##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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, 2009

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 No. 0-22288





Fidelity Bancorp, Inc.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Pennsylvania                                                   |  | 25-1705405                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1009 Perry Highway, Pittsburgh, Pennsylvania 15237

(Address of principal executive offices)

412-367-3300

(Registrants telephone number, including area code)

Not Applicable

(Former name, former
address and former fiscal year, if changed since last report)





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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of large accelerated filer,
accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange Act.



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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).:     ̈  Yes    x  No

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 3,045,244 shares, par value $0.01, at July 31, 2009.









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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Index



|                               |  |                                                                                                    |  |      
|------------------------------ |  | -------------------------------------------------------------------------------------------------- |  | -----
|                               |  | Page                                                                                              
|Part I - Financial Information |  |                                                                                                   
|                               |  |                                                                                                   
|Item 1.                        |  | Financial Statements (Unaudited)                                                                   |  | 3    
|                               |  |                                                                                                   
|                               |  | Consolidated Statements of Financial Condition as of June 30, 2009 and September 30, 2008          |  | 3    
|                               |  |                                                                                                   
|                               |  | Consolidated Statements of Income for the Three and Nine Months Ended June 30, 2009 and 2008       |  | 4-5  
|                               |  |                                                                                                   
|                               |  | Consolidated Statements of Changes in Stockholders Equity for the Nine Months Ended June 30, 2009 |  | 6    
|                               |  |                                                                                                   
|                               |  | Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2009 and 2008             |  | 7-8  
|                               |  |                                                                                                   
|                               |  | Notes to Consolidated Financial Statements                                                         |  | 9    
|                               |  |                                                                                                   
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations              |  | 32   
|                               |  |                                                                                                   
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                                         |  | 43   
|                               |  |                                                                                                   
|Item 4T.                       |  | Controls and Procedures                                                                            |  | 44   
|                               | 
|Part II - Other Information    |  |                                                                                                   
|                               |  |                                                                                                   
|Item 1.                        |  | Legal Proceedings                                                                                  |  | 44   
|                               |  |                                                                                                   
|Item 1A.                       |  | Risk Factors                                                                                       |  | 44   
|                               |  |                                                                                                   
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                                        |  | 44   
|                               |  |                                                                                                   
|Item 3.                        |  | Defaults Upon Senior Securities                                                                    |  | 44   
|                               |  |                                                                                                   
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                                |  | 44   
|                               |  |                                                                                                   
|Item 5.                        |  | Other Information                                                                                  |  | 44   
|                               |  |                                                                                                   
|Item 6.                        |  | Exhibits                                                                                           |  | 45-46
|                               | 
|Signatures                     |  | 47                                                                                                



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##### Table of Contents

Part IFinancial Information

|Item 1. | Financial Statements
|------- | --------------------

FIDELITY
BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Financial Condition (Unaudited)

(in thousands, except share data)



|                                                                                                                            |  |              |         |   |                   |   |         |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                            |  | June 30,2009 |         |   | September 30,2008 |  
|Assets                                                                                                                      |  |              |         |   |                   |   |         |  
|Cash and due from banks                                                                                                     |  | $            | 6,077   |   |                   | $ | 6,701   |  
|Interest-bearing demand deposits with other institutions                                                                    |  |              | 47,951  |   |                   |   | 4,071   |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Cash and Cash Equivalents                                                                                                   |  |              | 54,028  |   |                   |   | 10,772  |  
|Securities available-for-sale (amortized cost of $152,983 and $155,273)                                                     |  |              | 145,713 |   |                   |   | 146,680 |  
|Securities held-to-maturity (fair value of $64,366 and $73,531)                                                             |  |              | 64,976  |   |                   |   | 75,404  |  
|Loans held for sale                                                                                                         |  |              | 2,806   |   |                   |   | 225     |  
|Loans receivable, net of allowance of $3,628 and $3,424                                                                     |  |              | 437,012 |   |                   |   | 460,786 |  
|Foreclosed real estate, net                                                                                                 |  |              | 80      |   |                   |   | 170     |  
|Federal Home Loan Bank stock, at cost                                                                                       |  |              | 10,034  |   |                   |   | 7,943   |  
|Office premises and equipment, net                                                                                          |  |              | 8,066   |   |                   |   | 6,949   |  
|Accrued interest receivable                                                                                                 |  |              | 2,932   |   |                   |   | 3,512   |  
|Cash surrender value of life insurance                                                                                      |  |              | 4,763   |   |                   |   | 6,131   |  
|Goodwill                                                                                                                    |  |              | 2,653   |   |                   |   | 2,653   |  
|Other assets                                                                                                                |  |              | 7,561   |   |                   |   | 5,985   |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Total Assets                                                                                                                |  | $            | 740,624 |   |                   | $ | 727,210 |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|                                                                                                                            |  |             
|Liabilities and Stockholders Equity                                                                                        |  |              |         |   |                   |   |         |  
|Liabilities:                                                                                                                |  |              |         |   |                   |   |         |  
|Deposits:                                                                                                                   |  |              |         |   |                   |   |         |  
|Non-interest bearing                                                                                                        |  | $            | 44,886  |   |                   | $ | 37,983  |  
|Interest bearing                                                                                                            |  |              | 398,903 |   |                   |   | 378,431 |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Total Deposits                                                                                                              |  |              | 443,789 |   |                   |   | 416,414 |  
|                                                                                                                            |  |             
|Securities sold under agreement to repurchase                                                                               |  |              | 111,626 |   |                   |   | 104,003 |  
|Short-term borrowings                                                                                                       |  |              | 201     |   |                   |   | 32,258  |  
|Long-term debt                                                                                                              |  |              | 118,607 |   |                   |   | 118,800 |  
|Subordinated debt                                                                                                           |  |              | 7,732   |   |                   |   | 7,732   |  
|Advance payments by borrowers for taxes and insurance                                                                       |  |              | 3,397   |   |                   |   | 1,483   |  
|Other liabilities                                                                                                           |  |              | 5,231   |   |                   |   | 4,365   |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Total Liabilities                                                                                                           |  |              | 690,583 |   |                   |   | 685,055 |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|                                                                                                                            |  |             
|Stockholders equity:                                                                                                       |  |              |         |   |                   |   |         |  
|Preferred stock, $0.01 par value per share, liquidation preference $1,000; 5,000,000 shares authorized; 7,000 shares issued |  |              | 6,670   |   |                   |   |        |  
|Common stock, $0.01 par value per share, 10,000,000 shares authorized; 3,664,373 and 3,647,854 shares issued, respectively  |  |              | 37      |   |                   |   | 36      |  
|Paid-in-capital                                                                                                             |  |              | 46,364  |   |                   |   | 45,931  |  
|Retained earnings                                                                                                           |  |              | 12,426  |   |                   |   | 12,268  |  
|Accumulated other comprehensive loss, net of tax                                                                            |  |              | (5,074  | ) |                   |   | (5,698  | )
|Treasury stock, at cost619,129 shares                                                                                      |  |              | (10,382 | ) |                   |   | (10,382 | )
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Total Stockholders Equity                                                                                                  |  |              | 50,041  |   |                   |   | 42,155  |  
|                                                                                                                            |  |              |         |   |                   |   |         |  
|Total Liabilities and Stockholders Equity                                                                                  |  | $            | 740,624 |   |                   | $ | 727,210 |  
|                                                                                                                            |  |              |         |   |                   |   |         |  

See accompanying notes to unaudited consolidated financial statements.



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

(in thousands, except per share data)



|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|--------------------------------------------------- |  | -------------------------- | ------ | ------------------------- | ---- | - | ----- |  | - | ------ | - |  | - | ------ | -
|                                                    |  | Three Months EndedJune 30, |        | Nine Months EndedJune 30, |     
|                                                    |  | 2009                       |        |                           | 2008 |   | 2009  |  |   | 2008   |  
|Interest income:                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Loans                                               |  | $                          | 6,239  |                           |      | $ | 6,948 |  | $ | 20,184 |   |  | $ | 21,432 |  
|Mortgage-backed securities                          |  |                            | 894    |                           |      |   | 1,088 |  |   | 3,040  |   |  |   | 3,006  |  
|Investment securities-taxable                       |  |                            | 931    |                           |      |   | 1,259 |  |   | 3,101  |   |  |   | 4,188  |  
|Investment securities-tax-exempt                    |  |                            | 435    |                           |      |   | 423   |  |   | 1,306  |   |  |   | 1,249  |  
|Other                                               |  |                            | 8      |                           |      |   | 8     |  |   | 12     |   |  |   | 20     |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Total interest income                               |  |                            | 8,507  |                           |      |   | 9,726 |  |   | 27,643 |   |  |   | 29,895 |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Interest expense:                                   |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Deposits                                            |  |                            | 2,085  |                           |      |   | 2,751 |  |   | 6,613  |   |  |   | 9,169  |  
|Securities sold under agreement to repurchase       |  |                            | 1,278  |                           |      |   | 1,207 |  |   | 3,826  |   |  |   | 3,540  |  
|Short-term borrowings                               |  |                            | 2      |                           |      |   | 56    |  |   | 122    |   |  |   | 683    |  
|Long-term debt                                      |  |                            | 1,209  |                           |      |   | 1,346 |  |   | 3,687  |   |  |   | 3,973  |  
|Subordinated debt                                   |  |                            | 102    |                           |      |   | 103   |  |   | 308    |   |  |   | 346    |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Total interest expense                              |  |                            | 4,676  |                           |      |   | 5,463 |  |   | 14,556 |   |  |   | 17,711 |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|                                                    |  |                            |        |                          
|Net interest income                                 |  |                            | 3,831  |                           |      |   | 4,263 |  |   | 13,087 |   |  |   | 12,184 |  
|                                                    |  |                            |        |                          
|Provision for loan losses                           |  |                            | 270    |                           |      |   | 350   |  |   | 1,145  |   |  |   | 740    |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|                                                    |  |                            |        |                          
|Net interest income after provision for loan losses |  |                            | 3,561  |                           |      |   | 3,913 |  |   | 11,942 |   |  |   | 11,444 |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|                                                    |  |                            |        |                          
|Other income:                                       |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Loan service charges and fees                       |  |                            | 208    |                           |      |   | 161   |  |   | 475    |   |  |   | 389    |  
|Realized gain on sales of securities, net           |  |                            |       |                           |      |   |      |  |   |       |   |  |   | 7      |  
|Impairment charge on securities                     |  |                            | (1,401 | )                         |      |   |      |  |   | (3,121 | ) |  |   | (322   | )
|Gain on sales of loans                              |  |                            | 247    |                           |      |   | 71    |  |   | 402    |   |  |   | 127    |  
|Gain (loss) on loan interest rate swaps             |  |                            | 14     |                           |      |   |      |  |   | (2     | ) |  |   |       |  
|Deposit service charges and fees                    |  |                            | 357    |                           |      |   | 363   |  |   | 1,087  |   |  |   | 1,087  |  
|ATM fees                                            |  |                            | 192    |                           |      |   | 184   |  |   | 548    |   |  |   | 529    |  
|Non-insured investment products                     |  |                            | 39     |                           |      |   | 40    |  |   | 88     |   |  |   | 186    |  
|Earnings on cash surrender value of life insurance  |  |                            | 490    |                           |      |   | 67    |  |   | 628    |   |  |   | 202    |  
|Other                                               |  |                            | 36     |                           |      |   | 68    |  |   | 149    |   |  |   | 225    |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Total other income                                  |  |                            | 182    |                           |      |   | 954   |  |   | 254    |   |  |   | 2,430  |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Operating expenses:                                 |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Compensation and benefits                           |  |                            | 2,061  |                           |      |   | 2,042 |  |   | 6,078  |   |  |   | 5,953  |  
|Office occupancy and equipment expense              |  |                            | 245    |                           |      |   | 250   |  |   | 758    |   |  |   | 772    |  
|Depreciation and amortization                       |  |                            | 118    |                           |      |   | 126   |  |   | 360    |   |  |   | 384    |  
|Loss on sales of foreclosed real estate             |  |                            | 7      |                           |      |   | 16    |  |   | 17     |   |  |   | 21     |  
|Foreclosed real estate expense                      |  |                            | 1      |                           |      |   | 5     |  |   | 3      |   |  |   | 28     |  
|Amortization of intangible assets                   |  |                            | 5      |                           |      |   | 7     |  |   | 17     |   |  |   | 22     |  
|Advertising                                         |  |                            | 100    |                           |      |   | 100   |  |   | 290    |   |  |   | 300    |  
|Professional fees                                   |  |                            | 93     |                           |      |   | 76    |  |   | 350    |   |  |   | 325    |  
|Service bureau expense                              |  |                            | 97     |                           |      |   | 93    |  |   | 317    |   |  |   | 236    |  
|FDIC insurance premiums                             |  |                            | 745    |                           |      |   | 12    |  |   | 839    |   |  |   | 37     |  
|Other                                               |  |                            | 575    |                           |      |   | 520   |  |   | 1,670  |   |  |   | 1,540  |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  
|Total operating expenses                            |  |                            | 4,047  |                           |      |   | 3,247 |  |   | 10,699 |   |  |   | 9,618  |  
|                                                    |  |                            |        |                           |      |   |       |  |   |        |   |  |   |        |  



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited) (Contd.)

(in
thousands, except per share data)



|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|------------------------------------------------------------ |  | -------------------------- | ---- | ------------------------- | ---- | - | ----- |  | - | ----- | - |  | - | -----
|                                                             |  | Three Months EndedJune 30, |      | Nine Months EndedJune 30,
|                                                             |  | 2009                       |      |                           | 2008 |   | 2009  |  |   | 2008 
|Income (Loss) before Provision for (Benefit of) Income Taxes |  | $                          | (304 | )                         |      | $ | 1,620 |  | $ | 1,497 |   |  | $ | 4,256
|Provision for (Benefit of) Income Taxes                      |  |                            | (542 | )                         |      |   | 393   |  |   | (298  | ) |  |   | 1,000
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|Net Income                                                   |  |                            | 238  |                           |      |   | 1,227 |  |   | 1,795 |   |  |   | 3,256
|Preferred stock dividend                                     |  |                            | (88  | )                         |      |   |      |  |   | (193  | ) |  |   |     
|Accretion of preferred stock discount                        |  |                            | (15  | )                         |      |   |      |  |   | (30   | ) |  |   |     
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|Net income available to common stockholders                  |  | $                          | 135  |                           |      | $ | 1,227 |  | $ | 1,572 |   |  | $ | 3,256
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|                                                             |  |                            |      |                          
|Earnings per Share                                           |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|Basic earnings per common share                              |  | $                          | 0.04 |                           |      | $ | 0.41  |  | $ | 0.52  |   |  | $ | 1.08 
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|Diluted earnings per common share                            |  | $                          | 0.04 |                           |      | $ | 0.40  |  | $ | 0.52  |   |  | $ | 1.07 
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      
|Dividends per common share                                   |  | $                          | 0.07 |                           |      | $ | 0.14  |  | $ | 0.35  |   |  | $ | 0.42 
|                                                             |  |                            |      |                           |      |   |       |  |   |       |   |  |   |      

See accompanying notes to unaudited consolidated financial statements.



