities and Use of Proceeds                                                                                                                               | 37     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      3.                | Defaults      Upon Senior Securities                                                                                                                                                           | 37     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      4.                | Submission      of Matters to a Vote of Security Holders                                                                                                                                       | 37     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      5.                | Other      Information                                                                                                                                                                         | 38     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | Item      6.                | Exhibits                                                                                                                                                                                       | 39     |   |
|         |                        |                                                                                                                                                                                           |   |   |
|         | SIGNATURES                  | 40                                                                                                                                                                                             |   |

----

| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES           |
|--------------------------------------------------------------------------|
|                                                                     |
| UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL  CONDITION |

|                                                                                                                                                              |   | December      31,2008       |    |   | September      30,2008(as      restatedSee      note 10) |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|----------------------------------------------------------|--------|
|                                                                                                                                                              |   | (Dollars      in thousands) |    |
| ASSETS                                                                                                                                                            |   |                        |    |   |                                                     |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| Cash      and amounts due from depository institutions                                                                                                            |   | $                           | 4,118   |   |                                                     | $      | 4,318 |   |
| Interest-bearing      deposits                                                                                                                                    |   |                        | 7,727   |   |                                                     |   | 5,136 |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| Total      cash and cash equivalents                                                                                                                              |   |                        | 11,845  |   |                                                     |   | 9,454 |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| Investment      securities held to maturity (estimated fair value—December 31, 2008,      $115,313;September      30, 2008, $120,741)                       |   |                        | 114,338 |   |                                                     |   | 123,022 |   |
| Investment      securities available for sale (amortized cost—December 31, 2008,      $2,019;September      30, 2008, $3,026)                               |   |                        | 2,000   |   |                                                     |   | 2,922 |   |
| Mortgage-backed      securities held to maturity (estimated fair value—December      31, 2008, $40,631; September 30, 2008, $39,811)                        |   |                        | 39,432  |   |                                                     |   | 40,281 |   |
| Mortgage-backed      securities available for sale (amortized cost—December      31, 2008, $52,463; September 30, 2008, $53,126)                            |   |                        | 50,689  |   |                                                     |   | 52,184 |   |
| Loans      receivable—net of allowance for loan losses (December 31, 2008,      $1,904;September      30, 2008, $1,591)                                     |   |                        | 253,850 |   |                                                     |   | 243,969 |   |
| Accrued      interest receivable:                                                                                                                                 |   |                        |    |   |                                                     |   |   |   |
| Loans      receivable                                                                                                                                             |   |                        | 1,381   |   |                                                     |   | 1,291 |   |
| Mortgage-backed      securities                                                                                                                                   |   |                        | 389     |   |                                                     |   | 393 |   |
| Investment      securities                                                                                                                                        |   |                        | 1,784   |   |                                                     |   | 1,493 |   |
| Real      estate owned                                                                                                                                            |   |                        | 1,488   |   |                                                     |   | 1,488 |   |
| Federal      Home Loan Bank stock—at cost                                                                                                                   |   |                        | 3,545   |   |                                                     |   | 2,620 |   |
| Office      properties and equipment—net                                                                                                                    |   |                        | 2,099   |   |                                                     |   | 2,182 |   |
| Prepaid      expenses and other assets                                                                                                                            |   |                        | 7,023   |   |                                                     |   | 7,147 |   |
| Deferred      tax asset-net                                                                                                                                       |   |                        | 1,938   |   |                                                     |   | 1,091 |   |
| TOTAL      ASSETS                                                                                                                                                 |   | $                           | 491,801 |   |                                                     | $      | 489,537 |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                   |   |                        |    |   |                                                     |   |   |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| LIABILITIES:                                                                                                                                                      |   |                        |    |   |                                                     |   |   |   |
| Deposits:                                                                                                                                                         |   |                        |    |   |                                                     |   |   |   |
| Noninterest-bearing                                                                                                                                               |   | $                           | 3,623   |   |                                                     | $      | 4,327 |   |
| Interest-bearing                                                                                                                                                  |   |                        | 383,899 |   |                                                     |   | 372,503 |   |
| Total      deposits                                                                                                                                               |   |                        | 387,522 |   |                                                     |   | 376,830 |   |
| Advances      from Federal Home Loan Bank                                                                                                                         |   |                        | 32,691  |   |                                                     |   | 31,701 |   |
| Accrued      interest payable                                                                                                                                     |   |                        | 944     |   |                                                     |   | 3,471 |   |
| Advances      from borrowers for taxes and insurance                                                                                                              |   |                        | 1,932   |   |                                                     |   | 1,348 |   |
| Accounts      payable and accrued expenses                                                                                                                        |   |                        | 1,921   |   |                                                     |   | 7,169 |   |
| Accrued      dividend payable                                                                                                                                     |   |                        | 531     |   |                                                     |   | 531 |   |
| Total      liabilities                                                                                                                                            |   |                        | 425,541 |   |                                                     |   | 421,050 |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| 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 December 31, 2008 and September 30, 2008 |   |                        | 126     |   |                                                     |   | 126 |   |
| Additional      paid-in capital                                                                                                                                   |   |                        | 54,924  |   |                                                     |   | 54,925 |   |
| Unearned      ESOP shares                                                                                                                                         |   |                        | (3,624  | )      |                                                     |   | (3,680 | ) |
| Treasury      stock, at cost: 1,493,884 shares at December 31, 2008and      September 30, 2008                                                                    |   |                        | (19,481 | )      |                                                     |   | (19,481 | ) |
| Retained      earnings (As substantially restricted)                                                                                                              |   |                        | 35,504  |   |                                                     |   | 37,288 |   |
| Accumulated      other comprehensive loss                                                                                                                         |   |                        | (1,189  | )      |                                                     |   | (691 | ) |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| Total      stockholders’ equity                                                                                                                             |   |                        | 66,260  |   |                                                     |   | 68,487 |   |
|                                                                                                                                                              |   |                        |    |   |                                                     |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                             |   | $                           | 491,801 |   |                                                     | $      | 489,537 |   |

----

| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES |
|----------------------------------------------------------------|
|                                                           |
| UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS  |

|                                                          |   | Three      Months EndedDecember      31,                 |   |
|---------------------------------------------------------------|--------|----------------------------------------------------------|--------|
|                                                          |   | 2008                                                     |   |   | 2007(as      restatedSee      note 10) |   |
|                                                          |   | (Dollars      in Thousands Except PerShare      Amounts) |   |
| INTEREST      INCOME:                                         |   |                                                     |   |   |   |   |
| Interest      on loans                                        |   | $                                                        | 3,727  |   |   | $ | 3,635 |   |
| Interest      on mortgage-backed securities                   |   |                                                     | 1,756  |   |   |   | 724 |   |
| Interest      and dividends on investments                    |   |                                                     | 1,744  |   |   |   | 2,302 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| Total      interest income                                    |   |                                                     | 7,227  |   |   |   | 6,661 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| INTEREST      EXPENSE:                                        |   |                                                     |   |   |   |   |   |   |
| Interest      on deposits                                     |   |                                                     | 3,159  |   |   |   | 3,494 |   |
| Interest      on borrowings                                   |   |                                                     | 303    |   |   |   | 400 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| Total      interest expense                                   |   |                                                     | 3,462  |   |   |   | 3,894 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| NET      INTEREST INCOME                                      |   |                                                     | 3,765  |   |   |   | 2,767 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                |   |                                                     | 313    |   |   |   | 75 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| NET      INTEREST INCOME AFTER PROVISION FOR      LOAN LOSSES |   |                                                     | 3,452  |   |   |   | 2,692 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| NON-INTEREST      INCOME:                                     |   |                                                     |   |   |   |   |   |   |
| Fees      and other service charges                           |   |                                                     | 125    |   |   |   | 142 |   |
| Impairment      charge on mortgage-backed securities          |   |                                                     | (2,154 | ) |   |   | — |   |
| Other                                                         |   |                                                     | 82     |   |   |   | 80 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| Total      non-interest (loss) income                         |   |                                                     | (1,947 | ) |   |   | 222 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| NON-INTEREST      EXPENSE:                                    |   |                                                     |   |   |   |   |   |   |
| Salaries      and employee benefits                           |   |                                                     | 1,068  |   |   |   | 1,147 |   |
| Data      processing                                          |   |                                                     | 165    |   |   |   | 124 |   |
| Professional      services                                    |   |                                                     | 216    |   |   |   | 85 |   |
| Office      occupancy                                         |   |                                                     | 95     |   |   |   | 85 |   |
| Depreciation                                                  |   |                                                     | 84     |   |   |   | 83 |   |
| Payroll      taxes                                            |   |                                                     | 63     |   |   |   | 68 |   |
| Director      compensation                                    |   |                                                     | 58     |   |   |   | 64 |   |
| Other                                                         |   |                                                     | 705    |   |   |   | 354 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| Total      non-interest expense                               |   |                                                     | 2,454  |   |   |   | 2,010 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| (LOSS)      INCOME BEFORE INCOME TAXES                        |   |                                                     | (949   | ) |   |   | 904 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| INCOME      TAXES:                                            |   |                                                     |   |   |   |   |   |   |
| Current                                                       |   |                                                     | 503    |   |   |   | 331 |   |
| Deferred      benefit                                         |   |                                                     | (459   | ) |   |   | (41 | ) |
|                                                          |   |                                                     |   |   |   |   |   |   |
| Total      income tax                                         |   |                                                     | 44     |   |   |   | 290 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| NET      (LOSS) INCOME                                        |   | $                                                        | (993   | ) |   | $ | 614 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| BASIC      (LOSS) EARNINGS PER SHARE                          |   | $                                                        | (0.09  | ) |   | $ | 0.06 |   |
|                                                          |   |                                                     |   |   |   |   |   |   |
| DILUTED      (LOSS) EARNINGS PER SHARE                        |   | $                                                        | (0.09  | ) |   | $ | 0.06 |   |

|                                                                          |
|-------------------------------------------------------------------------------|
| See      notes to unaudited condensed consolidated financial      statements. |

