<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549


                                    FORM 10-Q

(MARK ONE)

 X       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
---      EXCHANGE ACT OF 1934
         FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2005

                                       OR

         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
---      EXCHANGE ACT OF 1934
         FOR THE TRANSITION PERIOD FROM ___________________TO___________________

         COMMISSION FILE NUMBER: 000-51214


                    PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
             (Exact Name of Registrant as Specified in Its Charter)

          PENNSYLVANIA                                       68-0593604
 (State or Other Jurisdiction of                        (I.R.S. Employer
  Incorporation or Organization)                        Identification No.)

                               1834 OREGON AVENUE
                        PHILADELPHIA, PENNSYLVANIA 19145
               (Address of Principal Executive Offices) (Zip Code)

                                 (215) 755-1500
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x   No
                                      ---    ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes     No x
                                               ---    ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 11, 2005: 12,497,450

<PAGE>
<TABLE>
<CAPTION>
<S>                                                                           <C>
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

TABLE OF CONTENTS

                                                                                        PAGE
                                                                                        ----
PART I         FINANCIAL INFORMATION:

     Item 1.   Condensed Financial Statements

               Unaudited Consolidated Statements of Financial Condition
               as of June 30, 2005 and September 30, 2004                                2

               Unaudited Consolidated Statements of Income for the Three
               and Nine Months Ended June 30, 2005 and 2004                              3

               Unaudited Consolidated Statement of Changes in Stockholders'
               Equity and Comprehensive Income for the Nine Months Ended
               June 30, 2005                                                             4

               Unaudited Consolidated Statements of Cash Flows for the Nine
               Months Ended June 30, 2005 and 2004                                       5

               Notes to Unaudited Consolidated Financial Statements                      6

     Item 2.   Management's Discussion and Analysis of Financial Condition and
               Results of Operations                                                     14

     Item 3.   Quantitative and Qualitative Disclosures About Market Risk                22

     Item 4.   Controls and Procedures                                                   25

PART II        OTHER INFORMATION

     Item 1.   Legal Proceedings                                                         26

     Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds               26

     Item 3.   Defaults Upon Senior Securities                                           26

     Item 4.   Submission of Matters to a Vote of Security Holders                       26

     Item 5.   Other Information                                                         26

     Item 6.   Exhibits                                                                  26

     SIGNATURES                                                                          27
</TABLE>

                                       1
<PAGE>
<TABLE>
<CAPTION>
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
--------------------------------------------------------------------------------------------------------------------------

                                                                                             JUNE 30,       SEPTEMBER 30,
                                                                                               2005             2004
                                                                                          ---------------  ---------------
<S>                                                                                        <C>              <C>
ASSETS

Cash and amounts due from depository institutions                                          $   4,463,123    $   4,627,592
Interest-bearing deposits                                                                     28,737,015        5,433,169
                                                                                          ---------------  ---------------

          Total cash and cash equivalents                                                     33,200,138       10,060,761

Investment securities held to maturity (estimated fair value--June 30, 2005,
  $123,712,021; September 30, 2004, $114,491,562)                                            124,102,823      114,806,161
Investment securities available for sale (amortized cost--June 30, 2005, $38,007,116;
  September 30, 2004, $39,007,038)                                                            38,991,657       40,286,790
Mortgage-backed securities held to maturity (estimated fair value--
  June 30, 2005, $68,669,171 ; September 30, 2004, $82,074,306)                               67,176,465       80,931,942
Loans receivable--net of allowance for loan losses (June 30, 2005, $557,956;
  September 30, 2004, $557,956)                                                              170,487,716      151,564,693
Accrued interest receivable:
  Loans receivable                                                                               885,924          770,610
  Mortgage-backed securities                                                                     294,352          357,011
  Investment securities                                                                        1,728,514        1,520,046
Real estate owned                                                                                422,784          547,784
Federal Home Loan Bank stock--at cost                                                          1,646,000        2,074,000
Office properties and equipment--net                                                           1,793,603        1,879,367
Prepaid expenses and other assets                                                              3,546,465        1,839,059
                                                                                          ---------------  ---------------

TOTAL ASSETS                                                                               $ 444,276,441    $ 406,638,224
                                                                                          ===============  ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES:
  Deposits:
     Noninterest-bearing                                                                   $   3,724,686    $   2,231,839
     Interest-bearing                                                                        329,399,517      346,926,671
                                                                                          ---------------  ---------------
          Total deposits                                                                     333,124,203      349,158,510
  Advances from Federal Home Loan Bank                                                        13,833,178       13,862,127
  Accrued interest payable                                                                     1,348,129        1,851,239
  Advances from borrowers for taxes and insurance                                              1,729,549        1,030,168
  Accounts payable and accrued expenses                                                        2,971,391        1,601,646
  Accrued dividend payable                                                                       499,898                -
  Deferred income taxes                                                                           75,069           35,997
                                                                                          ---------------  ---------------

          Total liabilities                                                                  353,581,417      367,539,687
                                                                                          ---------------  ---------------

COMMITMENTS AND CONTINGENCIES (Notes 4 and 8)

STOCKHOLDERS' EQUITY:
  Preferred stock, $.01par value, 10,000,000 shares authorized; none issued                            -                -
  Common stock, $.01 par value, 40,000,000 shares authorized; issued 12,563,750;
     outstanding - 12,497,450 at June 30, 2005; 0 at September 30, 2004                          125,638                -
  Additional paid-in capital                                                                  54,723,810                -
  Unearned ESOP shares                                                                        (4,405,389)               -
  Treasury stock, at cost: 66,300 shares  at June 30, 2005;
     0 shares at September 30, 2004                                                             (654,415)               -
  Retained earnings                                                                           40,265,429       38,266,698
  Accumulated other comprehensive income                                                         639,951          831,839
                                                                                          ---------------  ---------------

          Total stockholders' equity                                                          90,695,024       39,098,537
                                                                                          ---------------  ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $ 444,276,441    $ 406,638,224
                                                                                          ===============  ===============

See notes to unaudited consolidated financial statements.

                                                             2
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
---------------------------------------------------------------------------------------------------------------------------

                                                          THREE MONTHS ENDED                    NINE MONTHS ENDED
                                                               JUNE 30,                             JUNE 30,
                                                  -----------------------------------   -----------------------------------
                                                       2005               2004               2005              2004
                                                  ----------------   ----------------   ----------------   ----------------
<S>                                                <C>                <C>                <C>                <C>
INTEREST INCOME:
  Interest and fees on loans                       $    2,570,161     $    2,114,348     $    7,211,401     $    6,386,871
  Interest on mortgage-backed securities                  910,868          1,099,341          2,915,620          3,357,537
  Interest and dividends on investments                 1,932,482          1,585,294          5,403,831          4,756,016
                                                   --------------     --------------     --------------     --------------

          Total interest income                         5,413,511          4,798,983         15,530,852         14,500,424
                                                   --------------     --------------     --------------     --------------

INTEREST EXPENSE:
  Interest on deposits                                  2,091,932          2,042,721          6,231,128          6,172,787
  Interest on borrowings                                  193,118            193,349            579,528            582,309
                                                   --------------     --------------     --------------     --------------

          Total interest expense                        2,285,050          2,236,070          6,810,656          6,755,096
                                                   --------------     --------------     --------------     --------------

NET INTEREST INCOME                                     3,128,461          2,562,913          8,720,196          7,745,328

PROVISION FOR LOAN LOSSES                                       -             30,000                  -             40,000
                                                   --------------     --------------     --------------     --------------

NET INTEREST  INCOME AFTER PROVISION
  FOR LOAN LOSSES                                       3,128,461          2,532,913          8,720,196          7,705,328
                                                   --------------     --------------     --------------     --------------

NON-INTEREST INCOME:
  Fees and other service charges                          104,511            125,290            353,461            365,388
  Other                                                    22,656             21,868             75,224             66,206
                                                   --------------     --------------     --------------     --------------

          Total non-interest income                       127,167            147,158            428,685            431,594
                                                   --------------     --------------     --------------     --------------

NON-INTEREST EXPENSES:
  Salaries and employee benefits                          971,568            987,429          2,956,180          2,931,305
  Data processing                                         116,937            113,080            365,084            289,097
  Office occupancy                                         76,152             66,027            222,637            236,840
  Depreciation                                             64,994             68,390            197,816            201,133
  Payroll taxes                                            54,830             52,093            183,083            171,828
  Director compensation                                    55,812             38,550            162,061             95,400
  Professional services                                    76,730             38,499            161,728            121,711
  Litigation expense                                            -            404,013            120,000            404,013
  Other                                                   264,734            365,484            777,541            986,443
                                                   --------------     --------------     --------------     --------------

          Total non-interest expenses                   1,681,757          2,133,565          5,146,130          5,437,770
                                                   --------------     --------------     --------------     --------------

INCOME BEFORE INCOME TAXES                              1,573,871            546,506          4,002,751          2,699,152
                                                   --------------     --------------     --------------     --------------

INCOME TAXES:
  Current                                                 543,248             63,937          1,261,727            798,880
  Deferred                                                 23,327             46,886            142,395            143,295
                                                   --------------     --------------     --------------     --------------

          Total                                           566,575            110,823          1,404,122            942,175
                                                   --------------     --------------     --------------     --------------

NET INCOME                                          $   1,007,296      $     435,683      $   2,598,629      $   1,756,977
                                                   ==============     ==============     ==============     ==============

BASIC EARNINGS PER SHARE                            $        0.08             (1)               (2)                 (1)

DILUTED EARNINGS PER SHARE                          $        0.08             (1)               (2)                 (1)

---------------------------------------------------------------------------------------------------------------------------

(1)     For the 2004 periods, no shares of common stock were outstanding.

(2)     Due to timing of the Bank's reorganization into the mutual holding company form and the completion of the Company's
initial public offering on March 29, 2005, earnings per share information for the periods prior to the quarter ended June
30, 2005 is not considered meaningful and is not shown

See notes to unaudited consolidated financial statements.

