----

----

|   |                                                                                                                                                                                                                                           |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| x      | QUARTERLY      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934For      the quarterly period ended December 31, 2009                                                                                         |
| OR     |
| o      | TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF      1934For      the transition period      from          toCommission      file number: 000-51214 |

|                                                                |   |                                      |
|---------------------------------------------------------------------|--------|-------------------------------------------|
| Pennsylvania                                                        |   | 68-0593604                                |
| (State      or Other Jurisdiction of Incorporation or Organization) |   | (I.R.S.      Employer Identification No.) |
| 1834      Oregon AvenuePhiladelphia,      Pennsylvania              |   | 19145(Zip      Code)                      |
| (Address      of Principal Executive Offices)                       |   |                                      |

|   | o Yes        o No |
|--------|---------------------------------------|

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

|   |                                  |
|--------|---------------------------------------|
|   | o Yes        x      No |

----

|         |                        |                                                                                                                                                                     | PAGE   |
|--------------|-----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|         |                        |                                                                                                                                                                     |   |   |
| PART      I  | FINANCIAL      INFORMATION: |                                                                                                                                                                     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      1.                | Consolidated      Financial Statements                                                                                                                                   |   |   |
|         |                        |                                                                                                                                                                     |   |   |
|         |                        | Unaudited      Consolidated Statements of Financial Condition December 31, 2009 and      September 30, 2009                                                              | 2      |   |
|         |                        |                                                                                                                                                                     |   |   |
|         |                        | Unaudited      Consolidated Statements of Operations for the Three Months Ended December      31, 2009 and 2008                                                          | 3      |   |
|         |                        |                                                                                                                                                                     |   |   |
|         |                        | Unaudited      Consolidated Statements of Changes in Stockholders’ Equity and      Comprehensive Income for the Three Months Ended December 31, 2009 and      2008 | 4      |   |
|         |                        |                                                                                                                                                                     |   |   |
|         |                        | Unaudited      Consolidated Statements of Cash Flows for the Three Months Ended December      31, 2009 and 2008                                                          | 5      |   |
|         |                        |                                                                                                                                                                     |   |   |
|         |                        | Notes      to Unaudited Consolidated Financial Statements                                                                                                                | 6      |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      2.                | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations                                                                    | 24     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      3.                | Quantitative      and Qualitative Disclosures About Market Risk                                                                                                          | 36     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | 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                                                                                                                                     | 38     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      4.                | Submission      of Matters to a Vote of Security Holders                                                                                                                 | 38     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      5.                | Other      Information                                                                                                                                                   | 38     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | Item      6.                | Exhibits                                                                                                                                                                 | 38     |   |
|         |                        |                                                                                                                                                                     |   |   |
|         | SIGNATURES                  | 39                                                                                                                                                                       |   |

----

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

|                                                                                                                                                               |   | December      31,2009       |    |   | September      30,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|------------------------|--------|
|                                                                                                                                                               |   | (Dollars      in Thousands) |    |
|                                                                                                                                                               |   |                        |    |   |                   |   |
| ASSETS                                                                                                                                                             |   |                        |    |   |                   |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |
| Cash      and amounts due from depository institutions                                                                                                             |   | $                           | 6,759   |   |                   | $      | 4,088 |   |
| Interest-bearing      deposits                                                                                                                                     |   |                        | 5,116   |   |                   |   | 9,581 |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| Total      cash and cash equivalents                                                                                                                               |   |                        | 11,875  |   |                   |   | 13,669 |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| Investment      and mortgage-backed securities held to maturity (estimated fair      value—December 31, 2009, $147,450; September 30, 2009,      $161,968)   |   |                        | 148,271 |   |                   |   | 160,126 |   |
| Investment      and mortgage-backed securities available for sale (amortized cost—December      31, 2009, $66,143; September 30, 2009, $63,000)              |   |                        | 65,081  |   |                   |   | 62,407 |   |
| Loans      receivable—net of allowance for loan losses (December 31, 2009, $2,867;      September 30, 2009, $2,732)                                          |   |                        | 256,002 |   |                   |   | 256,694 |   |
| Accrued      interest receivable:                                                                                                                                  |   |                        |    |   |                   |   |   |   |
| Loans      receivable                                                                                                                                              |   |                        | 1,429   |   |                   |   | 1,419 |   |
| Mortgage-backed      securities                                                                                                                                    |   |                        | 385     |   |                   |   | 390 |   |
| Investment      securities                                                                                                                                         |   |                        | 1,410   |   |                   |   | 1,496 |   |
| Real      estate owned                                                                                                                                             |   |                        | 4,059   |   |                   |   | 3,622 |   |
| Federal      Home Loan Bank stock—at cost                                                                                                                    |   |                        | 3,545   |   |                   |   | 3,545 |   |
| Office      properties and equipment—net                                                                                                                     |   |                        | 1,966   |   |                   |   | 1,992 |   |
| Bank      owned life insurance                                                                                                                                     |   |                        | 5,839   |   |                   |   | 5,786 |   |
| Prepaid      expenses and other assets                                                                                                                             |   |                        | 3,882   |   |                   |   | 1,272 |   |
| Deferred      tax asset-net                                                                                                                                        |   |                        | 2,475   |   |                   |   | 2,343 |   |
| TOTAL      ASSETS                                                                                                                                                  |   | $                           | 506,219 |   |                   | $      | 514,761 |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| LIABILITIES      AND STOCKHOLDERS’ EQUITY                                                                                                                    |   |                        |    |   |                   |   |   |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| LIABILITIES:                                                                                                                                                       |   |                        |    |   |                   |   |   |   |
| Deposits:                                                                                                                                                          |   |                        |    |   |                   |   |   |   |
| Noninterest-bearing                                                                                                                                                |   | $                           | 2,269   |   |                   | $      | 2,848 |   |
| Interest-bearing                                                                                                                                                   |   |                        | 418,859 |   |                   |   | 429,526 |   |
| Total      deposits                                                                                                                                                |   |                        | 421,128 |   |                   |   | 432,374 |   |
| Advances      from Federal Home Loan Bank                                                                                                                          |   |                        | 23,648  |   |                   |   | 19,659 |   |
| Accrued      interest payable                                                                                                                                      |   |                        | 755     |   |                   |   | 3,463 |   |
| Advances      from borrowers for taxes and insurance                                                                                                               |   |                        | 1,810   |   |                   |   | 1,214 |   |
| Accounts      payable and accrued expenses                                                                                                                         |   |                        | 2,417   |   |                   |   | 1,703 |   |
| Accrued      dividend payable                                                                                                                                      |   |                        | 516     |   |                   |   | 491 |   |
| Total      liabilities                                                                                                                                             |   |                        | 450,274 |   |                   |   | 458,904 |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| 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 - 10,331,866 at December 31, 2009 and September 30,      2009 |   |                        | 126     |   |                   |   | 126 |   |
| Additional      paid-in capital                                                                                                                                    |   |                        | 53,091  |   |                   |   | 52,938 |   |
| Unearned      ESOP shares                                                                                                                                          |   |                        | (3,401  | )      |                   |   | (3,457 | ) |
| Treasury      stock, at cost: 2,231,884 shares at December 31, 2009 and September 30,      2009                                                                    |   |                        | (28,652 | )      |                   |   | (28,652 | ) |
| Retained      earnings                                                                                                                                             |   |                        | 35,482  |   |                   |   | 35,293 |   |
| Accumulated      other comprehensive loss                                                                                                                          |   |                        | (701    | )      |                   |   | (391 | ) |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| Total      stockholders’ equity                                                                                                                              |   |                        | 55,945  |   |                   |   | 55,857 |   |
|                                                                                                                                                               |   |                        |    |   |                   |   |   |   |
| TOTAL      LIABILITIES AND STOCKHOLDERS’ EQUITY                                                                                                              |   | $                           | 506,219 |   |                   | $      | 514,761 |   |

----

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

|                                                                             |   | Three      Months EndedDecember      31,             |   |
|----------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|
|                                                                             |   | 2009                                                 |   |   | 2008 |   |
|                                                                             |   |                                                 |   |
|                                                                             |   | (Dollars      in Thousands Except Per Share Amounts) |   |
| INTEREST      INCOME:                                                            |   |                                                 |   |   |   |   |
| Interest      on loans                                                           |   | $                                                    | 3,751  |   |   | $ | 3,727 |   |
| Interest      on mortgage-backed securities                                      |   |                                                 | 1,223  |   |   |   | 1,756 |   |
| Interest      and dividends on investments                                       |   |                                                 | 1,492  |   |   |   | 1,744 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      interest income                                                       |   |                                                 | 6,466  |   |   |   | 7,227 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| INTEREST      EXPENSE:                                                           |   |                                                 |   |   |   |   |   |   |
| Interest      on deposits                                                        |   |                                                 | 2,272  |   |   |   | 3,159 |   |
| Interest      on borrowings                                                      |   |                                                 | 217    |   |   |   | 303 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      interest expense                                                      |   |                                                 | 2,489  |   |   |   | 3,462 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| NET      INTEREST INCOME                                                         |   |                                                 | 3,977  |   |   |   | 3,765 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| PROVISION      FOR LOAN LOSSES                                                   |   |                                                 | 135    |   |   |   | 313 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| NET      INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                         |   |                                                 | 3,842  |   |   |   | 3,452 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| NON-INTEREST      INCOME (LOSS):                                                 |   |                                                 |   |   |   |   |   |   |
| Fees      and other service charges                                              |   |                                                 | 125    |   |   |   | 125 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      other-than-temporary impairment losses                                |   |                                                 | (294   | ) |   |   | (2,154 | ) |
| Portion      of loss recognized in other comprehensive income, before      taxes |   |                                                 | 90     |   |   |   | - |   |
| Net      impairment losses recognized in earnings                                |   |                                                 | (204   | ) |   |   | (2,154 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Other                                                                            |   |                                                 | 98     |   |   |   | 82 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      non-interest income (loss)                                            |   |                                                 | 19     |   |   |   | (1,947 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| NON-INTEREST      EXPENSE:                                                       |   |                                                 |   |   |   |   |   |   |
| Salaries      and employee benefits                                              |   |                                                 | 1,361  |   |   |   | 1,068 |   |
| Data      processing                                                             |   |                                                 | 138    |   |   |   | 165 |   |
| Professional      services                                                       |   |                                                 | 141    |   |   |   | 216 |   |
| Office      occupancy                                                            |   |                                                 | 93     |   |   |   | 95 |   |
| Depreciation                                                                     |   |                                                 | 87     |   |   |   | 84 |   |
| Payroll      taxes                                                               |   |                                                 | 67     |   |   |   | 63 |   |
| Director      compensation                                                       |   |                                                 | 62     |   |   |   | 58 |   |
| Federal      Deposit Insurance Corporation insurance                             |   |                                                 | 182    |   |   |   | 208 |   |
| Other                                                                            |   |                                                 | 422    |   |   |   | 497 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      non-interest expense                                                  |   |                                                 | 2,553  |   |   |   | 2,454 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| INCOME      (LOSS) BEFORE INCOME TAXES                                           |   |                                                 | 1,308  |   |   |   | (949 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| INCOME      TAXES:                                                               |   |                                                 |   |   |   |   |   |   |
| Current      expense                                                             |   |                                                 | 594    |   |   |   | 503 |   |
| Deferred      expense (benefit)                                                  |   |                                                 | 28     |   |   |   | (459 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| Total      income tax expense                                                    |   |                                                 | 622    |   |   |   | 44 |   |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| NET      INCOME (LOSS)                                                           |   | $                                                    | 686    |   |   | $ | (993 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| BASIC      INCOME (LOSS) PER SHARE                                               |   | $                                                    | 0.07   |   |   | $ | (0.09 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| DILUTED      INCOME (LOSS) PER SHARE                                             |   | $                                                    | 0.07   |   |   | $ | (0.09 | ) |
|                                                                             |   |                                                 |   |   |   |   |   |   |
| See      notes to unaudited consolidated financial statements.                   |   |                                                 |   |   |   |   |   |   |