----

|                                                                                 |
|--------------------------------------------------------------------------------------|
| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND    SUBSIDIARIES                    |
|                                                                                 |
| UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN                       |
| STOCKHOLDERS’      EQUITY AND COMPREHENSIVE INCOME (AS RESTATED, SEE NOTE  10) |

|                                                                                                                                |   | CommonStock                 |    |   | AdditionalPaid-InCapital |   |   | UnearnedESOPShares |   |   | TreasuryStock |   |   | RetainedEarnings |    |   | AccumulatedOtherComprehensiveIncome |   |    | TotalStockholders’Equity |   |   | ComprehensiveIncome |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|------------------|---------|--------|-------------------------------------|--------|---------|--------------------------------|--------|--------|---------------------|--------|
|                                                                                                                                |   | (Dollars      in Thousands) |    |
| BALANCE,      OCTOBER 1, 2008(as restated - see note 10)                                                                            |   | $                           | 126     |   |                     | $      | 54,925 |               |   | $      | (3,680        | )      |   | $                | (19,481 | )      |                                | $      | 37,288  |                           |   | $      | (691                | )      |   | $ | 68,487 |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
| Cummulative      adjustment related to the adoption of EITF 06-10, net of    tax                                                    |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   | (256    | )                              |   |   |                |   |   |   | (256 | ) |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                                          |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
| Net      loss                                                                                                                       |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   | (993    | )                              |   |   |                |   |   |   | (993 | ) |   |   | (993 | ) |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Net      unrealized holding loss on available for sale securities arising during      the period, net of income tax benefit of $989 |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   | (1,920              | )      |   |   | (1,920 | ) |   |   | (1,920 | ) |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Reclassification      adjustment for other than temporary impairment net of tax of      $732                                        |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   | 1,422               |   |   |   | 1,422 |   |   |   | 1,422 |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Comprehensive      loss                                                                                                             |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   | $ | (1,491 | ) |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Cash      dividend declared($.05      per share)                                                                                    |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   | (535    | )                              |   |   |                |   |   |   | (535 | ) |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| ESOP      shares committed to be released                                                                                           |   |                        | — |   |                     |   | (1     | )                  |   |   | 56            |   |   |             | — |   |                                |   | — |                           |   |   | —             |   |   |   | 55 |   |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| BALANCE,      December 31, 2008                                                                                                     |   | $                           | 126     |   |                     | $      | 54,924 |               |   | $      | (3,624        | )      |   | $                | (19,481 | )      |                                | $      | 35,504  |                           |   | $      | (1,189              | )      |   | $ | 66,260 |   |   |   |   |   |

|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|------------------|---------|--------|-------------------------------------|--------|---------|--------------------------------|--------|--------|---------------------|--------|
|                                                                                                                                |   | CommonStock                 |    |   | AdditionalPaid-InCapital |   |   | UnearnedESOPShares |   |   | TreasuryStock |   |   | RetainedEarnings |    |   | AccumulatedOtherComprehensiveIncome |   |    | TotalStockholders’Equity |   |   | ComprehensiveIncome |   |
|                                                                                                                                |   | (Dollars      in Thousands) |    |
| BALANCE,      OCTOBER 1, 2007(as restated - see note 10)                                                                            |   | $                           | 126     |   |                     | $      | 54,880 |               |   | $      | (3,903        | )      |   | $                | (14,372 | )      |                                | $      | 43,568  |                           |   | $      | 259                 |   |   | $ | 80,558 |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                                          |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                     |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   | 614     |                           |   |   |                |   |   |   | 614 |   |   |   | 614 |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Net      unrealized holding loss on available for sale securities arising during      the period, net of income tax benefit of $166 |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   | (321                | )      |   |   | (321 | ) |   |   | (321 | ) |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                                                                                           |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   | $ | 293 |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Treasury      stock purchased                                                                                                       |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             | (1,350  | )      |                                |   |    |                           |   |   |                |   |   |   | (1,350 | ) |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| Cash      dividend declared($.05      per share)                                                                                    |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   | (547    | )                         |   |   |                |   |   |   | (547 | ) |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| ESOP      shares committed to be released                                                                                           |   |                        | — |   |                     |   | 16     |               |   |   | 55            |   |   |             | — |   |                                |   | — |                           |   |   | —             |   |   |   | 71 |   |   |   |   |   |
|                                                                                                                                |   |                        |    |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                |   |    |                           |   |   |                |   |   |   |   |   |   |   |   |   |
| BALANCE,      December 31, 2007                                                                                                     |   | $                           | 126     |   |                     | $      | 54,896 |               |   | $      | (3,848        | )      |   | $                | (15,722 | )      |                                | $      | 43,635  |                           |   | $      | (62                 | )      |   | $ | 79,025 |   |   |   |   |   |

----

|                                                           |
|----------------------------------------------------------------|
| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES |
|                                                           |
| UNAUDITED      CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS  |

|                                                                                    |   | Three      Months Ended     |    |
|-----------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|                                                                                    |   | December      31,           |    |
|                                                                                    |   |                        |    |   | 2007 |   |
|                                                                                    |   |                        |    |   | (As      restated |   |
|                                                                                    |   | 2008                        |    |   | see      note 10) |   |
|                                                                                    |   | (Dollars      in Thousands) |    |
| OPERATING      ACTIVITIES:                                                              |   |                        |    |   |   |   |
| Net      (loss) income                                                                  |   | $                           | (993    | ) |   | $ | 614 |   |
| Adjustments      to reconcile net income to net cash used in operating      activities: |   |                        |    |   |   |   |   |   |
| Provision      for loan losses                                                          |   |                        | 313     |   |   |   | 75 |   |
| Depreciation                                                                            |   |                        | 84      |   |   |   | 83 |   |
| Net      accretion of premiums/discounts                                                |   |                        | (531    | ) |   |   | (16 | ) |
| Net      accretion of deferred loan fees and costs                                      |   |                        | (31     | ) |   |   | (54 | ) |
| Amortization      of ESOP                                                               |   |                        | 55      |   |   |   | 71 |   |
| Impairment      charge on mortgage-backed securities                                    |   |                        | 2,154   |   |   |   | — |   |
| Income      from bank owned life insurance                                              |   |                        | (53     | ) |   |   | (47 | ) |
| Deferred      income tax benefit                                                        |   |                        | (459    | ) |   |   | (41 | ) |
| Changes      in assets and liabilities which used cash:                                 |   |                        |    |   |   |   |   |   |
| Accounts      payable and accrued expenses                                              |   |                        | (5,630  | ) |   |   | (479 | ) |
| Accrued      interest payable                                                           |   |                        | (2,527  | ) |   |   | (1,995 | ) |
| Prepaid      expenses and other assets                                                  |   |                        | 177     |   |   |   | 424 |   |
| Accrued      interest receivable                                                        |   |                        | (377    | ) |   |   | 88 |   |
| Net      cash used in operating activities                                              |   |                        | (7,818  | ) |   |   | (1,277 | ) |
| INVESTING      ACTIVITIES:                                                              |   |                        |    |   |   |   |   |   |
| Purchase      of investment securities held to maturity                                 |   |                        | (6,997  | ) |   |   | (9,984 | ) |
| Purchase      of mortgage-backed securities available for sale                          |   |                        | (1,985  | ) |   |   | (4,843 | ) |
| Loans      originated or acquired                                                       |   |                        | (20,620 | ) |   |   | (15,231 | ) |
| Principal      collected on loans                                                       |   |                        | 10,457  |   |   |   | 12,391 |   |
| Principal      payments received on mortgage-backed securities:                         |   |                        |    |   |   |   |   |   |
| held-to-maturity                                                                        |   |                        | 948     |   |   |   | 1,349 |   |
| available-for-sale                                                                      |   |                        | 924     |   |   |   | 191 |   |
| Proceeds      from calls and maturities of investment securities held to      maturity  |   |                        | 15,682  |   |   |   | 15,693 |   |
| Proceeds      from calls and maturities of investment available for sale                |   |                        | 991     |   |   |   | 999 |   |
| Net      (increase) decrease in Federal Home Loan Bank stock                            |   |                        | (925    | ) |   |   | 98 |   |
| Purchases      of equipment                                                             |   |                        | (1      | ) |   |   | (25 | ) |
| Net      cash (used in) provided by investing activities                                |   |                        | (1,526  | ) |   |   | 638 |   |
| FINANCING      ACTIVITIES:                                                              |   |                        |    |   |   |   |   |   |
| Net      decrease in demand deposits, NOW accounts, and savings      accounts           |   |                        | (735    | ) |   |   | (153 | ) |
| Net      increase in certificates of deposit                                            |   |                        | 11,427  |   |   |   | 5,778 |   |
| Net      borrowings (repayments) from Federal Home Loan Bank                            |   |                        | 990     |   |   |   | (6,010 | ) |
| Increase      in advances from borrowers for taxes and insurance                        |   |                        | 584     |   |   |   | 700 |   |
| Cash      dividend paid                                                                 |   |                        | (531    | ) |   |   | (554 | ) |
| Purchase      of treasury stock                                                         |   |                        | — |   |   |   | (1,350 | ) |
| Net      cash provided by (used in) financing activities                                |   |                        | 11,735  |   |   |   | (1,589 | ) |
|                                                                                    |   |                        |    |   |   |   |   |   |
| NET      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               |   |                        | 2,391   |   |   |   | (2,228 | ) |
| CASH      AND CASH EQUIVALENTS—Beginning of period                                |   |                        | 9,454   |   |   |   | 12,269 |   |
| CASH      AND CASH EQUIVALENTS—End of period                                      |   | $                           | 11,845  |   |   | $ | 10,041 |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:                                 |   |                        |    |   |   |   |   |   |
| Interest      paid on deposits and advances from Federal Home Loan Bank                 |   | $                           | 5,989   |   |   | $ | 5,883 |   |
| Income      taxes paid                                                                  |   | $                           | 850     |   |   | $ | 550 |   |
| SUPPLEMENTAL      DISCLOSURES OF NONCASH ITEMS;                                         |   |                        |    |   |   |   |   |   |
| Impact      of adoption of EITF 06-10 on other liabilities                              |   | $                           | 388     |   |   | $ | — |   |
|                                                                                    |   |                        |    |   |   |   |   |   |