                                                             3
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND
COMPREHENSIVE INCOME
------------------------------------------------------------------------------------------------------------------------------------

                                                                                          ACCUMULATED
                                     ADDITIONAL    UNEARNED                                 OTHER          TOTAL
                           COMMON     PAID-IN        ESOP       TREASURY     RETAINED   COMPREHENSIVE   STOCKHOLDERS'  COMPREHENSIVE
                            STOCK     CAPITAL       SHARES        STOCK      EARNINGS   INCOME (LOSS)      EQUITY          INCOME

<S>                       <C>       <C>          <C>           <C>         <C>            <C>          <C>             <C>
BALANCE, OCTOBER 1, 2004  $      -  $         -  $          -  $        -  $  38,266,698  $  831,839   $  39,098,537   $          -

 Comprehensive income:

   Net income                                                                  2,598,629                   2,598,629      2,598,629

   Net unrealized
    holding loss on
    available for
    sale securities
    arising during
    the period, net
    of income tax
    benefit of
    $103,324                                                                                (191,888)       (191,888)      (191,888)
                                                                                                                       -------------

   Comprehensive income                                                                                                $  2,406,741
                                                                                                                       =============

 Capitalization of
   mutual holding
   company                                                                      (100,000)                   (100,000)

 Cash dividend ($.04
   per share)                                                                   (499,898)                   (499,898)

 Issuance of common
   stock                   125,638   54,724,693                                                           54,850,331

 Treasury stock
   purchased                                                    (654,415)                                   (654,415)

 Purchase of ESOP
   shares                                         (4,461,166)                                             (4,461,166)

 ESOP shares committed
   to be released                          (833)      55,777                                                  54,944

                        ----------  -----------  ------------  ----------  -------------  ----------   -------------

BALANCE, JUNE 30, 2005  $  125,638  $54,723,860  $(4,405,389)  $(654,415)  $  40,265,429  $  639,951   $  90,695,074
                        ==========  ===========  ============  ==========  =============  ==========   =============


                                                                 4
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------------------------------

                                                                                       NINE MONTHS ENDED
                                                                                           JUNE 30,
                                                                               --------------------------------
                                                                                     2005            2004
                                                                               ---------------  ---------------
<S>                                                                             <C>              <C>
OPERATING ACTIVITIES:
  Net income                                                                    $   2,598,629    $   1,756,977
  Adjustments to reconcile net income to net cash used in
    operating activities:
    Provision for loan losses                                                               -           40,000
    Depreciation                                                                      197,816          201,133
    Net accretion of premiums/discounts                                               (53,793)         (34,173)
    Net accretion of deferred loan fees and costs                                    (188,483)        (179,358)
    Amortization of ESOP                                                               54,439                -
    Deferred income tax expense                                                       142,395          143,295
    Changes in assets and liabilities which (used) provided cash:
      Accounts payable and accrued expenses                                          (630,255)        (296,846)
      Accrued interest payable                                                       (503,110)        (547,985)
      Prepaid expenses and other assets                                               292,594          171,004
      Accrued interest receivable                                                    (261,123)        (348,416)
                                                                                -------------    -------------
               Net cash provided by operating activities                            1,649,109          905,631
                                                                                -------------    -------------
INVESTING ACTIVITIES:
  Purchase of investment securities held to maturity                              (35,533,500)     (37,834,519)
  Purchase of mortgage-backed securities held to maturity                                   -      (19,718,541)
  Loans originated or acquired                                                    (56,720,324)     (45,764,000)
  Principal collected on loans                                                     37,986,239       38,601,756
  Principal payments received on mortgage-backed securities
     held-to-maturity                                                              13,777,848       18,407,597
  Proceeds from calls/maturities of investment securities held to maturity         26,268,182       25,500,000
  Proceeds from calls/sales of investment securities available for sale             1,000,000        3,005,837
  Purchase of Federal Home Loan Bank stock                                            (18,300)         (55,200)
  Proceeds from redemption of Federal Home Loan Bank stock                            446,300          245,100
  Proceeds from the sale of real estate owned                                         125,000                -
  Purchases of equipment                                                             (112,052)        (273,306)
                                                                                -------------    -------------
               Net cash used in investing activities                              (12,780,607)     (17,885,276)
                                                                                -------------    -------------
FINANCING ACTIVITIES:
  Net (decrease) increase in demand deposits, NOW accounts,
     and savings accounts                                                          (6,861,019)      13,468,711
  Net decrease in certificates of deposit                                          (9,173,288)      (1,117,206)
  Repayment of advances from Federal Home Loan Bank                                   (28,949)         (28,262)
  Increase in advances from borrowers for taxes and insurance                         699,381          540,669
  Proceeds from stock issuance, net of conversion costs                            54,850,331                -
  Capitalization of mutual holding company                                           (100,000)               -
  Purchase of stock for ESOP                                                       (4,461,166)               -
  Purchase of treasury stock                                                         (654,415)               -
                                                                                -------------    -------------
               Net cash provided by financing activities                           34,270,875       12,863,912
                                                                                -------------    -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               23,139,377       (4,115,733)

CASH AND CASH EQUIVALENTS--Beginning of year                                       10,060,761       24,107,723
                                                                                -------------    -------------

CASH AND CASH EQUIVALENTS--End of year                                           $ 33,200,138     $ 19,991,990
                                                                                =============    =============

SUPPLEMENTAL DISCLOSURES OF CASH FLOW  INFORMATION:
  Interest paid on deposits and advances from Federal
     Home Loan Bank                                                              $  7,313,766     $  7,309,027
                                                                                =============    =============

  Income taxes paid                                                              $  1,140,711     $    633,342
                                                                                =============    =============

SUPPLEMENTAL DISCLOSURE OF NONCASH ITEMS:
Commitments to purchase investment securities                                    $  2,000,000     $          -
                                                                                =============    =============


See notes to unaudited consolidated financial statements.

                                                         5
</TABLE>

<PAGE>

PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------


1.      BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

        BASIS OF PRESENTATION - Prudential Bancorp, Inc. of Pennsylvania (the
        "Company") is a Pennsylvania corporation, which was organized to be the
        mid-tier holding company for Prudential Savings Bank (the "Bank"), which
        is a Pennsylvania-chartered, FDIC-insured savings bank. The Company was
        organized in conjunction with the Bank's reorganization from a mutual
        savings bank to the mutual holding company structure in March 2005.
        Financial statements prior to the reorganization were the financial
        statements of the Bank. Prudential Mutual Holding Company, a
        Pennsylvania corporation, is the mutual holding company parent of the
        Company. Prudential Mutual Holding Company owns 55.3% (6,910,062 shares)
        of the Company's outstanding common stock and must always own at least a
        majority of the voting stock of the Company. In addition to the shares
        of the Company, Prudential Mutual Holding Company was capitalized with
        $100,000 in cash from the Bank. The consolidated financial statements of
        the Company include the accounts of the Company and the Bank. All
        significant intercompany balances and transactions have been eliminated.

        Prior to the reorganization described above, the Board of Directors
        approved a plan of charter conversion in May 2004 by which the Bank
        would convert its charter from a Pennsylvania-chartered mutual savings
        and loan association to a Pennsylvania-chartered mutual savings bank.
        Such conversion was subject to receipt of both member and regulatory
        approval. The members of the Bank approved the plan of conversion at a
        special meeting held on July 20, 2004 and the Pennsylvania Department of
        Banking approved the Bank's application to convert its charter on July
        21, 2004. The conversion to a Pennsylvania-chartered mutual savings bank
        was completed on August 20, 2004. As a result of the charter conversion,
        the Bank's primary federal banking regulator changed from the Office of
        Thrift Supervision to the Federal Deposit Insurance Corporation. The
        Pennsylvania Department of Banking remains as the Bank's state banking
        regulator.

        The accompanying unaudited consolidated financial statements were
        prepared in accordance with the instructions to Form 10-Q, and therefore
        do not include all the information or footnotes necessary for complete
        financial statements in conformity with accounting principles generally
        accepted in the United States of America. 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 and nine month period ended June 30, 2005 are not
        necessarily indicative of the results that may be expected for the
        fiscal year ending September 30, 2005, or any other period. These
        unaudited consolidated financial statements should be read in
        conjunction with the audited financial statements of the Bank and the
        accompanying notes thereto for the year ended September 30, 2004,
        included in the Company's registration statement on Form S-1 (the
        "Registration Statement") initially filed with the Securities and
        Exchange Commission ("SEC") on September 20, 2004, which as amended, was
        declared effective by the SEC on January 27, 2005 (File No. 333-119130).

        USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS--The
        preparation of financial statements in conformity with accounting
        principles generally accepted in the United States of America requires
        management to make estimates and assumptions that affect the reported
        amounts of assets and liabilities and the disclosure of contingent
        assets and liabilities at the date of the financial statements and the
        reported amounts of income and expenses during the reporting period. The
        most significant estimates and assumptions in the Company's financial
        statements are recorded in the allowance for loan losses and deferred
        income taxes. Actual results could differ from those estimates.

        DIVIDEND PAYABLE - On June 24, 2005, the Company's Board of Directors
        declared a quarterly cash dividend of $.04 on the common stock of the
        Company payable on July 29, 2005 to the shareholders of record at the
        close of business on July 15, 2005. The Company had 12,497,450 shares
        outstanding at the time of the declaration resulting in a payable of
        $499,898 at June 30, 2005. A portion of the cash dividend was payable to
        Prudential Mutual Holding Company on its shares of the Company's common
        stock and totaled $276,402.

                                       6
<PAGE>

        EMPLOYEE STOCK OWNERSHIP PLAN - In 2005, the Bank established an
        employee stock ownership plan ("ESOP") for substantially all of its
        full-time employees. The ESOP purchased 452,295 shares of the Company's
        common stock for approximately $4.5 million. Shares of the Company's
        common stock purchased by the ESOP are held in a suspense account until
        released for allocation to participants. Shares released will be
        allocated to each eligible participant based on the ratio of each such
        participant's compensation, as defined in the ESOP, to the total
        compensation of all eligible plan participants. As the unearned shares
        are released from suspense, the Company recognizes compensation expense
        equal to the fair value of the ESOP shares during the periods in which
        they become committed to be released. To the extent that the fair value
        of the ESOP shares released differs from the cost of such shares, the
        difference is charged or credited to equity as additional paid-in
        capital. As of June 30, 2005, the Company had committed to release 5,655
        shares from the suspense account and recognized $54,439 in compensation
        expense.