5



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FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders Equity (Unaudited)

(in thousands, except share data)



|                                                                                                     |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|---------------------------------------------------------------------------------------------------- |  | --------------------------- |  | -------------- | ----- | ----------- | - | -------------- |  | - | ---------------- | - |  | ----------------------------------------- | ------ | - | ------------- | - | ------ | ----- |  | - | ------- | - |  | - | ------ | -
|                                                                                                     |  | Numberof CommonSharesIssued |  | PreferredStock |       | CommonStock |   | Paid-inCapital |  |   | RetainedEarnings |   |  | AccumulatedOtherComprehensiveIncome(Loss) |        |   | TreasuryStock |   |        | Total | 
|Balance at September 30, 2008                                                                        |  | 3,647,854                   |  | $              |      |             | $ | 36             |  | $ | 45,931           |   |  | $                                         | 12,268 |   |               | $ | (5,698 | )     |  | $ | (10,382 | ) |  | $ | 42,155 |  
|Comprehensive income:                                                                                |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|Net income                                                                                           |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | 1,795  |   |               |   |        |       |  |   |         |   |  |   | 1,795  |  
|Comprehensive loss on cash flow hedges net of tax of ($129)                                          |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   | (250   | )     |  |   |         |   |  |   | (250   | )
|Comprehensive loss on investment securities, net of tax of ($611)                                    |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   | (1,186 | )     |  |   |         |   |  |   | (1,186 | )
|Reclassification adjustment on investment securities, net of tax of $1,061                           |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   | 2,060  |       |  |   |         |   |  |   | 2,060  |  
|                                                                                                     |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|Total comprehensive income                                                                           |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | 2,419  |  
|                                                                                                     |  |                             |  |                |       |             |   |               
|Cumulative effect of change in accounting for split dollar life insurance arrangements (see Note 12) |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | (351   | ) |               |   |        |       |  |   |         |   |  |   | (351   | )
|Preferred stock issued (7,000 shares) (see Note 14)                                                  |  |                             |  |                | 6,640 |             |   |                |  |   | 302              |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | 6,942  |  
|Accretion of preferred stock discount                                                                |  |                             |  |                | 30    |             |   |                |  |   |                  |   |  |                                           | (30    | ) |               |   |        |       |  |   |         |   |  |   |       |  
|Cumulative dividends on preferred stock                                                              |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | (193   | ) |               |   |        |       |  |   |         |   |  |   | (193   | )
|Stock-based compensation expense                                                                     |  |                             |  |                |       |             |   |                |  |   | 75               |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | 75     |  
|Stock options exercised                                                                              |  | 79                          |  |                |       |             |   |                |  |   | 1                |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | 1      |  
|Tax adjustment on stock options exercised                                                            |  |                             |  |                |       |             |   |                |  |   | (15              | ) |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | (15    | )
|Restricted stock issued                                                                              |  | 7,100                       |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|Cash dividends declared                                                                              |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           | (1,063 | ) |               |   |        |       |  |   |         |   |  |   | (1,063 | )
|Shares issued to Dividend                                                                            |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|Reinvestment Plan                                                                                    |  | 9,340                       |  |                |       |             |   | 1              |  |   | 70               |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   | 71     |  
|                                                                                                     |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  
|                                                                                                     |  |                             |  |                |       |             |   |               
|Balance at June 30, 2009                                                                             |  | 3,664,373                   |  | $              | 6,670 |             | $ | 37             |  | $ | 46,364           |   |  | $                                         | 12,426 |   |               | $ | (5,074 | )     |  | $ | (10,382 | ) |  | $ | 50,041 |  
|                                                                                                     |  |                             |  |                |       |             |   |                |  |   |                  |   |  |                                           |        |   |               |   |        |       |  |   |         |   |  |   |        |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)



|                                                                                        |  |                            |         |   |      |   |         |  
|--------------------------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                                        |  | Nine Months Ended June 30, |        
|                                                                                        |  | 2009                       |         |   | 2008 |  
|Operating Activities:                                                                   |  |                            |         |   |      |   |         |  
|Net income                                                                              |  | $                          | 1,795   |   |      | $ | 3,256   |  
|Adjustments to reconcile net income to net cash provided by operating activities:       |  |                            |         |   |      |   |         |  
|Provision for loan losses                                                               |  |                            | 1,145   |   |      |   | 740     |  
|Loss on foreclosed real estate                                                          |  |                            | 17      |   |      |   | 21      |  
|Provision for depreciation and amortization                                             |  |                            | 360     |   |      |   | 384     |  
|Deferred loan fee amortization                                                          |  |                            | 38      |   |      |   | (2      | )
|Amortization of investment and mortgage-backed securities discounts/premiums, net       |  |                            | 82      |   |      |   | 123     |  
|Amortization of intangibles                                                             |  |                            | 17      |   |      |   | 22      |  
|Net realized gains on sales of investments                                              |  |                            |        |   |      |   | (7      | )
|Impairment charge on securities                                                         |  |                            | 3,121   |   |      |   | 322     |  
|Loans originated for sale                                                               |  |                            | (32,033 | ) |      |   | (11,987 | )
|Sales of loans held for sale                                                            |  |                            | 29,854  |   |      |   | 11,681  |  
|Net gains on sales of loans                                                             |  |                            | (402    | ) |      |   | (127    | )
|Earnings on cash surrender value of life insurance policies                             |  |                            | (165    | ) |      |   | (202    | )
|Expenses related to cash surrender value of life insurance policies                     |  |                            | 35      |   |      |   | 34      |  
|Earnings on cash surrender value of the Chairman of the Boards life insurance policies |  |                            | (463    | ) |      |   |        |  
|Decrease in interest receivable                                                         |  |                            | 580     |   |      |   | 102     |  
|(Decrease) increase in interest payable                                                 |  |                            | (20     | ) |      |   | 40      |  
|Increase in accrued taxes                                                               |  |                            | (698    | ) |      |   | (453    | )
|Noncash compensation expense related to stock benefit plans                             |  |                            | 75      |   |      |   | 85      |  
|Changes in other assets                                                                 |  |                            | (1,257  | ) |      |   | 460     |  
|Changes in other liabilities                                                            |  |                            | 141     |   |      |   | 285     |  
|                                                                                        |  |                            |         |   |      |   |         |  
|                                                                                        |  |                           
|Net cash provided by operating activities                                               |  |                            | 2,222   |   |      |   | 4,777   |  
|                                                                                        |  |                            |         |   |      |   |         |  
|                                                                                        |  |                           
|Investing Activities:                                                                   |  |                            |         |   |      |   |         |  
|Proceeds from sales of securities available-for-sale                                    |  |                            |        |   |      |   | 537     |  
|Proceeds from maturities and principal repayments of securities available-for-sale      |  |                            | 20,230  |   |      |   | 28,279  |  
|Purchases of securities available-for-sale                                              |  |                            | (21,056 | ) |      |   | (39,024 | )
|Proceeds from maturities and principal repayments of securities held-to-maturity        |  |                            | 23,662  |   |      |   | 24,389  |  
|Purchases of securities held to maturity                                                |  |                            | (13,279 | ) |      |   | (23,954 | )
|Net decrease in loans                                                                   |  |                            | 22,484  |   |      |   | 6,033   |  
|Proceeds from sales of foreclosed real estate                                           |  |                            | 180     |   |      |   | 278     |  
|Additions to office premises and equipment                                              |  |                            | (1,477  | ) |      |   | (535    | )
|Purchases of FHLB stock                                                                 |  |                            | (2,424  | ) |      |   | (3,988  | )
|Redemptions of FHLB stock                                                               |  |                            | 333     |   |      |   | 3,776   |  
|Life insurance proceeds received upon the death of the former Chairman of the Board     |  |                            | 2,705   |   |      |   |        |  
|Purchases of cash surrender value life insurance                                        |  |                            | (744    | ) |      |   |        |  
|                                                                                        |  |                            |         |   |      |   |         |  
|                                                                                        |  |                           
|Net cash provided by (used in) investing activities                                     |  |                            | 30,614  |   |      |   | (4,209  | )
|                                                                                        |  |                            |         |   |      |   |         |  



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited) (Contd.)

(in
thousands)



|                                                                    |  |                            |         |   |      |   |         |  
|------------------------------------------------------------------- |  | -------------------------- | ------- | - | ---- | - | ------- | -
|                                                                    |  | Nine Months Ended June 30, |        
|                                                                    |  | 2009                       |         |   | 2008 |  
|Financing Activities:                                               |  |                            |         |   |      |   |         |  
|Net increase (decrease) in deposits                                 |  | $                          | 27,375  |   |      | $ | (10,080 | )
|Net increase in retail repurchase agreements                        |  |                            | 7,623   |   |      |   | 847     |  
|Net decrease in short-term borrowings                               |  |                            | (32,057 | ) |      |   | (19,480 | )
|Increase in advance payments by borrowers for taxes and insurance   |  |                            | 1,914   |   |      |   | 2,402   |  
|Proceeds from long-term debt                                        |  |                            | 30,000  |   |      |   | 55,000  |  
|Repayments of long-term debt                                        |  |                            | (30,193 | ) |      |   | (30,187 | )
|Cash dividends paid                                                 |  |                            | (1,256  | ) |      |   | (1,265  | )
|Preferred stock issued                                              |  |                            | 6,942   |   |      |   |        |  
|Stock options exercised                                             |  |                            | 1       |   |      |   | 302     |  
|Excess tax benefit realized on stock-based compensation             |  |                            |        |   |      |   | 27      |  
|Proceeds from sale of stock through Dividend Reinvestment Plan      |  |                            | 71      |   |      |   | 109     |  
|                                                                    |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Net cash provided by (used in) financing activities                 |  |                            | 10,420  |   |      |   | (2,325  | )
|                                                                    |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Net increase (decrease) in cash and cash equivalents                |  |                            | 43,256  |   |      |   | (1,757  | )
|                                                                    |  |                           
|Cash and cash equivalents at beginning of period                    |  |                            | 10,772  |   |      |   | 11,076  |  
|                                                                    |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Cash and cash equivalents at end of period                          |  | $                          | 54,028  |   |      | $ | 9,319   |  
|                                                                    |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Supplemental Disclosure of Cash Flow Information                    |  |                            |         |   |      |   |         |  
|Cash paid during the period for:                                    |  |                            |         |   |      |   |         |  
|Interest on deposits and other borrowings                           |  | $                          | 14,576  |   |      | $ | 17,671  |  
|                                                                    |  |                            |         |   |      |   |         |  
|Income taxes                                                        |  | $                          | 1,606   |   |      | $ | 1,065   |  
|                                                                    |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Supplemental Schedule of Noncash Investing and Financing Activities |  |                            |         |   |      |   |         |  
|                                                                    |  |                           
|Transfer of loans to foreclosed real estate                         |  | $                          | 107     |   |      | $ | 354     |  
|                                                                    |  |                            |         |   |      |   |         |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

FIDELITY BANCORP, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements  (Unaudited)

June 30, 2009

(1) Consolidation

The consolidated financial statements contained herein for Fidelity Bancorp, Inc. (the Company) include the accounts of Fidelity Bancorp, Inc. and its wholly-owned subsidiary, Fidelity Bank, PaSB (the
Bank). All inter-company balances and transactions have been eliminated.

(2) Basis of Presentation

The accompanying consolidated financial statements were prepared in accordance with instructions to Form 10-Q, and therefore, do not include information or footnotes
necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles in the United States. However, all adjustments (consisting of normal recurring
adjustments), which, in the opinion of management, are necessary for a fair presentation of the financial statements, have been included. These financial statements should be read in conjunction with the audited financial statements and the
accompanying notes thereto included in the Companys Annual Report for the fiscal year ended September 30, 2008. The results for the three and nine month periods ended June 30, 2009 are not necessarily indicative of the results that
may be expected for the fiscal year ending September 30, 2009 or any future interim period.

Certain amounts in the 2008 financial statements have
been reclassified to conform with the 2009 presentation format. These reclassifications had no effect on stockholders equity or net income.

(3)
New Accounting Standards

In February 2008, the FASB issued Staff Position No.157-2, Partial Deferral of the Effective Date of Statement 157,
which deferred the effective date of FAS No. 157, Fair Value Measurements, for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. The Company is currently evaluating the impact
the adoption of the standard will have on the Companys results of operations.

In May 2008, the FASB issued FSP No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). This FSP provides guidance on the accounting for certain types of convertible debt instruments that may be settled in cash upon
conversion. Additionally, this FSP specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entitys nonconvertible debt borrowing rate when interest cost is
recognized in subsequent periods. The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company is currently evaluating the impact the
adoption of the FSP will have on the Companys results of operations.

In June 2008, the FASB ratified Emerging Issues Task Force (EITF)
Issue No. 08-4, Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios. This Issue provides transition guidance for conforming changes made to EITF Issue No. 98-5,
Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjusted Conversion Ratios, that resulted from EITF Issue No. 00-27, Application of Issue No. 98-5 to Certain Convertible Instruments,and
FAS No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liability and Equity. The conforming changes are effective for financial statements issued for fiscal years ending after December 15, 2008, with
earlier application permitted. The Company is currently evaluating the impact the adoption of the FSP will have on the Companys results of operations.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, Employers Disclosures about Postretirement Benefit Plan Assets. This FSP amends FASB Statement No. 132 (revised 2003), Employers Disclosures about Pensions
and Other Postretirement Benefits, to improve an employers disclosures about plan assets of a defined benefit pension or other postretirement plan. The disclosures about plan assets required by the FSP are to be provided for fiscal years
ending after December 15, 2009. The adoption of this FSP is not expected to have a material effect on the Companys results of operations or financial position.



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##### Table of Contents

In April 2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination That Arise from Contingencies.This FSP requires companies acquiring contingent assets or assuming contingent liabilities in a business combination to either (a) if the assets or liabilities fair value can
be determined, recognize them at fair value, at the acquisition date, or (b) if the assets or liabilities fair value cannot be determined, but (i) it is probable that an asset existed or that a liability had been incurred at
the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated, recognize them at their estimated amount, at the acquisition date. If the fair value of these contingencies cannot be determined and they are not
probable or cannot be reasonably estimated, then companies should not recognize these contingencies as of the acquisition date and instead should account for them in subsequent periods by following other applicable GAAP. This FSP also eliminates the
FAS 141R requirement of disclosing in the footnotes to the financial statements the range of expected outcomes for a recognized contingency. This FSP shall be effective for assets or liabilities arising from contingencies in business combinations
for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The adoption of this FSP is not expected to have a material effect on the Companys results of
operations or financial position.

In April 2009, the FASB issued FSP No. FAS 157-4, Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly. This FSP relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It
reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP No. FAS 157-4 is effective for interim and annual periods ending after
June 15, 2009. The adoption of this FSP did not have a material effect on the Companys results of operations or financial position. The Company has presented the necessary disclosures in Note (11) herein.

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, which relates to fair value
disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires
these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP No. FAS 107-1 and APB 28-1 is effective
for interim and annual periods ending after June 15, 2009. The Company has adopted FSP No. FAS 107-1 and APB 28-1 as of June 30, 2009 and presented the necessary disclosures in Note (11) herein.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, which provides additional
guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. FSP No. FAS 115-2 and FAS 124-2 is effective for interim and annual periods ending after June 15, 2009. The adoption
of FSP No. FAS 115-2 and FAS 124-2 did not have a material impact on the Companys financial position or results of operations. The Company has presented the necessary disclosures in Note (6) herein.

In May 2009, the FASB issued FAS No. 165, Subsequent Events, which requires companies to evaluate events and transactions that occur after the balance sheet
date but before the date the financial statements are issued, or available to be issued in the case of non-public entities. FAS No. 165 requires entities to recognize in the financial statements the effect of all events or transactions
that provide additional evidence of conditions that existed at the balance sheet date, including the estimates inherent in the financial preparation process. Entities shall not recognize the impact of events or transactions that provide
evidence about conditions that did not exist at the balance sheet date but arose after that date. FAS No. 165 also requires entities to disclose the date through which subsequent events have been evaluated. FAS No. 165 was
effective for interim and annual reporting periods ending after June 15, 2009. The Company adopted the provisions of FAS No. 165 as of June 30, 2009, as required, and adoption did not have a material impact on Companys
results of operations or financial position. The Company has presented the necessary disclosures in Note (15) herein.



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##### Table of Contents

In June 2009, the FASB issued FAS No. 166, Accounting for Transfers of Financial Assets. FAS 166 removes
the concept of a qualifying special-purpose entity (QSPE) from FAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities, and removes the exception from applying FIN 46(R). This statement
also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This statement is effective for fiscal years beginning after November 15, 2009. As such, the Company plans to
adopt FAS No. 166 effective October 1, 2010. The adoption of this standard is not expected to have a material effect on the Companys results of operations or financial position.

In June 2009, the FASB issued FAS No. 167, Amendments to FASB Interpretation No. 46(R). FAS 167, which amends FASB Interpretation No. 46
(revised December 2003), Consolidation of Variable Interest Entities, (FIN 46(R)), prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity (VIE) and eliminates the
quantitative model prescribed by FIN 46(R). The new model identifies two primary characteristics of a controlling financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a
company to absorb losses of and/or provides rights to receive benefits from the VIE. FAS No. 167 requires a company to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling
financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. This statement is effective for fiscal years beginning after November 15, 2009. The Company is currently evaluating the impact the
adoption of the standard will have on the Companys results of operations.

In June 2009, the FASB issued FAS No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. FAS No. 168 establishes the FASB Accounting Standards Codification (Codification), which was officially launched on July 1,
2009, and became the primary source of authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under the authority of Federal
securities laws are also sources of authoritative GAAP for SEC registrants. The subsequent issuances of new standards will be in the form of Accounting Standards Updates that will be included in the Codification. FAS No. 168 is effective for
financial statements issued for interim and annual periods ending after September 15, 2009. As such, the Company plans to adopt FAS No.168 in connection with its fourth quarter 2009 reporting. As the Codification is neither expected nor
intended to change GAAP, the adoption of FAS No.168 will not have a material impact on its results of operations or financial position.

(4) Stock Based
Compensation

As of June 30, 2009, the Company had six share-based compensation plans, for which stock options were outstanding as of June 30,
2009. However, the plan described below is the only plan for which stock options and restricted stock are available for grant.

The Companys 2005
Stock-Based Incentive Plan (the Plan), which was shareholder-approved, permits the grant of stock options and restricted stock to its employees and non-employee directors for up to 165,000 shares of common stock, of which a maximum of 55,000 may be
restricted stock. Option awards are granted with an exercise price equal to the market value of the common stock on the date of the grant, the options vest over a three-year period, and have a contractual term of seven years, although the Plan
permits contractual terms of up to ten years. Option awards provide for accelerated vesting if there is a change in control, as defined in the Plan. Additionally, at November 30, 2008 and December 31, 2007, the Company awarded 7,100 and
5,100 shares of restricted stock, respectively, from the unallocated shares under the Plan having a market value of approximately $49,700 and $66,600, respectively. Compensation expense on the restricted stock awards equals the market value of the
Companys stock on the grant date and will be amortized ratably over the three-year vesting period. As of June 30, 2009, 4,242 share awards were available for grant under this program.

As of June 30, 2009 there was approximately $121,000 of unrecognized compensation costs related to unvested share-based compensation awards granted.