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|                                                                 |
|----------------------------------------------------------------------|
| PRUDENTIAL      BANCORP, INC. OF PENNSYLVANIA AND SUBSIDIARIES       |
|                                                                 |
| NOTES      TO CONDENSED CONSOLIDATED UNAUDITED FINANCIAL  STATEMENTS |

| 1.     | SIGNIFICANT      ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Basis of      presentation –The accompanying unaudited condensed consolidated      financial statements were prepared pursuant to the rules and regulations      of the United States Securities and Exchange Commission (SEC) for interim      information and therefore do not include all the information or footnotes      necessary for a complete presentation of financial condition, results of      operations, changes in equity and cash flows in conformity with accounting      principles generally accepted in the United States of      America (“GAAP”). However, all normal recurring adjustments that, in      the opinion of management, are necessary for a fair presentation of the      financial statements have been included.  The results for the      three months ended December 31, 2008 are not necessarily indicative of the      results that may be expected for the fiscal year ending September 30,      2009, or any other period. These financial statements should be read in      conjunction with the audited consolidated financial statements of      Prudential Bancorp, Inc. of Pennsylvania (“the Company”) and the      accompanying notes thereto for the year ended September 30, 2008 included      in the Company’s Annual Report on Form 10-K for the fiscal year ended      September 30, 2008.                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Use      of Estimates in the Preparation of Financial Statements —The      preparation of financial statements in conformity with GAAP in the United      States of America requires management to make estimates and assumptions      that affect the reported amounts of assets and liabilities and the      disclosure of contingent assets and liabilities at the date of the      financial statements and the reported amounts of income and expenses      during the reporting period. The most significant estimates and      assumptions in the Company’s consolidated financial statements are      recorded in the allowance for loan losses, deferred income taxes, and the      fair value measurement for investment securities available for sale.      Actual results could differ from those      estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Dividend      Payable –      On December 17, 2008, the Company’s Board of Directors declared a      quarterly cash dividend of $.05 on the common stock of the Company payable      on January 26, 2009 to the shareholders of record at the close of business      on January 12, 2009 which resulted in a payable of $531,000 at December      31, 2008. A portion of the cash dividend was payable to Prudential Mutual      Holding Company due to its ownership of shares of the Company’s common      stock and totaled $354,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Employee      Stock Ownership Plan –      The Company maintains an employee stock ownership plan (“ESOP”) for      substantially all of its full-time employees. The ESOP purchased 452,295      shares of the Company’s common stock for an aggregate cost of      approximately $4.5 million in fiscal 2005. Shares of the Company’s common      stock purchased by the ESOP are held in a suspense account until released      for allocation to participants. Shares are allocated to each eligible      participant based on the ratio of each such participant’s compensation, as      defined in the ESOP, to the total compensation of all eligible plan      participants. As the unearned shares are released from the suspense      account, the Company recognizes compensation expense equal to the fair      value of the ESOP shares during the periods in which they become committed      to be released. To the extent that the fair value of the ESOP shares      released differs from the cost of such shares, the difference is charged      or credited to equity as additional paid-in capital. As of December 31,      2008, the Company had allocated a total of 84,825 shares from the suspense      account to participants. In addition, at such date of the total number of      shares of Company common stock held by the ESOP was 450,200. For the      quarter ended December 31, 2008, the Company recognized $51,000 in      compensation expense. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Treasury      Stock –      Stock held in treasury by the Company is accounted for using the      cost method, which treats stock held in treasury as a reduction to total      stockholders’ equity. On January 21, 2009, the Company announced its      seventh stock repurchase program to repurchase up to 198,000 shares or      approximately 5% of the Company’s outstanding common stock held by      shareholders other than Prudential Mutual Holding Company (the “MHC”). In      addition, the MHC announced that its Board of Directors approved its      second stock repurchase plan to repurchase up to 198,000 shares or      approximately 5% of the Company’s common stock held by shareholders other      than the MHC. As of December 31, 2008, The MHC had purchased 179,600      shares at an 6 average cost of $10.71 per share. The average cost per      share of the shares which have been repurchased by the Company was $13.04      for purchases through December 31, 2008. The repurchased shares are      available for general corporate  purposes.                                                                                                                                                                                                                                                                                                                                                                                                   |

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|   | Comprehensive      Income (loss) —The Company presents in the unaudited condensed      consolidated statement of changes in stockholders’ equity and      comprehensive income those amounts arising from transactions and other      events which currently are excluded from the statement of income and are      recorded directly to stockholders’ equity.  For the quarters      ended December 31, 2008 and 2007, the only components of comprehensive      income were net income, unrealized holding gains and losses, net of income      tax expense and benefit, on available for sale securities and      reclassifications related to realized loss due to other than temporary      impairment, net of tax.  The Company recognized a comprehensive      loss $1.5 million for the three months ended December 31, 2008 while      comprehensive income totaled $293,000 for the three months ended December      31, 2007. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | FHLB      Stock –      Federal Home Loan Bank      (“FHLB”) stock is classified as a restricted equity security      because ownership is restricted and there is not an established market for      its resale. FHLB stock is carried at cost and is evaluated for impairment      when certain conditions warrant further consideration. The Company has      been informed that the FHLB of Pittsburgh has ceased paying dividends on      shares of stock and repurchasing shares thereof.  While      certain conditions are noted that required management to evaluate the      stock for impairment it is currently not probable that the Company will      not realize its cost basis. Management concluded that no impairment      existed as of December 31, 2008.                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Recent      Accounting Pronouncements –      In September 2006, the Emerging Issues Task Force (“EITF”) of      Financial Accounting Standards Board (“FASB”) issued EITF Issue No. 06-4,      “Accounting for Deferred Compensation and Postretirement Benefit Aspects      of Endorsement Split Dollar Life Insurance Arrangements” (EITF 06-04).      EITF 06-4 requires the recognition of a liability related to the      postretirement benefits covered by an endorsement split-dollar life      insurance arrangement. EITF 06-4 is effective for fiscal years beginning      after December 15, 2007, with earlier application permitted. The Company      adopted the provisions of the EITF on October 1, 2008 and the adoption of      EITF 06-04 did not have a material impact on its financial condition or      results of operations.                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | In      March 2007, the FASB ratified Emerging Issues Task Force Issue No. 06-10      “Accounting for Collateral Assignment Split-Dollar Life Insurance      Agreements” (EITF 06-10). EITF 06-10 provides guidance for determining a      liability for the postretirement benefit obligation as well as recognition      and measurement of the associated asset on the basis of the terms of the      collateral assignment agreement. EITF 06-10 is effective for fiscal years      beginning after December 15, 2007. Upon adoption of the accounting      guidance under EITF 06-10 as of October 1, 2008, the Company recognized a      liability of $388,000 in accordance with Accounting Principles Board      Opinion No. 12, Omnibus Opinion—1967 (“APB 12”) and recorded a      corresponding reduction to retained earnings, net of tax, representing the      cumulative effect of the change in accountingprinciple.             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | In      February 2008, the FASB issued FSP No. 157-2, Effective Date of FASB      Statement No. 157. The FSP delays the effective date of SFAS No. 157 for      nonfinancial assets and nonfinancial liabilities, except for items that      are recognized or disclosed at fair value in an entity’s financial      statements on a recurring basis (at least annually), to fiscal years      beginning after November 15, 2008.  The Company is currently      evaluating the impact of the FSP on its financial    statements.                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | In      May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally      Accepted Accounting Principles” (“SFAS No. 162”). SFAS No. 162 identifies      the sources of accounting principles and the framework for selecting the      principles to be used in the preparation of financial statements of      nongovernmental entities that are presented in conformity with GAAP. The      Company adopted the provisions of the statement on November 15, 2008 and      it did not have an impact on its financial condition or results of      operations as it did not change its current  practice.                                                                                                                                                                                                                                                                                                                                      |

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|   | In      September 2008, the FASB issued a Staff Position (“FSP”) No. FAS 133-1 and      FIN 45-4 “Disclosures about Credit Derivatives and Certain Guarantees: An      Amendment of FASB Statement No. 133 and FASB Interpretation No. 45”; and      “Clarification of the Effective Date of FASB Statement No. 161”,      respectively. The FSP is intended to improve disclosures about credit      derivatives by requiring more information about the potential adverse      effects of changes in credit risk on the financial position, financial      performance, and cash flows of the sellers of credit derivatives. It      amends SFAS No. 133, “Accounting for Derivative Instruments and Hedging      Activities”, to require disclosures by sellers of credit derivatives,      including credit derivatives embedded in hybrid instruments. This FSP      encourages that the amendments to SFAS No. 133 and FIN 45 be applied in      periods earlier than the effective date to facilitate comparisons at      initial adoption. In periods after initial adoption, this FSP requires      comparative disclosures only for periods ending subsequent to initial      adoption. The FSP is effective for reporting periods (annual or interim)      ending after November 15, 2008. The Company adopted the requirements of      FSP FAS 133-1 and FIN 45-4 in the quarter ended December 31, 2008 and the      adoption did not have an impact, on the Company’s financial condition or      results of operations.                                                                                  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      January 2009, FASB issued final FSP No. EITF 99-20-1, Amendments to the      Impairment Guidance of EITF Issue No. 99-20. The FSP amends the impairment      guidance in EITF Issue No. 99-20, “Recognition of Interest Income and      Impairment on Purchased Beneficial Interests and Beneficial Interests That      Continue to Be Held by a Transferor in Securitized Financial Assets,” to      achieve more consistent determination of whether an other-than-temporary      impairment (OTTI) has occurred. The FSP retains and emphasizes the OTTI      guidance and required disclosures in Statement 115, FSP FAS 115-1 and FAS      124-1, The Meaning of Other-Than-Temporary Impairment and Its Application      to Certain Investments, SEC Staff Accounting Bulletin (SAB) Topic 5M,      Other Than Temporary Impairment of Certain Investments in Debt and Equity      Securities.  The FSP is effective for interim and annual reporting      periods ending after December 15, 2008, and shall be applied      prospectively. Consistent with paragraph 15 of FSP FAS 115-1 and FAS      124-1, any other-than temporary impairment resulting from the application      of Statement 115 or Issue 99-20 shall be recognized in earnings equal to      the entire difference between the investment’s cost and its fair value at      the balance sheet date of the reporting period for which the assessment is      made . The Company adopted the provisions of the statement of position as      of December 31, 2008 and the adoption did not have an impact on its      financial condition or results of operations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 2.     | EARNINGS      PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Basic      earnings per common share is computed  by dividing net income      available to common shareholders by the weighted average number of shares      of common stock outstanding, net of any treasury shares, during the      period.  Diluted earnings per share is calculated by dividing net      income available to common shareholders by the weighted average number of      shares of common stock outstanding, net of any treasury shares, after      consideration of the potential dilutive effect of common stock      equivalents ("CSEs"), based upon the treasury stock method using an      average market price for the period.  As of December 31, 2008,      the Company did not issue and does not have any outstanding      CSEs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      calculated basic and diluted earnings per share are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|   |                                                                                                   |   | Quarter Ended December      31,                              |       |
|--------|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------|------------|
|   |                                                                                                   |   | 2008                                                         |       |   | 2007 |   |
|   |                                                                                                   |   |  (Dollars      in Thousands Except Per Share      Data) |       |
|   |                                                                                                   |   |                                                         |       |   |   |   |   |   |
|   | Net      (loss) income                                                                                 |   | $                                                            | (993       | ) |   | $ | 614 |   |
|   |                                                                                                   |   |                                                         |       |   |   |   |   |   |
|   | Weighted      average shares outstanding used in basic and diluted earnings per share      computation |   |                                                         | 10,814,956 |   |   |   | 11,057,143 |   |
|   |                                                                                                   |   |                                                         |       |   |   |   |   |   |
|   | (Loss)      earnings per share - basic and diluted                                                     |   | $                                                            | (0.09      | ) |   | $ | 0.06 |   |