        TREASURY STOCK - Stock held in treasury by the Company is accounted for
        using the cost method, which treats stock held in treasury as a
        reduction to total stockholders' equity.

        COMPREHENSIVE INCOME--The Company presents in the statement of
        comprehensive income those amounts from transactions and other events
        which currently are excluded from the statement of income and are
        recorded directly to retained earnings. Comprehensive income totaled
        $2,406,741 and $1,761,810 for the nine months ended June 30, 2005 and
        2004.

        RECENT ACCOUNTING PRONOUNCEMENTS - In March 2004, the Financial
        Accounting Standards Board ("FASB") ratified the consensus reached by
        the Emerging Issues Task Force ("EITF") in Issue 03-1, THE MEANING OF
        OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS APPLICATION TO CERTAIN
        INVESTMENTS. EITF 03-1 provides guidance for determining when an
        investment is considered impaired, whether impairment is
        other-than-temporary, and measurement of an impairment loss. In
        September 2004, the FASB issued FASB Staff Position (FSP) 03-1-1, which
        delayed the effective date for the measurement and recognition guidance
        contained in paragraphs 10-20 of Issue 03-1 due to additional proposed
        guidance. The FASB decided not to provide additional guidance on the
        meaning of other-than-temporary impairment, but directed the staff to
        issue proposed FSP EITF 03-1-a, IMPLEMENTATION GUIDANCE FOR THE
        APPLICATION OF PARAGRAPH 16 OF EITF ISSUE NO. 03-1, as final. The final
        FSP will supersede EITF Issue No. 03-1 and EITF Topic No. D-44,
        RECOGNITION OF OTHER-THAN-TEMPORARY IMPAIRMENT UPON THE PLANNED SALE OF
        A SECURITY WHOSE COST EXCEEDS FAIR VALUE. The final FSP (retitled FSP
        FAS 115-1, THE MEANING OF OTHER-THAN-TEMPORARY IMPAIRMENT AND ITS
        APPLICATION TO CERTAIN INVESTMENTS) will replace the guidance set forth
        in paragraphs 10-18 of Issue 03-1 with references to existing
        other-than-temporary impairment guidance, such as FASB Statement No.
        115, ACCOUNTING FOR CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES,
        SEC Staff Accounting Bulletin No. 59, ACCOUNTING FOR NONCURRENT
        MARKETABLE EQUITY SECURITIES, and APB Opinion No. 18, THE EQUITY METHOD
        OF ACCOUNTING FOR INVESTMENTS IN COMMON STOCK. FSP FAS 115-1 will codify
        the guidance set forth in EITF Topic D-44 and clarify that an investor
        should recognize an impairment loss no later than when the impairment is
        deemed other than temporary, even if a decision to sell has not been
        made.

        The FASB decided that FSP FAS 115-1 would be effective for
        other-than-temporary impairment analysis conducted in periods beginning
        after September 15, 2005. The FASB directed the staff to proceed to a
        draft of a final FSP for vote by written ballot. The Company is
        continuing to evaluate the impact of these pronouncements and does not
        anticipate that the guidance will have a material impact on the Company.
        The disclosure requirements of EITF 03-1 continue to be effective for
        the Company's financial statements and the Company is complying with
        those requirements.

        In December 2004, the FASB issued SFAS No. 123R (revised 2004),
        SHARE-BASED PAYMENT, which revises SFAS No. 123, ACCOUNTING FOR STOCK
        BASED COMPENSATION, and supersedes APB Opinion No. 25, ACCOUNTING FOR
        STOCK ISSUED TO EMPLOYEES. This Statement requires an entity to
        recognize the cost of employee services received in share-based payment
        transactions and measure the cost on a grant-date fair value of the
        award. That cost will be recognized over the period during which an
        employee is required to provide service in exchange for the award. As a
        result of a delaying order issued by the SEC in April 2005, the
        provisions of SFAS No. 123R will be effective for the Company's
        consolidated financial statements issued for its fiscal year periods
        beginning on

                                       7
<PAGE>

        October 1, 2005. Management is currently evaluating the effects of the
        adoption of this Statement on its financial statements. The Company did
        not issue and does not have outstanding any stock-based compensation as
        of June 30, 2005, other than the ESOP which is a tax-qualified plan and
        is not subject to the Statement.

2.      EARNINGS PER SHARE

        Basic earnings per common share is computed based on the weighted
        average number of shares outstanding. Diluted earnings per share is
        computed based on the weighted average number of shares outstanding and
        common share equivalents ("CSEs") that would arise from the exercise of
        dilutive securities. As of June 30, 2005 and for the three and nine
        months then ended, the Company did not issue and does not have
        outstanding any CSEs. Due to the timing of the Bank's reorganization
        into the mutual holding company form and the completion of the Company's
        initial public offering on March 29, 2005, earnings per share for the
        periods prior to the quarter ended June 30, 2005 is not considered
        meaningful and is not shown. For the 2004 period, there were no shares
        of common stock outstanding.

        The calculated basic and diluted earnings per share are as follows:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED JUNE 30, 2005
                                                          ---------------------------------------
                                                               BASIC                DILUTED
                                                          ----------------       ----------------
<S>                                                        <C>                    <C>
        Net Income                                         $    1,007,296         $    1,007,296

        Weighted average shares outstanding used in
            basic earnings per share computation               12,094,410             12,094,410
        Effect of CSEs                                                  -                      -
                                                          ----------------       ----------------
        Adjusted weighted average shares used in
            diluted earnings per share computation             12,094,410             12,094,410
                                                          ----------------       ----------------

        Earnings per share - basic and diluted             $         0.08         $         0.08
                                                          ================       ================
</TABLE>

3.      INVESTMENT SECURITIES

        The amortized cost and fair value of securities, with gross unrealized
        gains and losses, are as follows:

<TABLE>
<CAPTION>
                                                                               JUNE 30, 2005
                                                       --------------------------------------------------------------
                                                                            GROSS          GROSS         ESTIMATED
                                                           AMORTIZED      UNREALIZED     UNREALIZED        FAIR
                                                             COST           GAINS          LOSSES          VALUE
<S>                                                      <C>              <C>           <C>           <C>
        Securities Held to Maturity:
          Debt securities - U.S. Treasury securities
           and securities of U.S. Government agencies    $121,218,417     $  105,800    $ (490,805)   $ 120,833,412
          Debt securities - Municipal bonds                 2,884,406         15,241       (21,038)       2,878,609
                                                         ------------     ----------    ----------    -------------

               Total securities held to maturity         $124,102,823     $  121,041    $ (511,843)   $ 123,712,021
                                                         ============     ==========    ==========    =============

        Securities Available for Sale:
          Debt securities - U.S. Treasury securities
            and securities of U.S. Government agencies   $  2,998,670     $    1,955    $   (3,750)   $   2,996,875
          FNMA stock                                               84          6,924             -            7,008
          Mutual fund                                      34,982,453              -      (719,230)      34,263,223
          FHLMC preferred stock                                25,909      1,698,642             -        1,724,551
                                                         ------------     ----------    ----------    -------------

               Total securities available for sale       $ 38,007,116     $1,707,521    $ (722,980)   $  38,991,657
                                                         ============     ==========    ==========    =============
</TABLE>

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30, 2004
                                                       --------------------------------------------------------------
                                                                            GROSS          GROSS         ESTIMATED
                                                           AMORTIZED      UNREALIZED     UNREALIZED        FAIR
                                                             COST           GAINS          LOSSES          VALUE
<S>                                                      <C>              <C>           <C>           <C>
        Securities Held to Maturity:
          Debt securities - U.S. Treasury securities
           and securities of U.S. Government agencies    $112,396,812     $  512,890    $ (797,780)   $ 112,111,922
          Debt securities - Municipal bonds                 2,409,349         12,830       (42,539)       2,379,640
                                                         ------------     ----------    ----------    -------------

               Total securities held to maturity         $114,806,161     $  525,720    $ (840,319)   $ 114,491,562
                                                         ============     ==========    ==========    =============

        Securities Available for Sale:
          Debt securities - U.S. Treasury securities
            and securities of U.S. Government agencies   $  3,998,592     $   11,418    $        -    $   4,010,010
          FNMA stock                                               84          7,524             -            7,608
          Mutual fund                                      34,982,453              -      (438,096)      34,544,357
          FHLMC preferred stock                                25,909      1,698,906             -        1,724,815
                                                         ------------     ----------    ----------    -------------

               Total securities available for sale       $ 39,007,038     $ 1,717,848   $ (438,096)   $  40,286,790
                                                         ============     ==========    ==========    =============
</TABLE>

        The following table shows the gross unrealized losses and related
        estimated fair values of the Company's investment and mortgage-backed
        securities, aggregated by investment category and length of time that
        individual securities have been in a continuous loss position at June
        30, 2005:

<TABLE>
<CAPTION>
                                                             LESS THAN 12 MONTHS               MORE THAN 12 MONTHS
                                                      ---------------------------------  -------------------------------
                                                           GROSS           ESTIMATED         GROSS          ESTIMATED
                                                         UNREALIZED          FAIR          UNREALIZED          FAIR
                                                           LOSSES            VALUE           LOSSES            VALUE
<S>                                                     <C>              <C>              <C>              <C>
        Securities held to maturity:
           Mortgage-backed securities                   $      55,806    $   1,163,470    $      57,352    $   7,330,529
           U.S. Treasury and Government agencies               66,374       26,160,137          424,431       43,123,329
           Municipal bonds                                          -                -           21,038        1,143,369
                                                       --------------   --------------   --------------   --------------

               Total securities held to maturity              122,180       27,323,607          502,821       51,597,227
                                                       --------------   --------------   --------------   --------------

        Securities available for sale:
           U.S. Treasury and Government agencies                3,750          996,250                -                -
           Mutual fund                                              -                -          719,230       34,263,223
                                                       --------------   --------------   --------------   --------------

               Total securities available for sale              3,750          996,250          719,230       34,263,223
                                                       --------------   --------------   --------------   --------------

        Total                                           $     125,930    $  28,319,857    $   1,222,051    $  85,860,450
                                                       ==============   ==============   ==============   ==============
</TABLE>

        Management evaluates securities for other-than-temporary impairment at
        least on a quarterly basis, and more frequently when economic or market
        concerns warrant such evaluation. Consideration is given to (1) the
        length of time and the extent to which the fair value has been less than
        cost, (2) the financial condition and near-term prospects of the issuer,
        and (3) the intent and ability of the Company to retain its investment
        in the issuer for a period of time sufficient to allow for any
        anticipated recovery in fair value.