11



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##### Table of Contents

Stock option transactions for the nine months ended June 30, 2009 were as follows:



|                                         |  |         |   |  |                               |      
|---------------------------------------- |  | ------- | - |  | ----------------------------- | -----
|                                         |  | Options |   |  | Weighted-AverageExercisePrice
|Outstanding at the beginning of the year |  | 375,002 |   |  | $                             | 15.68
|Granted                                  |  | 49,200  |   |  |                               | 6.23 
|Exercised                                |  | (79     | ) |  |                               | 10.70
|Forfeited                                |  | (20,611 | ) |  |                               | 10.40
|                                         |  |         |   |  |                               |      
|Outstanding as of June 30, 2009          |  | 403,512 |   |  | $                             | 14.80
|                                         |  |         |   |  |                               |      
|Exercisable as of June 30, 2009          |  | 338,728 |   |  | $                             | 15.89
|                                         |  |         |   |  |                               |      

The options outstanding and exercisable as of June 30, 2009 have a weighted average remaining term of 3.1
years.

The fair value of options granted for the nine month periods ended June 30, 2009 and 2008 were estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average assumptions:



|                                               |  |                            |           |   |      |   |           |  
|---------------------------------------------- |  | -------------------------- | --------- | - | ---- | - | --------- | -
|                                               |  | Nine Months Ended June 30, |          
|                                               |  | 2009                       |           |   | 2008 |  
|                                               |  |                           
|Dividend yield                                 |  |                            | 8.99      | % |      |   | 4.94      | %
|Expected life                                  |  |                            | 5.5 years |   |      |   | 5.5 years |  
|Expected volatility                            |  |                            | 31.23     | % |      |   | 20.92     | %
|Risk-free interest rate                        |  |                            | 2.08      | % |      |   | 3.58      | %
|Weighted average fair value of options granted |  | $                          | 0.62      |   |      | $ | 1.64      |  

Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant
date over the vesting period. Compensation expense related to restricted stock was $26,000 and $11,000 for the nine months ended June 30, 2009 and 2008, respectively. The following table summarizes restricted stock awards for the nine months
ended June 30, 2009 and 2008, respectively:



|                                       |  |                            |       |      |   |      
|-------------------------------------- |  | -------------------------- | ----- | ---- | - | -----
|                                       |  | Nine Months Ended June 30,
|                                       |  | 2009                       |       | 2008
|Number of shares awarded               |  |                            | 7,100 |      |   | 5,100
|Market price of stock on date of grant |  | $                          | 7.00  |      | $ | 13.06



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##### Table of Contents

(5) Earnings Per Share

Basic earnings per share (EPS) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The following table sets forth the computation of basic and diluted
earnings per share (amounts in thousands, except per share data):



|                                                                                           |  |                            |       |                           |   |       |  |      |       |  |   |      
|------------------------------------------------------------------------------------------ |  | -------------------------- | ----- | ------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                                                                                           |  | Three Months EndedJune 30, |       | Nine Months EndedJune 30,
|                                                                                           |  | 2009                       |       | 2008                      |   | 2009  |  | 2008
|Numerator:                                                                                 |  |                            |       |                           |   |       |  |      |       |  |   |      
|Net income available to common stockholders                                                |  | $                          | 135   |                           | $ | 1,227 |  | $    | 1,572 |  | $ | 3,256
|Denominator:                                                                               |  |                            |       |                           |   |       |  |      |       |  |   |      
|Denominator for basic earnings per shareweighted average shares outstanding               |  |                            | 3,034 |                           |   | 3,024 |  |      | 3,030 |  |   | 3,013
|Effect of dilutive securities:                                                             |  |                            |       |                           |   |       |  |      |       |  |   |      
|Common stock equivalents                                                                   |  |                            | 8     |                           |   | 29    |  |      | 8     |  |   | 37   
|                                                                                           |  |                            |       |                           |   |       |  |      |       |  |   |      
|Denominator for diluted earnings per shareweighted average shares and assumed conversions |  |                            | 3,042 |                           |   | 3,053 |  |      | 3,038 |  |   | 3,050
|                                                                                           |  |                            |       |                           |   |       |  |      |       |  |   |      
|Basic earnings per share                                                                   |  | $                          | 0.04  |                           | $ | 0.41  |  | $    | 0.52  |  | $ | 1.08 
|                                                                                           |  |                            |       |                           |   |       |  |      |       |  |   |      
|Diluted earnings per share                                                                 |  | $                          | 0.04  |                           | $ | 0.40  |  | $    | 0.52  |  | $ | 1.07 
|                                                                                           |  |                            |       |                           |   |       |  |      |       |  |   |      

Options to purchase 314,675 shares of common stock at prices ranging from $11.06 to $22.91 per share, 3,200 shares
of restricted stock at $13.06 per share, and warrants to acquire 121,387 shares of common stock at a price of $8.65 per share were outstanding during the three months ended June 30, 2009, but were not included in the computation of diluted EPS
because to do so would have been anti-dilutive. Similarly, options to purchase 250,604 shares of common stock ranging from $14.27 to $22.91 per share were outstanding during the three months ended June 30, 2008, but were not included in the
computation of diluted EPS because to do so would have been anti-dilutive.

Options to purchase 314,675 shares of common stock at prices ranging from
$11.06 to $22.91 per share, 3,200 shares of restricted stock at $13.06 per share, and warrants to acquire 121,387 shares of common stock at a price of $8.65 per share were outstanding during the nine months ended June 30, 2009, but were not
included in the computation of diluted EPS because to do so would have been anti-dilutive. Similarly, options to purchase 170,406 shares of common stock ranging from $18.64 to $22.91 per share were outstanding during the nine months ended
June 30, 2008, but were not included in the computation of diluted EPS because to do so would have been anti-dilutive.



13



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(6) Securities

The
amortized cost and fair value of securities are as follows:



|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|------------------------------------------------------------------ |  | ------------- | ------- | --------------- | - | ---------------- |  | --------- | ----- |  | - | -------
|(Dollar amounts in thousands)                                      |  | AmortizedCost |         | UnrealizedGains |   | UnrealizedLosses |  | FairValue
|                                                                   |  |               |         |                
|Available for sale:                                                |  |               |         |                 |   |                  |  |           |       |  |   |        
|As of June 30, 2009:                                               |  |               |         |                 |   |                  |  |           |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 32,922  |                 | $ | 928              |  | $         | 8     |  | $ | 33,842 
|Municipal obligations                                              |  |               | 20,057  |                 |   | 85               |  |           | 688   |  |   | 19,454 
|Corporate obligations                                              |  |               | 12,560  |                 |   | 252              |  |           | 494   |  |   | 12,318 
|Equity securities                                                  |  |               | 4,144   |                 |   |                 |  |           | 875   |  |   | 3,269  
|Mutual funds                                                       |  |               | 9,828   |                 |   | 42               |  |           | 34    |  |   | 9,836  
|Trust preferred securities                                         |  |               | 23,122  |                 |   | 132              |  |           | 6,898 |  |   | 16,356 
|Federal Home Loan Mortgage Corp. preferred stock                   |  |               |        |                 |   | 45               |  |           |      |  |   | 45     
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 50,350  |                 |   | 1,042            |  |           | 799   |  |   | 50,593 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  | $             | 152,983 |                 | $ | 2,526            |  | $         | 9,796 |  | $ | 145,713
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  |               |         |                
|Held to maturity:                                                  |  |               |         |                 |   |                  |  |           |       |  |   |        
|As of June 30, 2009:                                               |  |               |         |                 |   |                  |  |           |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 12,116  |                 | $ | 72               |  | $         | 22    |  | $ | 12,166 
|Municipal obligations                                              |  |               | 20,052  |                 |   | 385              |  |           | 306   |  |   | 20,131 
|Corporate obligations                                              |  |               | 1,996   |                 |   | 15               |  |           | 102   |  |   | 1,909  
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 30,812  |                 |   | 359              |  |           | 1,011 |  |   | 30,160 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  | $             | 64,976  |                 | $ | 831              |  | $         | 1,441 |  | $ | 64,366 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        



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|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|------------------------------------------------------------------ |  | ------------- | ------- | --------------- | - | ---------------- |  | --------- | ----- |  | - | -------
|(Dollar amounts in thousands)                                      |  | AmortizedCost |         | UnrealizedGains |   | UnrealizedLosses |  | FairValue
|                                                                   |  |               |         |                
|Available for sale:                                                |  |               |         |                 |   |                  |  |           |       |  |   |        
|As of September 30, 2008:                                          |  |               |         |                 |   |                  |  |           |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 19,998  |                 | $ | 259              |  | $         | 32    |  | $ | 20,225 
|Municipal obligations                                              |  |               | 17,157  |                 |   | 12               |  |           | 970   |  |   | 16,199 
|Corporate obligations                                              |  |               | 14,076  |                 |   | 54               |  |           | 786   |  |   | 13,344 
|Equity securities                                                  |  |               | 4,064   |                 |   | 64               |  |           | 945   |  |   | 3,183  
|Mutual funds                                                       |  |               | 11,729  |                 |   |                 |  |           | 85    |  |   | 11,644 
|Trust preferred securities                                         |  |               | 25,175  |                 |   |                 |  |           | 5,127 |  |   | 20,048 
|Federal Home Loan Mortgage Corp. preferred stock                   |  |               | 75      |                 |   |                 |  |           |      |  |   | 75     
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 62,999  |                 |   | 188              |  |           | 1,225 |  |   | 61,962 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  | $             | 155,273 |                 | $ | 577              |  | $         | 9,170 |  | $ | 146,680
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  |               |         |                
|Held to maturity:                                                  |  |               |         |                 |   |                  |  |           |       |  |   |        
|As of September 30, 2008:                                          |  |               |         |                 |   |                  |  |           |       |  |   |        
|U.S. government and agency obligations                             |  | $             | 19,019  |                 | $ | 5                |  | $         | 146   |  | $ | 18,878 
|Municipal obligations                                              |  |               | 20,595  |                 |   | 357              |  |           | 509   |  |   | 20,443 
|Corporate obligations                                              |  |               | 1,993   |                 |   |                 |  |           | 521   |  |   | 1,472  
|Mortgage-backed securities and collateralized mortgage obligations |  |               | 33,797  |                 |   | 57               |  |           | 1,116 |  |   | 32,738 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        
|                                                                   |  | $             | 75,404  |                 | $ | 419              |  | $         | 2,292 |  | $ | 73,531 
|                                                                   |  |               |         |                 |   |                  |  |           |       |  |   |        

The following table presents the amortized cost and fair value of debt securities by contractual maturity dates as
of June 30, 2009 and September 30, 2008:



|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|-------------------------------------- |  | ----------------------------- | ------- | --------------------------- | - | ------------- |  | --------- | ------ |  | - | ------
|                                       |  | Securities Available for Sale |         | Securities Held to Maturity
|                                       |  | AmortizedCost                 |         | FairValue                   |   | AmortizedCost |  | FairValue
|                                       |  | (In Thousands)               
|As of June 30, 2009:                   |  |                               |         |                             |   |               |  |           |        |  |   |       
|Due in one year or less                |  | $                             | 2,836   |                             | $ | 2,862         |  | $         | 4,700  |  | $ | 4,637 
|Due after one year through five years  |  |                               | 38,667  |                             |   | 39,368        |  |           | 14,003 |  |   | 14,116
|Due after five years through ten years |  |                               | 18,245  |                             |   | 18,890        |  |           | 12,352 |  |   | 12,391
|Due after ten years                    |  |                               | 79,263  |                             |   | 71,443        |  |           | 33,921 |  |   | 33,222
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|                                       |  | $                             | 139,011 |                             | $ | 132,563       |  | $         | 64,976 |  | $ | 64,366
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|                                       |  |                              
|                                       |  | Securities Available for Sale |         | Securities Held to Maturity
|                                       |  | AmortizedCost                 |         | FairValue                   |   | AmortizedCost |  | FairValue
|                                       |  | (In Thousands)               
|As of September 30, 2008:              |  |                               |         |                             |   |               |  |           |        |  |   |       
|Due in one year or less                |  | $                             | 3,501   |                             | $ | 3,498         |  | $         |       |  | $ |      
|Due after one year through five years  |  |                               | 28,077  |                             |   | 27,988        |  |           | 23,672 |  |   | 22,993
|Due after five years through ten years |  |                               | 15,696  |                             |   | 15,495        |  |           | 16,418 |  |   | 16,066
|Due after ten years                    |  |                               | 92,131  |                             |   | 84,797        |  |           | 35,314 |  |   | 34,472
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       
|                                       |  | $                             | 139,405 |                             | $ | 131,778       |  | $         | 75,404 |  | $ | 73,531
|                                       |  |                               |         |                             |   |               |  |           |        |  |   |       



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The Company recognized gross gains of $7,000 on sales of securities during the nine months ended June 30, 2008.
There were no gains or losses recognized on sales of securities during the three months ended June 30, 2009 and 2008 and for the nine months ended June 30, 2009.

The Company recognized other-than-temporary impairment losses on available-for-sale securities of $1.4 million and $3.1 million for the three and nine month periods ended June 30, 2009, respectively. The Company
recognized similar losses of $322,000 for the nine months ended June 30, 2008. There were no impairment losses recognized during the three months ended June 30, 2008. The impairment charges for the three-month period ended June 30,
2009 relate to two pooled trust preferred securities. The impairment charges for the nine-month period ended June 30, 2009 relate to the Companys holdings of the AMF Ultra Short Mortgage Fund, Freddie Mac preferred stock, and the two
pooled trust preferred securities. The impairment charges for the nine-month period ended June 30, 2008 relate to the Companys holdings of the AMF Ultra Short Mortgage Fund.

At June 30, 2009, the unrealized losses on the securities portfolio were primarily attributable to wider credit spreads, reflecting market illiquidity. The Company does not intend to sell these securities and it
is not more likely than not that the Company will have to sell these securities.



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The following tables show the aggregate related fair value of investments with a continuous unrealized loss position for
less than twelve months and those that have been in a continuous unrealized loss position for greater than twelve months.



|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|------------------------------------------------------------------ |  | ------------------- |  | ----------------- | ------ | ---------------- | - | -------------- |  | --------- |  | ---------------- | ------ | -------------- | - | --------- |  | ---------------- |  | - | ------ |  | - | ------
|                                                                   |  | Less than 12 Months |  | 12 Months or More |        | Total           
|(Dollar amounts in thousands)                                      |  | # ofSecurities      |  | FairValue         |        | UnrealizedLosses |   | # ofSecurities |  | FairValue |  | UnrealizedLosses |        | # ofSecurities |   | FairValue |  | UnrealizedLosses
|                                                                   |  |                     |  |                   |        |                  |   |                | 
|As of June 30, 2009:                                               |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Available for sale:                                                |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|U.S. government and agency obligations                             |  | 2                   |  | $                 | 3,994  |                  | $ | 8              |  |          |  | $                |       |                | $ |          |  | 2                |  | $ | 3,994  |  | $ | 8     
|Municipal obligations                                              |  | 26                  |  |                   | 14,295 |                  |   | 494            |  | 3         |  |                  | 1,747  |                |   | 194       |  | 29               |  |   | 16,042 |  |   | 688   
|Corporate obligations                                              |  | 1                   |  |                   | 447    |                  |   | 40             |  | 4         |  |                  | 3,519  |                |   | 454       |  | 5                |  |   | 3,966  |  |   | 494   
|Equity securities                                                  |  | 4                   |  |                   | 1,425  |                  |   | 297            |  | 4         |  |                  | 1,844  |                |   | 578       |  | 8                |  |   | 3,269  |  |   | 875   
|Mutual funds                                                       |  |                    |  |                   |       |                  |   |               |  | 2         |  |                  | 2,421  |                |   | 34        |  | 2                |  |   | 2,421  |  |   | 34    
|Trust preferred securities                                         |  | 1                   |  |                   | 810    |                  |   | 227            |  | 21        |  |                  | 15,357 |                |   | 6,671     |  | 22               |  |   | 16,167 |  |   | 6,898 
|Mortgage-backed securities and collateralized mortgage obligations |  | 8                   |  |                   | 7,060  |                  |   | 38             |  | 7         |  |                  | 6,924  |                |   | 761       |  | 15               |  |   | 13,984 |  |   | 799   
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired available-for-sale securities           |  | 42                  |  |                   | 28,031 |                  |   | 1,104          |  | 41        |  |                  | 31,812 |                |   | 8,692     |  | 83               |  |   | 59,843 |  |   | 9,796 
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|                                                                   |  |                     |  |                   |        |                  |   |                | 
|Held to maturity:                                                  |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|U.S. government and agency obligations                             |  | 3                   |  |                   | 5,099  |                  |   | 22             |  |          |  |                  |       |                |   |          |  | 3                |  |   | 5,099  |  |   | 22    
|Municipal obligations                                              |  | 9                   |  |                   | 4,388  |                  |   | 120            |  | 3         |  |                  | 2,197  |                |   | 186       |  | 12               |  |   | 6,585  |  |   | 306   
|Corporate obligations                                              |  |                    |  |                   |       |                  |   |               |  | 1         |  |                  | 898    |                |   | 102       |  | 1                |  |   | 898    |  |   | 102   
|Mortgage-backed securities and collateralized mortgage obligations |  | 3                   |  |                   | 4,151  |                  |   | 86             |  | 9         |  |                  | 6,041  |                |   | 925       |  | 12               |  |   | 10,192 |  |   | 1,011 
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired held-to-maturity securities             |  | 15                  |  |                   | 13,638 |                  |   | 228            |  | 13        |  |                  | 9,136  |                |   | 1,213     |  | 28               |  |   | 22,774 |  |   | 1,441 
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       
|Total temporarily impaired securities                              |  | 57                  |  | $                 | 41,669 |                  | $ | 1,332          |  | 54        |  | $                | 40,948 |                | $ | 9,905     |  | 111              |  | $ | 82,617 |  | $ | 11,237
|                                                                   |  |                     |  |                   |        |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |        |  |   |       