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| 3.     | INVESTMENT      SECURITIES                                                                                         |
|--------|--------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                               |
|   | The      amortized cost and fair value of securities, with gross unrealized gains      and losses, are as follows: |

|   |                                                                                            |   | December      31, 2008      |    |
|--------|-------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|   |                                                                                            |   | (Dollars      in Thousands) |    |
|   |                                                                                            |   | AmortizedCost               |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   | Securities      held to maturity:                                                               |   |                        |    |   |   |   |   |   |   |   |   |   |
|   | Debt      securities - U.S. Treasury securities and securities of U.S. Government      agencies |   | $                           | 111,888 |   |   | $ | 1,186 |   |   | $ | (217 | ) |   | $ | 112,857 |   |
|   | Debt      securities - Municipal bonds                                                          |   |                        | 2,450   |   |   |   | 6 |   |   |   | — |   |   |   | 2,456 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity                                                          |   | $                           | 114,338 |   |   | $ | 1,192 |   |   | $ | (217 | ) |   | $ | 115,313 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale:                                                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Debt      securities - U.S. Treasury securities and securities of U.S. Government      agencies |   | $                           | 2,000   |   |   | $ | — |   |   | $ | (19 | ) |   | $ | 1,981 |   |
|   | FHLMC      preferred stock                                                                      |   |                        | 19      |   |   |   | — |   |   |   | — |   |   |   | 19 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale                                                        |   | $                           | 2,019   |   |   | $ | — |   |   | $ | (19 | ) |   | $ | 2,000 |   |

|   |                                                                                            |   | September      30, 2008     |    |
|--------|-------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|
|   |                                                                                            |   | AmortizedCost               |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   |                                                                                            |   | (Dollars      in Thousands) |    |
|   | Securities      held to maturity:                                                               |   |                        |    |   |   |   |   |   |   |   |   |   |
|   | Debt      securities - U.S. Treasury securities and securities of U.S. Government      agencies |   | $                           | 120,572 |   |   | $ | 112 |   |   | $ | (2,377 | ) |   | $ | 118,307 |   |
|   | Debt      securities - Municipal bonds                                                          |   |                        | 2,450   |   |   |   | — |   |   |   | (16 | ) |   |   | 2,434 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity                                                          |   | $                           | 123,022 |   |   | $ | 112 |   |   | $ | (2,393 | ) |   | $ | 120,741 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale:                                                             |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Debt      securities - U.S. Treasury securities and securities of U.S. Government      agencies |   | $                           | 3,000   |   |   | $ | — |   |   | $ | (124 | ) |   | $ | 2,876 |   |
|   | FNMA      stock                                                                                 |   |                        | — |   |   |   | 1 |   |   |   | — |   |   |   | 1 |   |
|   | FHLMC      preferred stock                                                                      |   |                        | 26      |   |   |   | 19 |   |   |   | — |   |   |   | 45 |   |
|   |                                                                                            |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale                                                        |   | $                           | 3,026   |   |   | $ | 20 |   |   | $ | (124 | ) |   | $ | 2,922 |   |

----

|   | The      following table shows the gross unrealized losses and related estimated      fair values of the Company’s investment securities, aggregated by      investment category and length of time that individual securities have      been in a continuous loss position at December 31,  2008: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                       |   | Less      than 12 months    |   |   | More      than 12 months |   |
|--------|--------------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|
|   |                                       |   | GrossUnrealizedLosses       |   |   | EstimatedFairValue       |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   |                                       |   | (Dollars      in Thousands) |   |
|   | Securities      held to maturity:          |   |                        |   |   |                     |   |   |   |   |   |   |   |
|   | U.S.      Treasury and Government agencies |   | $                           | 217    |   |                     | $      | 18,752 |   |   | $ | — |   |   | $ | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity     |   |                        | 217    |   |                     |   | 18,752 |   |   |   | — |   |   |   | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale:        |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | U.S.      Treasury and Government agencies |   |                        | 19     |   |                     |   | 1,981 |   |   |   | — |   |   |   | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale   |   |                        | 19     |   |                     |   | 1,981 |   |   |   | — |   |   |   | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                      |   | $                           | 236    |   |                     | $      | 20,733 |   |   | $ | — |   |   | $ | — |   |

|   | The      following table shows the gross unrealized losses and related estimated      fair values of the Company’s investment securities, aggregated by      investment category and length of time that individual securities have      been in a continuous loss position at September 30,  2008: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                       |   | Less      than 12 months    |   |   | More      than 12 months |   |
|--------|--------------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|
|   |                                       |   | GrossUnrealizedLosses       |   |   | EstimatedFairValue       |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   |                                       |   | (Dollars      in thousands) |   |
|   | Securities      held to maturity:          |   |                        |   |   |                     |   |   |   |   |   |   |   |
|   | U.S.      Treasury and Government agencies |   | $                           | 2,377  |   |                     | $      | 99,203 |   |   | $ | — |   |   | $ | — |   |
|   | Municipal      bonds                       |   |                        | 9      |   |                     |   | 1,280 |   |   |   | 7 |   |   |   | 343 |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity     |   |                        | 2,386  |   |                     |   | 100,483 |   |   |   | 7 |   |   |   | 343 |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale:        |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | U.S.      Treasury and Government agencies |   |                        | 124    |   |                     |   | 2,876 |   |   |   | — |   |   |   | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale   |   |                        | 124    |   |                     |   | 2,876 |   |   |   | — |   |   |   | — |   |
|   |                                       |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                      |   | $                           | 2,510  |   |                     | $      | 103,359 |   |   | $ | 7 |   |   | $ | 343 |   |

----

|   |                                  |   |   December      31, 2008 |    |
|--------|---------------------------------------|--------|------------------------------------|---------|
|   |                                  |   | Held      to Maturity              |    |   | Available      for Sale |   |
|   |                                  |   | AmortizedCost                      |    |   | EstimatedFairValue |   |   | AmortizedCost |   |   | EstimatedFairValue |   |
|   |                                  |   | (Dollars      in thousands)        |    |
|   | Due      within one year              |   | $                                  | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   | Due      after one through five years |   |                               | 5,165   |   |   |   | 5,267 |   |   |   | — |   |   |   | — |   |
|   | Due      after five through ten years |   |                               | 48,211  |   |   |   | 48,862 |   |   |   | — |   |   |   | — |   |
|   | Due      after ten years              |   |                               | 60,962  |   |   |   | 61,184 |   |   |   | 2,000 |   |   |   | 1,981 |   |
|   |                                  |   |                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                 |   | $                                  | 114,338 |   |   | $ | 115,313 |   |   | $ | 2,000 |   |   | $ | 1,981 |   |

----

|   |                                  |   |  September      30, 2008 |    |
|--------|---------------------------------------|--------|-------------------------------|---------|
|   |                                  |   | Held      to Maturity         |    |   | Available      for Sale |   |
|   |                                  |   | AmortizedCost                 |    |   | EstimatedFairValue |   |   | AmortizedCost |   |   | EstimatedFairValue |   |
|   |                                  |   | (Dollars      in thousands)   |    |
|   | Due      within one year              |   | $                             | — |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |
|   | Due      after one through five years |   |                          | 4,790   |   |   |   | 4,820 |   |   |   | — |   |   |   | — |   |
|   | Due      after five through ten years |   |                          | 51,084  |   |   |   | 50,311 |   |   |   | 1,000 |   |   |   | 991 |   |
|   | Due      after ten years              |   |                          | 67,148  |   |   |   | 65,610 |   |   |   | 2,000 |   |   |   | 1,885 |   |
|   |                                  |   |                          |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                 |   | $                             | 123,022 |   |   | $ | 120,741 |   |   | $ | 3,000 |   |   | $ | 2,876 |   |

| 4.     | MORTGAGE-BACKED      SECURITIES                           |
|--------|-----------------------------------------------------------|
|   |                                                      |
|   | Mortgage-backed      securities are summarized asfollows: |

|   |                                                                               |   | December      31, 2008      |   |
|--------|------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|   |                                                                               |   |                        |   |   | Gross |   |   | Gross |   |   | Estimated |   |
|   |                                                                               |   | Amortized                   |   |   | Unrealized |   |   | Unrealized |   |   | Fair |   |
|   |                                                                               |   | Cost                        |   |   | Gains |   |   | Losses |   |   | Value |   |
|   |                                                                               |   | (Dollars      in Thousands) |   |
|   | Securities      held to maturity                                                   |   |                        |   |   |   |   |   |   |   |   |   |   |
|   |   GNMA      pass-through certificates                                    |   | $                           | 36,603 |   |   | $ | 1,154 |   |   | $ | - |   |   | $ | 37,757 |   |
|   |   FNMA      pass-through certificates                                    |   |                        | 1,338  |   |   |   | 34 |   |   |   | - |   |   |   | 1,372 |   |
|   |   FHLMC      pass-through certificates                                   |   |                        | 1,491  |   |   |   | 11 |   |   |   | - |   |   |   | 1,502 |   |
|   |                                                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |        Total      securities held to maturity   |   | $                           | 39,432 |   |   | $ | 1,199 |   |   | $ | - |   |   | $ | 40,631 |   |
|   |                                                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                                                                               |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale                                                 |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |   GNMA                                                                   |   | $                           | 20,110 |   |   | $ | 1,001 |   |   | $ | - |   |   | $ | 21,111 |   |
|   |   FNMA                                                                   |   |                        | 18,312 |   |   |   | 476 |   |   |   | (40 | ) |   |   | 18,748 |   |
|   |   FHLMC                                                                  |   |                        | 1,841  |   |   |   | 25 |   |   |   | (3 | ) |   |   | 1,863 |   |
|   |   Non      agency                                                        |   |                        | 12,200 |   |   |   | - |   |   |   | (3,233 | ) |   |   | 8,967 |   |
|   |        Total      securities available for sale |   | $                           | 52,463 |   |   | $ | 1,502 |   |   | $ | (3,276 | ) |   | $ | 50,689 |   |