----

| PRUDENTIAL BANCORP, INC. OF      PENNSYLVANIA AND SUBSIDIARIES                                                       |
|----------------------------------------------------------------------------------------------------------------------|
|                                                                                                                 |
| UNAUDITED      CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY AND      COMPREHENSIVE INCOME (LOSS) |

|                                                                                                                                |   | CommonStock                                          |   |   | AdditionalPaid-InCapital |   |   | UnearnedESOPShares |   |   | TreasuryStock |   |   | RetainedEarnings |    |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   | TotalStockholders’Equity |   |   | ComprehensiveIncome      (Loss) |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|--------------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|------------------|---------|--------|-------------------------------------------------|--------|--------|--------------------------------|--------|--------|---------------------------------|--------|
|                                                                                                                                |   | (Dollars      in Thousands except per share amounts) |   |
| BALANCE,      OCTOBER 1, 2009                                                                                                       |   | $                                                    | 126    |   |                     | $      | 52,938 |               |   | $      | (3,457        | )      |   | $                | (28,652 | )      |                                            | $      | 35,293 |                           |   | $      | (391                            | )      |   | $ | 55,857 |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |
| Comprehensive      income:                                                                                                          |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |
| Net      income                                                                                                                     |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   | 686    |                           |   |   |                            |   |   |   | 686 |   |   |   | 686 |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Net      unrealized holding loss on available for sale securities arising during      the period, net of income tax benefit of $229 |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   | (445                            | )      |   |   | (445 | ) |   |   | (445 | ) |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Reclassification      adjustment for other than temporary impairment recognized in earnings net      of tax of $69                  |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   | 135                             |   |   |   | 135 |   |   |   | 135 |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Comprehensive      income                                                                                                           |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   | $ | 376 |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Cash      dividend declared ($.05      per share)                                                                                   |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   | (497   | )                              |   |   |                            |   |   |   | (497 | ) |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Excess      tax benefit from stock compensation                                                                                     |   |                                                 |   |   |                     |   | 37     |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   | 37                              |   |   |   |   |   |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Stock      option expense                                                                                                           |   |                                                 |   |   |                     |   | 53     |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   | 53 |   |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| Recognition      and Retention Plan expense                                                                                         |   |                                                 |   |   |                     |   | 63     |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   | 63 |   |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| ESOP      shares committed to be released (5,655 shares)                                                                            |   |                                                 | -      |   |                     |   | -      |               |   |   | 56            |   |   |             | -       |   |                                            |   | -      |                           |   |   | -                               |   |   |   | 56 |   |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                            |   |   |   |   |   |   |   |   |   |
| BALANCE,      December 31, 2009                                                                                                     |   | $                                                    | 126    |   |                     | $      | 53,091 |               |   | $      | (3,401        | )      |   | $                | (28,652 | )      |                                            | $      | 35,482 |                           |   | $      | (701                            | )      |   | $ | 55,945 |   |   |   |   |   |

|                                                                                                                                |   | CommonStock                                          |   |   | AdditionalPaid-InCapital |   |   | UnearnedESOPShares |   |   | TreasuryStock |   |   | RetainedEarnings |    |   | AccumulatedOtherComprehensiveIncome      (Loss) |   |   | TotalStockholders’Equity |   |   | ComprehensiveIncome    (Loss) |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|--------|--------|--------------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|------------------|---------|--------|-------------------------------------------------|--------|--------|--------------------------------|--------|--------|-------------------------------|--------|
|                                                                                                                                |   | (Dollars      in Thousands except per share amounts) |   |
| BALANCE,      OCTOBER 1, 2008                                                                                                       |   | $                                                    | 126    |   |                     | $      | 54,925 |               |   | $      | (3,680        | )      |   | $                | (19,481 | )      |                                            | $      | 37,288 |                           |   | $      | (691                          | )      |   | $ | 68,487 |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                          |   |   |   |   |   |   |   |   |
| Cumulative      adjustment related to the adoption of EITF 06-10, net of    tax                                                     |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   | (256   | )                              |   |   |                          |   |   |   | (256 | ) |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                          |   |   |   |   |   |   |   |   |
| Comprehensive      income (loss):                                                                                                   |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                          |   |   |   |   |   |   |   |   |
| 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 recognized in earnings 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 (5,655 shares)                                                                            |   |                                                 | -      |   |                     |   | (1     | )                  |   |   | 56            |   |   |             | -       |   |                                            |   | -      |                           |   |   | -                             |   |   |   | 55 |   |   |   |   |   |
|                                                                                                                                |   |                                                 |   |   |                     |   |   |               |   |   |          |   |   |             |    |   |                                            |   |   |                           |   |   |                          |   |   |   |   |   |   |   |   |   |
| BALANCE,      December 31, 2008                                                                                                     |   | $                                                    | 126    |   |                     | $      | 54,924 |               |   | $      | (3,624        | )      |   | $                | (19,481 | )      |                                            | $      | 35,504 |                           |   | $      | (1,189                        | )      |   | $ | 66,260 |   |   |   |   |   |

----

| PRUDENTIAL BANCORP, INC. OF      PENNSYLVANIA AND SUBSIDIARIES |
|----------------------------------------------------------------|
|                                                           |
| UNAUDITED CONSOLIDATED      STATEMENTS OF CASH FLOWS           |

|                                                                                     |   | Three      Months Ended December 31, |    |
|------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                     |   | 2009                                 |    |   | 2008 |   |
| OPERATING      ACTIVITIES:                                                               |   | (Dollars      in Thousands)          |    |
| Net      income (loss)                                                                   |   | $                                    | 686     |   |   | $ | (993 | ) |
| Adjustments      to reconcile net income (loss) to net cash used in                      |   |                                 |    |   |   |   |   |   |
| operating      activities:                                                               |   |                                 |    |   |   |   |   |   |
| Provision      for loan losses                                                           |   |                                 | 135     |   |   |   | 313 |   |
| Depreciation                                                                             |   |                                 | 87      |   |   |   | 84 |   |
| Net      accretion of premiums/discounts                                                 |   |                                 | (81     | ) |   |   | (531 | ) |
| Net      accretion of deferred loan fees and costs                                       |   |                                 | (13     | ) |   |   | (31 | ) |
| Impairment      charge on investment securities                                          |   |                                 | 204     |   |   |   | 2,154 |   |
| Share-based      compensation expense                                                    |   |                                 | 153     |   |   |   | - |   |
| Amortization      of ESOP                                                                |   |                                 | 56      |   |   |   | 55 |   |
| Income      from bank owned life insurance                                               |   |                                 | (53     | ) |   |   | (53 | ) |
| Deferred      income tax expense (benefit)                                               |   |                                 | 28      |   |   |   | (459 | ) |
| Excess      tax benefit related to stock compensation                                    |   |                                 | (37     | ) |   |   | - |   |
| Changes      in assets and liabilities which used cash:                                  |   |                                 |    |   |   |   |   |   |
| Accrued      interest receivable                                                         |   |                                 | 81      |   |   |   | (377 | ) |
| Prepaid      expenses and other assets                                                   |   |                                 | (2,611  | ) |   |   | 177 |   |
| Accrued      interest payable                                                            |   |                                 | (2,708  | ) |   |   | (2,527 | ) |
| Accounts      payable and accrued expenses                                               |   |                                 | (285    | ) |   |   | (5,630 | ) |
| Net      cash used in operating activities                                               |   |                                 | (4,358  | ) |   |   | (7,818 | ) |
| INVESTING      ACTIVITIES:                                                               |   |                                 |    |   |   |   |   |   |
| Purchase      of investment and mortgage-backed securities held to    maturity           |   |                                 | (2,994  | ) |   |   | (6,997 | ) |
| Purchase      of investment and mortgage-backed securities available for      sale       |   |                                 | (5,935  | ) |   |   | (1,985 | ) |
| Loans      originated or acquired                                                        |   |                                 | (11,167 | ) |   |   | (20,620 | ) |
| Principal      collected on loans                                                        |   |                                 | 11,300  |   |   |   | 10,457 |   |
| Principal      payments received on investment and mortgage-backed      securities:      |   |                                 |    |   |   |   |   |   |
| held-to-maturity                                                                         |   |                                 | 15,861  |   |   |   | 16,630 |   |
| available-for-sale                                                                       |   |                                 | 2,656   |   |   |   | 1,915 |   |
| Acquisition      of FHLB stock, net                                                      |   |                                 | -       |   |   |   | (925 | ) |
| Purchases      of equipment                                                              |   |                                 | (61     | ) |   |   | (1 | ) |
| Net      cash provided by (used in) investing activities                                 |   |                                 | 9,660   |   |   |   | (1,526 | ) |
| FINANCING      ACTIVITIES:                                                               |   |                                 |    |   |   |   |   |   |
| Net      increase (decrease) in demand deposits, NOW accounts, and savings      accounts |   |                                 | 7,561   |   |   |   | (735 | ) |
| Net      (decrease) increase in certificates of deposit                                  |   |                                 | (18,807 | ) |   |   | 11,427 |   |
| Net      borrowings of advances from Federal Home Loan Bank                              |   |                                 | 3,989   |   |   |   | 990 |   |
| Increase      in advances from borrowers for taxes and insurance                         |   |                                 | 596     |   |   |   | 584 |   |
| Excess      tax benefit related to stock compensation                                    |   |                                 | 37      |   |   |   | - |   |
| Cash      dividend paid                                                                  |   |                                 | (472    | ) |   |   | (531 | ) |
| Net      cash (used in) provided by financing activities                                 |   |                                 | (7,096  | ) |   |   | 11,735 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| NET      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                |   |                                 | (1,794  | ) |   |   | 2,391 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—Beginning of period                                 |   |                                 | 13,669  |   |   |   | 9,454 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| CASH      AND CASH EQUIVALENTS—End of period                                       |   | $                                    | 11,875  |   |   | $ | 11,845 |   |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:                                  |   |                                 |    |   |   |   |   |   |
| Interest      paid on deposits and advances from Federal Home Loan Bank                  |   | $                                    | 5,197   |   |   | $ | 5,989 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| Income      taxes paid                                                                   |   | $                                    | 753     |   |   | $ | 850 |   |
|                                                                                     |   |                                 |    |   |   |   |   |   |
| SUPPLEMENTAL      DISCLOSURES OF NONCASH ITEMS:                                          |   |                                 |    |   |   |   |   |   |
| Real      estate acquired in settlement of loans                                         |   | $                                    | 437     |   |   | $ | - |   |

----

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

| 1.     | SIGNIFICANT      ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Basis      of presentation      –The accompanying unaudited 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, 2009 are not      necessarily indicative of the results that may be expected for the fiscal      year ending September 30, 2010, 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, 2009 included in the Company’s Annual Report on Form 10-K for the      fiscal year ended September 30, 2009.                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | 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 thoseestimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Dividend      Payable – On December 16, 2009, the Company’s Board of Directors      declared a quarterly cash dividend of $.05 on the common stock of the      Company payable on January 25, 2010 to the shareholders of record at the      close of business on January 11, 2010 which resulted in a payable of      $516,000 at December 31, 2009. A portion of the cash dividend was payable      to Prudential Mutual Holding Company (the “MHC”) due to its ownership of      shares of the Company’s common stock and totaled      $367,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | 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, 2009, the Company had allocated a total of      107,445 shares from the suspense account to participants. In addition, at      such date the total number of shares of Company common stock held by the      ESOP was 450,200. For the three months ended December 31, 2009, the      Company recognized $51,000 in compensation  expense. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Share-Based      Compensation – The Company accounts for stock-based compensation      issued to employees, and where appropriate non-employees, at fair value.      Under fair value provisions , stock-based compensation cost is measured at      the grant date based on the fair value of the award and is recognized as      expense over the appropriate vesting period using the straight-line      method. The amount of stock-based compensation recognized at any date must      at least equal the portion of the grant date fair value of the award that      is vested at that date and as a result it may be necessary to recognize      the expense using a ratable method. Determining the fair value of      stock-based awards at the date of grant requires judgment, including      estimating the expected term of the stock options and the expected      volatility of the Company’s stock. In addition, judgment is required in      estimating the amount of stock-based awards that are expected to be      forfeited. If actual results differ significantly from these estimates or      different key assumptions were used, it could have a material effect on      the Company’s Consolidated Financial  Statements.                                                                                                                                                                                                                                                    |