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|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|------------------------------------------------------------------ |  | ------------------- |  | ----------------- | ------- | ---------------- | - | -------------- |  | --------- |  | ---------------- | ------ | -------------- | - | --------- |  | ---------------- |  | - | ------- |  | - | ------
|                                                                   |  | Less than 12 Months |  | 12 Months or More |         | Total           
|(Dollar amounts in thousands)                                      |  | # ofSecurities      |  | FairValue         |         | UnrealizedLosses |   | # ofSecurities |  | FairValue |  | UnrealizedLosses |        | # ofSecurities |   | FairValue |  | UnrealizedLosses
|                                                                   |  |                     |  |                   |         |                  |   |                | 
|As of September 30, 2008:                                          |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|Available for sale:                                                |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|U.S. government and agency obligations                             |  | 2                   |  | $                 | 3,968   |                  | $ | 32             |  |          |  | $                |       |                | $ |          |  | 2                |  | $ | 3,968   |  | $ | 32    
|Municipal obligations                                              |  | 27                  |  |                   | 15,387  |                  |   | 970            |  |          |  |                  |       |                |   |          |  | 27               |  |   | 15,387  |  |   | 970   
|Corporate obligations                                              |  | 12                  |  |                   | 7,301   |                  |   | 686            |  | 2         |  |                  | 1,893  |                |   | 100       |  | 14               |  |   | 9,194   |  |   | 786   
|Equity securities                                                  |  | 4                   |  |                   | 1,785   |                  |   | 608            |  | 2         |  |                  | 872    |                |   | 337       |  | 6                |  |   | 2,657   |  |   | 945   
|Mutual funds                                                       |  |                    |  |                   |        |                  |   |               |  | 2         |  |                  | 2,288  |                |   | 85        |  | 2                |  |   | 2,288   |  |   | 85    
|Trust preferred securities                                         |  | 11                  |  |                   | 5,588   |                  |   | 1,462          |  | 11        |  |                  | 14,460 |                |   | 3,665     |  | 22               |  |   | 20,048  |  |   | 5,127 
|Mortgage-backed securities and collateralized mortgage obligations |  | 23                  |  |                   | 34,874  |                  |   | 917            |  | 7         |  |                  | 6,101  |                |   | 308       |  | 30               |  |   | 40,975  |  |   | 1,225 
|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|Total temporarily impaired available-for-sale securities           |  | 79                  |  | $                 | 68,903  |                  | $ | 4,675          |  | 24        |  | $                | 25,614 |                | $ | 4,495     |  | 103              |  | $ | 94,517  |  | $ | 9,170 
|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|                                                                   |  |                     |  |                   |         |                  |   |                | 
|Held to maturity:                                                  |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|U.S. government and agency obligations                             |  | 7                   |  |                   | 14,846  |                  |   | 146            |  |          |  |                  |       |                |   |          |  | 7                |  |   | 14,846  |  |   | 146   
|Municipal obligations                                              |  | 15                  |  |                   | 8,601   |                  |   | 509            |  |          |  |                  |       |                |   |          |  | 15               |  |   | 8,601   |  |   | 509   
|Corporate obligations                                              |  | 1                   |  |                   | 813     |                  |   | 180            |  | 1         |  |                  | 659    |                |   | 341       |  | 2                |  |   | 1,472   |  |   | 521   
|Mortgage-backed securities and collateralized mortgage obligations |  | 12                  |  |                   | 16,221  |                  |   | 431            |  | 12        |  |                  | 11,105 |                |   | 685       |  | 24               |  |   | 27,326  |  |   | 1,116 
|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|Total temporarily impaired held-to-maturity securities             |  | 35                  |  |                   | 40,481  |                  |   | 1,266          |  | 13        |  |                  | 11,764 |                |   | 1,026     |  | 48               |  |   | 52,245  |  |   | 2,292 
|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       
|Total temporarily impaired securities                              |  | 114                 |  | $                 | 109,384 |                  | $ | 5,941          |  | 37        |  | $                | 37,378 |                | $ | 5,521     |  | 151              |  | $ | 146,762 |  | $ | 11,462
|                                                                   |  |                     |  |                   |         |                  |   |                |  |           |  |                  |        |                |   |           |  |                  |  |   |         |  |   |       

The Company conducts periodic reviews to identify and evaluate each investment that has an unrealized loss, in
accordance with FSP No. FAS 115-1 and FSP No. FAS 115-2. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are
recorded, net of tax, in Accumulated Other Comprehensive Income(AOCI) for available-for-sale securities, while such losses related to held-to-maturity securities are not recorded, as these investments are carried at their amortized cost.

Regardless of the classification of the securities as available-for-sale or held-to-maturity, the Company has assessed each position for credit
impairment.



18



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Factors considered in determining whether a loss is temporary include:



| |  |  | the length of time and the extent to which fair value has been below cost;
| | - |  | --------------------------------------------------------------------------



| |  |  | the severity of the impairment;
| | - |  | -------------------------------



| |  |  | the cause of the impairment and the financial condition and near-term prospects of the issuer;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | activity in the market of the issuer which may indicate adverse credit conditions; and
| | - |  | --------------------------------------------------------------------------------------



| |  |  | the Companys ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------

The Companys review for impairment generally entails:



| |  |  | identification and evaluation of investments that have indications of possible impairment;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | analysis of individual investments that have fair values less than amortized cost, including consideration of the length of time the investment has been in an
unrealized loss position and the expected recovery period;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discussion of evidential matter, including an evaluation of factors or triggers that could cause individual investments to qualify as having other-than-temporary
impairment and those that would not support other-than-temporary impairment; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | documentation of the results of these analyses, as required under business policies.
| | - |  | ------------------------------------------------------------------------------------

For debt securities that are not deemed to be credit impaired, management performs additional analysis to assess whether it intends to sell or would more-likely-than-not
be required to sell the investment before the expected recovery of the amortized cost basis. Management has asserted that is has no intent to sell and that it believes it is more-likely-than-not that it will not be required to sell the investment
before recovery of its amortized cost basis.

Similarly, for equity securities, management considers the various factors described above, including its
intent and ability to hold the equity security for a period of time sufficient for recovery to amortized cost. Where management lacks that intent or ability, the securitys decline in fair value is deemed to be other than temporary and is
recorded in earnings.

For debt securities, a critical component of the evaluation for other-than-temporary impairment is the identification of credit
impaired securities, where management does not receive cash flows sufficient to recover the entire amortized cost basis of the security. The extent of the Companys analysis regarding credit quality and the stress on assumptions used in the
analysis had been refined for securities where the current fair value or other characteristics of the security warrant. The paragraphs below describe the Companys process for identifying credit impairment in security types with the most
significant unrealized losses as of June 30, 2009.



19



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##### Table of Contents

Pooled Trust Preferred Debt Securities

Included in debt securities in an unrealized loss position at June 30, 2009 were 22 different trust preferred offerings with an aggregate fair value of $16.2 million, of which $15.7 million had floating rates
based on LIBOR. The unrealized losses on these debt securities amounted to $6.9 million at June 30, 2009. Due to dislocations in the credit markets broadly, and the lack of trading and new issuances in pooled trust preferred securities, market
price indications generally reflect the lack of liquidity in the market. Prices on trust preferred securities were calculated using a discounted cash-flow technique. Cash flows were estimated based on credit and prepayment assumptions. The present
value of the projected cash flows was calculated using a discount rate equal to the current yield used to accrete the beneficial interest plus a liquidity and credit premium to reflect higher credit spreads due to economic stresses in the
marketplace and lower credit ratings. During the three and nine months ended June 30, 2009, the Company recognized in earnings impairment charges of $1.4 million and $1.8 million, respectively, on two investments in pooled trust preferred
securities resulting from several factors, including a downgrade on their credit ratings, failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows.
Management of the Company has deemed the impairment on these two trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which the market value has been less than cost, the inability to forecast
a recovery in market value, and other factors concerning the issuers in the pooled security. There were no impairment charges taken on these securities during the three and nine months ended June 30, 2008. Based on cash flow forecasts for the
remaining securities, management expects to recover the remaining amortized cost of these securities. Furthermore, the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell
these securities before recovery of their cost basis, which may be at maturity.

Equity Securities

At June 30, 2009 the Company had $909,000 of unrealized losses on equity securities. These securities represent investments in common equity offerings of seven
financial institutions with an aggregate fair value of $2.6 million, one investment in preferred stock of an insurance company with a fair value of $646,000, and investments in two different mutual fund offerings with an aggregate fair value of $2.4
million. In addition to the general factors mentioned above for determining whether the decline in market value is other than temporary, the analysis of each of these securities includes a review of the profitability of each issuer and its capital
adequacy, and all data available to determine the credit quality of each issuer. For the nine months ended June 30, 2009 and 2008, the Company recognized in earnings impairment charges of $1.3 million and $322,000, respectively, on equity
securities. Impairment charges of $1.2 million during the nine-month period ended June 30, 2009 were related to the Companys holdings of the AMF Ultra Short Mortgage fund. This impairment charge resulted from the continuing uncertainty in
spreads in the bond market for mortgage related securities. This uncertainty has negatively impacted the market value of the securities in the fund and thus the net asset value of the fund itself. Management of the Company has deemed the impairment
of the fund to be other-than-temporary based upon the duration and extent to which the market value has been less than cost, the limitations placed on fund redemptions, and the inability to forecast a recovery in the market value. Additional
impairment charges of $75,000 during the nine-month period ended June 30, 2009 related to the Companys holdings of Freddie Mac preferred stock. The impairment charges of $322,000 for the nine-month period ended June 30, 2008 were
related to the Companys holdings of the AMF Ultra Short Mortgage Fund. There were no impairment charges taken on equity securities for the three months ended June 30, 2009 and 2008. Based on the Companys detailed analysis, and
because the Company has the ability and intent to hold the investments until a recovery of its amortized cost basis, except for the investments mentioned above, the Company does not consider these remaining assets to be other-than-temporarily
impaired at June 30, 2009. However, continued price declines could result in a writedown of one or more of these equity investments.



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##### Table of Contents

(7) Loans Receivable

Loans receivable are comprised of the following (dollar amounts in thousands):



|                                      |  |              |         |   |                   |   |         |  
|------------------------------------- |  | ------------ | ------- | - | ----------------- | - | ------- | -
|                                      |  | June 30,2009 |         |   | September 30,2008 |  
|First mortgage loans:                 |  |              |         |   |                   |   |         |  
|Conventional:                         |  |              |         |   |                   |   |         |  
|1-4 family dwellings                  |  | $            | 175,968 |   |                   | $ | 215,940 |  
|Multi-family dwellings                |  |              | 86      |   |                   |   | 154     |  
|Commercial                            |  |              | 93,406  |   |                   |   | 84,074  |  
|Construction:                         |  |              |         |   |                   |   |         |  
|Residential                           |  |              | 2,057   |   |                   |   | 8,580   |  
|Commercial                            |  |              | 33,204  |   |                   |   | 26,519  |  
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |              | 304,721 |   |                   |   | 335,267 |  
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |             
|Less: Loans in process                |  |              | (11,828 | ) |                   |   | (11,265 | )
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |              | 292,893 |   |                   |   | 324,002 |  
|                                      |  |              |         |   |                   |   |         |  
|Consumer loans:                       |  |              |         |   |                   |   |         |  
|Home equity                           |  |              | 81,822  |   |                   |   | 90,532  |  
|Consumer loans                        |  |              | 1,414   |   |                   |   | 1,765   |  
|Other                                 |  |              | 2,258   |   |                   |   | 2,357   |  
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |              | 85,494  |   |                   |   | 94,654  |  
|                                      |  |              |         |   |                   |   |         |  
|Commercial business loans and leases: |  |              |         |   |                   |   |         |  
|Commercial business loans             |  |              | 62,165  |   |                   |   | 45,277  |  
|Commercial leases                     |  |              | 205     |   |                   |   | 250     |  
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |              | 62,370  |   |                   |   | 45,527  |  
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |             
|Less: Allowance for loan losses       |  |              | (3,628  | ) |                   |   | (3,424  | )
|                                      |  |              |         |   |                   |   |         |  
|                                      |  |             
|Unearned discounts and fees           |  |              | (117    | ) |                   |   | 27      |  
|                                      |  |              |         |   |                   |   |         |  
|Loans receivable, net                 |  | $            | 437,012 |   |                   | $ | 460,786 |  
|                                      |  |              |         |   |                   |   |         |  

(8) Allowance for Loan Losses

Changes in the allowance for loan losses for the nine months ended June 30, 2009, fiscal year ended September 30, 2008, and for the nine months ended June 30, 2008 are as follows (dollar amounts in
thousands):



|                               |  |                              |        |   |                             |   |       |                              |  |   |       |  
|------------------------------ |  | ---------------------------- | ------ | - | --------------------------- | - | ----- | ---------------------------- |  | - | ----- | -
|                               |  | Nine MonthsEndedJune 30,2009 |        |   | Year EndedSeptember 30,2008 |   |       | Nine MonthsEndedJune 30,2008 | 
|Balance at beginning of period |  | $                            | 3,424  |   |                             | $ | 3,027 |                              |  | $ | 3,027 |  
|Provision for loan losses      |  |                              | 1,145  |   |                             |   | 1,260 |                              |  |   | 740   |  
|Charge-offs                    |  |                              | (1,031 | ) |                             |   | (947  | )                            |  |   | (516  | )
|Recoveries                     |  |                              | 90     |   |                             |   | 84    |                              |  |   | 71    |  
|                               |  |                              |        |   |                             |   |       |                              |  |   |       |  
|Net charge-offs                |  |                              | (941   | ) |                             |   | (863  | )                            |  |   | (445  | )
|                               |  |                              |        |   |                             |   |       |                              |  |   |       |  
|Balance at end of period       |  | $                            | 3,628  |   |                             | $ | 3,424 |                              |  | $ | 3,322 |  
|                               |  |                              |        |   |                             |   |       |                              |  |   |       |  



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The provision for loan losses charged to expense is based upon past loan loss experience and an evaluation of probable
losses in the current loan portfolio, including the evaluation of impaired loans under FAS Nos. 114 and 118. A loan is considered to be impaired when, based upon current information and events, it is probable that the Bank will be unable to collect
all amounts due according to the contractual terms of the loan. An insignificant shortfall in payments does not necessarily result in a loan being identified as impaired. For this purpose, delays less than 90 days are considered to be insignificant.

Impairment losses are included in the provision for loan losses. FAS No. 114 does not apply to large groups of smaller balance, homogeneous loans
that are collectively evaluated for impairment, except for those loans restructured under a troubled debt restructuring. Loans collectively evaluated for impairment include consumer loans and residential real estate loans, and are not included in
the following data.

At June 30, 2009, the recorded investment in loans that are considered to be impaired under FAS No. 114 was $17.7 million
compared to $10.8 million at June 30, 2008. The increase is primarily related to five commercial real estate loans totaling $11.4 million and one commercial business loan totaling $492,000, partially offset by two commercial real estate loans
totaling $4.6 million at June 30, 2008 that are no longer impaired at June 30, 2009, one loan subsequently paid off and the other loan is now less than 90 days past due. Included in the current amount are $7.9 million of impaired loans for
which the related allowance for loan losses is $114,000. Impaired loans of $9.8 million do not have a related allowance for loan losses as a result of applying impairment tests prescribed under FAS No. 114. The average recorded investment in
impaired loans during the nine months ended June 30, 2009 was $9.6 million compared to $9.4 million for the same period in the prior year. For the nine months ended June 30, 2009, the Company recognized $599,000 of interest income
on impaired loans using the cash basis of income recognition. The Company recognized $185,000 of interest income on impaired loans during the nine-month period ended June 30, 2008.

(9) Derivative Instruments

The Company accounts for its derivative instruments as either assets or liabilities on
the balance sheet at fair value through adjustments to either the hedged items, accumulated other comprehensive income (loss), or current earnings, as appropriate. As part of its overall interest rate risk management activities, the Company utilizes
derivative instruments to manage its exposure to various types of interest rate risk. These derivative instruments consist of interest rate swaps. There were two interest rate swap contracts outstanding as of June 30, 2009.

During the second quarter of fiscal 2008, the Company entered into an interest rate swap to manage its exposure to interest rate risk. This interest rate swap
transaction involved the exchange of the Companys floating rate interest rate payment on its $7.5 million in floating rate preferred securities for a fixed rate interest payment without the exchange of the underlying principal amount. Entering
into interest rate derivatives potentially exposes the Company to the risk of counterparties failure to fulfill their legal obligations including, but not limited to, potential amounts due or payable under each derivative contract. Notional
principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller.

This
hedge relationship fails to qualify for the assumption of no ineffectiveness (short cut method) as defined by FAS 133 paragraph 68. Therefore, consistent with the requirement of FAS No. 133 paragraphs 28-35 and with the risk management
objective of hedging the variability of expected future cash flows, the Company accounts for this hedge relationship as a cash flow hedge.