----

|   |                                     |   | September      30, 2008     |   |
|--------|------------------------------------------|--------|-----------------------------|--------|
|   |                                     |   | AmortizedCost               |   |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   |                                     |   | (Dollars      in thousands) |   |
|   | Securities      held to maturity         |   |                        |   |   |   |   |   |   |   |   |   |   |
|   | GNMA      pass-through certificates      |   | $                           | 37,438 |   |   | $ | 79 |   |   | $ | (536 | ) |   | $ | 36,981 |   |
|   | FNMA      pass-through certificates      |   |                        | 1,344  |   |   |   | — |   |   |   | (29 | ) |   |   | 1,315 |   |
|   | FHLMC      pass-through certificates     |   |                        | 1,499  |   |   |   | 16 |   |   |   | — |   |   |   | 1,515 |   |
|   |                                     |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity   |   | $                           | 40,281 |   |   | $ | 95 |   |   | $ | (565 | ) |   | $ | 39,811 |   |
|   |                                     |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                                     |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale       |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | GNMA                                     |   | $                           | 18,211 |   |   | $ | 198 |   |   | $ | (87 | ) |   | $ | 18,322 |   |
|   | FNMA                                     |   |                        | 18,054 |   |   |   | 274 |   |   |   | (73 | ) |   |   | 18,255 |   |
|   | FHLMC                                    |   |                        | 1,813  |   |   |   | 29 |   |   |   | — |   |   |   | 1,842 |   |
|   | Non      agency                          |   |                        | 15,048 |   |   |   | 32 |   |   |   | (1,315 | ) |   |   | 13,765 |   |
|   | Total      securities available for sale |   | $                           | 53,126 |   |   | $ | 533 |   |   | $ | (1,475 | ) |   | $ | 52,184 |   |

----

|   |                                     |   | Less      than 12 months    |   |   | More      than 12 months |   |
|--------|------------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|
|   |                                     |   | Gross                       |   |   | Estimated                |   |   | Gross |   |   | Estimated |   |
|   |                                     |   | Unrealized                  |   |   | Fair                     |   |   | Unrealized |   |   | Fair |   |
|   |                                     |   | Losses                      |   |   | Value                    |   |   | Losses |   |   | Value |   |
|   |                                     |   | (Dollars      in thousands) |   |
|   | Securities      available for sale:      |   |                        |   |   |                     |   |   |   |   |   |   |   |
|   |    GNMA                   |   | $                           | -      |   |                     | $      | - |   |   | $ | - |   |   | $ | - |   |
|   |    FNMA                   |   |                        | 40     |   |                     |   | 3,237 |   |   |   | - |   |   |   | - |   |
|   |    FHLMC                  |   |                        | 3      |   |                     |   | 678 |   |   |   | - |   |   |   | - |   |
|   |    Non      agency        |   |                        | 3,233  |   |                     |   | 6,538 |   |   |   | - |   |   |   | - |   |
|   |                                     |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   |                                     |   |                        |   |   |                     |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale |   | $                           | 3,276  |   |                     | $      | 10,453 |   |   | $ | - |   |   | $ | - |   |

|   |                                     |   |                        |    |   |                     |   |    |                  |   |   |               |   |
|--------|------------------------------------------|--------|-----------------------------|---------|--------|--------------------------|--------|---------|-----------------------|--------|--------|--------------------|--------|
|   |                                     |   | Less      than 12 months    |    |   | More      than 12 months |   |
|   |                                     |   | GrossUnrealizedLosses       |    |   | EstimatedFairValue       |   |    | GrossUnrealizedLosses |   |   | EstimatedFairValue |   |
|   | Securities      held to maturity:        |   | (Dollars      in thousands) |    |
|   | GNMA      pass-through certificates      |   | $                           | 279     |   |                     | $      | 22,488  |                  |   | $      | 257                |   |   | $ | 5,778 |   |
|   | FNMA      pass-through certificates      |   |                        | 29      |   |                     |   | 1,315   |                  |   |   | —            |   |   |   | — |   |
|   | FHLMC      pass-through certificates     |   |                        | — |   |                     |   | — |                  |   |   | —            |   |   |   | — |   |
|   |                                     |   |                        |    |   |                     |   |    |                  |   |   |               |   |   |   |   |   |
|   | Total      securities held to maturity   |   | $                           | 308     |   |                     | $      | 23,803  |                  |   | $      | 257                |   |   | $ | 5,778 |   |
|   |                                     |   |                        |    |   |                     |   |    |                  |   |   |               |   |   |   |   |   |
|   | Securities      available for sale:      |   |                        |    |   |                     |   |    |                  |   |   |               |   |   |   |   |   |
|   | GNMA                                     |   | $                           | 87      |   |                     | $      | 7,640   |                  |   | $      | —            |   |   | $ | — |   |
|   | FNMA                                     |   |                        | 73      |   |                     |   | 7,061   |                  |   |   | —            |   |   |   | — |   |
|   | FHLMC                                    |   |                        | — |   |                     |   | — |                  |   |   | —            |   |   |   | — |   |
|   | Non      agency                          |   |                        | 1,315   |   |                     |   | 8,276   |                  |   |   | —            |   |   |   | — |   |
|   |                                     |   |                        |    |   |                     |   |    |                  |   |   |               |   |   |   |   |   |
|   | Total      securities available for sale |   | $                           | 1,475   |   |                     | $      | 22,977  |                  |   | $      | —            |   |   | $ | — |   |

----

----

| 5.     | LOANS      RECEIVABLE                          |
|--------|------------------------------------------------|
|   |                                           |
|   | Loans      receivable consist of thefollowing: |

|                                         |   | December      31,2008       |    |   | September      30,2008 |   |
|----------------------------------------------|--------|-----------------------------|---------|--------|------------------------|--------|
|                                         |   | (Dollars      in Thousands) |    |
|                                         |   |                        |    |   |                   |   |
| One-to-four      family residential          |   | $                           | 197,066 |   |                   | $      | 191,344 |   |
| Multi-family      residential                |   |                        | 2,769   |   |                   |   | 2,801 |   |
| Commercial      real estate                  |   |                        | 20,143  |   |                   |   | 20,518 |   |
| Construction      and land development       |   |                        | 45,329  |   |                   |   | 42,634 |   |
| Commercial      business                     |   |                        | 730     |   |                   |   | 465 |   |
| Consumer                                     |   |                        | 719     |   |                   |   | 739 |   |
|                                         |   |                        |    |   |                   |   |   |   |
| Total      loans                             |   |                        | 266,756 |   |                   |   | 258,501 |   |
|                                         |   |                        |    |   |                   |   |   |   |
| Undisbursed      portion of loans-in-process |   |                        | (11,626 | )      |                   |   | (13,515 | ) |
| Deferred      loan costs, net                |   |                        | 624     |   |                   |   | 574 |   |
| Allowance      for loan losses               |   |                        | (1,904  | )      |                   |   | (1,591 | ) |
|                                         |   |                        |    |   |                   |   |   |   |
| Net                                          |   | $                           | 253,850 |   |                   | $      | 243,969 |   |

|                              |   | Three      Months Ended December 31, |    |
|-----------------------------------|--------|--------------------------------------|---------|
|                    |   | 2008                                 |    |   | 2007 |   |
|                              |   | (Dollars      in Thousands)     |    |
|                              |   |                                 |    |   |   |   |   |   |
| Balance,      beginning of period |   | $                                    | 1,591   |   |   | $ | 1,011 |   |
| Provision      for loan losses    |   |                                 | 313     |   |   |   | 75 |   |
| Charge-offs                       |   |                                 | — |   |   |   | — |   |
| Recoveries                        |   |                                 | — |   |   |   | — |   |
|                              |   |                                 |    |   |   |   |   |   |
| Balance,      end of period       |   | $                                    | 1,904   |   |   | $ | 1,086 |   |

|   | The      Company established a provision for loan losses of $313,000 for the      quarter ended December 31, 2008, compared to $75,000 for the comparable      quarter in 2007.  The primary factor in the increase of the loan      loss provision relates to a non-performing construction loan of $3.0      million reflecting the Company’s participation interest in a $14.9 million      construction loan to build a 40-unit high-rise condominium project in      Center City, Philadelphia which has experienced payment delinquencies.      Although the project is substantially completed, based on an updated      appraisal, the value of the real estate collateralizing the loan has      declined.  Another financial institution is the lead lender on      the loan. At December 31, 2008, the Company’s non-performing assets      totaled $8.1 million or 1.7% of total assets.  The      non-performing assets consisted of two construction loans (one of which is      the $3.0 million noted above) totaling $3.6 million, three commercial real      estate loans totaling $2.1 million, seven one-to four-family residential      mortgage lands totaling $0.9 million and one real estate owned property      totaling $1.5 million. The allowance for loan losses totaled $1.9 million,      or 0.7% of total loans and 28.9% of non-performing      loans. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Nonperforming      loans (which consist of nonaccrual loans and loans in excess of 90 days      delinquent and still accruing interest) at December 31, 2008 and September      30, 2008 amounted to approximately $6.6 million and $4.0 million,      respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | We      account for our impaired loans under generally accepted accounting      principles. An impaired loan generally is one for which it is probable,      based on current information, that the lender will not collect all the      amounts due under the contractual terms of the loan. Large groups of      smaller balance, homogeneous loans are collectively evaluated for      impairment. Loans collectively evaluated for impairment include smaller      balance commercial real estate loans, residential real estate loans and      consumer loans. These loans are evaluated as a group because they have      similar characteristics and performance experience. Larger commercial real      estate, construction and commercial business loans are individually      evaluated for impairment. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | As      of December 31, 2008 and September 30, 2008, the recorded investment in      loans that are considered to be impaired was as  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

|                                                              |   |   December      31,            |   |   |   September      30,  |   |
|-------------------------------------------------------------------|--------|-----------------------------------------------|--------|--------|--------------------------------------|--------|
|                                                              |   |   2008                         |   |   |   2008                |   |
|                                                              |   |   (Dollars      in thousands)  |   |
| Impaired      colateral-dependent loans with related allowance    |   | $                                             | 3,640  |   |                                 | $      | 3,640 |   |
| Impaired      colateral-dependent loans with no related allowance |   | $                                             | 1,587  |   |                                 | $      | — |   |

|   |                                                                                   |
|--------|----------------------------------------------------------------------------------------|
|   |                                                                                   |
|   | Other      data for impaired loans as of December 31, 2008 and 2007 is as      follow: |

|                                              |   | For      the Three Months EndedDecember      31, |    |
|---------------------------------------------------|--------|--------------------------------------------------|---------|
|                                              |   | 2008                                             |    |   | 2007 |   |
|                                              |   | (Dollars      in thousands)                      |    |
| Average      impaired loans                       |   | $                                                | 4,169   |   |   | $ | 2,022 |   |
| Interest      income recognized on impaired loans |   | $                                                | — |   |   | $ | — |   |

| 6.     | DEPOSITS                                                     |
|--------|--------------------------------------------------------------|
|   |                                                         |
|   | Deposits      consist of the following majorclassifications: |

|                                             |   |  December      31,2008   |    |   |  September      30,2008   |   |
|--------------------------------------------------|--------|-----------------------------------------|---------|--------|------------------------------------------|--------|
|                                             |   |                                    |    |   |                                     |   |   |   |   |   |   |   |
|                                             |   |   Amount                 |    |   |   Percent                 |   |   |   Amount  |   |   |   Percent  |   |
|                                             |   |  (Dollars      in Thousands)       |    |
| Money      market deposit accounts               |   | $                                       | 66,305  |   |                                     |   | 17.1 | % |   | $ | 66,484 |   |   |   | 17.6 | % |
| NOW      accounts                                |   |                                    | 27,563  |   |                                     |   | 7.1 |   |   |   | 27,335 |   |   |   | 7.3 |   |
| Passbook,      club and statement savings        |   |                                    | 67,137  |   |                                     |   | 17.3 |   |   |   | 67,921 |   |   |   | 18.0 |   |
| Certificates      maturing in six months or less |   |                                    | 100,234 |   |                                     |   | 25.9 |   |   |   | 93,141 |   |   |   | 24.7 |   |
| Certificates      maturing in more than six mont |   |                                    | 126,283 |   |                                     |   | 32.6 |   |   |   | 121,949 |   |   |   | 32.4 |   |
|                                             |   |                                    |    |   |                                     |   |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   | $                                       | 387,522 |   |                                     |   | 100.0 | % |   | $ | 376,830 |   |   |   | 100.0 | % |

|   | At      December 31, 2008 and September 30, 2008, the weighted average rate paid      on deposits was 3.31% and 3.34%,respectively. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