                                       9

<PAGE>

        At June 30, 2005, securities in a gross unrealized loss position for
        twelve months or longer consist of 52 securities having an aggregate
        depreciation of 1.4% from the Company's amortized cost basis. Securities
        in a gross unrealized loss position for less than twelve months consist
        of 32 securities having an aggregate depreciation of 0.4% from the
        Company's amortized cost basis. Management believes that the estimated
        fair value of the securities disclosed above is primarily dependent upon
        the movement in market interest rates. Although the fair value will
        fluctuate as the market interest rates move, the majority of the
        Company's investment portfolio consists of low-risk securities from
        government agencies or government sponsored enterprises. If held to
        maturity, the contractual principal and interest payments of such
        securities are expected to be received in full. As such, no loss in
        value is expected over the lives of the securities. Although not all of
        the securities are classified as held to maturity, the Company has the
        ability to hold these securities until they mature. The Company also has
        a significant investment in a mutual fund that invests in
        adjustable-rate mortgage-backed securities. Management believes that the
        estimated fair value of the mutual fund is also primarily dependent upon
        the movement in market interest rates. Although the investment in the
        mutual fund is classified as available for sale, the Company has the
        ability to hold the mutual fund until the fair value increases. Based on
        the above, management believes that the unrealized losses are temporary.
        The determination of whether a decline in market value is temporary is
        necessarily a matter of subjective judgment. The timing and amount of
        any realized losses reported in the Company's financial statements could
        vary if conclusions other than those made by management were to
        determine whether an other-than-temporary impairment exists.

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

<TABLE>
<CAPTION>
                                                                      JUNE 30, 2005
                                          ---------------------------------------------------------------------
                                                    HELD TO MATURITY                 AVAILABLE FOR SALE
                                          ----------------------------------  ---------------------------------
                                                               ESTIMATED                          ESTIMATED
                                              AMORTIZED          FAIR            AMORTIZED          FAIR
                                                 COST            VALUE             COST             VALUE
<S>                                         <C>              <C>               <C>              <C>
        Due within one year                 $   4,000,000    $   3,989,375     $           -    $           -
        Due after one through five years       34,068,937       33,959,947                 -                -
        Due after five through ten years       40,840,735       40,793,807         1,000,000          996,250
        Due after ten years                    45,193,151       44,968,892         1,998,670        2,000,625
                                            -------------    -------------     -------------    -------------

        Total                               $ 124,102,823    $ 123,712,021     $   2,998,670    $   2,996,875
                                            =============    =============     =============    =============

<CAPTION>
                                                                     SEPTEMBER 30, 2004
                                          ---------------------------------------------------------------------
                                                    HELD TO MATURITY                 AVAILABLE FOR SALE
                                          ----------------------------------  ---------------------------------
                                                               ESTIMATED                          ESTIMATED
                                              AMORTIZED          FAIR            AMORTIZED          FAIR
                                                 COST            VALUE             COST             VALUE
<S>                                         <C>              <C>               <C>              <C>
        Due after one through five years    $   5,991,842    $   5,971,560     $           -    $           -
        Due after five through ten years       42,578,514       42,497,079         1,000,000        1,003,130
        Due after ten years                    66,235,805       66,022,923         2,998,592        3,006,880
                                            -------------    -------------     -------------    -------------

        Total                               $ 114,806,161    $ 114,491,562     $   3,998,592    $   4,010,010
                                            =============    =============     =============    =============
</TABLE>

                                       10

<PAGE>

4.      MORTGAGE-BACKED SECURITIES

        Mortgage-backed securities held to maturity are summarized as follows:

<TABLE>
<CAPTION>
                                                                      JUNE 30, 2005
                                          ---------------------------------------------------------------------
                                                               ESTIMATED                          ESTIMATED
                                              AMORTIZED          FAIR            AMORTIZED          FAIR
                                                 COST            VALUE             COST             VALUE
<S>                                         <C>              <C>               <C>              <C>
        GNMA pass-through certificates      $  66,177,012    $   1,582,735     $     (94,880)   $  67,664,867
        FNMA pass-through certificates            390,968            6,252            (3,303)         393,917
        FHLMC pass-through certificates           608,485           16,877           (14,975)         610,387
                                            -------------    -------------     -------------    -------------

        Total                               $  67,176,465    $   1,605,864     $    (113,158)   $  68,669,171
                                            =============    =============     =============    =============
<CAPTION>

                                                                    SEPTEMBER 30, 2004
                                          ---------------------------------------------------------------------
                                                               ESTIMATED                          ESTIMATED
                                              AMORTIZED          FAIR            AMORTIZED          FAIR
                                                 COST            VALUE             COST             VALUE
<S>                                         <C>              <C>               <C>              <C>
        GNMA pass-through certificates      $  79,626,339    $   1,431,834     $    (316,198)   $  80,741,975
        FNMA pass-through certificates            487,864           12,172              (594)         499,442
        FHLMC pass-through certificates           817,739           25,636           (10,486)         832,889
                                            -------------    -------------     -------------    -------------

        Total                               $ 80,931,942     $   1,469,642     $    (327,278)   $  82,074,306
                                            =============    =============     =============    =============
</TABLE>

        See Note 3 for information regarding the Company's mortgage-backed
        securities' gross unrealized losses and related estimated fair values
        aggregated by the length of time that individual securities have been in
        a continuous loss position at June 30, 2005.

5.      LOANS RECEIVABLE

        Loans receivable consist of the following:

<TABLE>
<CAPTION>
                                                             JUNE 30,        SEPTEMBER 30,
                                                               2005              2004
                                                         ----------------  ----------------
<S>                                                        <C>               <C>
        Single-family residential                          $ 134,381,655     $ 124,085,179
        Multi-family residential                               2,596,753         3,181,115
        Commercial real estate                                10,048,292         5,608,024
        Construction and land development                     47,807,689        39,216,733
        Commercial business                                      169,340           145,000
        Consumer                                               1,278,696         1,205,509
                                                          --------------    --------------

              Total loans                                    196,282,425       173,441,560

          Undisbursed portion of loans-in-process            (25,317,749)      (21,337,992)
          Deferred loan costs, net of fees                        80,996            19,081
          Allowance for loan losses                             (557,956)         (557,956)
                                                          --------------    --------------

        Net                                                $ 170,487,716     $ 151,564,693
                                                          ==============    ==============
</TABLE>

                                       11
<PAGE>

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

                                                 NINE MONTHS ENDED JUNE 30,
                                              -------------------------------
                                                    2005            2004
                                              --------------   --------------

        Balance, beginning of period           $    557,956     $    553,422
        Provision for loan losses                         -           40,000
        Charge-offs                                       -          (78,000)
        Recoveries                                        -           32,534
                                               ------------     ------------

        Balance, end of period                 $    557,956     $    547,956
                                               ============     ============

        Nonperforming loans (which consist of nonaccrual loans and loans in
        excess of 90 days delinquent and still accruing interest) at June 30,
        2005 and September 30, 2004 amounted to approximately $512,000 and
        $479,000, respectively. At June 30, 2005, nonperforming loans consisted
        of only single-family loans.

6.      DEPOSITS

        Deposits consist of the following major classifications:

<TABLE>
<CAPTION>
                                                                     JUNE 30,                   SEPTEMBER 30,
                                                                      2005                         2004
                                                         ----------------------------  -----------------------------

                                                              AMOUNT       PERCENT          AMOUNT       PERCENT
<S>                                                       <C>                <C>        <C>                <C>
        Money market deposit accounts                     $  51,574,060      15.5 %     $  49,161,438      14.1 %
        NOW accounts                                         49,194,102      14.8          54,179,814      15.5
        Passbook, club and statement savings                 90,579,717      27.2          94,867,646      27.2
        Certificates maturing in six months or less          50,689,586      15.2          65,065,162      18.6
        Certificates maturing over six months or more        91,086,738      27.3          85,884,450      24.6
                                                          -------------    ------       -------------    ------

          Total                                           $ 333,124,203     100.0 %     $ 349,158,510     100.0 %
                                                          =============    ======       =============    ======
</TABLE>

        At June 30, 2005 and September 30, 2004, the weighted average cost of
        funds was 2.6 % and 2.3%, respectively.

                                       12
<PAGE>

7.      INCOME TAXES

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

<TABLE>
<CAPTION>
                                                               JUNE 30,       SEPTEMBER 30,
                                                                 2005             2004
                                                            ---------------  ---------------
<S>                                                           <C>              <C>
        Deferred tax assets:
          Deposit premium                                     $    375,233     $    411,941
          Allowance for loan losses                                256,560          258,872
          Other                                                     39,638           44,399
                                                              ------------     ------------

          Total                                                   671,431           715,212
                                                              ------------     ------------
        Deferred tax liabilities:
          Unrealized gain on available for sale securities         344,589          447,913
          Property                                                 355,851          284,760
          Mortgage servicing rights                                 12,374           14,531
          Deferred loan costs, net of fees                          25,694            4,005
          Employee stock ownership plan                              7,992                -
                                                              ------------     ------------

          Total                                                    746,500          751,209
                                                              ------------     ------------

        Net deferred tax liability                            $    (75,069)    $    (35,997)
                                                              ============     ============
</TABLE>

8.      COMMITMENTS AND CONTINGENT LIABILITIES

        At June 30, 2005, the Company had $12,993,655 in outstanding commitments
        to originate fixed and variable- rate loans with market interest rates
        ranging from 5.50% to 7.25%. At September 30, 2004, the Company had
        $35,093,990 in outstanding commitments to originate fixed and
        variable-rate loans with market interest rates ranging from 5.00% to
        7.25%. These commitment amounts include participation interests sold to
        other financial institutions of $0 and $18,000,000 at June 30, 2005 and
        September 30, 2004, respectively. In October 2004, a $20,000,000
        construction loan was closed with participation interests sold to other
        local financial institutions totaling $15,000,000.