----

|   | Dividends      with respect to non-vested share awards are held by the Company’s      Recognition and Retention Plan (“Plan”) Trust (the “Trust”) for the      benefit of the recipients and will be paid out proportionately by the      Trust to the recipients of stock awards granted pursuant to the Plan as      soon as practicable after the stock awards are earned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | 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 the MHC. As of December 31, 2009, there were      20,000 shares remaining to be purchased under this program. The average      cost per share of the approximately 1.5 million shares which have been      repurchased by the Company was $12.84 for purchases through December 31,      2009. The repurchased shares are available for general corporate purposes.      In addition, the MHC announced on December 16, 2009 that its Board of      Directors approved its third stock purchase plan to purchase up to 50,000      shares of Company’s common stock. As of December 31, 2009, the MHC had      purchased 427,500 shares at an average cost of $11.19 per      share.                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Comprehensive      Income (Loss) —The Company presents in the unaudited consolidated      statement of changes in stockholders’ equity and comprehensive income      those amounts arising from transactions and other events which currently      are excluded from the statements of operations and are recorded directly      to stockholders’ equity. For the three months ended December 31, 2009 and      2008, the only components of comprehensive income were net income (loss),      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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | 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. While the FHLB has recognized losses in recent periods, it      is currently not probable that the Company will not realize its cost basis      as the FHLB has maintained capital levels in excess of regulatory      requirements. Management concluded that no impairment existed as of      December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | Recent      Accounting Pronouncements – In June 2009, the FASB issued      Accounting Standards Update (“ASU”) No. 2009-01, Topic 105 - Generally      Accepted Accounting Principles - FASB Accounting Standards Codification      and the Hierarchy of Generally Accepted Accounting Principles. The      Codification is the single source of authoritative nongovernmental U.S.      generally accepted accounting principles (GAAP). The Codification does not      change current GAAP, but is intended to simplify user access to all      authoritative GAAP by providing all the authoritative literature related      to a particular topic in one place. Rules and interpretive releases of the      SEC under federal securities laws are also sources of authoritative GAAP      for SEC registrants. The Company adopted this standard for the annual      reporting period ended September 30, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | In      September 2006, the FASB issued an accounting standard related to fair      value measurements, which was effective for the Company on October 1,      2008. This standard defined fair value, established a framework for      measuring fair value, and expanded disclosure requirements about fair      value measurements. On October 1, 2008, the Company adopted this      accounting standard related to fair value measurements for the Company’s      financial assets and financial liabilities. The Company deferred adoption      of this accounting standard related to fair value measurements for the      Company’s nonfinancial assets and nonfinancial liabilities, except for      those items recognized or disclosed at fair value on an annual or more      frequently recurring basis, until October 1, 2010.      The adoption of this accounting standard related to fair value      measurements for the Company’s nonfinancial assets and nonfinancial      liabilities had no impact on retained earnings and did not have a material      impact on the Company’s statements of income and condition. This      accounting standard was subsequently codified into ASC Topic 820, Fair      Value Measurements and Disclosures. The adoption of this standard      is did not have a material effect on the Company’s results of operations      or financial position. |

----

|   | In      January 2010, the FASB issued ASU 2010-06 that describes amendments that      require some new disclosures and clarifies some existing disclosure      requirements about fair value measurement as set forth in ASC Topic      820-10. The Board’s objective is to improve these disclosures and, thus,      increase the transparency in financial reporting. The amendments are      effective for interim and annual reporting periods beginning after      December 15, 2009, except for the disclosures about purchases, sales,      issuances, and settlements in the roll forward of activity in Level 3 fair      value measurements. Those disclosures are effective for fiscal years      beginning after December 15, 2010, and for interim periods within those      fiscal years. Early adoption is permitted. The adoption of this standard      is not expected to have a material effect on the Company’s results of      operations or financial position.                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      June 2009, the FASB issued an accounting standard related to the      accounting for transfers of financial assets, which is effective for      fiscal years beginning after November 15, 2009, and interim periods within      those fiscal years. This standard enhances reporting about transfers of      financial assets, including securitizations, and where companies have      continuing exposure to the risks related to transferred financial assets.      This standard eliminates the concept of a “qualifying special-purpose      entity” and changes the requirements for derecognizing financial assets.      This standard also requires additional disclosures about all continuing      involvements with transferred financial assets including information about      gains and losses resulting from transfers during the period. This      accounting standard was subsequently codified into ASC Topic 860, Transfers      and Servicing. The adoption of this standard is not expected to      have a material effect on the Company’s results of operations or financial      position. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      April 2009, the FASB issued new guidance impacting ASC Topic 820, Fair      Value Measurements and Disclosures. This ASC provides additional      guidance in determining fair values when there is no active market or      where the price inputs being used represent distressed sales. It reaffirms      the need to use judgment to ascertain if a formerly active market has      become inactive and in determining fair values when markets have become      inactive. The adoption of this new guidance did not have a material effect      on the Company’s results of operations or financial    position.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      April 2009, the FASB issued new guidance impacting ASC 825-10-50, Financial      Instruments, which relates to fair value disclosures for any      financial instruments that are not currently reflected on the balance      sheet of companies at fair value. This guidance amended existing GAAP to      require disclosures about fair value of financial instruments for interim      reporting periods of publicly traded companies as well as in annual      financial statements. This guidance is effective for interim and annual      periods ending after June 15, 2009. The adoption of this new guidance did      not have a material impact on the Company’s financial position or results      of operations. The Company has presented the necessary disclosures in Note      9 herein.                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      April 2009, the FASB issued new guidance impacting ASC 320-10, Investments      — Debt and Equity Securities, which provides additional guidance      designed to create greater clarity and consistency in accounting for and      presenting impairment losses on securities. This guidance is effective for      interim and annual periods ending after June 15, 2009. The Company has      presented the necessary disclosures in Note 3 herein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | In      August 2009, the FASB issued ASU No. 2009-05,      Fair Value Measurements and Disclosures (Topic 820) – Measuring      Liabilities at Fair Value. This ASU provides amendments for fair      value measurements of liabilities. It provides clarification that in      circumstances in which a quoted price in an active market for the      identical liability is not available, a reporting entity is required to      measure fair value using one or more techniques. ASU 2009-05 also      clarifies that when estimating a fair value of a liability, a reporting      entity is not required      to include a separate input or adjustment to other inputs relating to the      existence of a restriction that prevents the transfer of the liability.      ASU 2009-05 was adopted effective October 1, 2009. This standard did not      have a specific impact on the Company’s financial condition, results of      operations, anddisclosures.                                                                                                                                                            |

----

|   | In      June 2008, the FASB issued accounting guidance related to determining      whether instruments granted in share-based payment transactions are      participating securities, which is effective for financial statements      issued for fiscal years beginning after December 15, 2008, and interim      periods within those years. This guidance clarified that instruments      granted in share-based payment transactions can be participating      securities prior to the requisite service having been rendered. A basic      principle of this guidance is that unvested share-based payment awards      that contain nonforfeitable rights to dividends or dividend equivalents      (whether paid or unpaid) are participating securities and are to be      included in the computation of earnings per share pursuant to the      two-class method. All prior-period earnings per share data presented      (including interim financial statements, summaries of earnings, and      selected financial data) are required to be adjusted retrospectively to      conform with this guidance. This accounting guidance was subsequently      codified into ASC Topic 260, Earnings      Per Share. The adoption of this standard did not have a material      effect on the Company’s results of operations or financial      position. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The      calculated basic and diluted earnings per share are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   |                                                                            |   | Quarter      Ended December 31,                         |      |
|--------|---------------------------------------------------------------------------------|--------|---------------------------------------------------------|-----------|
|   |                                                                            |   |                                                    |      |   |   |   |
|   |                                                                            |   | 2009                                                    |      |   | 2008 |   |
|   |                                                                            |   | Basic                                                   |      |   | Diluted |   |   | Basic |   |   | Diluted |   |
|   |                                                                            |   |  (Dollars      in Thousands Except Per Share Data) |      |
|   | Net      income (loss)                                                          |   | $                                                       | 686       |   |   | $ | 686 |   |   | $ | (993 | ) |   | $ | (993 | ) |
|   | Weighted      average shares outstanding                                        |   |                                                    | 9,873,428 |   |   |   | 9,873,428 |   |   |   | 10,814,956 |   |   |   | 10,814,956 |   |
|   | Effect      of common stock equivalents                                         |   |                                                    | -         |   |   |   | 187,566 |   |   |   | - |   |   |   | - |   |
|   | Adjusted      weighted average shares used in earnings per share    computation |   | $                                                       | 9,873,428 |   |   | $ | 10,060,994 |   |   | $ | 10,814,956 |   |   | $ | 10,814,956 |   |
|   | Income      (loss) per share - basic and diluted                                |   | $                                                       | 0.07      |   |   | $ | 0.07 |   |   | $ | (0.09 | ) |   | $ | (0.09 | ) |

----

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

|   |                                                       |   | December      31, 2009      |    |
|--------|------------------------------------------------------------|--------|-----------------------------|---------|
|   |                                                       |   | AmortizedCost               |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|   | Securities      held to maturity:                          |   | (Dollars      in Thousands) |    |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |
|   | U.S.      Government agency obligations                    |   | $                           | 114,923 |   |   | $ | 281 |   |   | $ | (2,364 | ) |   | $ | 112,840 |   |
|   | Municipal      obligations                                 |   |                        | 1,620   |   |   |   | 3 |   |   |   | - |   |   |   | 1,623 |   |
|   | Mortgage-backed      securities - U.S. Government agencies |   |                        | 31,728  |   |   |   | 1,259 |   |   |   | - |   |   |   | 32,987 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity                     |   | $                           | 148,271 |   |   | $ | 1,543 |   |   | $ | (2,364 | ) |   | $ | 147,450 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      available for sale:                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | U.S.      Government agency obligations                    |   | $                           | 2,000   |   |   | $ | - |   |   | $ | (65 | ) |   | $ | 1,935 |   |
|   | Mortgage-backed      securities - U.S. Government agencies |   |                        | 54,471  |   |   |   | 1,644 |   |   |   | (488 | ) |   |   | 55,627 |   |
|   | Mortgage-backed      securities - Non-agency               |   |                        | 9,656   |   |   |   | 52 |   |   |   | (2,228 | ) |   |   | 7,480 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      debt securities                                 |   |                        | 66,127  |   |   |   | 1,696 |   |   |   | (2,781 | ) |   |   | 65,042 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | FHLMC      preferred stock                                 |   |                        | 16      |   |   |   | 23 |   |   |   | - |   |   |   | 39 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale                   |   | $                           | 66,143  |   |   | $ | 1,719 |   |   | $ | (2,781 | ) |   | $ | 65,081 |   |

|   |                                                       |   | September      30, 2009     |    |
|--------|------------------------------------------------------------|--------|-----------------------------|---------|
|   |                                                       |   | AmortizedCost               |    |   | GrossUnrealizedGains |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|   |                                                       |   | (Dollars      in Thousands) |    |
|   | Securities      Held to Maturity:                          |   |                        |    |   |   |   |   |   |   |   |   |   |
|   | U.S.      Government agency obligations                    |   | $                           | 123,923 |   |   | $ | 881 |   |   | $ | (645 | ) |   | $ | 124,159 |   |
|   | Municipal      obligations                                 |   |                        | 1,970   |   |   |   | 6 |   |   |   | - |   |   |   | 1,976 |   |
|   | Mortgage-backed      securities - U.S. Government agencies |   |                        | 34,233  |   |   |   | 1,600 |   |   |   | - |   |   |   | 35,833 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities held to maturity                     |   | $                           | 160,126 |   |   | $ | 2,487 |   |   | $ | (645 | ) |   | $ | 161,968 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Securities      Available for Sale:                        |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | U.S.      Government agency obligations                    |   | $                           | 2,000   |   |   | $ | - |   |   | $ | (18 | ) |   | $ | 1,982 |   |
|   | Mortgage-backed      securities - U.S. Government agencies |   |                        | 50,659  |   |   |   | 2,009 |   |   |   | (57 | ) |   |   | 52,611 |   |
|   | Mortgage-backed      securities - Non-agency               |   |                        | 10,325  |   |   |   | 6 |   |   |   | (2,564 | ) |   |   | 7,767 |   |
|   | Total      debt securities                                 |   |                        | 62,984  |   |   |   | 2,015 |   |   |   | (2,639 | ) |   |   | 62,360 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | FHLMC      preferred stock                                 |   |                        | 16      |   |   |   | 31 |   |   |   | - |   |   |   | 47 |   |
|   |                                                       |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total      securities available for sale                   |   | $                           | 63,000  |   |   | $ | 2,046 |   |   | $ | (2,639 | ) |   | $ | 62,407 |   |