----

| 7.     | INCOME      TAXES                                                                               |
|--------|-------------------------------------------------------------------------------------------------|
|   |                                                                                            |
|   | Items      that gave rise to significant portions of deferred income taxes are as      follows: |

|   |                                                       |   | December      31,2008       |   |   | September      30,2008(As restated,See note 10) |   |
|--------|------------------------------------------------------------|--------|-----------------------------|--------|--------|-------------------------------------------------|--------|
|   |                                                       |   | (Dollars      in thousands) |   |
|   |  Deferred      tax assets:                            |   |                        |   |   |                                            |   |   |   |
|   | Unrealized      loss on available for sale securities      |   | $                           | 612    |   |                                            | $      | 356 |   |
|   | Deposit      premium                                       |   |                        | 204    |   |                                            |   | 216 |   |
|   | Allowance      for loan losses                             |   |                        | 699    |   |                                            |   | 594 |   |
|   | Real      estate owned expenses                            |   |                        | 102    |   |                                            |   | 99 |   |
|   | Nonaccrual      interest                                   |   |                        | 57     |   |                                            |   | 21 |   |
|   | Accrued      vacation                                      |   |                        | 38     |   |                                            |   | 34 |   |
|   | Capital      loss carryforward                             |   |                        | 1,873  |   |                                            |   | 1,873 |   |
|   | Impairment      loss                                       |   |                        | 979    |   |                                            |   | 247 |   |
|   | Split      dollar life insurance                           |   |                        | 132    |   |                                            |   | — |   |
|   | Post-retirement      benefits                              |   |                        | 199    |   |                                            |   | 200 |   |
|   | Employee      stock ownership plan                         |   |                        | 116    |   |                                            |   | 110 |   |
|   |                                                       |   |                        |   |   |                                            |   |   |   |
|   | Total      deferred tax assets                             |   |                        | 5,011  |   |                                            |   | 3,750 |   |
|   | Valuation      allowance                                   |   |                        | (2,386 | )      |                                            |   | (1,991 | ) |
|   | Total      deferred tax assets, net of valuation allowance |   |                        | 2,625  |   |                                            |   | 1,759 |   |
|   |                                                       |   |                        |   |   |                                            |   |   |   |
|   | Deferred      tax liabilities:                             |   |                        |   |   |                                            |   |   |   |
|   | Property                                                   |   |                        | 470    |   |                                            |   | 467 |   |
|   | Mortgage      servicing rights                             |   |                        | 5      |   |                                            |   | 6 |   |
|   | Deferred      loan fees                                    |   |                        | 212    |   |                                            |   | 195 |   |
|   |                                                       |   |                        |   |   |                                            |   |   |   |
|   | Total      deferred tax liabilities                        |   |                        | 687    |   |                                            |   | 668 |   |
|   |                                                       |   |                        |   |   |                                            |   |   |   |
|   | Net      deferred tax asset                                |   | $                           | 1,938  |   |                                            | $      | 1,091 |   |

----

| 8.     | COMMITMENTS      AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | At      December 31, 2008, the Company had $14.5 million in outstanding      commitments to originate fixed and variable-rate loans with market      interest rates ranging from 6.00% to 8.50%. At September 30, 2008, the      Company had $18.6 million in outstanding commitments to originate fixed      and variable-rate loans with market interest rates ranging from 5.50% to      8.50%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company also had commitments under unused lines of credit of $6.6 million      and $5.9 million at December 31, 2008 and September 30, 2008,      respectively, and letters of credit outstanding of $95,000 at both      December 31, 2008 and September 30, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Among      the Company’s contingent liabilities are exposures to limited recourse      arrangements with respect to the Company’s sales of whole loans and      participation interests. At December 31, 2008, the exposure, which      represents a portion of credit risk associated with the interests sold,      amounted to $64,000. This exposure is for the life of the related loans      and payables, on our proportionate share, as actual losses are      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company is involved in various legal proceedings occurring in the ordinary      course of business. Management of the Company, based on discussions with      litigation counsel, believes that such proceedings will not have a      material adverse effect on the financial condition, operations or Cash      Flows of the Company. There can be no assurance that any of the      outstanding legal proceedings to which the Company is a party will not be      decided adversely to the Company’s interests and have a material adverse      effect on the financial condition and operations of the      Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 9.     | FAIR      VALUE MEASUREMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Effective      October 1, 2008, the Company adopted FASB issued SFAS No. 157, Fair Value      Measurements. SFAS No. 157 defines fair value, establishes a framework for      measuring fair value, and expands disclosures about fair value      measurements. SFAS No. 157 does not require any new fair value      measurements. The definition of fair value retains the exchange price      notion in earlier definitions of fair value. SFAS No. 157 clarifies that      the exchange price is the price in an orderly transaction between market      participants to sell the asset or transfer the liability in the market in      which the reporting entity would transact for the asset or liability. The      definition focuses on the price that would be received to sell the asset      or paid to transfer the liability (an exit price), not the price that      would be paid to acquire the asset or received to assume the liability (an      entry price). SFAS No. 157 emphasizes that fair value is a market-based      measurement, not an entity-specific measurement. FSP No. 157-2, Effective      Date of FASB Statement No. 157, issued in February 2008, delays the      effective date of SFAS No. 157 for nonfinancial assets and nonfinancial      liabilities, except for items that are recognized or disclosed at fair      value in an entity’s financial statements on a recurring basis (at least      annually), to fiscal years beginning after November 15,    2008. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | In      October 2008, the FASB issued FSP FAS 157-3, “Determining the Fair Value      of a Financial Asset When the Market for That Asset Is Not Active” (“FSP      FAS 157-3”). The purpose of FSP FAS 157-3 was to clarify the application      of SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), for a market that      is not active. It also allows for the use of management’s internal      assumptions about future cash flows with appropriately risk-adjusted      discount rates when relevant observable market data does not exist. FSP      FAS 157-3 did not change the objective of SFAS No. 157 which is the      determination of the price that would be received in an orderly      transaction that is not a forced liquidation or distressed sale at the      measurement date. FSP FAS 157-3 was effective upon issuance, including      prior periods for which financial statements had not been issued. The      adoption of FSP FAS 157-3 had no impact on its financial condition or      results of operations.                                                                                                                                                                                                                                                                                                                                                                                                              |

----

|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Level      1 | Quoted      prices in active markets for identical assets or    liabilities.                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Level      2 | Observable      inputs other than Level 1 prices, such as quoted prices for similar assets      or liabilities; quoted prices in markets that are not active; or other      inputs that are observable or can be corroborated by observable market      data for substantially the full term of the assets or      liabilities.                                                                                                                                                   |
|   |         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Level      3 | Unobservable      inputs that are supported by little or no market activity and that are      significant to the fair value of the assets or liabilities. Level 3 assets      and liabilities include financial instruments whose value is determined      using pricing models, discounted cash flow methodologies, or similar      techniques, as well as instruments for which the determination of fair      value requires significant management judgment or    estimation. |

|                                                                     |   | Category      Used for Fair Value Measurement |   |
|--------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                     |   | Level      1                                  |   |   | Level      2 |   |   | Level      3 |   |
|                                                                     |   | (Dollars      in Thousands)                   |   |
|                                                                     |   |                                          |   |   |   |   |   |   |   |
| Assets:                                                                  |   |                                          |   |   |   |   |   |   |   |
| Securities      available for sale:                                      |   |                                          |   |   |   |   |   |   |   |
|   U.S.      Government agencies and mortgage-backed securities |   | $                                             | -      |   |   | $ | 43,703 |   |   | $ | - |   |
|   Non      agency mortgage-backed securities                   |   |                                          | -      |   |   |   | 8,043 |   |   |   | 924 |   |
|   FNMA      and FHLMC Preferred stock                          |   |                                          | 19     |   |   |   | - |   |   |   | - |   |
|            Total  |   | $                                             | 19     |   |   | $ | 51,746 |   |   | $ | 924 |   |

|                                                   |   |  Fair Value Measurements Using      Significant |   |
|--------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                   |   | Unobservable Inputs (Level      3)              |   |
|                                                   |   | Non      agency mortgage-backed      securities      |   |   |   | Total  |   |
|                                                   |   |  (Dollars      in Thousands)                    |   |
|                                                   |   |                                                 |   |   |   |   |   |   |
| Balance,      October 1, 2008:                         |   | $                                                    | 384    |   |   | $ | 384 |   |
| Total      losses, realized/unrealized                 |   |                                                 |   |   |   |   |   |   |
| Included      in earnings                              |   |                                                 | (151   | ) |   |   | (151 | ) |
| Included      in accumulated other comprehensive loss  |   |                                                 | (105   | ) |   |   | (105 | ) |
| Purchases,      maturities, prepayments and calls, net |   |                                                 | (15    | ) |   |   | (15 | ) |
| Transfers      into Level 3                            |   |                                                 | 811    |   |   |   | 811 |   |
| Total                                                  |   | $                                                    | 924    |   |   | $ | 924 |   |

----

|                  |   | At      December 31, 2008 |   |
|-----------------------|--------|---------------------------|--------|
| ($      in thousands) |   |  Total          |   |   |  Level      1 |   |   |  Level      2 |   |   |  Level      3 |   |
| Impaired      Loans   |   | $                         | 4,513  |   |   | $ | — |   |   | $ | — |   |   | $ | 4,513 |   |

|                                                                                                              |   |     |    |   |
|-------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|
|                                                                                                              |   | Impaired |    |
| ($      in thousands)                                                                                             |   | Loans    |    |
| Balance      at October 1, 2008                                                                                   |   | $        | 3,111   |   |
| Total      net gains                                                                                              |   |     | — |   |
| Net      transfers in/(out) Level 3                                                                               |   |     | 1,402   |   |
| Balance      at December 31, 2008                                                                                 |   | $        | 4,513   |   |
| Net      realized gains included in net income for the year to date relating to      sales of repossessed assets. |   | $        | — |   |