        The Company also had commitments under unused lines of credit of
        $5,705,725 and $3,925,428 and letters of credit outstanding of $110,000
        and $40,000 at June 30, 2005 and September 30, 2004, respectively.

        In February 2005, the Bank entered into a settlement for the award of
        counsel's fees and interest totaling $120,000 related to a previously
        disclosed lawsuit. The amount was paid as of June 30, 2005.

        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 June 30, 2005, the exposure, which
        represents a portion of credit risk associated with the sold interests,
        amounted to $56,300. This exposure is for the life of the related loans
        and payables, on our proportionate share, as actual losses are incurred.


                                       13

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

OVERVIEW. Prudential Bancorp, Inc. of Pennsylvania (the "Company") is a
Pennsylvania corporation, which was organized to be the mid-tier holding company
for Prudential Savings Bank (the "Bank"), which is a Pennsylvania-chartered,
FDIC-insured savings bank. The Company was organized in conjunction with the
Bank's reorganization from a mutual savings bank to the mutual holding company
structure in March 2005. Financial statements for periods ending prior to the
completion of the reorganization were the financial statements of the Bank. The
Company's results of operations are primarily dependent on the results of the
Bank, which is the wholly owned subsidiary of the Company. The Bank's results of
operations depend to a large extent on net interest income, which is the
difference between the income earned on its loan and securities portfolios and
the cost of funds, which is the interest paid on deposits and borrowings.
Results of operations are also affected by our provisions for loan losses,
non-interest income and non-interest expense. Non-interest expense principally
consists of salaries and employee benefits, office occupancy, depreciation, data
processing expense, payroll taxes and other expense. Our results of operations
are also significantly affected by general economic and competitive conditions,
particularly changes in interest rates, government policies and actions of
regulatory authorities. Future changes in applicable laws, regulations or
government policies may materially impact our financial condition and results of
operations. The Bank is subject to regulation by the Federal Deposit Insurance
Corporation ("FDIC") and the Pennsylvania Department of Banking. The Bank's main
office is in Philadelphia, Pennsylvania, with five additional banking offices
located in Philadelphia and Delaware Counties. The Bank's primary business
consists of attracting deposits from the general public and using those funds
together with borrowings to originate loans and to invest primarily in U.S.
Government and agency securities and mortgage-backed securities.

CRITICAL ACCOUNTING POLICIES. In reviewing and understanding financial
information for the Company, you are encouraged to read and understand the
significant accounting policies used in preparing our financial statements.
These policies are described in Note 2 of the Notes to Financial Statements
included in the Company's Registration Statement. The accounting and financial
reporting policies of the Company conform to accounting principles generally
accepted in the United States of America and to general practices within the
banking industry. The preparation of the Company's financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and 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. Management evaluates these estimates and
assumptions on an ongoing basis. The following accounting policies comprise
those that management believes are the most critical to aid in fully
understanding and evaluating our reported financial results. These policies
require numerous estimates or economic assumptions that may prove inaccurate or
may be subject to variations which may significantly affect our reported results
and financial condition for the period or in future periods.

ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses is established through
a provision for loan losses charged to expense. Loans are charged against the
allowance for loan losses when management believes that the collectibility of
the principal is unlikely. Subsequent recoveries are added to the allowance. The
allowance is an amount that management believes will cover known and inherent
losses in the loan portfolio that are both probable and reasonable to estimate,
based on evaluations of the collectibility of loans. The evaluations take into
consideration such factors as changes in the types and amount of loans in the
loan portfolio, historical loss experience, adverse situations that may affect a
borrower's ability to repay, estimated value of any underlying collateral,
estimated losses relating to specifically identified loans, and current economic
conditions, both nationally and within the Bank's primary market area. This
evaluation is inherently subjective as it requires material estimates including,
among others, exposure at default, the amount and timing of expected future cash
flows on impacted loans, value of collateral, estimated losses on our
commercial, construction and residential loan portfolios and general amounts for
historical loss experience. All of these estimates may be susceptible to
significant change.

While management uses the best information available to make loan loss allowance
evaluations, adjustments to the allowance may be necessary based on changes in
economic and other conditions or changes in accounting guidance. Historically,
our estimates of the allowance for loan loss have not required significant
adjustments from management's initial estimates. In addition, the Pennsylvania
Department of Banking and the FDIC, as an integral part of their examination
processes, periodically review our allowance for loan losses. The Pennsylvania
Department of Banking

                                       14
<PAGE>

and the FDIC may require the recognition of adjustments to the allowance for
loan losses based on their judgment of information available to them at the time
of their examinations. To the extent that actual outcomes differ from
management's estimates, additional provisions to the allowance for loan losses
may be required that would adversely impact earnings in future periods.

INCOME TAXES. We make estimates and judgments to calculate some of our tax
liabilities and determine the recoverability of some of our deferred tax assets,
which arise from temporary differences between the tax and financial statement
recognition of revenues and expenses. We also estimate a reserve for deferred
tax assets if, based on the available evidence, it is more likely than not that
some portion or all of the recorded deferred tax assets will not be realized in
future periods. These estimates and judgments are inherently subjective. In the
past, our estimates and judgments to calculate our deferred tax accounts have
not required significant revision to our initial estimates.

In evaluating our ability to recover deferred tax assets, we consider all
available positive and negative evidence, including our past operating results,
recent cumulative losses and our forecast of future taxable income. In
determining future taxable income, we make assumptions for the amount of taxable
income, the reversal of temporary differences and the implementation of feasible
and prudent tax planning strategies. These assumptions require us to make
judgments about our future taxable income and are consistent with the plans and
estimates we use to manage our business. Any reduction in estimated future
taxable income may require us to record an additional valuation allowance
against our deferred tax assets. An increase in the valuation allowance would
result in additional income tax expense in the period and could have a
significant impact on our future earnings.

FORWARD-LOOKING STATEMENTS. In addition to historical information, this
Quarterly Report on Form 10-Q includes certain "forward-looking statements"
based on management's current expectations. The Company's actual results could
differ materially, as such term is defined in the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, from management's
expectations. Such forward-looking statements include statements regarding
management's current intentions, beliefs or expectations as well as the
assumptions on which such statements are based. These forward-looking statements
are subject to significant business, economic and competitive uncertainties and
contingencies, many of which are not subject to the Company's control. You are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.
Factors that could cause future results to vary from current management
expectations include, but are not limited to, general economic conditions,
legislative and regulatory changes, monetary and fiscal policies of the federal
government, changes in tax policies, rates and regulations of federal, state and
local tax authorities, changes in interest rates, deposit flows, the cost of
funds, demand for loan products, demand for financial services, competition,
changes in the quality or composition of the Company's loan and investment
securities portfolios, changes in accounting principles, policies or guidelines
and other economic, competitive, governmental and technological factors
affecting the Company's operations, markets, products, services and fees.

The Company undertakes no obligation to update or revise any forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated
events or changes to future operating results that occur subsequent to the date
such forward-looking statements are made.

COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 2005 AND SEPTEMBER 30, 2004

Total assets of the Company increased by $37.7 million, or 9.3%, from $406.6
million at September 30, 2004 to $444.3 million at June 30, 2005 primarily due
to increases in cash and cash equivalents, investment securities
held-to-maturity and net loans receivable. The increase in cash and cash
equivalents of $23.1 million to $33.2 million reflected the receipt of proceeds
from the subscription offering. A portion of the proceeds from the offering have
been invested contributing to the increase in investment securities
held-to-maturity of $9.3 million or 8.1% to $124.1 million. Our net loan
portfolio experienced an $18.9 million or 12.5% increase to $170.5 million as we
continued our emphasis on growing the loan portfolio. The majority of the growth
in the loan portfolio was concentrated in construction, commercial real estate
and single-family residential loans. Partially offsetting such increases was a
decrease in mortgage-backed securities held to maturity of $13.7 million or
16.9% to $67.2 million at June 30, 2005 as a result of prepayments and
repayments due to the interest rate environment existing during the last nine
months.

                                       15
<PAGE>

Our total liabilities decreased $13.9 million or 3.8% from $367.5 million at
September 30, 2004 to $353.6 million at June 30, 2005. The majority of the
decrease was due to a decrease in total deposits of $16.1 million or 4.6% to
$333.1 million at June 30, 2005. Such decrease primarily reflected the decline
in certificates of deposit of $9.2 million as we made a decision to more
competitively price our certificates and allow higher costing deposits to
run-off as they matured. Offsetting these decreases was a $1.4 million increase
in accounts payable and accrued expenses from September 30, 2004 mostly due to a
payable of $2.0 million recorded in June 2005 for commitments to purchase
investments that were settled after the end of the quarter.

Stockholders' equity increased by $51.6 million to $90.7 million at June 30,
2005 as compared to $39.1 million at September 30, 2004 primarily due to the
receipt of the $54.9 million in net proceeds from the subscription offering. The
Company sold 5,653,688 shares of common stock representing 45% of the total
outstanding shares of the Company at the date of issuance. The remaining 55% or
6,910,062 shares were issued to Prudential Mutual Holding Company, the Company's
parent mutual holding company. Retained earnings increased $2.0 million to $40.3
million primarily as a result of the $2.6 million in net income for the first
nine months of fiscal 2005 offset in part by the Company's quarterly cash
dividend of $500,000 and also by the Bank's $100,000 capitalization of
Prudential Mutual Holding Company in connection with the completion of the
mutual holding company reorganization. In addition, the Bank's employee stock
ownership plan ("ESOP"), which was unable to purchase any shares in the
subscription offering, purchased at a total cost of $4.5 million 452,295 shares
of common stock in open market purchases, such amount representing 8% of the
shares sold in the subscription offering.

Also during the quarter ended June 30, 2005, the Company repurchased 66,300
shares of the Company's outstanding common stock, pursuant to the Company's
previously announced stock repurchase program that was approved by the Company's
Board of Directors during the quarter ended June 30, 2005. Repurchases are
authorized to be made by the Company from time to time in open-market
transactions during the next 12 months as, in the opinion of management, market
conditions warrant. The repurchased shares are held as treasury stock and are
available for general corporate purposes.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30,
2005 AND 2004

NET INCOME. Net income for the quarter ended June 30, 2005 was $1.0 million, an
increase of $571,000, as compared to net income of $436,000 for the same period
in 2004. The increase was primarily due to a $565,000 increase in net interest
income combined with a $452,000 decrease in non-interest expenses offset in part
by a $456,000 increase in income tax expense.