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The cumulative change in fair value of the hedging derivative, to the extent that it is expected to be offset by the
cumulative change in anticipated interest cash flows from the hedged exposure, will be deferred and reported as a component of other comprehensive income (OCI). Any hedge ineffectiveness will be charged to current earnings. Consistent with the risk
management objective and the hedge accounting designation, management measured the degree of hedge effectiveness by comparing the cumulative change in anticipated interest cash flows from the hedged exposure over the hedging period to the cumulative
change in anticipated cash flows from the hedging derivative. Management will utilize the Hypothetical Derivative Method to compute the cumulative change in anticipated interest cash flows from the hedged exposure. To the extent that the
cumulative change in anticipated cash flows from the hedging derivative offsets from 80% to 125% of the cumulative change in anticipated interest cash flows from the hedged exposure, the hedge will be deemed effective. The Company will use the
Hypothetical Derivative Method to measure ineffectiveness. Under this method, the calculation of ineffectiveness, as required under paragraph 30(b)(2) of FAS No. 133, will be done by using the change in fair value of the hypothetical
derivative. That is, the swap will be recorded at fair value on the balance sheet and other comprehensive income will be adjusted to an amount that reflects the lesser of either the cumulative change in fair value of the swap or the cumulative
change in the fair value of the hypothetical derivative instrument. Management will determine the ineffectiveness of the hedging relationship by comparing the cumulative change in anticipated interest cash flows from the hedged exposure over the
hedging period to the cumulative change in anticipated cash flows from the hedging derivative. Any difference between these two measures will be deemed hedge ineffectiveness and recorded in current earnings. As of June 30, 2009 the hedge
instrument was deemed to be effective, therefore, no amounts were charged to current earnings. The Company does not expect to reclassify any hedge-related amounts from accumulated other comprehensive income (loss) to earnings over the next twelve
months.

The pay fixed interest rate swap contract outstanding at June 30, 2009 is being utilized to hedge $7.5 million in floating rate preferred
securities. Below is a summary of the interest rate swap contract and the terms at June 30, 2009:



|                       |  |                |       |         |      |   |                |      |   |              |            |            |   |   |  |   |    
|---------------------- |  | -------------- | ----- | ------- | ---- | - | -------------- | ---- | - | ------------ | ---------- | ---------- | - | - |  | - | ---
|(Dollars in thousands) |  | NotionalAmount |       | PayRate |      |   | ReceiveRate(*) |      |   | MaturityDate |            | Unrealized
|                       |  |                |       |         | Gain |   | Loss          
|Cash flow hedge        |  | $              | 7,500 |         | 5.32 | % |                | 1.99 | % |              | 12/15/2012 |            | $ |  |  | $ | 419



|(*) | Variable receive rate based upon contract rates in effect at June 30, 2009.
|--- | ---------------------------------------------------------------------------

During the first quarter of fiscal 2009, the Bank entered into a fixed rate loan with one of its commercial mortgage loan customers and simultaneously entered into an offsetting fixed interest rate swap contract with PNC Bank, National
Association (PNC). The Bank pays PNC interest at the same fixed rate on the same notional amount as the customer pays to the Bank on the commercial mortgage loan, and receives interest from PNC at a floating rate on the same notional
amount. This interest rate hedging program helps the Bank limit its interest rate risk while at the same time helps the Bank meet the financing needs and interest rate risk management needs of its commercial customers. This interest rate swap
contract was recorded at fair value with any resulting gain or loss recorded in current period earnings. For the three and nine months ended June 30, 2009 the Company recorded a gain of $14,000 and a loss of $2,000, respectively, relating to
this contract. As of June 30, 2009, the notional amount of the customer related interest rate derivative financial instrument was $988,000. There were no similar derivatives of this kind outstanding as of June 30, 2008.



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##### Table of Contents

(10) Comprehensive Income

In complying with Financial Accounting Standards No. 130, Reporting Comprehensive Income, the Company has developed the following table, which includes the tax effects of the components of other comprehensive income (loss).
Other comprehensive income (loss) consists of net unrealized gains (losses) on securities available for sale and derivatives that qualify as cash flow hedges. Other comprehensive income (loss) and related tax effects for the indicated periods,
consists of:



|                                                                                                    |  |                                |        |   |                                |   |        |  
|--------------------------------------------------------------------------------------------------- |  | ------------------------------ | ------ | - | ------------------------------ | - | ------ | -
|(Dollars in thousands)                                                                              |  | Three MonthsEndedJune 30, 2009 |        |   | Three MonthsEndedJune 30, 2008 |  
|Net income                                                                                          |  | $                              | 238    |   |                                | $ | 1,227  |  
|Comprehensive gain on cash flow hedges net of tax of $55 in 2009 and $15 in 2008                    |  |                                | 107    |   |                                |   | 294    |  
|Comprehensive loss on investment securities, net of tax of ($61) in 2009 and ($1,747) in 2008       |  |                                | (119   | ) |                                |   | (3,392 | )
|Reclassification adjustment on investment securities, net of tax of $476 in 2009 and $0 in 2008     |  |                                | 925    |   |                                |   |       |  
|                                                                                                    |  |                                |        |   |                                |   |        |  
|Total comprehensive income (loss)                                                                   |  | $                              | 1,151  |   |                                | $ | (1,871 | )
|                                                                                                    |  |                                |        |   |                                |   |        |  
|                                                                                                    |  |                               
|(Dollars in thousands)                                                                              |  | Nine MonthsEndedJune 30, 2009  |        |   | Nine MonthsEndedJune 30, 2008  |  
|Net income                                                                                          |  | $                              | 1,795  |   |                                | $ | 3,256  |  
|Comprehensive (loss) gain on cash flow hedges net of tax of ($129) in 2009 and $15 in 2008          |  |                                | (250   | ) |                                |   | 30     |  
|Comprehensive loss on investment securities, net of tax of ($611) in 2009 and ($2,091) in 2008      |  |                                | (1,186 | ) |                                |   | (4,059 | )
|Reclassification adjustment on investment securities, net of tax of $1,061 in 2009 and $108 in 2008 |  |                                | 2,060  |   |                                |   | 207    |  
|                                                                                                    |  |                                |        |   |                                |   |        |  
|Total comprehensive income (loss)                                                                   |  | $                              | 2,419  |   |                                | $ | (566   | )
|                                                                                                    |  |                                |        |   |                                |   |        |  



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##### Table of Contents

(11) Fair Value

In
September 2006, the FASB issued FAS No. 157, Fair Value Measurements, which provides enhanced guidance for using fair value to measure assets and liabilities. In February 2008, the FASB issued Staff Position No.157-2, Partial Deferral
of the Effective Date of Statement 157, which deferred the effective date of FAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008. Effective October 1, 2008, the
Company adopted FAS No. 157, which, among other things, required enhanced disclosures about assets and liabilities carried at fair value. FAS No. 157 establishes a hierarchal disclosure framework associated with the level of pricing
observations utilized in measuring assets and liabilities at fair value. The three broad levels defined by FAS No. 157 hierarchy are as follows:



|            |  |                                                                                                                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level I    |  | Quoted prices are available in the active markets for identical assets or liabilities as of the reported date.                                                                                                                                                                                                                                                                           
|            | 
|Level II   |  | Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reported date. The nature of these assets and liabilities include
items for which quoted prices are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed.
|            | 
|Level III  |  | Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.                                                                                                                                                                                                                                                      

This hierarchy requires the use of observable market data when available. The adoption of FAS No. 157 did not
have a significant impact on the companys financial position or results of operations.

The following table presents the assets and liabilities
reported on the consolidated statements of financial condition at their fair value as of June 30, 2009 by level within the fair value hierarchy. As required by FAS No. 157, financial assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value measurement.



|                                                                   |  |         |        |          |   |           |  |       |        |  |   |        
|------------------------------------------------------------------ |  | ------- | ------ | -------- | - | --------- |  | ----- | ------ |  | - | -------
|                                                                   |  | Level I |        | Level II |   | Level III |  | Total
|Assets:                                                            |  |         |        |          |   |           |  |       |        |  |   |        
|Available for sale securities:                                     |  |         |        |          |   |           |  |       |        |  |   |        
|U.S. government and agency obligations                             |  | $       |       |          | $ | 33,843    |  | $     |       |  | $ | 33,843 
|Municipal obligations                                              |  |         |       |          |   | 19,454    |  |       |       |  |   | 19,454 
|Corporate obligations                                              |  |         |       |          |   | 12,318    |  |       |       |  |   | 12,318 
|Equity securities                                                  |  |         | 3,269  |          |   |          |  |       |       |  |   | 3,269  
|Mutual funds                                                       |  |         | 9,836  |          |   |          |  |       |       |  |   | 9,836  
|Trust preferred securities                                         |  |         |       |          |   |          |  |       | 16,356 |  |   | 16,356 
|Federal Home Loan Mortgage Corp. preferred stock                   |  |         |       |          |   | 45        |  |       |       |  |   | 45     
|Mortgage-backed securities and collateralized mortgage obligations |  |         |       |          |   | 50,592    |  |       |       |  |   | 50,592 
|                                                                   |  |         |        |          |   |           |  |       |        |  |   |        
|                                                                   |  | $       | 13,105 |          | $ | 116,252   |  | $     | 16,356 |  | $ | 145,713
|                                                                   |  |         |        |          |   |           |  |       |        |  |   |        
|Residential loans held for sale                                    |  | $       |       |          | $ | 2,806     |  | $     |       |  | $ | 2,806  
|                                                                   |  |         |        |          |   |           |  |       |        |  |   |        
|Liabilities:                                                       |  |         |        |          |   |           |  |       |        |  |   |        
|Derivative instruments                                             |  | $       |       |          | $ | 476       |  | $     |       |  | $ | 476    
|                                                                   |  |         |        |          |   |           |  |       |        |  |   |        



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##### Table of Contents

At June 30, 2009, pooled trust preferred securities represent investments in 23 different trust preferred offerings
with an aggregate fair value of $16.4 million, of which $15.9 million had floating rates based on LIBOR at June 30, 2009. Due to dislocations in the credit markets broadly, and the lack of trading and new issuance in pooled trust preferred
securities, market price indications generally reflect the lack of liquidity in the market. Prices on trust preferred securities were calculated using a discounted cash-flow technique. Cash flows were estimated based on credit and prepayment
assumptions. The present value of the projected cash flows was calculated using a discount rate equal to the current yield used to accrete the beneficial interest plus a liquidity and credit premium to reflect higher credit spreads due to economic
stresses in the marketplace and lower credit ratings. During the three and nine months ended June 30, 2009 the Company recognized in earnings $1.4 million and $1.8 million, respectively, of impairment charges on two pooled trust preferred
securities resulting from several factors, including a downgrade in their credit ratings, failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows.
Management of the Company has deemed the impairment on these two trust preferred securities to be other-than-temporary based upon these factors and the duration and extent to which their market values have been less than cost, the inability to
forecast a recovery in market value, and other factors concerning the issuers in the pooled security. There were no impairment charges taken on these securities during the three and nine months ended June 30, 2008. Based on cash flow forecasts
for the remaining securities, management expects to recover the remaining amortized cost of these securities. Furthermore, the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to
sell these securities before recovery of their cost basis, which may be at maturity.

The following table presents the changes in the Level III fair-value
category for the nine months ended June 30, 2009. The Company classifies financial instruments in Level III of the fair-value hierarchy when there is reliance on at least one significant unobservable input to the valuation model. In addition to
the unobservable inputs, the valuation models for Level III financial instruments typically also rely on a number of inputs that are readily observable either directly or indirectly.



|                              |  |                |   |                       |   |       |  |                                    |   |                                   |   |              |  |                                   |   |  |   |        |  |   |        |  
|----------------------------- |  | -------------- | - | --------------------- | - | ----- |  | ---------------------------------- | - | --------------------------------- | - | ------------ |  | --------------------------------- | - |  | - | ------ |  | - | ------ | -
|                              |  | October 1,2008 |   | PrincipalTransactions |   | Other |  | Transfers inand/or out ofLevel III |   | Purchasesissuances andsettlements |   | June 30,2009 |  | Unrealizedgains(losses)still held |  
|Assets:                       |  |                |   |                       |   |       |  |                                    |   |                                   |   |              |  |                                   |   |  |   |        |  |   |        |  
|Available for sale securities |  | $              |  |                       | $ |      |  | $                                  |  |                                   | $ | 16,356       |  | $                                 |  |  | $ | 16,356 |  | $ | (6,766 | )

The following table presents the assets measured on a nonrecurring basis on the consolidated statements of
financial condition at their fair value as of June 30, 2009 by level within the fair value hierarchy. Impaired loans that are collateral dependent are written down to fair value through the establishment of specific reserves. Techniques used to
value the collateral that secure the impaired loan include: quoted market prices for identical assets classified as Level I inputs; observable inputs, employed by certified appraisers, for similar assets classified as Level II inputs. In cases where
valuation techniques included inputs that are unobservable and are based on estimates and assumptions developed by management based on the best information available under each circumstance, the asset valuation is classified as Level III inputs.



|                                         |  |         |   |          |   |           |  |       |        |  |   |       
|---------------------------------------- |  | ------- | - | -------- | - | --------- |  | ----- | ------ |  | - | ------
|                                         |  | Level I |   | Level II |   | Level III |  | Total
|Assets Measured on a Nonrecurring Basis: |  |         |   |          |   |           |  |       |        |  |   |       
|Impaired loans                           |  | $       |  |          | $ |          |  | $     | 17,735 |  | $ | 17,735



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Management uses its best judgment in estimating the fair value of the Companys financial instruments, however,
there are inherent weaknesses in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction
on the dates indicated. The estimated fair value amounts have been measured as of their respective periods, and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates. As such, the
estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each period.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Companys assets and liabilities.

Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Companys disclosures and those of
other companies may not be meaningful. The Company, in estimating its fair value disclosures for financial instruments, used the following methods and assumptions:

Cash and Due From Banks

The carrying amounts reported approximate those assets fair value.

Interest Bearing Demand Deposits with Other Institutions

The
carrying amounts reported approximate those assets fair value.

Securities

Fair values of securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. Prices on trust
preferred securities were calculated using a discounted cash-flow technique. Cash flows were estimated based on credit and prepayment assumptions. The present value of the projected cash flows was calculated using a discount rate equal to the
current yield used to accrete the beneficial interest plus a liquidity and credit premium to reflect higher credit spreads due to economic stresses in the marketplace and lower credit ratings.

Loans Receivable

For variable rate loans that reprice frequently and
with no significant change in credit risk, fair values are based on carrying values. The fair values for other loans receivable were estimated using discounted cash flow analyses, using interest rates currently offered for loans with similar terms
to borrowers of similar credit quality. Loans with significant collectibility concerns were fair valued on a loan-by-loan basis utilizing a discounted cash flow method or the fair market value of the underlying collateral.

Federal Home Loan Bank Stock

The carrying amounts reported
approximate those assets fair value.

Accrued Interest Receivable and Payable

The carrying amounts of accrued interest receivable and payable approximate their fair value.



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##### Table of Contents

Deposits

The fair
values disclosed for demand deposits (e.g., interest bearing and noninterest bearing checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their
carrying amounts). Fair values for fixed rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates of deposit to a schedule of aggregated expected monthly
maturities on time deposits.

Short-Term Borrowings

The carrying amounts for short-term borrowings approximate the estimated fair value of such liabilities.

Securities Sold Under Agreements to
Repurchase

The fair values for securities sold under agreement to repurchase were estimated using the interest rate currently available from the party
that holds the existing debt.

Subordinated Debt

Fair
values for subordinated debt are estimated using a discounted cash flow calculation similar to that used in valuing fixed rate certificate of deposit liabilities.

Interest Rate Swap Contracts

Estimated fair values of interest rate swap contracts are based on quoted market prices.

Advance Payments by Borrowers for Taxes and Insurance

The fair value
of the advance payments by borrowers for taxes and insurance approximates the carrying value of those commitments at those dates.

Long-Term Debt

The fair values for long-term debt were estimated using the interest rate currently available from the party that holds the existing debt.

Off-Balance Sheet Instruments

Fair values for the Companys
off-balance sheet instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties credit standing.