----

|                                       |   |  September 30,      2008     |    |
|--------------------------------------------|--------|-----------------------------------|---------|
|                                       |   | As                                |    |   |   |   |   |   |   |   |
|                                       |   |  Previously                  |    |   |   |   |   |  As |   |
|                                       |   | Reported                          |    |   |  Adjustment |   |   |  Restated |   |
| STATEMENT      OF FINANCIAL CONDITION      |   |  (Dollars      in thousands) |    |
| Deferred      income taxes - net           |   | $                                 | 891     |   |   | $ | 200 |   |   | $ | 1,091 |   |
| Total      assets                          |   |                              | 489,337 |   |   |   | 200 |   |   |   | 489,537 |   |
| Accounts      payable and accrued expenses |   |                              | 6,581   |   |   |   | 588 |   |   |   | 7,169 |   |
| Total      liabilities                     |   |                              | 420,462 |   |   |   | 588 |   |   |   | 421,050 |   |
| Retained      earnings                     |   |                              | 37,676  |   |   |   | (388 | ) |   |   | 37,288 |   |
| Total      stockholders' equity            |   |                              | 68,875  |   |   |   | (388 | ) |   |   | 68,487 |   |

|                                      |   |  Three      months ended     |   |
|-------------------------------------------|--------|-----------------------------------|--------|
|                                      |   |  December      31, 2007      |   |
|                                      |   | As                                |   |   |   |   |   |   |   |
|                                      |   | Previously                        |   |   |   |   |   | As |   |
|                                      |   | Reported                          |   |   | Adjustment |   |   | Restated |   |
| Consolidated      Statement of Operations |   | (Dollars      in thousands)  |   |
| Salaries      and employee benefits       |   | $                                 | 1,153  |   |   | $ | (6 | ) |   | $ | 1,147 |   |
| Total      non-interest expense           |   |                              | 2,016  |   |   |   | (6 | ) |   |   | 2,010 |   |
| Income      before taxes                  |   |                              | 898    |   |   |   | 6 |   |   |   | 904 |   |
| Deferred      tax benefit                 |   |                              | (43    | ) |   |   | 2 |   |   |   | (41 | ) |
| Total      income tax                     |   |                              | 288    |   |   |   | 2 |   |   |   | 290 |   |
| Net      income                           |   |                              | 610    |   |   |   | 4 |   |   |   | 614 |   |
|                                      |   |                              |   |   |   |   |   |   |   |   |   |   |

----

|                                                  |   |  Three      months ended           |   |
|-------------------------------------------------------|--------|-----------------------------------------|--------|
|                                                  |   |  December      31, 2007            |   |
|                                                  |   | As                                      |   |   |   |   |   |   |   |
|                                                  |   | Previously                              |   |   |   |   |   | As |   |
|                                                  |   | Reported                                |   |   | Adjustment |   |   | Restated |   |
| Consolidated      Statement of Cash Flows             |   |   (Dollars      in thousands) |   |
| Net      income                                       |   |                                    | 610    |   |   |   | 4 |   |   |   | 614 |   |
| Deferred      Income Tax Benefit                      |   |                                    | (43    | ) |   |   | 2 |   |   |   | (41 | ) |
| Changes      in accounts payable and accrued expenses |   |                                    | (473   | ) |   |   | (6 | ) |   |   | (479 | ) |

----

----

----

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Level      1 - Quoted prices (unadjusted) in active markets for identical assets or      liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ● | Level      2 - Inputs other than quoted prices included within Level 1 that are      observable for the asset or liability, either directly or indirectly.      Level 2 inputs include: quoted prices for similar assets or liabilities in      active markets; quoted prices for identical or similar assets or      liabilities in markets that are not active; inputs other than quoted      prices that are observable for the asset or liability; and inputs that are      derived principally from or corroborated by observable market data by      correlation or other means. |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ● | Level      3 - Unobservable inputs that are supported by little or no market activity      and that are significant to the fair value of the assets or liabilities.      Level 3 assets and liabilities include financial instruments whose value      is determined using pricing models, discounted cash flow methodologies, or      similar techniques, as well as instruments for which the determination of      fair value requires significant management judgment or      estimation.                                                                                          |

----

----

----

|                                                  |   | Three    Months                   |                                   |
|-------------------------------------------------------|--------|-----------------------------------|----------------------------------------|
|                                                  |   |  Ended      December 31,     |                                   |
|                                                  |   |  2008                        |                                   |   | 2007  |   |
|                                                  |   |                              |  (as      restated - see note 10) |   |
|                                                  |   |  Average                     |                                   |   |   |   |   |  Average |   |   |  Average |   |   |   |   |   |  Average |   |
|                                                  |   |  Balance                     |                                   |   |  Interest |   |   |  Yield/Rate |   |   |  Balance |   |   |  Interest |   |   |  Yield/Rate |   |
|                                                  |   |                              |                                   |
|                                                  |   |  (Dollars      in Thousands) |                                   |
| Interest-earning      assets:                         |   |                              |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment      securities                            |   | $                                 | 130,742                                |   |   | $ | 1,727 |   |   |   | 5.28 | % |   | $ | 172,485 |   |   | $ | 2,235 |   |   |   | 5.18 | % |
| Mortgage-backed      securities (3)                   |   |                              | 92,025                                 |   |   |   | 1,756 |   |   |   | 7.63 |   |   |   | 54,574 |   |   |   | 724 |   |   |   | 5.31 |   |
| Loans      receivable(1)                              |   |                              | 249,564                                |   |   |   | 3,727 |   |   |   | 5.97 |   |   |   | 220,893 |   |   |   | 3,635 |   |   |   | 6.58 |   |
| Other      interest-earning assets (4)                |   |                              | 7,743                                  |   |   |   | 17 |   |   |   | 0.88 |   |   |   | 8,406 |   |   |   | 67 |   |   |   | 3.19 |   |
| Total      interest-earning assets                    |   |                              | 480,074                                |   |   |   | 7,227 |   |   |   | 6.02 |   |   |   | 456,358 |   |   |   | 6,661 |   |   |   | 5.84 |   |
| Cash      and non-interest-bearing balances           |   |                              | 3,538                                  |   |   |   |   |   |   |   |   |   |   |   | 4,034 |   |   |   |   |   |   |   |   |   |
| Other      non-interest-earning assets                |   |                              | 14,008                                 |   |   |   |   |   |   |   |   |   |   |   | 12,616 |   |   |   |   |   |   |   |   |   |
| Total      assets                                     |   | $                                 | 497,620                                |   |   |   |   |   |   |   |   |   |   | $ | 473,008 |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                    |   |                              |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings      accounts                                 |   | $                                 | 65,007                                 |   |   |   | 442 |   |   |   | 2.72 |   |   | $ | 67,486 |   |   |   | 376 |   |   |   | 2.23 |   |
| Money      market deposit and NOW accounts            |   |                              | 92,465                                 |   |   |   | 606 |   |   |   | 2.62 |   |   |   | 90,879 |   |   |   | 800 |   |   |   | 3.52 |   |
| Certificates      of deposit                          |   |                              | 221,264                                |   |   |   | 2,109 |   |   |   | 3.81 |   |   |   | 193,898 |   |   |   | 2,316 |   |   |   | 4.78 |   |
| Total      deposits                                   |   |                              | 378,736                                |   |   |   | 3,157 |   |   |   | 3.33 |   |   |   | 352,263 |   |   |   | 3,492 |   |   |   | 3.97 |   |
| Advances      from Federal Home Loan Bank             |   |                              | 43,064                                 |   |   |   | 303 |   |   |   | 2.81 |   |   |   | 30,658 |   |   |   | 400 |   |   |   | 5.22 |   |
| Advances      from borrowers for taxes and insurance  |   |                              | 1,589                                  |   |   |   | 2 |   |   |   | 0.50 |   |   |   | 1,462 |   |   |   | 2 |   |   |   | 0.55 |   |
| Total      interest-bearing liabilities               |   |                              | 423,389                                |   |   |   | 3,462 |   |   |   | 3.27 |   |   |   | 384,383 |   |   |   | 3,894 |   |   |   | 4.05 |   |
| Non-interest-bearing      liabilities:                |   |                              |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts             |   |                              | 4,016                                  |   |   |   |   |   |   |   |   |   |   |   | 4,883 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                |   |                              | 2,907                                  |   |   |   |   |   |   |   |   |   |   |   | 3,122 |   |   |   |   |   |   |   |   |   |
| Total      liabilities                                |   |                              | 430,312                                |   |   |   |   |   |   |   |   |   |   |   | 392,388 |   |   |   |   |   |   |   |   |   |
| Stockholders’      equity                       |   |                              | 67,308                                 |   |   |   |   |   |   |   |   |   |   |   | 81,020 |   |   |   |   |   |   |   |   |   |
| Total      liabilities and Stockholders’ equity |   | $                                 | 497,620                                |   |   |   |   |   |   |   |   |   |   | $ | 473,408 |   |   |   |   |   |   |   |   |   |
| Net      interest-earning assets                      |   | $                                 | 56,685                                 |   |   |   |   |   |   |   |   |   |   | $ | 71,975 |   |   |   |   |   |   |   |   |   |
| Net      interest income; interest rate spread        |   |                              |                                   |   |   | $ | 3,765 |   |   |   | 2.75 | % |   |   |   |   |   | $ | 2,767 |   |   |   | 1.79 | % |
| Net      interest margin(2)                           |   |                              |                                   |   |   |   |   |   |   |   | 3.14 | % |   |   |   |   |   |   |   |   |   |   | 2.43 | % |
|                                                  |   |                              |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Average      interest-earning assets to average       |   |                              |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| interest-bearing      liabilities                     |   |                              |                                   |   |   |   | 113.39 | % |   |   |   |   |   |   |   |   |   |   | 118.72 | % |   |   |   |   |

----

|   |                                                                                                                                                           |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | Includes      non-accrual loans. Calculated net of unamortized deferred fees,      undisbursed portion of loans-in-process and allowance for loan      losses. |
|   |                                                                                                                                                           |
| (2)    | Equals      net interest income divided by average interest-earning      assets.                                                                               |