Net income for the nine months ended June 30, 2005 was $2.6 million, an increase
of $842,000, or 47.9%, as compared to net income of $1.8 million for the same
period in 2004. The increase was primarily due to a $975,000 increase in net
interest income combined with a $292,000 decrease in non-interest expenses
offset in part by a $462,000 increase in income tax expense.

NET INTEREST INCOME. Net interest income increased $565,000 or 22.0% to $3.1
million for the three months ended June 30, 2005 as compared to $2.6 million for
the same period in 2004. The increase was primarily due to a $615,000 or 12.8%
increase in interest income which resulted from an increase of $34.9 million or
8.8% in the average balance of interest-earning assets combined with an eighteen
basis point increase to 5.04% in the weighted average yield earned on such
assets for the three months ended June 30, 2005, as compared to the same period
in 2004. Partially offsetting such increase was a $49,000 increase in interest
expense during the quarter ended June 30, 2005 as compared to the same quarter
in 2004 primarily as a result of a nineteen basis point increase to 2.64% in the
weighted average rate paid on interest-bearing liabilities offset in part by a
$20.2 million or 5.5% decrease in the average balance of interest-bearing
liabilities for the three months ended June 30, 2005 as we have allowed some of
the deposits to run-off by more competitively pricing our deposit products. The
increases on both the yields earned and the rates paid reflect the rising market
rates of interest experienced throughout the 2005 periods.

                                       16
<PAGE>

For the nine months ended June 30, 2005, net interest income increased $975,000
or 12.6% to $8.7 million as compared to the nine months ended June 30, 2004. Net
interest income increased primarily due to a $1.0 million or 6.9% increase in
interest income which reflected the effect of a $22.2 million increase in the
average balance of interest-earning assets during the nine month period ended
June 30, 2005 combined with a six basis point increase to 5.00% in the weighted
average rate earned on such assets. Interest expense during the nine months
ended June 30, 2005 remained relatively stable by comparison to the same period
in the prior fiscal year, increasing only $56,000 due to a seven basis point
increase in the weighted average rate paid on interest-bearing liabilities
offset slightly by a decrease in the average balance of such liabilities of $8.1
million from the same 2004 period.

For the three months ended June 30, 2005, the average interest rate spread and
net interest margin were 2.40% and 2.91%, respectively, as compared to 2.42% and
2.60%, respectively, for the same period in 2004. For the nine months ended June
30, 2005, the average interest rate spread and net interest margin were 2.44%
and 2.81%, respectively, as compared to 2.45% and 2.64%, respectively, for the
same period in 2004. The increases in the net interest margins for the 2005
periods were primarily due to the increases in the average interest earning
assets due to the receipt of funds from the offering.

AVERAGE BALANCES, NET INTEREST INCOME, AND YIELDS EARNED AND RATES PAID. The
following table shows for the periods indicated the total dollar amount of
interest from average interest-earning assets and the resulting yields, as well
as the interest expense on average interest-bearing liabilities, expressed both
in dollars and rates, and the net interest margin. Tax-exempt income and yields
have not been adjusted to a tax-equivalent basis. All average balances are based
on monthly balances. Management does not believe that the monthly averages
differ significantly from what the daily averages would be.


                                       17
<PAGE>
<TABLE>
<CAPTION>
                                                                             Three Months Ended June 30,
                                                          --------------------------------------------------------------------
                                                                       2005                               2004
                                           Yield/Rate     --------------------------------------------------------------------
                                           At June 30,     Average               Average      Average               Average
                                              2005         Balance   Interest   Yield/Rate    Balance   Interest   Yield/Rate
                                          ------------    --------- ---------- ------------  --------- ---------- ------------
                                                                                (Dollars in Thousands)
<S>                                           <C>         <C>        <C>       <C>           <C>        <C>            <C>
Interest-earning assets:
Investment securities                         4.15%       $ 157,911  $ 1,708       4.33%      $ 151,296  $ 1,563        4.13%
Mortgage-backed securities                    5.42           70,144      911       5.20          83,914    1,100        5.24
Loans receivable(1)                           6.03          167,728    2,570       6.13         142,641    2,114        5.93
Other interest-earning assets                 3.13           34,041      225       2.64          17,079       22        0.52
                                                          ---------  -------                  ---------  -------
    Total interest-earning assets             5.02          429,824    5,414       5.04         394,930    4,799        4.86
                                                                     -------       --------              -------        ------
Cash and non-interest-bearing balances                        6,624                               6,963
Other non-interest-earning assets                             6,542                               8,095
                                                          ---------                           ---------
    Total assets                                          $ 442,990                           $ 409,988
                                                          =========                           =========
Interest-bearing liabilities:
Savings accounts                              1.76        $  91,547      399       1.74        $ 94,533      536        2.27
Money market deposit and NOW accounts         2.40           97,336      582       2.39          99,112      353        1.42
Certificates of deposit                       3.13          141,461    1,108       3.13         156,969    1,152        2.94
                                                          ---------  -------                  ---------  -------
    Total deposits                            2.54          330,344    2,089       2.53         350,614    2,041        2.33
Advances from Federal Home Loan Bank          5.61           13,837      194       5.61          13,875      193        5.56
Advances from borrowers for taxes and
    insurance                                 0.46            1,416        2       0.56           1,306        2        0.61
                                                          ---------  -------                  ---------  -------
    Total interest-bearing liabilities        2.65          345,597    2,285       2.64         365,795    2,236        2.45
                                                                     -------       --------              -------        ------
Non-interest-bearing liabilities:
Non-interest-bearing demand accounts                          2,985                               2,971
Other liabilities                                             2,040                               2,881
                                                          ---------                           ---------
    Total liabilities                                       350,622                             371,647
Stockholders' equity                                         92,368                              38,341
                                                          ---------                           ---------
    Total liabilities and stockholders'
        equity                                            $ 442,990                           $ 409,988
                                                          =========                           =========
Net interest-earning assets                               $  84,227                            $ 29,135
                                                          =========                           =========
Net interest income; interest rate
    spread                                    2.37%                  $ 3,129       2.40%                 $ 2,563        2.42%
                                              ====                   =======       ========              =======        ======
Net interest margin(2)                                                             2.91%                                2.60%
                                                                                   ========                             ======
Average interest-earning assets to
    average interest-bearing liabilities                             124.37%                             107.96%
                                                                     ========                            =======
</TABLE>
-------------------------------------
(1)  Includes non-accrual loans. Calculated net of unamortized deferred fees,
     undisbursed portion of loans-in-process and allowance for loan losses.

(2)  Equals net interest income divided by average interest-earning assets.

                                       18
<PAGE>
<TABLE>
<CAPTION>
                                                                             Nine Months Ended June 30,
                                                          --------------------------------------------------------------------
                                                                       2005                               2004
                                           Yield/Rate     --------------------------------------------------------------------
                                           At June 30,     Average               Average      Average               Average
                                              2005         Balance   Interest   Yield/Rate    Balance   Interest   Yield/Rate
                                          ------------    --------- ---------- ------------  --------- ---------- ------------
                                                                                (Dollars in Thousands)
<S>                                           <C>         <C>        <C>       <C>           <C>        <C>            <C>
Interest-earning assets:
Investment securities                         4.02%       $ 153,988  $ 4,968       4.30%     $ 145,802   $ 4,685      4.28%
Mortgage-backed securities                    5.79           74,601    2,916       5.21         85,073     3,358      5.26
Loans receivable(1)                           5.64          160,243    7,211       6.00        140,324     6,387      6.07
Other interest-earning assets                 2.02           25,079      436       2.32         20,495        71      0.46
                                                          ---------  -------                 ---------   -------
    Total interest-earning assets             4.80          413,911   15,531       5.00        391,694    14,501      4.94
                                                                     -------       --------              -------      ------
Cash and non-interest-bearing balances                        5,882                              6,222
Other non-interest-earning assets                             6,713                              7,643
                                                          ---------                          ---------
    Total assets                                          $ 426,506                          $ 405,559
                                                          =========                          =========
Interest-bearing liabilities:
Savings accounts                              1.96        $  93,058    1,330       1.91      $  94,655     1,363      1.92
Money market deposit and NOW accounts         2.19          101,210    1,597       2.10         94,567     1,240      1.75
Certificates of deposit                       3.10          144,638    3,297       3.04        157,837     3,561      3.01
                                                          ---------  -------                 ---------   -------
    Total deposits                            2.52          338,906    6,224       2.45        347,059     6,164      2.37
Advances from Federal Home Loan Bank          5.59           13,846      580       5.59         13,884       582      5.59
Advances from borrowers for taxes and
    insurance                                 0.54            1,461        7       0.64          1,332         9      0.90
                                                          ---------  -------                 ---------   -------
    Total interest-bearing liabilities        2.63          354,213    6,811       2.56        362,275     6,755      2.49
                                                                     -------       --------              -------      ------
Non-interest-bearing liabilities:
Non-interest-bearing demand accounts                         12,349                              2,940
Other liabilities                                             2,290                              2,615
                                                          ---------                          ---------
    Total liabilities                                       368,852                            367,830
Stockholders' equity                                         57,654                             37,729
                                                          ---------                          ---------
    Total liabilities and stockholders'
         equity                                           $ 426,506                          $ 405,559
                                                          =========                          =========
Net interest-earning assets                               $  59,698                          $  29,419
                                                          =========                          =========
Net interest income; interest rate
    spread                                    2.17%                  $ 8,720       2.44%                 $ 7,746      2.45%
                                              ====                   =======       ========              =======      ======
Net interest margin(2)                                                             2.81%                              2.64%
                                                                                   ========                           ======

Average interest-earning assets to
    average interest-bearing
    liabilities                                                      116.85%                             108.12%
                                                                     =======                             =======
</TABLE>
-------------------------------------
(1)  Includes non-accrual loans. Calculated net of unamortized deferred fees,
     undisbursed portion of loans-in-process and allowance for loan losses.

(2)  Equals net interest income divided by average interest-earning assets.