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The carrying amounts and fair values of the Companys financial instruments are presented in the following table:



|                                                         |  |                |         |               |   |                |  |           |         |  |   |        
|-------------------------------------------------------- |  | -------------- | ------- | ------------- | - | -------------- |  | --------- | ------- |  | - | -------
|                                                         |  | June 30,       |         | September 30,
|                                                         |  | 2009           |         | 2008         
|                                                         |  | CarryingAmount |         | FairValue     |   | CarryingAmount |  | FairValue
|                                                         |  | (In Thousands)
|Financial assets:                                        |  |                |         |               |   |                |  |           |         |  |   |        
|Cash and due from banks                                  |  | $              | 6,077   |               | $ | 6,077          |  | $         | 6,701   |  | $ | 6,701  
|Interest bearing demand deposits with other institutions |  |                | 47,951  |               |   | 47,951         |  |           | 4,071   |  |   | 4,071  
|Securities available for sale                            |  |                | 145,713 |               |   | 145,713        |  |           | 146,680 |  |   | 146,680
|Securities held to maturity                              |  |                | 64,976  |               |   | 64,366         |  |           | 75,404  |  |   | 73,531 
|Loans receivable, net (including loans held for sale)    |  |                | 439,818 |               |   | 442,646        |  |           | 461,011 |  |   | 462,421
|Federal Home Loan Bank stock                             |  |                | 10,034  |               |   | 10,034         |  |           | 7,943   |  |   | 7,943  
|Accrued interest receivable                              |  |                | 2,932   |               |   | 2,932          |  |           | 3,512   |  |   | 3,512  
|                                                         |  |                |         |              
|Financial liabilities:                                   |  |                |         |               |   |                |  |           |         |  |   |        
|Deposits                                                 |  |                | 443,789 |               |   | 446,788        |  |           | 416,414 |  |   | 416,689
|Short-term borrowings                                    |  |                | 201     |               |   | 201            |  |           | 32,258  |  |   | 32,258 
|Securities sold under agreements to repurchase           |  |                | 111,626 |               |   | 121,494        |  |           | 104,003 |  |   | 110,871
|Subordinated Debt                                        |  |                | 7,732   |               |   | 7,722          |  |           | 7,732   |  |   | 7,433  
|Interest rate swap contracts                             |  |                | 419     |               |   | 419            |  |           | 40      |  |   | 40     
|Advance payments by borrowers for taxes and insurance    |  |                | 3,397   |               |   | 3,397          |  |           | 1,483   |  |   | 1,483  
|Accrued interest payable                                 |  |                | 1,249   |               |   | 1,249          |  |           | 1,265   |  |   | 1,265  
|Long-term debt                                           |  |                | 118,607 |               |   | 122,595        |  |           | 118,800 |  |   | 120,236
|                                                         |  |                |         |              
|Off-balance sheet financial instruments:                 |  |                |         |               |   |                |  |           |         |  |   |        
|Standby letters of credit                                |  |                |        |               |   |               |  |           |        |  |   |       
|Commitments to extend credit                             |  |                |        |               |   |               |  |           |        |  |   |       

(12) Adoption Of New Accounting Pronouncement

Effective October 1, 2008, the Company adopted Emerging Issues Task Force Issue 06-4 (EITF 06-4), Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar
Life Insurance Arrangements. EITF 06-4 requires that for a split-dollar life insurance arrangement within the scope of the issue, an employer should recognize a liability for future benefits in accordance with FAS No. 106 (if, in substance,
a postretirement benefit plan exists) or Accounting Principles Board Opinion No. 12 (if the arrangement is, in substance, an individual deferred compensation contract) based on the substantive agreement with the employee. The impact of adopting
EITF 06-4 reduced the beginning balance of retained earnings as of October 1, 2008 by $351,000, net-of-tax.

(13) Federal Home Loan Bank
(FHLB) Stock Dividends

The FHLB of Pittsburgh historically paid quarterly cash dividends, which were last paid on November 17, 2008 at
an annualized rate of 2.35%. In December 2008, the FHLB announced that it was suspending dividend payments beginning with the dividend payment that would have been payable in the March 2009 quarter in an effort to retain capital. In addition, the
historical practice of repurchasing excess capital stock from members of the FHLB was also suspended. The Banks investment in the FHLB of Pittsburgh was $10.0 million at June 30, 2009 and is valued at the par issue amount of $100 per
share.



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(14) TARP Capital Purchase Program

On December 12, 2008, the Registrant entered into a Letter Agreement and Securities Purchase Agreement (collectively, the Purchase Agreement) with the United States Department of the Treasury
(Treasury) under the TARP Capital Purchase Program, pursuant to which the Registrant sold (i) 7,000 shares of the Registrants Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the Series B Preferred Stock)
and (ii) a warrant (the Warrant) to purchase 121,387 shares of the Registrants common stock, par value $0.01 per share (the Common Stock), for an aggregate purchase price of $7.0 million in cash.

The Series B Preferred Stock will qualify as Tier 1 capital and will pay cumulative dividends at a rate of 5% per annum for the first five years, and 9% per
annum thereafter.

Pursuant to the terms of the Purchase Agreement, the ability of the Registrant to declare or pay dividends or distributions on, or
purchase, redeem or otherwise acquire for consideration, shares of its Junior Stock (as defined below) and Parity Stock (as defined below) will be subject to restrictions, including a restriction against increasing dividends from the last quarterly
cash dividend per share ($0.14) declared on the Common Stock prior to December 12, 2008. The Company may redeem the Series B Preferred Stock at a price of $1,000 per share plus accrued and unpaid dividends, subject to the concurrence of the
Treasury and its federal banking regulators. Prior to December 12, 2011, unless the Company has redeemed the Series B Preferred Stock or the Treasury has transferred the Series B Preferred Stock to a third party, the consent of the Treasury
will be required for the Company to increase its Common Stock dividend or repurchase its Common Stock or other equity or capital securities, other than in certain circumstances specified in the Agreement.

The Warrant has a 10-year term and is immediately exercisable upon its issuance, with an exercise price, subject to anti-dilution adjustments, equal to $8.65 per share
of the Common Stock. Treasury has agreed not to exercise voting power with respect to any shares of Common Stock issued upon exercise of the Warrant.

The
Series B Preferred Stock and the Warrant were issued in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. Upon the request of Treasury at any time, the Registrant has agreed to
promptly enter into a deposit arrangement pursuant to which the Series B Preferred Stock may be deposited and depositary shares (Depositary Shares), representing fractional shares of Series B Preferred Stock, may be issued. The
Registrant has agreed to register the Series B Preferred Stock, the Warrant, the shares of Common Stock underlying the Warrant (the Warrant Shares) and Depositary Shares, if any, as soon as practicable after the date of the issuance of
the Series B Preferred Stock and the Warrant. Neither the Series B Preferred Stock nor the Warrant will be subject to any contractual restrictions on transfer, except that Treasury may only transfer or exercise an aggregate of one-half of the
Warrant Shares prior to the earlier of the redemption of 100% of the shares of Series B Preferred Stock or December 31, 2009.

The fair value of the
preferred stock and the common stock warrants was determined based on their relative fair values calculated as of their issuance date, December 12, 2008. Based on their relative fair values, the TARP proceeds (net of issuance costs) were
allocated between preferred stock and additional paid in capital (for the warrant component). The market/discount rate used when deriving the fair value of the preferred stock was 10.00%. This rate was determined by calculating the average dividend
rate of the five most recent preferred equity offerings completed by banks and thrifts. A Black-Scholes model was used to calculate the fair value of the common stock warrants. Key assumptions input into the model included: amount of common stock,
$1,050,000 (based on 15% of the gross TARP proceeds); market price of the common stock on the warrant grant date, $6.75; exercise price of the warrant, $8.65 (20 day trailing average of the common stock as of the Treasurys approval date);
number of common stock warrants issued, 121,387; expected life of the warrants, 5 years; the risk free interest rate, 1.55%; the continuous annualized volatility of the change in the underlying common stocks price, 32.00%; and the simple
annual expected cash dividend yield on common stock, 8.30%. Based on the calculations, the fair value of the preferred stock represented 95.65% of the total fair value of the preferred stock and common stock warrants, while the fair value of the
common stock warrants represented 4.35% of the total. The discount on the preferred stock is being amortized on a straight-line basis over five years.



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##### Table of Contents

(15) Subsequent Events

The Company assessed events that have occurred subsequent to June 30, 2009 through August 14, 2009 for potential recognition and disclosure in the consolidated financial statements. No events have occurred that would require
adjustment to or disclosure in the consolidated financial statements which were issued on August 14, 2009.



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##### Table of Contents

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

FIDELITY BANCORP, INC. AND SUBSIDIARIES

MANAGEMENTS DISCUSSION AND
ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words believes, anticipates,
contemplates, expects, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties which could cause actual results to differ materially from
those projected. Those risks and uncertainties include changes in interest rates, risks associated with the effect of integrating newly acquired businesses, the ability to control costs and expenses, and general economic conditions. The Company does
not undertake to, and specifically disclaims any obligation to, update any such forward-looking statements.

Fidelity Bancorp, Inc.s
(Fidelity or the Company) business is conducted principally through its wholly-owned subsidiary, Fidelity Bank PaSB, (the Bank). All references to the Company refer collectively to the Company and the Bank, unless
the context indicates otherwise.

Critical Accounting Policies

Note 1 on pages 53 through 61 of the Companys 2008 Annual Report to Shareholders lists significant accounting policies used in the development and presentation of its financial statements. This discussion and analysis, the significant
accounting policies, and other financial statement disclosures identify and address key variables and other qualitative and quantitative factors that are necessary for an understanding and evaluation of the Company and its results of operations.

The most significant estimates in the preparation of the Companys financial statements are for the allowance for loan losses, evaluation of
investments for other-than-temporary impairment, income taxes, and accounting for stock options. Please refer to the discussion of the allowance for loan losses in Note 8, Allowance for Loan Losses, on pages 21 and 22 above. In addition,
further discussion of the estimates used in determining the allowance for loan losses is contained in the discussion on Provision for Loan Losses on pages 40 and 41 of the Companys 2008 Annual Report to Shareholders. Please refer
to the discussion of other-than-temporary impairment in Note 6, Securities, on pages 14 through 20 above and in Note 2, Securities, on pages 62 through 66 of the Companys 2008 Annual Report to Shareholders. Please refer
to the discussion of income taxes on page 42 below and in Note 11, Income Taxes, on pages 75 through 77 of the Companys 2008 Annual Report to Shareholders. Stock based compensation expense is reported in net income utilizing the
fair-value-based method set forth in FAS No. 123R. The fair value of each option award is estimated at the date of grant using the Black-Scholes option-pricing model. Please refer to the discussion of stock based compensation in Note 4,
Stock Based Compensation, on pages 11 and 12 above. In addition, further discussion of the assumptions used in determining stock based compensation is contained in Note 13, Stock Option Plans, on pages 78 through 80 of the
Companys 2008 Annual Report to Shareholders.

Comparison of Financial Condition

Total assets of the Company increased $13.4 million, or 1.8%, to $740.6 million at June 30, 2009 from $727.2 million at September 30, 2008. Significant changes in individual categories include increases in
cash and cash equivalents of $43.3 million, loans held for sale of $2.6 million, Federal Home Loan Bank stock of $2.1 million, office premises and equipment of $1.1 million and other assets of $1.6 million, partially offset by decreases in
securities held-to-maturity of $10.4 million, net loans of $23.8 million, and cash surrender value of life insurance of $1.4 million. The decrease in cash surrender value of life insurance was primarily due to $2.7 million of bank owned life
insurance proceeds received upon the death of the Companys former Chairman of the Board. The Company is currently experiencing increased levels of loan and mortgage-backed security prepayment and loan refinancing activity. The decrease in net
loans reflects $83.9 million of prepayments, partially offset by $61.1 million in loan originations. The increase in cash equivalents is a result of the increases in loans and mortgage-backed securities prepayments. The increase in other assets is
primarily due to an increase in deferred tax assets.



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##### Table of Contents

Total liabilities of the Company increased $5.5 million, or 0.8%, to $690.6 million at June 30, 2009 from $685.1
million at September 30, 2008. Significant changes include an increase in deposits of $27.4 million, an increase in securities sold under agreement to repurchase of $7.6 million, and an increase in advance payments by borrowers for taxes and
insurance of $1.9 million, partially offset by a decrease in short-term debt of $32.1 million. The short-term debt decrease was primarily attributed to the increase in deposits and the decreases in securities held-to-maturity, and net loans. The
increase in deposits is primarily attributed to an increase in checking accounts of $12.0 million, an increase in savings accounts of $4.1 million, an increase in time deposits of $8.5 million, and an increase in money market accounts of $2.8
million.

Stockholders equity increased to $50.0 million at June 30, 2009, compared to $42.2 million at September 30, 2008. This result
reflects net income for the nine-month period ended June 30, 2009 of $1.8 million; stock options exercised of $1,000; stock issued under the Dividend Reinvestment Plan of $71,000; stock-based compensation of $75,000; a decrease in the
accumulated other comprehensive loss of $624,000, which is a result of changes in the net unrealized losses on the available-for-sale securities and by the unrealized loss recognized on the cash flow hedge as discussed in Note 9, Derivative
Instrument, on pages 22 and 23 above; common stock warrants issued of $302,000; and the issuance of Fixed Rate Cumulative Perpetual Preferred Stock, Series B (the Series B Preferred Stock) of $6.6 million. On December 12,
2008, the Company sold $7.0 million in preferred stock to the U.S. Department of Treasury as a participant in the federal governments TARP Capital Purchase Program. In connection with the investment, the Company also issued a ten-year warrant
to the Treasury which permits the Treasury to purchase up to 121,387 shares of its common stock at an exercise price of $8.65 per share. The Series B Preferred Stock will pay dividends at the rate of 5% per annum until the fifth anniversary of
issuance and, unless earlier redeemed, at the rate of 9% thereafter. Until the third anniversary of the issuance of the Series B Preferred Stock or its earlier redemption or transfer by the Treasury Department to an unaffiliated holder, the Company
may not increase the dividend on the common stock or repurchase any shares of common stock. Offsetting these increases were common and preferred stock cash dividends paid of $1.3 million. Approximately $3.4 million of the balances in retained
earnings as of June 30, 2009 and September 30, 2008 represent base year bad debt deductions for tax purposes only, as they are considered restricted accumulated earnings.

Non-Performing Assets

The following table sets forth information regarding non-accrual loans and foreclosed real
estate held by the Company at the dates indicated. The table does not include $1.5 million and $653,000 in loans at June 30, 2009 and September 30, 2008, respectively, that were more than 90 days past maturity but were otherwise performing
in accordance with their terms. The Company did not have any loans which were classified as troubled debt restructurings at the dates presented (dollar amounts in thousands).



|                                                                                    |  |              |        |   |                   |   |       |  
|----------------------------------------------------------------------------------- |  | ------------ | ------ | - | ----------------- | - | ----- | -
|                                                                                    |  | June 30,2009 |        |   | September 30,2008 |  
|Non-accrual residential real estate loans (one-to-four family)                      |  | $            | 1,240  |   |                   | $ | 701   |  
|Non-accrual construction, multi-family residential and commercial real estate loans |  |              | 14,582 |   |                   |   | 2,993 |  
|Non-accrual installment loans                                                       |  |              | 308    |   |                   |   | 676   |  
|Non-accrual commercial business loans                                               |  |              | 1,012  |   |                   |   | 1,357 |  
|                                                                                    |  |              |        |   |                   |   |       |  
|Total non-performing loans                                                          |  | $            | 17,142 |   |                   | $ | 5,727 |  
|                                                                                    |  |              |        |   |                   |   |       |  
|Total non-performing loans as a percent of net loans receivable                     |  |              | 3.92   | % |                   |   | 1.24  | %
|                                                                                    |  |              |        |   |                   |   |       |  
|Total foreclosed real estate                                                        |  | $            | 80     |   |                   | $ | 170   |  
|                                                                                    |  |              |        |   |                   |   |       |  
|Total non-performing loans and foreclosed real estate as a percent of total assets  |  |              | 2.33   | % |                   |   | 0.81  | %
|                                                                                    |  |              |        |   |                   |   |       |  



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##### Table of Contents

Included in non-performing loans at June 30, 2009 are twelve single-family residential real estate loans totaling
$1.2 million, seven commercial real estate loans totaling $14.6 million, eight home equity and installment loans totaling $308,000, and five commercial business loans totaling $1.0 million. Non-performing loans increased $11.4 million to $17.1
million at June 30, 2009 from $5.7 million at September 30, 2008 primarily because of six commercial real estate loans with an aggregate balance of $12.0 million that were placed on non-accrual during the period.

At June 30, 2009, the Company had an allowance for loan losses of $3.6 million or 0.82% of gross loans receivable, as compared to an allowance of $3.4 million or
0.74% of gross loans receivable at September 30, 2008. The allowance for loan losses equals 21.2% of non-performing loans at June 30, 2009 compared to 59.8% at September 30, 2008. While non-performing loans have increased $11.4
million since September 30, 2008, the allowance for loan losses has not increased proportionately. As noted above, the increase in non-performing loans is primarily attributed to commercial real estate loans, which have also been deemed
impaired under FAS 114. In accordance with accounting guidance, management determined that reserves of $105,000 were required to be maintained for the $16.7 million in commercial real estate loans considered impaired as of June 30, 2009.
Management believes the balance in the allowance for loan losses is adequate based on its analysis of quantitative and qualitative factors as of June 30, 2009. Management has evaluated its entire loan portfolio, including these non-performing
loans, and the overall allowance for loan losses and is satisfied that the allowance for losses on loans at June 30, 2009 is reasonable. See also Provision for Loan Losses on page 38. However, there can be no assurance that the
allowance for loan losses is sufficient to cover possible future loan losses.

The Company recognizes that it must maintain an Allowance for Loan and Lease
Losses (ALLL) at a level that is adequate to absorb estimated credit losses associated with the loan and lease portfolio. The Companys Board of Directors has adopted an ALLL policy designed to provide management with a systematic
methodology for determining and documenting the ALLL each reporting period. This methodology was developed to provide a consistent process and review procedure to ensure that the ALLL is in conformity with the Companys policies and procedures
and other supervisory and regulatory guidelines.