----

| (3)    | The      increase in yield of the Company’s MBS portfolio is primarily a result of      changes in portoflio composition as well as in estimate of prepayment      speed assumptions. The Company employs the effective yield method of      accounting, which requires retrospective adjustments to the yield on the      Company’s assets, which in turn directly affects earnings. The Company      estimates yield at the time of purchase of each asset. To the extent      prepayment speeds assumptions differ from Company’s estimates at the time      of purchase, the Company is required to adjust the yield on that asset as      well as the amortization of premium or discount taken to date on the      asset. This cumulative “true up” of the amortization is taken through      earnings in the current period. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| (4)    | Yield      substantially decreased due to declining federal reserve overnight      investment rates over the twelve monthperiod.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

----

----

|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |
|--------|---------------------------------------------------|--------|-------------------|--------|--------|------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|--------|
|   |                                              |   | Actual      Ratio |   |   | Required      forCapital      AdequacyPurposes |   | To      BeWell      CapitalizedUnder      PromptCorrective      ActionProvisions |
|   | December      31, 2008:                           |   |              |   |   |                                           |   |                                                                             |   |   |
|   | Tier      1 capital (to average assets)           |   |              |   |   |                                           |   |                                                                             |   |   |
|   | The      Company                                  |   |              | 13.55  | %      |                                           |   | 4.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 12.57  | %      |                                           |   | 4.0                                                                              | %      |   |   | 5.0 | % |
|   | Tier      1 capital (to risk weighted assets)     |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | The      Company                                  |   |              | 29.78  | %      |                                           |   | 4.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 27.63  | %      |                                           |   | 4.0                                                                              | %      |   |   | 6.0 | % |
|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | Total      capital (to risk weighted assets)      |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | The      Company                                  |   |              | 30.63  | %      |                                           |   | 8.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 28.47  | %      |                                           |   | 8.0                                                                              | %      |   |   | 10.0 | % |
|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | September      30, 2008 (as revised see Note 10): |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | Tier      1 capital (to average assets)           |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | The      Company                                  |   |              | 14.49  | %      |                                           |   | 4.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 13.14  | %      |                                           |   | 4.0                                                                              | %      |   |   | 5.0 | % |
|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | Tier      1 capital (to risk weighted assets)     |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | The      Company                                  |   |              | 31.20  | %      |                                           |   | 4.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 28.74  | %      |                                           |   | 4.0                                                                              | %      |   |   | 6.0 | % |
|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | Total      capital (to risk weighted assets)      |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |
|   | The      Company                                  |   |              | 31.92  | %      |                                           |   | 8.0                                                                              | %      |   |   | N/A |   |
|   | The      Bank                                     |   |              | 29.46  | %      |                                           |   | 8.0                                                                              | %      |   |   | 10.0 | % |
|   |                                              |   |              |   |   |                                           |   |                                                                             |   |   |   |   |   |

----

|  |    |                                                                                                                                          |
|------------------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|             | ● | we      have reduced our exposure in callable agency bonds and increased our      portfolio of agency issued mortgage-backed securities;  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)                        |   | $                           | 6,982  |   |           | $      | 6,997   |            |   | $      | 6,996           |   |   | $              | 1,165   |   |   | $      | 94,217 |   |   | $ | 116,357 |   |
| Mortgage-backed      securities                      |   |                        | 13,231 |   |           |   | 24,969  |            |   |   | 20,710          |   |   |           | 15,184  |   |   |   | 17,801 |   |   |   | 91,895 |   |
| Loans      receivable(3)                             |   |                        | 32,159 |   |           |   | 62,877  |            |   |   | 75,293          |   |   |           | 41,451  |   |   |   | 43,350 |   |   |   | 255,130 |   |
| Other      interest earning assets                   |   |                        | 11,272 |   |           |   | -       |            |   |   | -               |   |   |           | -       |   |   |   | - |   |   |   | 11,272 |   |
| Total      interest-earning assets                   |   | $                           | 63,644 |   |           | $      | 94,843  |            |   | $      | 102,999         |   |   | $              | 57,800  |   |   | $      | 155,368 |   |   | $ | 474,654 |   |
|                                                 |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                   |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Savings      accounts                                |   | $                           | 133    |   |           | $      | 164     |            |   | $      | 39,352          |   |   | $              | 13,117  |   |   | $      | 13,117 |   |   | $ | 65,883 |   |
| Money      market deposit and NOW accounts           |   |                        | -      |   |           |   | 33,150  |            |   |   | 48,269          |   |   |           | 5,040   |   |   |   | 5,040 |   |   |   | 91,499 |   |
| Certificates      of deposits                        |   |                        | 40,136 |   |           |   | 121,727 |            |   |   | 38,359          |   |   |           | 26,295  |   |   |   | - |   |   |   | 226,517 |   |
| Advances      from Federal Home Loan Bank            |   |                        | 13,023 |   |           |   | 70      |            |   |   | 19,192          |   |   |           | 66      |   |   |   | 340 |   |   |   | 32,691 |   |
| Advances      from borrowers for taxes and insurance |   |                        | 1,932  |   |           |   | -       |            |   |   | -               |   |   |           | -       |   |   |   | - |   |   |   | 1,932 |   |
| Total      interest-bearing liabilities              |   | $                           | 55,224 |   |           | $      | 155,111 |            |   | $      | 145,172         |   |   | $              | 44,518  |   |   | $      | 18,497 |   |   | $ | 418,522 |   |
|                                                 |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Interest-earning      assets                         |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| less      interest-bearing liabilities               |   | $                           | 8,420  |   |           | $      | (60,268 | )               |   | $      | (42,173         | )      |   | $              | 13,282  |   |   | $      | 136,871 |   |   | $ | 56,132 |   |
|                                                 |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate sensitivity gap (4)    |   | $                           | 8,420  |   |           | $      | (51,848 | )               |   | $      | (94,021         | )      |   | $              | (80,739 | )      |   | $      | 56,132 |   |   |   |   |   |
|                                                 |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate gap as a               |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| percentage      of total assets at December 31, 2008 |   |                        | 1.71   | %      |           |   | -10.54  | %               |   |   | -19.12          | %      |   |           | -16.42  | %      |   |   | 11.41 | % |   |   |   |   |
|                                                 |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| Cumulative      interest-earning assets              |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| as      a percentage of cumulative interest-         |   |                        |   |   |           |   |    |            |   |   |            |   |   |           |    |   |   |   |   |   |   |   |   |   |
| bearing      liabilities at December 31, 2008        |   |                        | 115.25 | %      |           |   | 75.35   | %               |   |   | 73.55           | %      |   |           | 79.82   | %      |   |   | 113.41 | % |   |   |   |   |

| (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 the undisbursed portion of      loans-in-process. |
|   |                                                                                                                                                                                                                                           |
| (4)    | Cumulative      interest-rate sensitivity gap represents the difference between      interest-earning assets and interest-bearing  liabilities.                                                                                                |

----

|                                                                   |   |                     |                        |                                           |          |          |           |   |    |   |   |   |   |   |    |   |
|------------------------------------------------------------------------|--------|--------------------------|-----------------------------|------------------------------------------------|---------------|---------------|----------------|--------|---------|--------|--------|--------|--------|--------|---------|--------|
| Change      inInterest      RatesIn      Basis Points(Rate      Shock) |   | Net      Portfolio Value |                        | NPV      as % of PortfolioValue      of Assets |          |
|                                                                   | Amount |                     | $      Change               |                                           | %      Change |          | NPV      Ratio |   | Change  |   |
|                                                                   |   |                     | (Dollars      in Thousands) |                                           |
|                                                                   |   |                     |                        |                                           |          |          |           |   |    |   |   |   |   |   |    |   |
| 300                                                                    |   | $                        | 32,960                      |                                           | $             |  (43,202 | )              |   | (56.72  | )%     |   | 7.47   | %      |   | (7.71   | )%     |
| 200                                                                    |   |                     | 46,299                      |                                           |          | (29,863       | )              |   | (39.21  | )%     |   | 10.07  | %      |   | (5.11   | )%     |
| 100                                                                    |   |                     | 61,076                      |                                           |          | (15,086       | )              |   | (19.81  | )%     |   | 12.71  | %      |   | (2.47   | )%     |
| Static                                                                 |   |                     | 76,162                      |                                           |          | —       |           |   | — |   |   | 15.18  | %      |   | — |   |
| (100)                                                                  |   |                     | 77,333                      |                                           |          | 1,171         |           |   | 1.54    | %      |   | 15.19  | %      |   | 0.01    | %      |
| (200)                                                                  |   |                     | 76,419                      |                                           |          | 257           |           |   | 0.34    | %      |   | 14.85  | %      |   | (0.33   | )%     |
| (300)                                                                  |   |                     | 77,154                      |                                           |          | 992           |           |   | 1.30    | %      |   | 14.85  | %      |   | (0.33   | )%     |
|                                                                   |   |                     |                        |                                           |          |          |           |   |    |   |   |   |   |   |    |   |

----

----

|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (a)    | Not      applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (b)    | Not      applicable                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | (c)    | There      were no repurchases of common stock by the Company during the quarter      ended December 31, 2008. During January 2009, Prudential Mutual Holding      Company (the “MHC”) and the Company each announced approval of a stock      repurchase plan of up to an additional 198,000 shares (for a total of      396,000 shares), or approximately 5% (10% in the aggregate) of the      Company’s outstanding stock, held by other than the  MHC. |

|   |                                                                                                                                                                         |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1.     | The      proposal to adopt the 2008 Stock Option Plan was approved by the      affirmative vote of more than a majority of the total votes cast at the      special meeting. |

| For       |   | Against |   | Abstain |
|-----------|--------|---------|--------|---------|
| 9,883,322 |   | 227,251 |   | 1,410   |

----

| 2. | The      proposal to adopt the 2008 Recognition and Retention Plan and Trust      Agreement was approved by the affirmative vote of more than a majority of      the total votes cast at the specialmeeting. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| For       |   | Against |   | Abstain |
|-----------|--------|---------|--------|---------|
| 9,504,940 |   | 605,358 |   | 1,685   |

|   | There      were no broker non-votes at the specialmeeting |
|--------|-----------------------------------------------------------|

----

|             |   |                                                                      |
|------------------|--------|---------------------------------------------------------------------------|
| Exhibit      No. |   | Description                                                               |   |
| 10.1             |   | Directors’      Compensation – fiscal 2009                    |
| 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      1350Certifications                                           |

----

|   |                   |                                       |   |
|--------|------------------------|--------------------------------------------|--------|
| Date:  | February      17, 2009 | By:                                        | /s/    |    |
|   |                   | Thomas      A. Vento                       |
|   |                   | President      and Chief Executive Officer |
|   |                   |                                       |   |
| Date:  | February      17, 2009 | By:                                        | /s/    |   |
|   |                   | Joseph      R. Corrato                     |
|   |                   | Executive      Vice President and Chief    |
|   |                   | Financial      Officer                     |