PROVISIONS FOR LOAN LOSSES. Provisions for loan losses are charged to earnings
to maintain the total allowance for loan losses at a level believed by
management to cover all known and inherent losses in the loan portfolio which
are both probable and reasonably estimable. Management's analysis includes
consideration of the Company's historical experience, the volume and type of
lending conducted by the Company, the amount of the Company's classified assets,
the status of past due principal and interest payments, general economic
conditions, particularly as they relate to the amount of the Company's primary
market area, and other factors related to the collectibility of the Company's
loan portfolio. For the three months and nine months ended June 30, 2005, we
made no provision for loan losses as compared to $30,000 and $40,000,
respectively, for the comparable periods in 2004. Our allowance for loan losses
totaled $558,000 at both June 30, 2005 and September 30, 2004.


                                       19
<PAGE>

At June 30, 2005, non-performing assets totaled $935,000, or 0.21% of total
assets, a decrease of $92,000 from $1.0 million at September 30, 2004. Our
non-performing assets at June 30, 2005 consisted of $512,000 of non-performing
loans and one real estate owned property with a carrying value of $423,000.
Non-performing loans as percentage of net loans receivable amounted to 0.30% at
June 30, 2005 compared to 0.32% at September 30, 2004. The allowance for loan
losses as a percentage of total loans was 0.28% for June 30, 2005 and 0.32% for
September 30, 2004. The coverage ratio, which is the ratio of the allowance for
loan losses to non-performing loans, was 109.0% and 116.5% as of June 30, 2005
and September 30, 2004, respectively.

Management continues to review its loan portfolio to determine the extent, if
any, to which further additional loss provisions may be deemed necessary. There
can be no assurance that the allowance for losses will be adequate to cover
losses which may in fact be realized in the future and that additional
provisions for losses will not be required.

NON-INTEREST INCOME. Non-interest income decreased $20,000 and $3,000 for the
three and nine months ended June 30, 2005, respectively, as compared to the same
periods in 2004, primarily due to decreases in fees and other service charges.

NON-INTEREST EXPENSES. Non-interest expense decreased $452,000 and $292,000
during the three and nine months ended June 30, 2005 compared to the same period
in 2004, primarily due to decreases in litigation expense of $404,000 and
$284,000 for the three and nine month periods, respectively. The litigation
expenses relate to a previously disclosed lawsuit.

INCOME TAX EXPENSE. Income tax expense for the quarter and nine months ended
June 30, 2005 amounted to $567,000 and $1.4 million, respectively, compared to
$111,000 and $942,000, respectively, for the quarter and nine months ended June
30, 2004. Our effective income tax rate has remained consistent for the nine
months ended June 30, 2005 and 2004 at 35%.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity, represented by cash and cash equivalents, is a product
of its operating, investing and financing activities. Our primary sources of
funds are from deposits, scheduled principal and interest payments on loans,
loan prepayments and the maturity of loans, mortgage-backed securities and other
investments, and other funds provided from operations. While scheduled payments
from the amortization of loans and mortgage-backed securities and maturing
investment securities are relatively predictable sources of funds, deposit flows
and loan and securities prepayments can be greatly influenced by general
interest rates, economic conditions and competition. We also maintain excess
funds in short-term, interest-bearing assets that provide additional liquidity.
At June 30, 2005, our cash and cash equivalents amounted to $33.2 million. In
addition, our available for sale investment securities amounted to an aggregate
of $39.0 million at June 30, 2005.

We use our liquidity to fund existing and future loan commitments, to fund
maturing certificates of deposit and demand deposit withdrawals, to invest in
other interest-earning assets, and to meet operating expenses. At June 30, 2005,
the Company had $13.0 million in outstanding commitments to originate fixed and
variable-rate loans, not including loans in process. The Company also had
commitments under unused lines of credit of $5.7 million and letters of credit
outstanding of $110,000 at June 30, 2005. Certificates of deposit at June 30,
2005 maturing in one year or less totaled $81.0 million. Based upon historical
experience, we anticipate that a significant portion of the maturing
certificates of deposit will be redeposited with us.

In addition to cash flow from loan and securities payments and prepayments as
well as from sales of available for sale securities, we have significant
borrowing capacity available to fund liquidity needs should the need arise. Our
borrowings consist solely of advances from the Federal Home Loan Bank of
Pittsburgh, of which we are a member. Under terms of the collateral agreement
with the Federal Home Loan Bank, we pledge residential mortgage loans and
mortgage-backed securities as well as our stock in the Federal Home Loan Bank as
collateral for such advances. However, use of FHLB advances has been relatively
limited and the amount outstanding has remained relatively constant during the
past several years. At June 30, 2005 and September 30, 2004, we had $13.8
million in outstanding FHLB advances and we had the ability to obtain up to an
additional $192.6 million FHLB advances.


                                       20
<PAGE>

We anticipate that we will continue to have sufficient funds and alternative
funding sources to meet our current commitments.

The following table summarizes the Company's and the Bank's capital ratios as of
June 30, 2005 and the Bank's capital ratios as of September 30, 2004 and
compares them to current regulatory guidelines.

<TABLE>
<CAPTION>
                                                                                               TO BE
                                                                                          WELL CAPITALIZED
                                                                      REQUIRED FOR          UNDER PROMPT
                                                                    CAPITAL ADEQUACY     CORRECTIVE ACTION
                                                   ACTUAL RATIO         PURPOSES             PROVISIONS
                                                  --------------   -------------------- ---------------------
<S>                                                     <C>               <C>                   <C>
          June 30, 2005:
            Tier 1 capital (to average assets)
               The Company                              20.37 %           4.0 %                 N/A
               The Bank                                 14.42 %           4.0 %                 5.0 %

            Tier 1 capital (to risk weighted assets)
               The Company                              51.05             4.0 %                 N/A
               The Bank                                 36.14             4.0 %                 6.0 %

            Total capital (to risk weighted assets)
               The Company                              51.62             8.0 %                 N/A
               The Bank                                 36.71             8.0 %                10.0 %

          September 30, 2004:
            Tier 1 capital (to average assets)           9.39 %           4.0 %                 5.0 %

            Tier 1 capital (to risk weighted assets)    24.50             4.0                   6.0

            Total capital (to risk weighted assets)     25.22             8.0                  10.0
</TABLE>

IMPACT OF INFLATION AND CHANGING PRICES
The financial statements, accompanying notes, and related financial data of the
Company presented herein have been prepared in accordance with generally
accepted accounting principles which requires the measurement of financial
position and operating results in terms of historical dollars, without
considering changes in the relative purchasing power of money over time due to
inflation.

Unlike most industrial companies, substantially all of the assets and
liabilities of a financial institution are monetary in nature. As a result,
interest rates have a more significant impact on a financial institution's
performance than the effects of general levels of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the price
of goods and services, since such prices are affected by inflation to a larger
extent than interest rates. In the current interest rate environment, liquidity
and the maturity structure of the Company's assets and liabilities are critical
to the maintenance of acceptable performance levels.


                                       21
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ASSET/LIABILITY MANAGEMENT AND MARKET RISK. Market risk is the risk of loss from
adverse changes in market prices and rates. Our market risk arises primarily
from the interest rate risk which is inherent in our lending, investment and
deposit gathering activities. To that end, management actively monitors and
manages interest rate risk exposure. In addition to market risk, our primary
risk is credit risk on our loan portfolio. We attempt to manage credit risk
through our loan underwriting and oversight policies.

The principal objective of our interest rate risk management function is to
evaluate the interest rate risk embedded in certain balance sheet accounts,
determine the level of risk appropriate given our business strategy, operating
environment, capital and liquidity requirements and performance objectives, and
manage the risk consistent with approved guidelines. We seek to manage our
exposure to risks from changes in interest rates while at the same time trying
to improve our net interest spread. We monitor interest rate risk as such risk
relates to our operating strategies. We have established an Asset/Liability
Committee, which is comprised of our President and Chief Executive Officer, our
Chief Financial Officer, our Chief Lending Officer, and our Treasurer, and which
is responsible for reviewing our asset/liability policies and interest rate risk
position. The Asset/Liability Committee meets on a quarterly basis. Both the
extent and direction of shifts in interest rates are uncertainties that could
have a negative impact on future earnings.

In recent years, we primarily have utilized the following strategies in our
efforts to manage interest rate risk:

     o    we have increased our originations of shorter term loans and/or loans
          with adjustable rates of interest, particularly construction and land
          development loans;

     o    we have invested in securities with "step-up" rate features providing
          for increased interest rates prior to maturity according to a
          pre-determined schedule and formula;

     o    we have reduced our reliance on certificates of deposit as a funding
          source and increased the amount of our transaction accounts; and

     o    we have maintained moderate levels of short-term liquid assets.

However, notwithstanding the foregoing steps, we remain subject to a significant
level of interest rate risk in a rising rate environment due to the high
proportion of our loan portfolio that consists of fixed-rate loans as well as
our decision to continue to invest a significant amount of our assets in
long-term, fixed-rate investment and mortgage-backed securities designated as
held to maturity. In addition, our interest rate spread and margin have been
adversely affected due to our past practice of paying above average interest
rates on deposits which has resulted in a greater compression of our spread and
margin than we might have otherwise experienced had we reduced the rates paid on
deposits to the same degree as our competitors. In recent periods, we have begun
to more competitively price our deposits and have allowed higher costing
deposits to run-off. In addition, our unwillingness to originate long-term,
fixed-rate residential mortgage loans at low rates has resulted in borrowers in
many cases refinancing loans elsewhere, requiring us to reinvest the resulting
proceeds from the loan payoffs at low current market rates of interest. Thus,
both of these strategies have increased our interest rate risk. Compared to the
end of the last quarter, our interest rate margins and spreads have improved as
a result of reinvesting funds from calls and repayments of longer term
securities to shorter term securities, many of which have step-up interest rate
features.

GAP ANALYSIS. The matching of assets and liabilities may be analyzed by
examining the extent to which such assets and liabilities are "interest rate
sensitive" and by monitoring a Company's interest rate sensitivity "gap." An
asset and liability is said to be interest rate sensitive within a specific time
period if it will mature or reprice within that time period. The interest rate
sensitivity gap is defined as the difference between the amount of
interest-earning assets maturing or repricing within a specific time period and
the amount of interest-bearing liabilities maturing or repricing within that
same time period. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities. A
gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. During a
period of rising interest rates, a negative gap would tend to affect adversely
net interest income while a positive gap would tend to result in an increase in
net


                                       22
<PAGE>

interest income. Conversely, during a period of falling interest rates, a
negative gap would tend to result in an increase in net interest income while a
positive gap would tend to affect adversely net interest income.