----

|   | The      following table shows the gross unrealized losses and related fair values      of the Company’s investment securities, aggregated by investment category      and length of time that individual securities had been in a continuous      loss position at December 31, 2009: |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                             |   | Less      than 12 months    |   |   | More      than 12 months |   |    | Total                 |   |
|------------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|---------|-----------------------|--------|
|                                                             |   | GrossUnrealizedLosses       |   |   | FairValue                |   |    | GrossUnrealizedLosses |   |   | FairValue |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|                                                             |   | (Dollars      in Thousands) |   |
| Securities      Held to Maturity:                                |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency obligations                          |   | $                           | (2,364 | )      |                     | $      | 96,567  |                  |   | $ | - |   |   | $ | - |   |   | $ | (2,364 | ) |   | $ | 96,567 |   |
|                                                             |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity                           |   |                        | (2,364 | )      |                     |   | 96,567  |                  |   |   | - |   |   |   | - |   |   |   | (2,364 | ) |   |   | 96,567 |   |
|                                                             |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities      Available for Sale:                              |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government agency obligations                          |   |                        | -      |   |                     |   | -       |                  |   |   | (65 | ) |   |   | 1,935 |   |   |   | (65 | ) |   |   | 1,935 |   |
| Mortgage-backed      securities - U.S. Government  agencies |   |                        | (477   | )      |                     |   | 17,690  |                  |   |   | (11 | ) |   |   | 388 |   |   |   | (488 | ) |   |   | 18,078 |   |
| Mortgage-backed      securities - Non-agency                     |   |                        | (847   | )      |                     |   | 968     |                  |   |   | (1,381 | ) |   |   | 4,339 |   |   |   | (2,228 | ) |   |   | 5,307 |   |
|                                                             |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale                         |   |                        | (1,324 | )      |                     |   | 18,658  |                  |   |   | (1,457 | ) |   |   | 6,662 |   |   |   | (2,781 | ) |   |   | 25,320 |   |
|                                                             |   |                        |   |   |                     |   |    |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                            |   | $                           | (3,688 | )      |                     | $      | 115,225 |                  |   | $ | (1,457 | ) |   | $ | 6,662 |   |   | $ | (5,145 | ) |   | $ | 121,887 |   |

|   | All      equity securities, municipal bonds and mortgage-backed securities held to      maturity were in an unrealized gain position as of December 31, 2009.       The      following table shows the gross unrealized losses and related fair values      of the Company’s investment securities, aggregated by investment category      and length of time that individual securities had been in a continuous      loss position at September 30,2009: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | Less      than 12 months    |   |   | More      than 12 months |   |   | Total                 |   |
|------------------------------------------------------------|--------|-----------------------------|--------|--------|--------------------------|--------|--------|-----------------------|--------|
|                                                       |   | GrossUnrealizedLosses       |   |   | FairValue                |   |   | GrossUnrealizedLosses |   |   | FairValue |   |   | GrossUnrealizedLosses |   |   | FairValue |   |
|                                                       |   | (Dollars      in Thousands) |   |
| Securities      Held to Maturity:                          |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government and agency obligations                |   | $                           | (643   | )      |                     | $      | 52,854 |                  |   | $ | (2 | ) |   | $ | 1,993 |   |   | $ | (645 | ) |   | $ | 54,847 |   |
|                                                       |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities held to maturity                     |   |                        | (643   | )      |                     |   | 52,854 |                  |   |   | (2 | ) |   |   | 1,993 |   |   |   | (645 | ) |   |   | 54,847 |   |
|                                                       |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Securities      Available for Sale:                        |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government and agency obligations                |   |                        | -      |   |                     |   | -      |                  |   |   | (18 | ) |   |   | 1,982 |   |   |   | (18 | ) |   |   | 1,982 |   |
| Mortgage-backed      securities - U.S. Government agencies |   |                        | (48    | )      |                     |   | 2,886  |                  |   |   | (9 | ) |   |   | 400 |   |   |   | (57 | ) |   |   | 3,286 |   |
| Mortgage-backed      securities - Non-agency               |   |                        | (1,310 | )      |                     |   | 2,757  |                  |   |   | (1,254 | ) |   |   | 4,381 |   |   |   | (2,564 | ) |   |   | 7,138 |   |
|                                                       |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total      securities available for sale                   |   |                        | (1,358 | )      |                     |   | 5,643  |                  |   |   | (1,281 | ) |   |   | 6,763 |   |   |   | (2,639 | ) |   |   | 12,406 |   |
|                                                       |   |                        |   |   |                     |   |   |                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                                      |   | $                           | (2,001 | )      |                     | $      | 58,497 |                  |   | $ | (1,283 | ) |   | $ | 8,756 |   |   | $ | (3,284 | ) |   | $ | 67,253 |   |

|   | All      equity securities, municipal bonds and mortgage-backed securities held to      maturity were in an unrealized gain position as of September 30,      2009. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Management      has reviewed its investment securities and determined that for the three      months ended December 31, 2009 unrealized losses of $294,000 on a pre-tax      basis for certain securities in the non-agency mortgage-backed portfolio      classified as available for sale were deemed other than      temporary.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Management      evaluates securities for other-than-temporary impairment (“OTTI”) at least      on a quarterly basis, and more frequently when economic or market concerns      warrant such evaluation. The Company determines whether the unrealized      losses are temporary. The evaluation is based upon factors such as the      creditworthiness of the issuers/guarantors, the underlying collateral, if      applicable, and the continuing performance of the securities. Management      also evaluates other facts and circumstances that may be indicative of an      OTTI condition. This includes, but is not limited to, an evaluation of the      type of security, length of time and extent to which the fair value has      been less than cost, and near-term prospects of the  issuer.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      Company assesses whether the credit loss existed by considering whether      (1) the Company has the intent to sell the security, (2) it is more likely      than not that it will be required to sell the security before recovery, or      (3) it does not expect to recover the entire amortized cost basis of the      security. The Company bifurcates the OTTI impact on impaired securities      where impairment in value was deemed to be other than temporary between      the component representing credit loss and the component representing loss      related to other factors. The portion of the fair value decline      attributable to credit loss must be recognized through a charge to      earnings. Credit component is determined by comparing the present value of      the cash flows expected to be collected, discounted at the rate in effect      before recognizing any OTTI with the amortized cost basis of the debt      security. The Company uses the cash flow expected to be realized from the      security, which includes assumptions about interest rates, timing and      severity of defaults, estimates of potential recoveries, the cash flow      distribution from the bond indenture and other factors, then applies a      discount rate equal to the effective yield of the security. The difference      between the present value of the expected cash flows and the amortized      book value is considered a credit loss. The fair market value of the      security is determined using the same expected cash flows; the discount      rate is a rate the Company determines from open market and other sources      as appropriate for the security. The difference between the fair market      value and the security’s remaining amortized cost is recognized in other      comprehensive income. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | The      following is a rollforward for the three months ended December 31, 2009 of      the amounts recognized in earnings related to credit losses on securities      which the Company has recorded other than temporary impairment charges      through earnings and other comprehensiveincome.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|   |                                                                                                                                   |   | (Dollars      in thousands) |   |
|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|   | Credit      component of OTTI as of October 1, 2009                                                                                    |   | $                           | 2,859  |   |
|   |                                                                                                                                   |   |                        |   |   |
|   | Additions      for credit-related OTTI charges on previously unimpaired      securities                                                |   |                        | 5      |   |
|   |                                                                                                                                   |   |                        |   |   |
|   | Additional      increases as a result of impairment charges recognized on investments for      which an OTTI was previously recognized |   |                        | 199    |   |
|   |                                                                                                                                   |   |                        |   |   |
|   | Credit      component of OTTI as of December 31, 2009                                                                                  |   | $                           | 3,063  |   |

|   | United      States Treasury and Government Sponsored Enterprise and Agency Notes -      The Company’s investments in the preceding table in United States      Government sponsored enterprise notes consist of debt obligations of the      Federal Home Loan Bank (“FHLB”), Federal Home Loan Mortgage Corporation      (“FHLMC”), Federal National Mortgage Association (“FNMA”), and Federal      Farm Credit System (“FFCS”). FHLB debt securities are rated by both      Moody’s and Standard & Poor’s. All long-term debt issued by the FHLB      banks is rated Aaa by Moody’s and AAA by Standard and Poor’s. All      short-term debt is rated “Prime-1” by Moody’s and A-1+ by Standard &      Poor’s. FNMA and FHLMC senior debt securities are also currently rated      “Aaa” by Moody’s , short-term debt is rated “Prime-1”, subordinated debt      is rated “Aa2” and preferred stock ratings are currently “Aa3” with      “Stable” outlooks. Farm Credit Designated Bonds are high credit quality,      liquid and callable securities. The securities are Aaa rated by Moody’s,      AAA by Standard & Poor’s, and AAA by      Fitch. At December 31, 2009, securities in a gross unrealized loss for      less than twelve months consist of 55 securities having an aggregate      depreciation of 2.4% from the Company’s amortized cost basis. Securities      in a gross unrealized loss for more than twelve months consisted of two      securities having an aggregate depreciation of 1.8% from the Company’s      amortized cost basis. The unrealized losses on these debt securities      relates principally to the changes in market interest rates and a lack of      liquidity currently in the financial markets and are not as a result of      projected shortfall of cash flows. In addition, the Company does not      intend to sell these securities and it is more likely than not that the      Company will not be required to sell the securities. As such, the Company      anticipates it will recover the entire amortized cost basis of the      securities. As a result, the Company does not consider these investments      to be other-than-temporarily impaired at December 31,      2009. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | State and Municipal Obligations      – The municipal bonds consist of obligations of entities located in      Pennsylvania. None of the municipal bonds were in an unrealized loss      position as of December 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | US Agency Issued      Mortgage-Backed Securities - At December 31, 2009, the gross      unrealized loss in U.S. agency issued      mortgage-backed securities in the category of less than 12 months      was $477,000 or 2.6% from the Company’s amortized cost basis and consisted      of 13 securities. The gross unrealized loss in the category of more than      12 months was $11,000 or 2.9% of the Company’s amortized cost basis and      consisted of three securities. These securities represent asset-backed      issues that are issued or guaranteed by a U.S. Government sponsored agency      or carry the full faith and credit of the United States through a      government agency and are currently rated AAA by at least one bond credit      rating agency. In September 2008, the U.S. Department of the Treasury      announced the establishment of the Government-Sponsored Enterprise Credit      Facility to ensure credit availability to Fannie Mae and Freddie Mac. The      Treasury also entered into senior preferred stock purchase agreements,      which ensure that each entity maintains a positive net worth and      effectively support the holders of debt and mortgage-backed securities      (“MBS”) issued or guaranteed by Fannie Mae and Freddie Mac. The Agreements      enhance market stability by providing additional security to debt holders,      senior and subordinated, thereby alleviating the concern of the credit      driven impairment of the securities. The unrealized loss on these debt      securities relates principally to the changes in market interest rates and      a lack of liquidity currently in the financial markets and are not as a      result of projected shortfall in cash flows. In addition, the Company does      not intend to sell the securities and it is more likely than not that the      Company will not be required to sell the securities. As such, the Company      expects to recover the entire amortized cost basis of the securities. As a      result, the Company does not consider these investments to be      other-than-temporarily impaired at December 31, 2009. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | Non-Agency Issued      Mortgage-Backed Securities and Collateralized Mortgage Obligations -      This portfolio was acquired through the redemption-in-kind of a      mutual fund during 2008 and includes 72 collateralized mortgage      obligations (“CMO”) and mortgage-backed securities (“MBS”) securities issued      by large commercial financial institutions. For the three months ended      December 31, 2009 management recognized an other than temporary impairment      charge related to a portion of the portfolio securities in the amount of      $294,000 on a pre-tax basis due to the fact that, in management’s      judgment, the credit quality of the collateral pool underlying such      securities had deteriorated during the most recent quarter to the point      that full recovery of the entire amortized cost of the investment was      considered to be uncertain. This portfolio consists primarily of the      securities with underlying collateral of Alt-A loans and those      collateralized by home equity lines of credit and other receivables as      well as whole loans with more significant exposure to the declining      markets accountable for the balance of the other than temporary impairment      charges. Of the portfolio ,79% or $5.9 million is collateralized by      adjustable-rate whole loans, 4.0% or $296,000 is collateralized by      Alternative A-paper (Alt-A) mortgages, with remainder of the securities      collateralized by the home equity lines of credit and other receivables.      For the overall portfolio of the securities, the Company’s exposure to the      declining real estate markets such as California and Florida is      approximately 49%. Consequently, an other-than-temporary impairment charge      was deemed to be warranted as of December 31, 2009. Of the recorded      charge, a total of $204,000 was concluded to be credit related and      recognized currently in earnings and $90,000 was concluded to be      attributable to other factors and recognized in other comprehensive      income.                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | As      of December 31, 2009, with the exception of securities discussed above,      there are no securities for which the Company currently believes it is not      probable that it will collect all amounts due according to the contractual      terms of the investment. Management concluded that an other-than-temporary      impairment did not exist and the decline in value was attributed to the      illiquidity in the financial markets. In addition, the Company does not      intend to sell these securities and it is more likely than not that the      Company will not be required to sell these  securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