The Companys ALLL methodology incorporates managements current judgments about the credit
quality of the loan portfolio. The following factors are considered when analyzing the appropriateness of the allowance: historical loss experience; volume; type of lending conducted by the Bank; industry standards; the level and status of past due
and non-performing loans; the general economic conditions in the Banks lending area; and other factors affecting the collectibility of the loans in its portfolio. The primary elements of the Banks methodology include portfolio
segmentation and impairment measurement. Management acknowledges that this is a dynamic process and consists of factors, many of which are external and out of managements control, that can change often, rapidly and substantially. The adequacy
of the ALLL is based upon estimates considering all the aforementioned factors as well as current and known circumstances and events. There is no assurance that actual portfolio losses will not be substantially different than those that were
estimated.



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##### Table of Contents

Comparison of Results of Operations

for the Three and Nine Months Ended June 30, 2009 and 2008

Net Income

The Company recorded net income for the three months ended June 30, 2009 of $238,000 and net income available to common stockholders of $135,000 or $0.04 per
diluted common share compared to net income of $1.2 million or $0.40 per diluted common share for the same period in 2008. The decrease in net income primarily reflects pre-tax charges of $1.4 million for other-than-temporary impairment
(OTTI) on certain investment securities. Excluding the impairment charges of $1.4 million, net income would have been $1.2 million or $0.37 per diluted share. Other factors contributing to the decrease include a decrease in net interest
income of $432,000, or 10.1% and an increase in operating expenses of $800,000, or 24.6%, primarily due to a $733,000 increase in FDIC insurance premiums, partially offset by a decrease in the provision for loan losses of $80,000, an increase in
other income (excluding OTTI charges) of $629,000, or 65.9%, and a tax benefit of $542,000.

Net income for the nine months ended June 30, 2009 was
$1.8 million and net income available to common stockholders was $1.6 million or $0.52 per diluted common share compared to $3.3 million or $1.07 per diluted common share for the same period in 2008. The decrease in net income primarily reflects
OTTI charges of $3.1 million on certain investment securities. Excluding the impairment charges of $3.1 million, net income would have been $4.3 million or $1.33 per diluted share. Other factors contributing to the decrease include an increase in
the provision for loan losses of $405,000 and an increase in operating expenses of $1.1 million, or 11.2%, primarily due to a $802,000 increase in FDIC insurance premiums, partially offset by an increase in net interest income of $903,000, or 7.4%,
an increase in other income (excluding OTTI charges) of $623,000, or 22.6%, and a tax benefit of $298,000.

The Companys net income available to
common stockholders and diluted earnings per common share for the three and nine months ended June 30, 2009 reflects the impact of $103,000 and $223,000, respectively, of preferred stock dividends and discount accretion.



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Interest Rate Spread

The Companys interest rate spread, the difference between average yields calculated on a tax-equivalent basis on interest-earning assets and the average cost of funds, decreased to 2.01% (annualized) in the three months ended
June 30, 2009 from 2.22% (annualized) in the same period in 2008. The Companys tax-equivalent interest rate spread increased to 2.31% (annualized) in the nine months ended June 30, 2009 from 2.11% (annualized) in the same period in
2008. The decrease for the three-month period ended June 30, 2009 is the result of the average rate paid on interest-bearing liabilities decreasing less than the average yield on interest-earning assets. The increase for the nine-month period
ended June 30, 2009 is the result of the average rate paid on interest-bearing liabilities decreasing more than the average yield on interest-earning assets. The following table shows the average yields earned on the Companys
interest-earning assets and the average rates paid on its interest-bearing liabilities for the periods indicated, the resulting interest rate spreads, and the net yields on interest-earning assets.



|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|-------------------------------------------------------------------------------------------- |  | -------------------------- | - |  | ------------------------- | - |  | ---- | - |  | ---- | -
|                                                                                             |  | Three Months EndedJune 30, |   |  | Nine Months EndedJune 30, |  
|                                                                                             |  | 2009                       |   |  | 2008                      |   |  | 2009 |   |  | 2008 |  
|Average yield on:                                                                            |  |                            |   |  |                           |   |  |      |   |  |      |  
|Mortgage loans                                                                               |  | 5.47                       | % |  | 5.97                      | % |  | 5.81 | % |  | 6.03 | %
|Mortgage-backed securities                                                                   |  | 4.20                       |   |  | 4.48                      |   |  | 4.45 |   |  | 4.44 |  
|Installment loans                                                                            |  | 5.90                       |   |  | 6.24                      |   |  | 6.00 |   |  | 6.40 |  
|Commercial business loans and leases                                                         |  | 4.97                       |   |  | 6.30                      |   |  | 5.11 |   |  | 6.83 |  
|Interest-earning deposits with other institutions, investment securities, and FHLB stock (1) |  | 3.93                       |   |  | 5.10                      |   |  | 4.53 |   |  | 5.36 |  
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|Total interest-earning assets                                                                |  | 4.98                       |   |  | 5.63                      |   |  | 5.34 |   |  | 5.78 |  
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|Average rates paid on:                                                                       |  |                            |   |  |                           |   |  |      |   |  |      |  
|Deposits                                                                                     |  | 2.12                       |   |  | 2.85                      |   |  | 2.30 |   |  | 3.15 |  
|Borrowed funds                                                                               |  | 4.38                       |   |  | 4.26                      |   |  | 4.11 |   |  | 4.47 |  
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|Total interest-bearing liabilities                                                           |  | 2.97                       |   |  | 3.41                      |   |  | 3.03 |   |  | 3.67 |  
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|Average interest rate spread                                                                 |  | 2.01                       | % |  | 2.22                      | % |  | 2.31 | % |  | 2.11 | %
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  
|Net yield on interest-earning assets                                                         |  | 2.30                       | % |  | 2.52                      | % |  | 2.59 | % |  | 2.42 | %
|                                                                                             |  |                            |   |  |                           |   |  |      |   |  |      |  



|(1) | Interest income on tax-exempt investments has been adjusted for federal income tax purposes using a rate of 34%. Interest income on tax-exempt investment securities was $435,000 and
$423,000 and the yield was 4.47% and 4.44%, prior to adjusting for federal income tax for the three months ended June 30, 2009 and 2008, respectively. Interest income on tax-exempt investment securities was $1.3 million and $1.2 million and the
yield was 4.50% and 4.44%, prior to adjusting for federal income tax for the nine months ended June 30, 2009 and 2008, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest Income

Interest on loans decreased $709,000 or 10.2% to $6.2 million for the three months ended June 30, 2009, compared to
$6.9 million in the same period in 2008. Interest on loans decreased $1.2 million or 5.8% to $20.2 million for the nine months ended June 30, 2009, compared to the same period in 2008. The decrease for the three-month period ended June 30,
2009 reflects a decrease in the yield earned on the loan portfolio and a decrease in the average loan balance outstanding. The decrease for the nine-month period ended June 30, 2009 reflects a decrease in the yield earned on the loan portfolio,
partially offset by an increase in the average loan balance outstanding. The decrease in the yield earned on the loan portfolio is primarily due to adjustable rate loans, such as prime-based loans, repricing downward in the current lower rate
environment.



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Interest on mortgage-backed securities decreased $194,000 or 17.8% to $894,000 for the three-month period ended
June 30, 2009, compared to $1.1 million in the same period in 2008. Interest on mortgage-backed securities increased $34,000 or 1.1% to $3.0 million for the nine-month period ended June 30, 2009, compared to the same period in 2008. The
decrease for the three-month period ended June 30, 2009 reflects a decrease in the average balance of mortgage-backed securities owned and a decrease in the average yield earned on the portfolio. The increase for the nine-month period ended
June 30, 2009 reflects an increase in the average balance of mortgage-backed securities owned as well as a slight increase in the average yield earned on the portfolio.

Interest on interest-bearing demand deposits with other institutions and investment securities (non-tax equivalent) decreased $316,000 or 18.7% to $1.4 million for the three months ended June 30, 2009, as
compared to $1.7 million in the same period in 2008. Interest on interest-bearing demand deposits with other institutions and investment securities (non-tax equivalent) decreased $1.0 million or 19.0% to $4.4 million for the nine months ended
June 30, 2009, as compared to the same period in 2008. The decrease for the three-month period ended June 30, 2009 reflects a decrease in the yield earned on these investments, partially offset by an increase in the average balance of
investment securities in the portfolio. The decrease for the nine-month period ended June 30, 2009 reflects a decrease in the average balance of investment securities in the portfolio as well as a decrease in the yield earned on these
investments.

Interest Expense

Interest on deposits
decreased $666,000 or 24.2% to $2.1 million for the three-month period ended June 30, 2009, as compared to $2.8 million during the same period in 2008. Interest on deposits decreased $2.6 million or 27.9% to $6.6 million for the nine-month
period ended June 30, 2009, as compared to the same period in 2008. The decrease for the three-month period ended June 30, 2009 reflects a decrease in the average cost of the deposits, partially offset by an increase in the average balance
of deposits. The decrease for the nine-month period ended June 30, 2009 reflects a decrease in the average cost of the deposits as well as a decrease in the average balance of deposits.

Interest on securities sold under agreement to repurchase, including retail, term, and wholesale structured borrowings, increased $71,000 or 5.9% to $1.3 million for the
three-month period ended June 30, 2009, as compared to $1.2 million in the same period in 2008. Interest on securities sold under agreement to repurchase increased $286,000 or 8.1% to $3.8 million for the nine-month period ended June 30,
2009, as compared to the same period in 2008. The increase for the three-month period ended June 30, 2009 reflects an increase in the cost of these funds, as well as a higher level of average securities sold under agreement to repurchase. The
increase for the nine-month period ended June 30, 2009 reflects an increase in the cost of these funds, partially offset by a slightly lower level of average securities sold under agreement to repurchase. The Bank had $95.0 million of wholesale
structured borrowings outstanding at June 30, 2009 and 2008.

Interest on short-term borrowings, including Federal Home Loan Bank (FHLB)
RepoPlus advances, FHLB revolving line of credit, federal funds purchased, and treasury, tax and loan notes, decreased $54,000 or 96.4% to $2,000 for the three-month period ended June 30, 2009, as compared to $56,000 in the same
period in 2008. Interest on short-term borrowings decreased $561,000 or 82.1% to $122,000 for the nine-month period ended June 30, 2009, as compared to the same period in 2008. The decrease for the three-month period ended June 30, 2009
reflects a decrease in the average cost of these borrowings as well as a decrease in the average balance of these borrowings. The decrease for the nine-month period ended June 30, 2009 reflects a decrease in the average cost of these
borrowings, partially offset by an increase in the average balance of these borrowings.

Interest on long-term debt, including FHLB fixed rate advances and
Convertible Select advances, decreased $137,000 or 10.2% to $1.2 million for the three-month period ended June 30, 2009 as compared to $1.3 million in the same period in 2008. Interest on long-term debt decreased $286,000 or 7.2% to
$3.7 million for the nine-month period ended June 30, 2009 as compared to the same period in 2008. The decrease for the three-month period ended June 30, 2009 reflects a decrease in the average cost of the debt and a decrease in the
average balance of the debt. The decrease for the nine-month period ended June 30, 2009 reflects a decrease in the average cost of the debt, partially offset by an increase in the average balance of the debt.



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Interest on subordinated debt decreased $1,000 or 1.0% to $102,000 for the three months ended June 30, 2009, as
compared to $103,000 in the same period in 2008. Interest on subordinated debt decreased $38,000 or 11.0% to $308,000 for the nine months ended June 30, 2009, as compared to the same period in 2008. The decrease for both periods reflects a
decrease in the average cost of these floating-rate debentures while the average balance remained unchanged. The decrease in interest expense on subordinated debt was partially offset by $52,000 and $22,000 in interest expense for the three months
ended June 30, 2009 and 2008, respectively, on an interest rate swap contract to hedge its interest rate exposure from the subordinated debt. For the nine months ending June 30, 2009 and 2008 the interest expense recorded on the interest
rate swap contract was $116,000 and $11,000, respectively.

Net Interest Income

The Companys net interest income decreased $432,000 or 10.1% to $3.8 million, for the three-month period ended June 30, 2009, as compared to $4.3 million in the same period in 2008. The Companys net
interest income increased $903,000 or 7.4% to $13.1 million, for the nine-month period ended June 30, 2009, as compared to the same period in 2008. The decrease for the three-month period ended June 30, 2009 is attributable to a decrease
in the interest rate spread, partially offset by an increase in net interest-earning assets. The increase for the nine- month period ended June 30, 2009 is attributable to an increase in net interest-earning assets as well as an increase in the
interest rate spread. For the three months ended June 30, 2009 and 2008 the ratio of average interest-earning assets to average interest-bearing liabilities was 110.8% and 109.2%, respectively. For the nine months ended June 30, 2009 and
2008 the ratio of average interest-earning assets to average interest-bearing liabilities was 109.6% and 109.1%, respectively.

Provision for Loan
Losses

The provision for loan losses was $270,000 for the three-month period ended June 30, 2009, as compared to $350,000 for the same period in
2008. The provision for loan losses was $1.1 million for the nine months ended June 30, 2009 compared to $740,000 for the nine months ended June 30, 2008. At June 30, 2009, the allowance for loan losses increased to $3.6 million from
$3.4 million at September 30, 2008. Net loan charge-offs were $399,000 for the three months ended June 30, 2009 as compared to net loan charge-offs of $229,000 for the three months ended June 30, 2008. Net loan charge-offs were
$941,000 and $445,000 for the nine months ended June 30, 2009 and 2008, respectively. Charge-offs for the three months ended June 30, 2009 are primarily attributed to one commercial business loan totaling $235,000. Charge-offs for the nine
months ended June 30, 2009 are primarily attributed to ten commercial business loans totaling $533,000, one home equity loan totaling $146,000, and three residential real estate loans totaling $58,000.

The provision for loan losses is charged to operations to bring the total allowance for loan losses to a level that represents managements best estimates of the
losses inherent in the portfolio based on a monthly review by management of factors such as historical experience, volume, type of lending conducted by the Bank, industry standards, the level and status of past due and non-performing loans, the
general economic conditions in the Banks lending area, and other factors affecting the collectibility of the loans in its portfolio.

The allowance
for loan losses is maintained at a level that represents managements best estimates of losses in the loan portfolio at the balance sheet date. However, there can be no assurance that the allowance for loan losses will be adequate to cover
losses which may be realized in the future and that additional provisions for losses will not be required.



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Other Income

Excluding OTTI charges of $1.4 million and $3.1 million for the three and nine months ended June 30, 2009, respectively, and $322,000 for the nine months ended June 30, 2008, total non-interest or other income increased $629,000
or 65.9% to $1.6 million and increased $623,000 or 22.6% to $3.4 million for the three and nine month periods ended June 30, 2009, respectively, as compared to the same periods in 2008. The increase for the three-month period ended
June 30, 2009 is primarily attributed to an increase in loan service charges and fees, an increase in gains on sales of loans, an increase in gains on loan interest rate swaps, and an increase in earnings on cash surrender value of life
insurance, partially offset by a decrease in other income. The increase for the nine-month period ended June 30, 2009 is primarily attributed to an increase in loan service charges and fees, an increase in gains on sales of loans, an increase
in ATM fees, and in increase in earnings on cash surrender value of life insurance, partially offset by an increase in losses on loan interest rate swaps, a decrease in non-insured investment product income, and a decrease in other income.

Loan service charges and fees, which includes late charges on loans and other miscellaneous loan fees, increased $47,000 or 29.2% to $208,000, and
increased $86,000 or 22.1% to $475,000 for the three and nine months ended June 30, 2009, respectively, as compared to the same periods in 2008. The increase for the three-month period ended June 30, 2009 is primarily attributed to an
increase in title insurance fees, partially offset by a decrease in late charges collected on loans and a decrease in miscellaneous fees collected on residential mortgage loans. The increase for the nine-month period ended June 30, 2009 is
primarily attributed to an increase in late charges collected on commercial loans, an increase in loan satisfaction fee income, and an increase in title insurance fees, partially offset by a decrease in miscellaneous fees collected on residential
mortgage loans and home equity loans.

Impairment charges on securities were $1.4 million during the three-month period ending June 30, 2009; there
were no similar charges in the prior year period. The impairment charges relate to the Companys investments in two pooled trust preferred securities. The impairment charges resulted from several factors, including a downgrade in their credit
ratings, their failure to pass their principal coverage tests, indications of a break in yield, and the decline in the net present value of their projected cash flows. Management of the Company has deemed the impairment on the trust preferred
securities to be other-than-temporary based upon these factors and the duration and extent to which the market value has been less than cost, the inability to forecast a recovery in market value, and other factors concerning the issuers in the
pooled securities. Impairment charges on securities were $3.1 million and $322,000 for the nine months ended June 30, 2009 and 2008, respectively. The impairment charges for the current year period relate to the Companys holdings of
Freddie Mac preferred stock, the AMF Ultra Short Mortgage Fund, and its investment in two pooled trust preferred securities, whereas the impairment charges for the prior-year period primarily relate to the Companys holdings of the AMF Ultra
Short Mortgage Fund.

Gains on the sales of loans were $247,000 and $402,000 for the three and nine month periods ended June 30, 2009, respectively,
as compared to gains of $71,000 and $127,000 for the same periods in fiscal 2008. The three-month period ended June 30, 2009 results reflect the sale of approximately $18.3 million of fixed-rate, single-family mortgage loans, compared to $6.6
million of similar loan sales during the prior year-period. The nine-month period ended June 30, 2009 results reflect the sale of approximately $29.9 million of fixed-rate, single-family mortgage loans, compared to $11.7 million of similar loan
sales during the prior year-period.