The following table sets forth the amounts of our interest-earning assets and
interest-bearing liabilities outstanding at June 30, 2005, which we expect,
based upon certain assumptions, to reprice or mature in each of the future time
periods shown (the "GAP Table"). Except as stated below, the amounts of assets
and liabilities shown which reprice or mature during a particular period were
determined in accordance with the earlier of term to repricing or the
contractual maturity of the asset or liability. The table sets forth an
approximation of the projected repricing of assets and liabilities at June 30,
2005, on the basis of contractual maturities, anticipated prepayments, and
scheduled rate adjustments within a three-month period and subsequent selected
time intervals. The loan amounts in the table reflect principal balances
expected to be redeployed and/or repriced as a result of contractual
amortization and anticipated prepayments of adjustable-rate loans and fixed-rate
loans, and as a result of contractual rate adjustments on adjustable-rate loans.
Annual prepayment rates for adjustable-rate and fixed-rate single-family and
multi-family residential and commercial mortgage loans are assumed to range from
14.4% to 31.1%. The annual prepayment rate for mortgage-backed securities is
assumed to range from 8.9% to 31.8%. Money market deposit accounts, savings
accounts and interest-bearing checking accounts are assumed to have annual rates
of withdrawal, or "decay rates," based on information from the FDIC. For savings
accounts and checking accounts, the decay rates are 60% in one to three years,
20% in three to five years and 20% in five to 10 years. For money market
accounts, the decay rates are 50% in three to 12 months and 50% in 13 to 36
months.

<TABLE>
<CAPTION>
                                                3 Months   3 Months     1 Year     3 Years    More than   Total
                                                or Less    to 1 Year  to 3 Years  to 5 Years   5 Years    Amount
                                               ---------   ---------  ----------  ----------  ---------  --------
                                                                      (Dollars in Thousands)
<S>                  <C>                       <C>         <C>        <C>         <C>         <C>        <C>
Interest-earning assets(1):
Investment securities(2)                       $  33,569   $  14,190  $   20,272  $   18,986  $  76,739  $163,756
Mortgage-backed securities                         3,469       8,073      10,139      13,916     31,579    67,176
Loans receivable(3)                               43,548      35,291      48,229      22,248     21,730   171,046
Other interest earning assets                     28,737           -           -           -          -    28,737
                                               ---------   ---------  ----------  ----------  ---------  --------
    Total interest-earning assets              $ 109,323   $  57,554  $   78,640  $   55,150  $ 130,048  $430,715
                                               =========   =========  ==========  ==========  =========  ========

Interest-bearing liabilities:
Savings accounts                               $       -   $     671    $ 54,929  $   18,310  $  18,309  $ 92,219
Money market deposit and NOW accounts                  -      25,787      52,085       8,766      8,766    95,404
Certificates of deposits                          27,180      53,794      48,404      12,399          -   141,777
Advances from Federal Home Loan Bank                  16          48         133         140     13,496    13,833
Advances from borrowers for taxes and
   insurance                                           -           -           -           -      1,730     1,730
                                               ---------   ---------  ----------  ----------  ---------  --------
    Total interest-bearing
      liabilities                              $  27,196   $  80,300  $  155,551  $   39,615  $  42,301  $344,963
                                               =========   =========  ==========  ==========  =========  ========

Interest-earning assets
   less interest-bearing liabilities           $  82,127   $ (22,746) $  (76,911) $   15,535  $  87,747  $ 85,752
                                               =========   =========  ==========  ==========  =========  ========

Cumulative interest-rate sensitivity gap (4)   $  82,127   $  59,381  $  (17,530) $   (1,995) $  85,752
                                               =========   =========  ==========  ==========  =========

Cumulative interest-rate gap as a percentage
   of total assets at June 30, 2005                18.49%      13.37%     (3.95)%     (0.45)%     19.30%
                                               =========   =========  ==========  ==========  =========

Cumulative interest-earning assets as a
   percentage of cumulative interest-
   bearing liabilities at June 30, 2005           401.98%     155.24%      93.34%      99.34%    124.86%
                                               =========   =========  ==========  ==========  =========
</TABLE>
-------------------------------------
(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.


                                       23
<PAGE>

-------------------------------------

(2)  For purposes of the gap analysis, investment securities are stated at
     amortized cost and include Federal Home Loan Bank stock.

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

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

Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods to repricing, they may react in different degrees
to changes in market interest rates. Also, the interest rates on certain types
of assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets, such as adjustable-rate loans, have
features which restrict changes in interest rates both on a short-term basis and
over the life of the asset. Further, in the event of a change in interest rates,
prepayment and early withdrawal levels would likely deviate significantly from
those assumed in calculating the table. Finally, the ability of many borrowers
to service their adjustable-rate loans may decrease in the event of an interest
rate increase.

NET PORTFOLIO VALUE ANALYSIS. Our interest rate sensitivity also is monitored by
management through the use of a model which generates estimates of the changes
in our net portfolio value ("NPV") over a range of interest rate scenarios. NPV
is the present value of expected cash flows from assets, liabilities and
off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is
defined as the NPV in that scenario divided by the market value of assets in the
same scenario. The following table sets forth our NPV as of June 30, 2005 and
reflects the changes to NPV as a result of immediate and sustained changes in
interest rates as indicated.

<TABLE>
<CAPTION>
                                                                                          NPV as % of Portfolio
                  Change in                 Net Portfolio Value                              Value of Assets
               Interest Rates        -------------------------------------------------------------------------------
               In Basis Points
                (Rate Shock)             Amount            $ Change       % Change      NPV Ratio        Change
         -----------------------------------------------------------------------------------------------------------
                                                               (Dollars in Thousands)
<S>                                     <C>               <C>               <C>          <C>             <C>
                     300                $ 72,153          $ (30,852)        (29.95)%     18.27%          (4.98)%
                     200                  82,425            (20,580)        (19.98)%     20.07%          (3.18)%
                     100                  93,385             (9,620)         (9.34)%     21.85%          (1.40)%
                   Static                103,005                  -              -       23.25%              -
                    (100)                102,056               (949)         (0.92)%     22.77%          (0.48)%
                    (200)                 99,024             (3,981)         (3.86)%     21.93%          (1.32)%
                    (300)                 96,392             (6,613)         (6.42)%     21.17%          (2.08)%
</TABLE>

As is the case with the GAP Table, certain shortcomings are inherent in the
methodology used in the above interest rate risk measurements. Modeling changes
in NPV require the making of certain assumptions which may or may not reflect
the manner in which actual yields and costs respond to changes in market
interest rates. In this regard, the models presented assume that the composition
of our interest sensitive assets and liabilities existing at the beginning of a
period remains constant over the period being measured and also assumes that a
particular change in interest rates is reflected uniformly across the yield
curve regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the NPV model provides an indication of
interest rate risk exposure at a particular point in time, such model is not
intended to and does not provide a precise forecast of the effect of changes in
market interest rates on net interest income and will differ from actual
results.


                                       24
<PAGE>

ITEM 4. CONTROLS AND PROCEDURES

Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based
on such evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are designed to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
regulations and are operating in an effective manner.

No change in our internal control over financial reporting (as defined in Rule
13a-15(e) or 15d-15(f) under the Securities Exchange Act of 1934) occurred
during the most recently completed fiscal quarter that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.


                                       25
<PAGE>

                                     PART II

ITEM 1. LEGAL PROCEEDINGS

None

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)  Not applicable

(b)  The Company's Form S-1 (File No. 333-119130) was declared effective by the
     SEC on January 27, 2005. A total of 5,653,688 shares of common stock were
     sold at $10.00 per share in the subscription offering, which was
     consummated on March 29, 2005, and 6,910,062 shares were issued to
     Prudential Mutual Holding Company, on that date. The gross offering
     proceeds were $56,536,880 and net proceeds were $54,850,331.

(c)  The following table sets forth information with respect to purchases made
     by or on behalf of the Company of shares of common stock of the Company
     during the indicated periods.

<TABLE>
<CAPTION>
                                                                  Total Number           Maximum Number of
                               Total Number      Average      Shares Purchased as       Shares that May Yet
                                of Shares      Price Paid     Part of the Publicly      Be Purchased Under
            Period              Purchased       per Share        Announced Plan            the Plan (1)
-------------------------------------------------------------------------------------------------------------
<S>                               <C>            <C>                  <C>                    <C>
April 1-30, 2005                       -         $    -                    -                 N/A (1)
May 1-31, 2005                    45,200         $ 9.83               45,200                 231,800
June 1-30, 2005                   21,100         $ 9.95               66,300                 210,700
                                 -------                             -------                 -------

            Total                 66,300         $ 9.87               66,300                 210,700
                                 =======        =======              =======                 =======
</TABLE>
     (1) On May 11, 2005, the Company announced its current program to
     repurchase up to 277,000 shares of the common stock of the Company. The
     repurchase program is in operation for 12 months or such longer time as may
     be required to complete the repurchase of all the shares under the program.
     The above table does not include 452,295 shares purchased at an average
     cost per share of $9.86 by the Company's ESOP, which was the maximum number
     of shares authorized to be purchased. The Company's ESOP was not able to
     purchase any shares in the subscription offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Exhibit No.       Description
-----------       -----------

31.1            Section 302 Certification of Chief Executive Officer
31.2            Section 302 Certification of Chief Financial Officer
32.1            Certification of Chief Executive Officer pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002
32.2            Certification of Chief Financial Officer pursuant to Section 906
                of the Sarbanes-Oxley Act of 2002


                                       26
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                      PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA





DATE:   AUGUST 15, 2005               BY: /s/
                                          ----------------------------------
                                          THOMAS A. VENTO
                                          PRESIDENT AND CHIEF EXECUTIVE OFFICER


DATE:   AUGUST 15, 2005               BY: /s/
                                          ---------------------------------
                                          JOSEPH R. CORRATO
                                          EXECUTIVE VICE PRESIDENT AND CHIEF
                                          FINANCIAL OFFICER


                                       27