----

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

|   |                                  |   | December      31, 2009      |    |
|--------|---------------------------------------|--------|-----------------------------|---------|
|   |                                  |   | Held      to Maturity       |    |   | Available      for Sale |   |
|   |                                  |   |                        |    |   |   |   |   |   |   |   |   |   |
|   |                                  |   | AmortizedCost               |    |   | FairValue |   |   | Amortized      Cost |   |   |  FairValue |   |
|   |                                  |   | (Dollars      in thousands) |    |
|   | Due      within one year              |   | $                           | 2,000   |   |   | $ | 2,027 |   |   | $ | - |   |   | $ | - |   |
|   | Due      after one through five years |   |                        | 440     |   |   |   | 440 |   |   |   | - |   |   |   | - |   |
|   | Due      after five through ten years |   |                        | 37,672  |   |   |   | 37,259 |   |   |   | - |   |   |   | - |   |
|   | Due      after ten years              |   |                        | 76,431  |   |   |   | 74,737 |   |   |   | 2,000 |   |   |   | 1,935 |   |
|   |                                  |   |                        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                 |   | $                           | 116,543 |   |   | $ | 114,463 |   |   | $ | 2,000 |   |   | $ | 1,935 |   |

|   | The      maturity table above excludes MBS because the contractual maturities are      not indicative of actual maturities due to significant      prepayments. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.     | LOANS      RECEIVABLE                          |
|--------|------------------------------------------------|
|   |                                           |
|   | Loans      receivable consist of thefollowing: |

|   |                                         |   | December      31,2009       |    |   | September      30,2009 |   |
|--------|----------------------------------------------|--------|-----------------------------|---------|--------|------------------------|--------|
|   |                                         |   | (Dollars      in Thousands) |    |
|   | One-to-four      family residential          |   | $                           | 199,868 |   |                   | $      | 201,396 |   |
|   | Multi-family      residential                |   |                        | 6,969   |   |                   |   | 4,178 |   |
|   | Commercial      real estate                  |   |                        | 20,441  |   |                   |   | 19,907 |   |
|   | Construction      and land development       |   |                        | 35,165  |   |                   |   | 36,764 |   |
|   | Commercial      business                     |   |                        | 2,088   |   |                   |   | 2,232 |   |
|   | Consumer                                     |   |                        | 575     |   |                   |   | 586 |   |
|   |                                         |   |                        |    |   |                   |   |   |   |
|   | Total      loans                             |   |                        | 265,106 |   |                   |   | 265,063 |   |
|   |                                         |   |                        |    |   |                   |   |   |   |
|   | Undisbursed      portion of loans-in-process |   |                        | (6,878  | )      |                   |   | (6,281 | ) |
|   | Deferred      loan costs, net                |   |                        | 641     |   |                   |   | 644 |   |
|   | Allowance      for loan losses               |   |                        | (2,867  | )      |                   |   | (2,732 | ) |
|   |                                         |   |                        |    |   |                   |   |   |   |
|   | Net                                          |   | $                           | 256,002 |   |                   | $      | 256,694 |   |

----

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

|   |                              | Three      Months Ended December 31, |   |
|--------|-----------------------------------|--------------------------------------|--------|
|   |                              | 2009                                 |   | 2008 |   |
|   |                              | (Dollars      in Thousands)          |   |
|   |                              |                                 |   |   |   |   |   |
|   | Balance,      beginning of period |  $                              | 2,732  |   | $  |   | 1,591 |   |
|   | Provision      for loan losses    |                                 |   | 135 |   |   |   | 313 |   |
|   | Charge-offs                       |                                 |   | - |   |   |   | - |   |
|   | Recoveries                        |                                 |   | - |   |   |   | - |   |
|   |                              |                                 |   |   |   |   |   |   |   |
|   | Balance,      end of period       |  $                              | 2,867  |   |  $ | 1,904 |   |

|   | The      Company established a provision for loan losses of $135,000 for the      quarter ended December 31, 2009, compared to $313,000 for the comparable      quarter in 2008. The larger provision for the 2008 period primarily      related to a 40-unit condominium project in which another bank acted as      the lead lender that had experienced payment delinquencies and the      estimated net realizable value of the collateral was less than the loan      balance. The loan was subsequently transferred to real estate owned during      the second fiscal quarter of 2009. At December 31, 2009, the Company’s      non-performing assets totaled $6.8 million or 1.3% of total assets. The      non-performing assets consisted of one construction loan totaling      $640,000, three commercial real estate loans totaling $790,000, 11 one-to      four-family residential mortgage loans totaling $1.4 million and four real      estate owned properties totaling $4.1 million. The allowance for loan      losses totaled $2.9 million, or 1.1% of total loans and 103.4% of      non-performing loans at December 31, 2009. At September 30, 2009, the      Company’s non-performing assets totaled $5.6 million or 1.1% of total      assets. At September 30, 2009, non-performing assets consisted of two      commercial real estate loans totaling $491,000, one construction loan      totaling $640,000, ten one-to four-family residential mortgage loans      totaling $851,000 and three real estate owned (“REO”) properties totaling      $3.6 million. The allowance for loan losses totaled $2.7 million, or 1.0%      of total loans, and 137.8% of non-performing loans at September 31,      2009. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | 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, 2009 and September 30, 2009, the recorded investment in      loans that are considered to be impaired was as  follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

|   |                                          | December      31,           |   | September      30, |   |
|--------|-----------------------------------------------|-----------------------------|--------|--------------------|--------|
|   |                                          | 2009                        |   | 2009               |   |
|   |                                          | (Dollars      in thousands) |   |
|   | Impaired      loans with related allowance    | $                           | 1,669  |               | $      | 1,661 |   |
|   | Impaired      loans without related allowance | $                           | -      |               | $      | - |   |
|   | Related      allowance for loan losses        | $                           | 950    |               | $      | 873 |   |

|   | Other      data for impaired loans for the three months ended December 31, 2009 and      2008 is as follow: |
|--------|-------------------------------------------------------------------------------------------------------------|

----

|   |                                              | For      the Three Months EndedDecember      31, |   |
|--------|---------------------------------------------------|--------------------------------------------------|--------|
|   |                                              | 2009                                             |   | 2008 |   |
|   |                                              | (Dollars      in thousands)                      |   |
|   | Average      impaired loans                       | $                                                | 1,665  |   | $ | 4,169 |   |
|   | Interest      income recognized on impaired loans | $                                                | 8      |   | $ | - |   |

|   |                                                         |
|--------|--------------------------------------------------------------|
| 5.     | DEPOSITS                                                     |
|   |                                                         |
|   | Deposits      consist of the following majorclassifications: |

|   |                                               |   | December      31,2009 |    |   | September      30,2009      |   |
|--------|----------------------------------------------------|--------|-----------------------|---------|--------|-----------------------------|--------|
|   |                                               |   |                  |    |   |                        |   |   |   |   |   |   |   |
|   |                                               |   | Amount                |    |   | Percent                     |   |   | Amount |   |   | Percent |   |
|   |                                               |   |                  |    |   | (Dollars      in Thousands) |   |   |   |   |
|   | Money      market deposit accounts                 |   | $                     | 79,015  |   |                        |   | 18.8 | % |   | $ | 75,349 |   |   |   | 17.4 | % |
|   | NOW      accounts                                  |   |                  | 31,488  |   |                        |   | 7.5 |   |   |   | 29,869 |   |   |   | 6.9 |   |
|   | Passbook,      club and statement savings          |   |                  | 69,245  |   |                        |   | 16.4 |   |   |   | 66,968 |   |   |   | 15.5 |   |
|   | Certificates      maturing in six months or less   |   |                  | 104,305 |   |                        |   | 24.8 |   |   |   | 120,636 |   |   |   | 27.9 |   |
|   | Certificates      maturing in more than six months |   |                  | 137,075 |   |                        |   | 32.5 |   |   |   | 139,552 |   |   |   | 32.3 |   |
|   |                                               |   |                  |    |   |                        |   |   |   |   |   |   |   |   |   |   |   |
|   | Total                                              |   | $                     | 421,128 |   |                        |   | 100.0 | % |   | $ | 432,374 |   |   |   | 100.0 | % |

|   | Certificates      of $100,000 and over totaled $81.1 million as of December 31, 2009 and      $91.9 million as of September 30,2009. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|

----

| 6.     | INCOME      TAXES                                                                               |
|--------|-------------------------------------------------------------------------------------------------|
|   |                                                                                            |
|   | Items      that gave rise to significant portions of deferred income taxes are as      follows: |

|   |                                                       |   | December      31,2009       |   |   | September      30,2009 |   |
|--------|------------------------------------------------------------|--------|-----------------------------|--------|--------|------------------------|--------|
|   |                                                       |   | (Dollars      in thousands) |   |
|   | Deferred      tax assets:                                  |   |                        |   |   |                   |   |
|   | Unrealized      loss on available for sale securities      |   | $                           | 361    |   |                   | $      | 201 |   |
|   | Deposit      premium                                       |   |                        | 155    |   |                   |   | 167 |   |
|   | Allowance      for loan losses                             |   |                        | 1,020  |   |                   |   | 974 |   |
|   | Real      estate owned expenses                            |   |                        | 475    |   |                   |   | 469 |   |
|   | Nonaccrual      interest                                   |   |                        | 19     |   |                   |   | 15 |   |
|   | Accrued      vacation                                      |   |                        | 47     |   |                   |   | 44 |   |
|   | Capital      loss carryforward                             |   |                        | 1,873  |   |                   |   | 1,873 |   |
|   | Impairment      loss                                       |   |                        | 1,432  |   |                   |   | 1,363 |   |
|   | Split      dollar life insurance                           |   |                        | 83     |   |                   |   | 84 |   |
|   | Post-retirement      benefits                              |   |                        | 152    |   |                   |   | 154 |   |
|   | Employee      benefit plans                                |   |                        | 289    |   |                   |   | 246 |   |
|   |                                                       |   |                        |   |   |                   |   |   |   |
|   | Total      deferred tax assets                             |   |                        | 5,906  |   |                   |   | 5,590 |   |
|   | Valuation      allowance                                   |   |                        | (2,728 | )      |                   |   | (2,551 | ) |
|   | Total      deferred tax assets, net of valuation allowance |   |                        | 3,178  |   |                   |   | 3,039 |   |
|   |                                                       |   |                        |   |   |                   |   |   |   |
|   | Deferred      tax liabilities:                             |   |                        |   |   |                   |   |   |   |
|   | Property                                                   |   |                        | 482    |   |                   |   | 480 |   |
|   | Mortgage      servicing rights                             |   |                        | 3      |   |                   |   | 4 |   |
|   | Deferred      loan fees                                    |   |                        | 218    |   |                   |   | 212 |   |
|   | Total      deferred tax liabilities                        |   |                        | 703    |   |                   |   | 696 |   |
|   |                                                       |   |                        |   |   |                   |   |   |   |
|   | Net      deferred tax asset                                |   | $                           | 2,475  |   |                   | $      | 2,343 |   |

|   | The      Company establishes a valuation allowance for deferred tax assets when      management believes that the deferred tax assets are not likely to be      realized either through a carry back to taxable income in prior years,      future reversals of existing taxable temporary differences, and, to a      lesser extent, future taxable income. The tax deduction generated by the      redemption of the shares of the mutual fund and the subsequent impairment      charge on the assets acquired through the redemption in kind are      considered to be capital losses and can only be utilized to the extent of      capital gains over a five year period, resulting in the establishment of a      valuation allowance for the carryforward period which expires beginning in      2013. The valuation allowance totaled $2.7 million at December 31, 2009 .      The gross deferred asset related to impairment losses increased by $69,000      during the three months ended December 31, 2009 while the corresponding      valuation allowance increased by $177,000, resulting in additional income      tax expense of $108,000 corresponding to the decrease in value of      available for sale MBS which may be sold in the future to generate capital      gains. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | There      is currently no liability for uncertain tax positions and no known      unrecognized tax benefits. The Company recognizes, when applicable,      interest and penalties related to unrecognized tax benefits in the      provision for income taxes in the Unaudited Consolidated Statement of      Operations. During 2009, the Internal Revenue Service concluded an audit      of the Company’s tax returns for the year ended September 30, 2007 in      which there was no change necessary to the Company’s tax liability. The      Company’s federal and state income tax returns for taxable years through      September 30, 2005 have been closed for purposes of examination by the      Internal Revenue Service and the Pennsylvania Department of      Revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

----

| 7.     | STOCK      COMPENSATION PLANS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | The      Company maintains a Recognition and Retention Plan (“RRP”) which is      administered by a committee of the Board of Directors. The RRP provides      for the grant of shares of common stock of the Company to certain      officers, employees and directors of the Company. In order to fund the      grant of shares under the RRP, the RRP Trust purchased 226,148 shares of      the Company’s common stock in the open market for approximately $2.5      million, at an average price per share of $10.85. The Company made      sufficient contributions to the RRP Trust to fund these purchases. No      additional purchases are expected to be made by the RRP Trust under this      plan. Grants covering 173,228 shares were awarded as part of the RRP, the      remaining shares in the RRP Trust will be available for future awards.      Shares subject to awards under the RRP will generally vest at the rate of      20% per year over five years. As of December 31, 2009, no awards had      become fully or partially vested and no shares were    forfeited. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | Compensation      expense related to the shares subject to awards granted to date is      recognized ratably over the five-year vesting period in an amount which      totals the share price at the grant date. During the three months ended      December 31, 2009, approximately $95,000 was recognized in compensation      expense for the RRP. A tax benefit of $32,000 was recognized during the      three months ended December 31, 2009. There was no compensation expense      recognized related to the RRP during the comparable period in 2008. At      December 31, 2009, approximately $1.5 million in additional compensation      expense for the shares awarded related to the RRP remained      unrecognized.                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   | A      summary of the Company’s non-vested stock award activity for the three      months ended December 31, 2009 is presented in the following      table:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

|   |                                                 |   | Three      Months EndedDecember      31, 2009 |    |
|--------|------------------------------------------------------|--------|-----------------------------------------------|---------|
|   |                                                 |   | Number      ofShares                          |    |   | Weighted      AverageGrant      Date FairValue |   |
|   |                                                 |   |                                          |    |   |   |   |
|   | Nonvested      stock awards at beginning of period   |   |                                          | 173,228 |   |   | $ | 11.17 |   |
|   | Issued                                               |   |                                          | -       |   |   |   | - |   |
|   | Vested                                               |   |                                          | -       |   |   |   | - |   |
|   | Nonvested      stock awards at the end of the period |   |                                          | 173,228 |   |   | $ | 11.17 |   |

|   | The      Company also maintains a Stock Option Plan. The Stock Option Plan      authorizes the grant of stock options to officers, employees and directors      of the Company to acquire shares of common stock with an exercise price at      least equal to the market value of the common stock on the grant date.      Options will generally become vested and exercisable at the rate of 20%      per year over five years and are generally exercisable for a period of ten      years after the grant date. A total of 565,369 shares of common stock are      available for future issuance pursuant to the Stock Option Plan. There      were 315,194 incentive stock options and 113,072 non-qualified stock      options awarded under the plan. As of December 31, 2009, no options were      vested or had been forfeited. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | A      summary of the status of the Company’ stock options under the Stock Option      Plan as of December 31, 2009 and changes during the three month period      ended December 31, 2009 are presentedbelow:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

|   |                                      |   | Three      Months EndedDecember      31, 2009 |    |
|--------|-------------------------------------------|--------|-----------------------------------------------|---------|
|   |                                      |   | Number      ofShares                          |    |   | Weighted      AverageExercise      Price |   |
|   |                                      |   |                                          |    |   |   |   |   |   |
|   | Outstanding      at beginning of period   |   |                                          | 428,266 |   |   | $ | 11.17 |   |
|   | Granted                                   |   |                                          | -       |   |   |   | - |   |
|   | Exercised                                 |   |                                          | -       |   |   |   | - |   |
|   | Forfeited                                 |   |                                          | -       |   |   |   | - |   |
|   | Outstanding      at the end of the period |   |                                          | 428,266 |   |   | $ | 11.17 |   |
|   | Exercisable      at the end of the period |   |                                          | -       |   |   | $ | - |   |

|   | The      weighted average remaining contractual term was approximately 9 years for      options outstanding as of December 31, 2009. No options were exercisable      as of December 31, 2009.                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                       |
|   | The      estimated fair value of options granted during fiscal 2009 was $2.81 per      share. The fair value was estimated on the date of grant in accordance      with FASB ASC Topic 718 using the Black-Scholes pricing model with the      following weighted average assumptionsused: |

|   |                          |   | December      31, 2009 |   |
|--------|-------------------------------|--------|------------------------|--------|
|   | Dividend      yield           |   |                   | 1.79   | % |
|   | Expected      volatility      |   |                   | 27.94  | % |
|   | Risk-free      interest rate  |   |                   | 1.96   | % |
|   | Expected      life of options |   | 6.5      years         |   |

|   | During      the three months ended December 31, 2009, $59,000 was recognized in      compensation expense for the Stock Option Plan. A tax benefit of $6,000      was recognized during the three months ended December 31, 2009. There was      no compensation expense recognized related to the Stock Option Plan during      the comparable period in 2008. At December 31, 2009, approximately      $946,000 in additional compensation expense for awarded options remained      unrecognized. The weighted average period over which this expense will be      recognized is approximately 4 years. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| 8.     | COMMITMENTS      AND CONTINGENT LIABILITIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | At      December 31, 2009, the Company had $10.6 million in outstanding      commitments to originate fixed and variable-rate loans with market      interest rates ranging from 5.00% to 7.25%. At September 30, 2009, the      Company had $11.0 million in outstanding commitments to originate fixed      and variable-rate loans with market interest rates ranging from 5.50% to      6.50%.                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      aggregate undisbursed portion of loans-in-process amounted to $6.9 million      and $6.3 million, respectively, at December 31, 2009 and September 30,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The      Company also had commitments under unused lines of credit of $7.2 million      and $7.7 million at December 31, 2009 and September 30, 2009,      respectively, and letters of credit outstanding of $621,000 at both      December 31, 2009 and September 30, 2009.                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | 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, 2009, 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 OF FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | The      fair value amounts have been determined by the Company using available      market information and appropriate valuation methodologies. However,      considerable judgment is necessarily required to interpret market data to      develop the estimates of fair value.                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | Accordingly,      the estimates presented herein are not necessarily indicative of the      amounts the Company could realize in a current market exchange. The use of      different market assumptions and/or estimation methodologies may have a      material effect on the estimated fair value  amounts.                                                                                                                                                                                                                                                                                                                                |

|                                                                            |   | December      31,           |    |   | September      30, |   |
|---------------------------------------------------------------------------------|--------|-----------------------------|---------|--------|--------------------|--------|
|                                                                            |   | 2009                        |    |   | 2009               |   |
|                                                                            |   |                        |    |   |               |   |   |   |   |   |   |   |
|                                                                            |   | CarryingAmount              |    |   | FairValue          |   |   | CarryingAmount |   |   | FairValue |   |
|                                                                            |   | (Dollars      in thousands) |    |
| Assets:                                                                         |   |                        |    |   |               |   |   |   |   |   |   |   |
| Cash      and cash equivalents                                                  |   | $                           | 11,875  |   |               | $      | 11,875 |   |   | $ | 13,669 |   |   | $ | 13,669 |   |
| Investment      and mortgage-backed securities held to maturity                 |   |                        | 148,271 |   |               |   | 147,450 |   |   |   | 160,126 |   |   |   | 161,968 |   |
| Investment      securities and mortgage-backed securities available for    sale |   |                        | 65,081  |   |               |   | 65,081 |   |   |   | 62,407 |   |   |   | 62,407 |   |
| Loans      receivable, net                                                      |   |                        | 256,002 |   |               |   | 260,487 |   |   |   | 256,694 |   |   |   | 262,000 |   |
| Accrued      interest receivable:                                               |   |                        |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Loans      receivable                                                           |   |                        | 1,429   |   |               |   | 1,429 |   |   |   | 1,419 |   |   |   | 1,419 |   |
| Mortgage-backed      securities                                                 |   |                        | 385     |   |               |   | 385 |   |   |   | 390 |   |   |   | 390 |   |
| Investment      securities                                                      |   |                        | 1,410   |   |               |   | 1,410 |   |   |   | 1,496 |   |   |   | 1,496 |   |
| Federal      Home Loan Bank stock                                               |   |                        | 3,545   |   |               |   | 3,545 |   |   |   | 3,545 |   |   |   | 3,545 |   |
|                                                                            |   |                        |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities:                                                                    |   |                        |    |   |               |   |   |   |   |   |   |   |   |   |   |   |
| NOW      accounts                                                               |   |                        | 31,488  |   |               |   | 31,488 |   |   |   | 29,869 |   |   |   | 29,869 |   |
| Money      market deposit accounts                                              |   |                        | 79,015  |   |               |   | 79,015 |   |   |   | 75,349 |   |   |   | 75,349 |   |
| Passbook,      club and statement savings accounts                              |   |                        | 69,245  |   |               |   | 69,245 |   |   |   | 66,968 |   |   |   | 66,968 |   |
| Certificates      of deposit                                                    |   |                        | 241,380 |   |               |   | 247,258 |   |   |   | 260,188 |   |   |   | 266,192 |   |
| Advances      from Federal Home Loan Bank                                       |   |                        | 23,648  |   |               |   | 24,100 |   |   |   | 19,659 |   |   |   | 20,294 |   |
| Accrued      interest payable                                                   |   |                        | 755     |   |               |   | 755 |   |   |   | 3,463 |   |   |   | 3,463 |   |

|   | Cash      and Cash Equivalents—For cash and cash equivalents, the carrying      amount is a reasonable estimate of fair value.                                                                                                                                                                                          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                          |
|   | Investments      and Mortgage-Backed Securities—The      fair value of investment securities and mortgage-backed securities is      based on quoted market prices, dealer quotes, and prices obtained from      independent pricing services that may be derivable from observable and      unobservable market inputs. |
|   |                                                                                                                                                                                                                                                                                                                          |
|   | Loans      Receivable—The      fair value of loans is estimated based on present value using the current      rates at which similar loans would be made to borrowers with similar      credit ratings and for the same remaining    maturities.                                                                        |
|   |                                                                                                                                                                                                                                                                                                                          |
|   | Accrued      Interest Receivable – For accrued interest receivable, the carrying      amount is a reasonable estimate of fair  value.                                                                                                                                                                                   |

----

|   | Federal      Home Loan Bank (FHLB) Stock—Although      FHLB stock is an equity interest in an FHLB, it is carried at cost because      it does not have a readily determinable fair value as its ownership is      restricted and it lacks a market. The estimated fair value approximates      the carrying amount.                                                                                                                                                                                                                              |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | NOW      Accounts, Money Market Deposit Accounts, Passbook Accounts, Club Accounts,      Statement Savings Accounts, and Certificates of Deposit—The      fair value of passbook accounts, club accounts, statement savings      accounts, NOW accounts, and money market deposit accounts is the amount      reported in the financial statements. The fair value of certificates of      deposit is based on a present value estimate using rates currently offered      for deposits of similar remaining maturity.                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Advances      from Federal Home Loan Bank—The      fair value of advances from FHLB is the amount payable on demand at the      reporting date.                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Accrued      Interest Payable – For accrued interest payable, the carrying      amount is a reasonable estimate of fair value.                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | Commitments      to Extend Credit and Letters of Credit—The      majority of the Bank’s commitments to extend credit and letters of credit      carry current market interest rates if converted to loans. Because      commitments to extend credit and letters of credit are generally      unassignable by either the Bank or the borrower, they only have value to      the Bank and the borrower. The estimated fair value approximates the      recorded deferred fee amounts, which are not      significant.                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 10.    | FAIR      VALUE MEASUREMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      fair value estimates presented herein are based on pertinent information      available to management as of December 31, 2009 and September 30, 2009,      respectively. Although management is not aware of any factors that would      significantly affect the fair value amounts, such amounts have not been      comprehensively revalued for purposes of these financial statements since      that date and, therefore, current estimates of fair value may differ      significantly from the amounts presented herein.                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      Company adopted FASB ASC Topic 820 “Fair Value Measurement and      Disclosures” effective October 1, 2008, which provides a frame work for      measuring fair value under generally accepted accounting procedures. FASB      ASC Topic 820 establishes a fair value hierarchy which requires an entity      to maximize the use of observable inputs and minimizes the use of      unobservable inputs when measuring fair value. The standard describes      three levels of inputs that may be used to measure fair    value. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | The      three broad levels defined by FASB ASC Topic 820 hierarchy are as      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                |

|   | 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. |

----

|   | Those      assets which will continue to be measured at fair value on a recurring      basis as of December 31, 2009 are asfollows: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|

|                                                       |   | Category      Used for Fair Value Measurement |   |
|------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                       |   | Level      1                                  |   | Level      2 |   | Level      3 |   | Total |   |
|                                                       |   | (Dollars      in Thousands)                   |   |
|                                                       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                    |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government and agency obligations                |   | $                                             | -      |   | $ | 1,935 |   | $ | - |   | $ | 1,935 |   |
| Mortgage-backed      securities - U.S. Government agencies |   |                                          |   |   |   | 55,627 |   |   |   |   |   | 55,627 |   |
| Mortgage-backed      securities - Non-agency               |   |                                          | -      |   |   | 7,402 |   |   | 78 |   |   | 7,480 |   |
| FNMA      and FHLMC preferred stock                        |   |                                          | 39     |   |   | - |   |   | - |   |   | 39 |   |
| Total                                                      |   | $                                             | 39     |   | $ | 64,964 |   | $ | 78 |   | $ | 65,081 |   |

|   | Those      assets measured at fair value on a recurring basis as of September 30,      2009 were as follows: |
|--------|--------------------------------------------------------------------------------------------------------------|

|                                                       |   | Category      Used for Fair Value Measurement |   |
|------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                       |   | Level      1                                  |   | Level      2 |   | Level      3 |   | Total |   |
|                                                       |   | (Dollars      in Thousands)                   |   |
|                                                       |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Assets:                                                    |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| Securities      available for sale:                        |   |                                          |   |   |   |   |   |   |   |   |   |   |   |
| U.S.      Government and agency obligations                |   | $                                             | -      |   | $ | 1,982 |   | $ | - |   | $ | 1,982 |   |
| Mortgage-backed      securities - U.S. Government agencies |   |                                          | -      |   |   | 52,611 |   |   | - |   |   | 52,611 |   |
| Mortgage-backed      securities - Non-agency               |   |                                          | -      |   |   | 7,685 |   |   | 82 |   |   | 7,767 |   |
| FNMA      and FHLMC preferred stock                        |   |                                          | 47     |   |   | - |   |   | - |   |   | 47 |   |
| Total                                                      |   | $                                             | 47     |   | $ | 62,278 |   | $ | 82 |   | $ | 62,407 |   |

|   | As      a result of general market conditions and the illiquidity in the market      for certain non-agency mortgage-backed securities, management deemed it      necessary to classify certain securities as Level 3. These securities were      priced by a third party specialist utilizing recent prices for similar      securities as inputs in the standard discounted cash flow model, adjusted      for assumptions unobservable in the market. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The      following provides details of the fair value measurement activity for      Level 3 of the three months ended December 31,  2009:                                                                                                                                                                                                                                                                                                                |

----

|                                                   |   | Measurements      UsingSignificantUnobservable      Inputs(Level      3) |   |
|--------------------------------------------------------|--------|--------------------------------------------------------------------------|--------|
|                                                   |   | Non-agency      mortgage-backed      securities                          |   |
|                                                   |   | (Dollars      in Thousands)                                              |   |
|                                                   |   |                                                                     |   |   |
| Balance,      October 1, 2009:                         |   | $                                                                        | 82     |   |
| Total      losses, realized/unrealized                 |   |                                                                     |   |   |
| Included      in earnings                              |   |                                                                     | (1     | ) |
| Included      in accumulated other comprehensive loss  |   |                                                                     | 6      |   |
| Purchases,      maturities, prepayments and calls, net |   |                                                                     | (9     | ) |
| Transfers      from Level 3, net                       |   |                                                                     | -      |   |
| Balance,      December 31, 2009:                       |   | $                                                                        | 78     |   |

|                   |   | At      December 31, 2009 |   |         |   |
|------------------------|--------|---------------------------|--------|--------------|--------|
|                   |   | Level      1              |   | Level      2 |   | Level      3 |   | Total |   |
| Impaired      loans    |   | $                         | -      |         | $      | 719 |   | $ | - |   | $ | 719 |   |
| Real      estate owned |   |                      | -      |         |   | 4,059 |   |   | - |   | $ | 4,059 |   |
| Total                  |   | $                         | -      |         | $      | 4,778 |   | $ | - |   | $ | 4,778 |   |

----

|                   |   | At      September 30, 2009 |   |         |   |
|------------------------|--------|----------------------------|--------|--------------|--------|
|                   |   | Level      1               |   | Level      2 |   | Level      3 |   | Total |   |
| Impaired      loans    |   | $                          | -      |         | $      | 788 |   | $ | - |   | $ | 788 |   |
| Real      estate owned |   |                       | -      |         |   | 3,622 |   |   | - |   | $ | 3,622 |   |
| Total                  |   | $                          | -      |         | $      | 4,410 |   | $ | - |   | $ | 4,410 |   |

| 11. | SUBSEQUENT      EVENTS |
|-----|------------------------|

----

|   |    |                                                                                                                                                                                                                     |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | ● | Levels      of past due, classified and non-accrual loans, troubled debt      restructurings and modifications                                                                                                           |
|   | ● | Nature      and volume of loans                                                                                                                                                                                          |
|   | ● | Changes      in lending policies and procedures, underwriting standards, collections,      charge-offs and recoveries and for commercial loans, the level of loans      being approved with exceptions to lending policy |
|   | ● | Experience,      ability and depth of management and staff                                                                                                                                                               |
|   | ● | National      and local economic and business conditions, including various market      segments                                                                                                                         |
|   | ● | Quality      of the Company’s loan review system and degree of Board      oversight                                                                                                                                |
|   | ● | Concentrations      of credit and changes in levels of such concentrations                                                                                                                                               |
|   | ● | Effect      of external factors on the level of estimated credit losses in the current      portfolio                                                                                                                    |

----

----

----

----

|                                                                              |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |
|-----------------------------------------------------------------------------------|--------|------------------------------------------|---------|--------|----------|--------|--------|-------------------|--------|--------|----------------|--------|--------|----------|---------|--------|-------------------|--------|
|                                                                              |   | Three      MonthsEnded      December 31, |    |
|                                                                              |   |                                     |    |   | 2009     |   |   |              |   |   |           |   |   | 2008     |    |   |              |   |
|                                                                              |   | AverageBalance                           |    |   | Interest |   |   | AverageYield/Rate |   |   | AverageBalance |   |   | Interest |    |   | AverageYield/Rate |   |
|                                                                              |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |
|                                                                              |   | (Dollars      in Thousands)              |    |
|                                                                              |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |
| Interest-earning      assets:                                                     |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |
| Investment      securities                                                        |   | $                                        | 126,535 |   |     | $      | 1,490  |              |   |   | 4.71           | %      |   | $        | 130,742 |   |              | $      | 1,727 |   |   |   | 5.28 | % |
| Mortgage-backed      securities                                                   |   |                                     | 94,671  |   |     |   | 1,223  |              |   |   | 5.17           |   |   |     | 92,025  |   |              |   | 1,756 |   |   |   | 7.63 |   |
| Loans      receivable(1)                                                          |   |                                     | 256,079 |   |     |   | 3,751  |              |   |   | 5.86           |   |   |     | 249,564 |   |              |   | 3,727 |   |   |   | 5.97 |   |
| Other      interest-earning assets (2)                                            |   |                                     | 5,100   |   |     |   | 2      |              |   |   | 0.16           |   |   |     | 7,743   |   |              |   | 17 |   |   |   | 0.88 |   |
| Total      interest-earning assets                                                |   |                                     | 482,385 |   |     |   | 6,466  |              |   |   | 5.36           |   |   |     | 480,074 |   |              |   | 7,227 |   |   |   | 6.02 |   |
| Cash      and non-interest-bearing balances                                       |   |                                     | 8,010   |   |     |   |   |              |   |   |           |   |   |     | 3,538   |   |              |   |   |   |   |   |   |   |
| Other      non-interest-earning assets                                            |   |                                     | 18,180  |   |     |   |   |              |   |   |           |   |   |     | 14,008  |   |              |   |   |   |   |   |   |   |
| Total      assets                                                                 |   | $                                        | 508,575 |   |     |   |   |              |   |   |           |   |   | $        | 497,620 |   |              |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |   |   |   |   |   |   |
| Savings      accounts                                                             |   | $                                        | 67,997  |   |     |   | 327    |              |   |   | 1.92           |   |   | $        | 65,007  |   |              |   | 442 |   |   |   | 2.72 |   |
| Money      market deposit and NOW accounts                                        |   |                                     | 106,462 |   |     |   | 293    |              |   |   | 1.10           |   |   |     | 92,465  |   |              |   | 606 |   |   |   | 2.62 |   |
| Certificates      of deposit                                                      |   |                                     | 246,200 |   |     |   | 1,650  |              |   |   | 2.68           |   |   |     | 221,264 |   |              |   | 2,109 |   |   |   | 3.81 |   |
| Total      deposits                                                               |   |                                     | 420,659 |   |     |   | 2,270  |              |   |   | 2.16           |   |   |     | 378,736 |   |              |   | 3,157 |   |   |   | 3.33 |   |
| Advances      from Federal Home Loan Bank                                         |   |                                     | 20,043  |   |     |   | 217    |              |   |   | 4.33           |   |   |     | 43,064  |   |              |   | 303 |   |   |   | 2.81 |   |
| Advances      from borrowers for taxes and insurance                              |   |                                     | 1,476   |   |     |   | 2      |              |   |   | 0.54           |   |   |     | 1,589   |   |              |   | 2 |   |   |   | 0.50 |   |
| Total      interest-bearing liabilities                                           |   |                                     | 442,178 |   |     |   | 2,489  |              |   |   | 2.25           |   |   |     | 423,389 |   |              |   | 3,462 |   |   |   | 3.27 |   |
| Non-interest-bearing      liabilities:                                            |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |   |   |   |   |   |   |
| Non-interest-bearing      demand accounts                                         |   |                                     | 3,047   |   |     |   |   |              |   |   |           |   |   |     | 4,016   |   |              |   |   |   |   |   |   |   |
| Other      liabilities                                                            |   |                                     | 7,449   |   |     |   |   |              |   |   |           |   |   |     | 2,907   |   |              |   |   |   |   |   |   |   |
| Total      liabilities                                                            |   |                                     | 452,674 |   |     |   |   |              |   |   |           |   |   |     | 430,312 |   |              |   |   |   |   |   |   |   |
| Stockholders’      equity                                                   |   |                                     | 55,901  |   |     |   |   |              |   |   |           |   |   |     | 67,308  |   |              |   |   |   |   |   |   |   |
| Total      liabilities and stockholders’ equity                             |   | $                                        | 508,575 |   |     |   |   |              |   |   |           |   |   | $        | 497,620 |   |              |   |   |   |   |   |   |   |
| Net      interest-earning assets                                                  |   | $                                        | 40,207  |   |     |   |   |              |   |   |           |   |   | $        | 56,685  |   |              |   |   |   |   |   |   |   |
| Net      interest income; interest rate spread                                    |   |                                     |    |   |     | $      | 3,977  |              |   |   | 3.11           | %      |   |     |    |   |              | $      | 3,765 |   |   |   | 2.75 | % |
| Net      interest margin(3)                                                       |   |                                     |    |   |     |   |   |              |   |   | 3.30           | %      |   |     |    |   |              |   |   |   |   |   | 3.14 | % |
|                                                                              |   |                                     |    |   |     |   |   |              |   |   |           |   |   |     |    |   |              |   |   |   |   |   |   |   |
| Average      interest-earning assets to average interest-bearing      liabilities |   |                                     |    |   |     |   | 109.09 | %                 |   |   |           |   |   |     |    |   |              |   | 113.39 | % |   |   |   |   |

----

| (1)    | Includes      non-accrual loans. Calculated net of unamortized deferred fees,      undisbursed portion of loans-in-process and allowance for loan      losses.  |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                            |
| (2)    | Yield      decreased substantially due to declining federal reserve overnight      investment rates during the 2009 period as compared to the 2008      period. |
|   |                                                                                                                                                            |
| (3)    | Equals      net interest income divided by average interest-earning      assets.                                                                                |

----

----

----

|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|--------|-----------------------------------------------|--------|-------------------|--------|------------------------------------------------|--------|----------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
|   |                                          |   | Actual      Ratio |   | Required      forCapital      AdequacyPurposes |   | To      BeWell      CapitalizedUnder      PromptCorrective      ActionProvisions |   |
|   | December      31, 2009:                       |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Tier      1 capital (to average assets)       |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 11.14  | %                                              |   |                                                                             | 4.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 10.15  | %                                              |   |                                                                             | 4.0    | %      |   |   | 5.0    | %      |   |
|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Tier      1 capital (to risk weighted assets) |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 24.68  | %                                              |   |                                                                             | 4.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 22.49  | %                                              |   |                                                                             | 4.0    | %      |   |   | 6.0    | %      |   |
|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Total      capital (to risk weighted assets)  |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 25.93  | %                                              |   |                                                                             | 8.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 23.74  | %                                              |   |                                                                             | 8.0    | %      |   |   | 10.0   | %      |   |
|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | September      30, 2009:                      |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Tier      1 capital (to average assets)       |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 10.86  | %                                              |   |                                                                             | 4.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 9.99   | %                                              |   |                                                                             | 4.0    | %      |   |   | 5.0    | %      |   |
|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Tier      1 capital (to risk weighted assets) |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 24.59  | %                                              |   |                                                                             | 4.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 22.61  | %                                              |   |                                                                             | 4.0    | %      |   |   | 6.0    | %      |   |
|   |                                          |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | Total      capital (to risk weighted assets)  |   |              |   |                                           |   |                                                                             |   |   |   |   |   |   |   |
|   | The      Company                              |   |              | 25.79  | %                                              |   |                                                                             | 8.0    | %      |   |   | N/A    |   |   |
|   | The      Bank                                 |   |              | 23.81  | %                                              |   |                                                                             | 8.0    | %      |   |   | 10.0   | %      |   |

----

----

|                                                                                                                         |   |   | 3      Monthsor      Less   |   | More      than3      Monthsto      1 Year |   | More      than1      Yearto      3 Years |   | More      than3      Yearsto      5 Years |    | More      than5      Years |   | TotalAmount |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------|--------|-------------------------------------------|--------|------------------------------------------|--------|-------------------------------------------|---------|----------------------------|--------|-------------|--------|
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |
|                                                                                                                         |   |   | (Dollars      in Thousands) |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |
| Interest-earning      assets(1):                                                                                             |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Investment      and mortgage-backed securities(2)                                                                            |   |   | $                           | 11,077 |                                      | $      | 20,607                                   |   | $                                         | 22,936  |                       | $      | 14,301      |   | $ | 145,494 |   |   | $ | 214,415 |   |
| Loans      receivable(3)                                                                                                     |   |   |                        | 30,931 |                                      |   | 59,365                                   |   |                                      | 81,994  |                       |   | 42,964      |   |   | 42,974 |   |   |   | 258,228 |   |
| Other      interest-earning assets(4)                                                                                        |   |   |                        | 8,661  |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   | 8,661 |   |
| Total      interest-earning assets                                                                                           |   |   | $                           | 50,669 |                                      | $      | 79,972                                   |   | $                                         | 104,930 |                       | $      | 57,265      |   | $ | 188,468 |   |   | $ | 481,304 |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Interest-bearing      liabilities:                                                                                           |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Savings      accounts                                                                                                        |   |   | $                           | 133    |                                      | $      | 145                                      |   | $                                         | 41,661  |                       | $      | 13,887      |   | $ | 13,887 |   |   | $ | 69,713 |   |
| Money      market deposit and NOW accounts                                                                                   |   |   |                        |   |                                      |   | 39,508                                   |   |                                      | 56,758  |                       |   | 5,750       |   |   | 5,750 |   |   |   | 107,766 |   |
| Certificates      of deposit                                                                                                 |   |   |                        | 60,076 |                                      |   | 91,078                                   |   |                                      | 66,772  |                       |   | 23,454      |   |   |   |   |   |   | 241,380 |   |
| Advances      from Federal Home Loan Bank                                                                                    |   |   |                        | 10,028 |                                      |   | 13,085                                   |   |                                      | 195     |                       |   |        |   |   | 340 |   |   |   | 23,648 |   |
| Advances      from borrowers for taxes and insurance                                                                         |   |   |                        | 1,810  |                                      |   | -                                        |   |                                      | -       |                       |   | -           |   |   | - |   |   |   | 1,810 |   |
| Total      interest-bearing liabilities                                                                                      |   |   | $                           | 72,047 |                                      | $      | 143,816                                  |   | $                                         | 165,386 |                       | $      | 43,091      |   | $ | 19,977 |   |   | $ | 444,317 |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Interest-earning      assets less interest-bearing liabilities                                                               |   |   | ($                          | 21,378 | )                                         | ($     | 63,844                                   | )      | ($                                        | 60,456  | )                          | $      | 14,174      |   | $ | 168,491 |   |   | $ | 36,987 |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate sensitivity gap (5)                                                                            |   |   | ($                          | 21,378 | )                                         | ($     | 85,222                                   | )      | ($                                        | 145,678 | )                          | ($     | 131,504     | )      | $ | 36,987 |   |   |   |   |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Cumulative      interest-rate gap as a percentage of total assets at December 31,      2009                                  |   |   |                        | -4.15  | %                                         |   | -16.56                                   | %      |                                      | -28.30  | %                          |   | -25.55      | %      |   | 7.19 | % |   |   |   |   |
|                                                                                                                         |   |   |                        |   |                                      |   |                                     |   |                                      |    |                       |   |        |   |   |   |   |   |   |   |   |
| Cumulative      interest-earning assets as a percentage of cumulative interest-bearing      liabilities at December 31, 2009 |   |   |                        | 70.33  | %                                         |   | 60.52                                    | %      |                                      | 61.79   | %                          |   | 69.01       | %      |   | 108.32 | % |   |   |   |   |

| (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)    | Includes      FHLB stock.                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                           |
| (5)    | 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                                                                    |   | $                           | 10,840        |                                           | $             |  (50,619 | )              |   | (82.36 | )%     |   | 2.45   | %      |   | (9.58  | )%     |
| 200                                                                    |   |                        | 25,995        |                                           |          | (35,464       | )              |   | (57.70 | )%     |   | 5.61   | %      |   | (6.42  | )%     |
| 100                                                                    |   |                        | 43,698        |                                           |          | (17,761       | )              |   | (28.90 | )%     |   | 8.97   | %      |   | (3.06  | )%     |
| Static                                                                 |   |                        | 61,459        |                                           |          | -             |           |   | -      |   |   | 12.03  | %      |   | -      |   |
| (100)                                                                  |   |                        | 68,945        |                                           |          | 7,486         |           |   | 12.18  | %      |   | 13.14  | %      |   | 1.11   | %      |
| (200)                                                                  |   |                        | 69,656        |                                           |          | 8,197         |           |   | 13.34  | %      |   | 13.15  | %      |   | 1.12   | %      |
| (300)                                                                  |   |                        | 72,603        |                                           |          | 11,144        |           |   | 18.13  | %      |   | 13.59  | %      |   | 1.56   | %      |

----

----

|   |   |                                                                                                           |
|--------|--------|----------------------------------------------------------------------------------------------------------------|
|   | (a)    | Not      applicable                                                                                            |
|   |   |                                                                                                           |
|   | (b)    | Not      applicable                                                                                            |
|   |   |                                                                                                           |
|   | (c)    | There      were no repurchases of common stock by the Company during the quarter      ended December 31, 2009. |

|                                      |   |                                     |   |                                 |   |                                                                                         |   |                                                                                          |   |   |   |   |   |
|-------------------------------------------|--------|------------------------------------------|--------|--------------------------------------|--------|----------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|
| Period                                    |   | Total      Numberof      SharesPurchased |   | Average      PricePaid      perShare |   | TotalNumber      ofSharesPurchased      asPart      ofPubliclyAnnouncedPlans      orPrograms |   | Maximum      Numberof      Shares that MayYet      be PurchasedUnder      the Plan orPrograms |   |
| October      1 – October 31, 2009   |   |                                     | 8,500  |                                 | $      | 10.12                                                                                        |   |                                                                                          | 8,500  |   |   | 64,648 |   |
| November      1 – November 30, 2009 |   |                                     | 6,400  |                                 |   | 10.02                                                                                        |   |                                                                                          | 6,400  |   |   | 58,248 |   |
| December      1 - December 31, 2009       |   |                                     | 17,048 |                                 |   | 9.83                                                                                         |   |                                                                                          | 17,048 |   |   | 41,200 |   |
|                                      |   |                                     |   |                                 |   |                                                                                         |   |                                                                                          |   |   |   |   |   |
| Total                                     |   |                                     | 31,948 |                                 | $      | 9.94                                                                                         |   |                                                                                          | 31,948 |   |   | 41,200 |   |

----

|   |                                                                                                                                                                                                                                                                                         |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1)    | On      January 21, 2009, the MHC announced its second stock purchase plan      (“Second Plan”) to purchase up to 198,000 shares of the Company’s common      stock, or approximately 5% of the Company’s common stock held by      shareholders other than the MHC. |
|   |                                                                                                                                                                                                                                                                                         |
| (2)    | The      Second Plan was completed on December 2, 2009.                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                         |
| (3)    | The      MHC announced on December 16, 2009 that its Board of Directors approved      its third stock purchase plan to purchase up to 50,000 shares of the      Company’s common stock                                                                                                 |

----

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

----

|   |                   |                                                  |   |
|--------|------------------------|-------------------------------------------------------|--------|
| Date:  | February      16, 2010 |    By:      /s/ Thomas      A. Vento   |   |
|   |                   | Thomas      A. Vento                                  |
|   |                   | President      and Chief Executive Officer            |
|   |                   |                                                  |
| Date:  | February      16, 2010 |    By:      /s/ Joseph      R. Corrato |   |
|   |                   | Joseph      R. Corrato                                |
|   |                   | Executive      Vice President and Chief               |
|   |                   |         Financial Officer                   |