The Company recognized a gain of $14,000 on loan interest rate swaps for the three months ended June 30, 2009 and
a loss of $2,000 for the nine-month period ended June 30, 2009. There were no gains or losses on loan interest rate swaps for the three and nine month periods ended June 30, 2008. As discussed in Note (9) above, during the first
quarter of fiscal 2009 the Company entered into a fixed-rate loan with one of its commercial mortgage loan customers and simultaneously entered into an offsetting fixed interest rate swap contract with PNC. It remains the only loan-related swap
outstanding as of June 30, 2009 and there were no similar derivatives outstanding in fiscal 2008.

Automated teller machine (ATM) fees were $192,000
and $548,000 for the three and nine months ended June 30, 2009, respectively, as compared to $184,000 and $529,000 for the same periods in 2008. The increase for both periods is primarily attributed to an increase in the interchange fees earned
on debit card transactions.



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Non-insured investment product income was $39,000 and $88,000 for the three and nine months ended June 30, 2009,
respectively, as compared to $40,000 and $186,000 for the same periods in 2008. The decrease for both periods is primarily attributed to a decrease in the commissions earned on the sales of these products due to lower volumes of sales.

Cash surrender value of life insurance income was $490,000 and $628,000 for the three and nine months ended June 30, 2009, respectively, as compared to $67,000
and $202,000 for the same periods in 2008. The increase for both periods is primarily attributed to $463,000 of bank owned life insurance earnings recognized during the current periods attributed to the death of the Companys former Chairman of
the Board.

Other income decreased $32,000 or 47.1% to $36,000 for the three-month period ended June 30, 2009, as compared to $68,000 for the same
period in 2008. Other income decreased $76,000 or 33.8% to $149,000 for the nine-month period ended June 30, 2009, as compared to the same period in 2008. The decrease for both periods is primarily attributed to a reduction in the recoveries
collected on a loss related to a check kiting fraud discovered in March 2005 attributable to one business customer. The recoveries collected for the three and nine months ended June 30, 2009 were $2,000 and $14,000, respectively, as compared to
$14,000 and $40,000 for the three and nine months ended June 30, 2008, respectively. The decrease for both periods is also attributed to a reduction in fees earned on the Companys official check account held with a third party. In April
of 2008 the third party changed their earnings rate from Fed Funds minus zero basis points to Fed Funds minus 110 basis points, essentially putting the Bank at a service fee expense position compared to income in the prior periods.

Operating Expenses

Total operating expenses for the three-month
period ended June 30, 2009 increased to $4.0 million, as compared to $3.2 million for the same period in 2008. Total operating expenses for the nine-month period ended June 30, 2009 totaled $10.7 million compared to $9.6 million for the
same period in 2008. The increase for both periods is primarily attributed to an increase in compensation and benefits expense, an increase in professional fees, an increase in service bureau expense, an increase in FDIC deposit insurance premiums,
and an increase in other operating expense, partially offset by a decrease in office occupancy and equipment expense, a decrease in depreciation and amortization expense, a decrease in the losses on foreclosed real estate, and a decrease in
foreclosed real estate expense.

Compensation and benefits expense was $2.1 million for the three-month period ended June 30, 2009, as compared to
$2.0 million for the same period in 2008. Compensation and benefits expense was $6.1 million for the nine-month period ended June 30, 2009, as compared to $6.0 million for the same period in 2008. The increase for both periods is primarily
attributed to normal salary increases for employees, an increase in retirement expense, and an increase in health insurance expense, partially offset by a decrease in life insurance expense due to the death of the Companys former Chairman of
the Board.

Office occupancy and equipment expense was $245,000 and $758,000 for the three and nine month periods ended June 30, 2009, respectively,
as compared to $250,000 and $772,000 for the same periods in 2008. The decrease for both periods is primarily attributed to a decrease in rent expense and furniture fixtures and equipment expense, partially offset by an increase in real estate taxes
paid on office buildings and an increase in office repairs and maintenance expense.

Depreciation and amortization expense was $118,000 and $360,000 for
the three and nine months ended June 30, 2009, respectively, as compared to $126,000 and $384,000 for the same periods in 2008. The decrease for both periods is primarily attributed to equipment becoming fully depreciated, partially offset by
depreciation on additions in the current period.



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Losses of $7,000 and $17,000 were recognized on the sales of foreclosed real estate for the three and nine months ended
June 30, 2009, respectively, as compared to $16,000 and $21,000 for the same periods in 2008. Foreclosed real estate expense was $1,000 and $3,000 for the three and nine month periods ended June 30, 2009, respectively, as compared to
$5,000 and $28,000 for the same periods in 2008. The results reflect the costs associated with the holding and disposition of properties, including writedowns during the periods. At June 30, 2009, foreclosed real estate consisted of one
non-farm residential property.

Professional fees were $93,000 and $350,000 for the three and nine months ended June 30, 2009, respectively, as
compared to $76,000 and $325,000 for the same periods in 2008. The increase for the three months ended June 30, 2009 is primarily attributed to an increase in legal fees. The increase for the nine-month period ended June 30, 2009 is
primarily attributed to an increase in legal fees and an increase in audit fees. The increase in legal fees for both periods is primarily related to collection efforts on delinquent loans. The increase in audit fees for the nine-month period is
primarily related to consent fees the Company paid to its former audit firm to consent on the Companys Annual Report for the fiscal year ended September 30, 2008 and the related filings associated with the TARP Capital Purchase Program.

Service bureau expense was $97,000 for the three-month period ended June 30, 2009, as compared to $93,000 for the same period in 2008. Service bureau
expense was $317,000 and $236,000, for the nine-month periods ended June 30, 2009 and 2008, respectively. The increase for the nine-month period ended June 30, 2009 is a result of the Bank continually adding technology and new products and
services.

Federal deposit insurance premiums were $745,000 and $839,000 for the three and nine months ended June 30, 2009, respectively, as compared
to $12,000 and $37,000 for the same periods in 2008. The increase for both periods is primarily related to the FDIC imposing a 5 basis point special assessment on each insured depository institutions assets minus Tier 1 capital as of
June 30, 2009. For the Bank the special assessment was estimated to be $331,000. The special assessment will be collected on September 30, 2009 but is being recognized in the current quarter. The increase for both periods was also due to
recent increases in the assessment rate for deposit insurance from the previous 5 to 7 basis points to 12 to 14 basis points for the quarter ended June 30, 2009. In addition, the Bank has elected to participate in the Transaction Account
Guarantee Program under the FDICs Temporary Liquidity Guarantee Program which provides unlimited insurance coverage for non-interest bearing transaction accounts. Under this program, the Bank will be assessed at the rate of 10 basis points for
transaction account balances in excess of the $250,000 insurance limit.

Other operating expenses were $575,000 for the three-month period ended
June 30, 2009 compared to $520,000 for the same period in 2008. Other operating expenses were $1.7 million for the nine-month period ended June 30, 2009 compared to $1.5 million for the same period in 2008. The increase for both periods is
due primarily to an increase in ScoreCard Reward expenses. In October of 2008 the Bank started a ScoreCard Reward program where customers can earn points for using their check card for normal routine purchases. For every $2.00 a customer spends, one
point is earned. Points can be redeemed for electronics, air travel, hotel stays and other rewards. The Bank accrues expense based on its estimated redemption rate and also pays administrative fees for the program.



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Income Taxes

Total
income tax benefit for the three-month period ended June 30, 2009 was $542,000, as compared to tax expense of $393,000 for the same 2008 period. The tax provision for the three months ended June 30, 2009 was significantly impacted by the
OTTI charges during the period and also by the $463,000 in bank owned life insurance income that was recorded during the period. Total income tax benefit for the nine-month period ended June 30, 2009 was $298,000, as compared to tax expense of
$1.0 million for the same 2008 period. The tax provision for the current nine-month period was also significantly impacted by the impairment charges during the period. The amount of tax benefit recognized on the OTTI charges was based on the tax
characteristics of each security (capital or ordinary). Those securities that are treated as capital for tax purposes have limited tax benefits recorded. The Company recognized the AMF Ultra Short Mortgage Fund impairment loss of $1.2 million as a
capital loss and recorded a tax valuation allowance of $419,000 relating to this investment. The tax provision was also impacted by the impairment charges recorded for the fiscal year ended September 30, 2008. On October 3, 2008, the
Emergency Economic Stabilization Act was enacted which includes a provision permitting banks to recognize losses relating to FNMA and FHLMC preferred stock as an ordinary loss, thereby allowing the Company to recognize a tax benefit on the losses.
Consequently, the Company recognized this additional tax benefit in the quarter ending December 31, 2008 for the OTTI charges related to its holdings of FHLMC preferred stock recorded in fiscal 2008. Also, the Company has a tax benefit recorded
for the three and nine months ended June 30, 2009 due to tax-exempt income that is currently higher than pre-tax income due to the OTTI charges taken during both periods as well as the $463,000 in bank owned life insurance income that was
recorded during the period. Tax-exempt income includes income earned on certain municipal investments that qualify for state and/or federal income tax exemption; income earned by the Banks Delaware subsidiary, which is not subject to state
income tax; and earnings on Bank-owned life insurance policies, which are exempt from federal taxation. State and federal tax-exempt income for the three-month period ended June 30, 2009 was $1.7 million and $1.0 million, respectively, compared
to $1.9 million and $394,000, respectively, for the three-month period ended June 30, 2008. State and federal tax-exempt income for the nine-month period ended June 30, 2009 was $5.3 million and $1.8 million, respectively, compared to $5.8
million and $1.2 million, respectively, for the nine-month period ended June 30, 2008.

Capital Requirements

The Federal Reserve Board measures capital adequacy for bank holding companies on the basis of a risk-based capital framework and a leverage ratio. The guidelines include
the concept of Tier 1 capital and total capital. Tier 1 capital is essentially common equity, excluding net unrealized gains (losses) on securities available-for-sale, goodwill, and cash flow hedges, plus certain types of preferred stock, including
the Series B Preferred Stock, and the Preferred Securities issued by FB Statutory Trust III in 2007. The Preferred Securities may comprise up to 25% of the Companys Tier 1 capital. The Series B Preferred Stock constitutes Tier 1 Capital for
both the risk-weighted and leverage capital requirements. Total capital includes Tier 1 capital and other forms of capital such as the allowance for loan losses, subject to limitations, and subordinated debt. The guidelines establish a minimum
standard risk-based target ratio of 8%, of which at least 4% must be in the form of Tier 1 capital. At June 30, 2009, the Company had Tier 1 capital as a percentage of risk-weighted assets of 11.69% and total risk-based capital as a percentage
of risk-weighted assets of 12.41%.

In addition, the Federal Reserve Board has established minimum leverage ratio guidelines for bank holding companies.
These guidelines currently provide for a minimum ratio of Tier 1 capital as a percentage of average total assets (the Leverage Ratio) of 3% for bank holding companies that meet certain criteria, including that they maintain the highest
regulatory rating. All other bank holding companies are required to maintain a Leverage Ratio of at least 4% or be subject to prompt corrective action by the Federal Reserve. At June 30, 2009, the Company had a leverage ratio of 8.10%.

The FDIC has issued regulations that require insured institutions, such as the Bank, to maintain minimum levels of capital. In general, current
regulations require a leverage ratio of Tier 1 capital to average total assets of not less than 3% for the most highly rated institutions and an additional 1% to 2% for all other institutions. At June 30, 2009, the Bank complied with the
minimum leverage ratio having Tier 1 capital of 7.34% of average total assets, as defined.



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The Bank is also required to maintain a ratio of qualifying total capital to risk-weighted assets and off-balance sheet
items of a minimum of 8%. At June 30, 2009, the Banks total capital to risk-weighted assets ratio calculated under the FDIC capital requirement was 11.40%.

Liquidity

The Companys primary sources of funds have historically consisted of deposits, repurchase
agreements, amortization and prepayments of outstanding loans, borrowings from the FHLB of Pittsburgh and other sources, including sales of securities and, to a limited extent, loans. At June 30, 2009, the total of approved loan commitments
amounted to $7.6 million. In addition, the Company had $11.8 million of undisbursed loan funds at that date. The amount of savings certificates which mature during the next twelve months totals approximately $109.4 million, a substantial portion of
which management believes, on the basis of prior experience as well as its competitive pricing strategy, will remain in the Company.

Off Balance Sheet
Commitments

The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments to extend credit and letters of credit. Those instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet.

The Banks exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and
letters of credit is represented by the contractual amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.

A summary of the contractual amount of the Companys financial instrument commitments is as follows:



|                                                    |  |                |        |                   |   |       
|--------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------
|                                                    |  | June 30,2009   |        | September 30,2008
|                                                    |  | (in thousands)
|Commitments to grant loans                          |  | $              | 7,592  |                   | $ | 5,422 
|Unfunded commitments under lines of credit          |  |                | 65,969 |                   |   | 63,269
|Financial and performance standby letters of credit |  |                | 1,099  |                   |   | 1,404 

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its
standby letters of credit. Standby letters of credit written are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, all letters of credit, when issued have expiration dates within
one year. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending other loan commitments. The Bank requires collateral supporting these letters of credit as deemed necessary. Management believes
that the proceeds obtained through a liquidation of such collateral would be sufficient to cover the maximum potential amount of future payments required under the corresponding guarantees. The current amount of liability as of June 30, 2009
for guarantees under standby letters of credit issued is not material.



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Not Applicable



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|Item 4T. | Controls and Procedures
|-------- | -----------------------

The Companys
management evaluated, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, the effectiveness of the Companys disclosure controls and procedures, as of the end of the period covered by this report.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Companys disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms.

There were no changes in the Companys internal control over financial reporting that occurred during the Companys last fiscal quarter that
have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.

Part
IIOther Information



|Item 1. | Legal Proceedings
|------- | -----------------

The Company is not involved in
any pending legal proceedings other than non-material legal proceedings undertaken in the ordinary course of business.



|Item 1A. | Risk Factors
|-------- | ------------

Not Applicable



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds
|------- | -----------------------------------------------------------

Not Applicable



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not Applicable



|Item 4. | Submission of Matters to a Vote of Security Holders
|------- | ---------------------------------------------------

Not Applicable



|Item 5. | Other Information
|------- | -----------------

(a) Not applicable

(b) Not applicable



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|Item 6. | Exhibits
|------- | --------

The following exhibits are filed as part
of this Report.



|        |  |                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1     |  | Articles of Incorporation (1)                                                                                                                                                                                                                                  
|3.2     |  | Amended Bylaws (14)                                                                                                                                                                                                                                            
|3.3     |  | Statement with Respect to Shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series B (15)                                                                                                                                                             
|4.1     |  | Common Stock Certificate (1)                                                                                                                                                                                                                                   
|4.2     |  | Rights Agreement dated as of March 31, 2003 by and between Fidelity Bancorp, Inc. and Registrar and Transfer Company (3)                                                                                                                                       
|4.3     |  | Amendment No. 1 to Rights Agreement (4)                                                                                                                                                                                                                        
|4.4*    |  | Indenture, dated as of September 20, 2007, between Fidelity Bancorp, Inc. and Wilmington Trust Company                                                                                                                                                         
|4.5*    |  | Amended and Restated Declaration of Trust, dated as of September 20, 2007, by and among Wilmington Trust Company as Institutional Trustee, Fidelity Bancorp, Inc., as Sponsor and Richard G.
Spencer, Lisa L. Griffith, and Michael A. Mooney as Administrators
|4.6*    |  | Guarantee Agreement, as dated as of September 20, 2007, by and between Fidelity Bancorp, Inc. and Wilmington Trust Company                                                                                                                                     
|4.7     |  | Form of Certificate for the Series B Preferred Stock (15)                                                                                                                                                                                                      
|4.8     |  | Warrant for Purchase of Shares of Common Stock (15)                                                                                                                                                                                                            
|10.1**  |  | Employee Stock Ownership Plan, as amended (1)                                                                                                                                                                                                                  
|10.4**  |  | 1997 Employee Stock Compensation Program (6)                                                                                                                                                                                                                   
|10.6**  |  | 1998 Group Term Replacement Plan (7)                                                                                                                                                                                                                           
|10.8**  |  | 1998 Salary Continuation Plan Agreement by and between R.G. Spencer, the Company and the Bank (7)                                                                                                                                                              
|10.9**  |  | 1998 Salary Continuation Plan Agreement by and between M.A. Mooney, the Company and the Bank (7)                                                                                                                                                               
|10.10** |  | Salary Continuation Plan Agreement with Lisa L. Griffith (2)                                                                                                                                                                                                   
|10.11** |  | 1998 Stock Compensation Plan (8)                                                                                                                                                                                                                               
|10.12** |  | 2000 Stock Compensation Plan (9)                                                                                                                                                                                                                               
|10.13** |  | 2001 Stock Compensation Plan (10)                                                                                                                                                                                                                              
|10.14** |  | 2002 Stock Compensation Plan (11)                                                                                                                                                                                                                              
|10.15** |  | 2005 Stock-Based Incentive Plan (12)                                                                                                                                                                                                                           
|10.16** |  | Form of Directors Indemnification Agreement (13)                                                                                                                                                                                                               
|10.17** |  | Employment Agreement, dated January 1, 2002, between Fidelity Bancorp, Inc. and Fidelity Bank, PaSB and Richard G. Spencer (14)                                                                                                                                
|10.18** |  | Employment Agreement, dated January 1, 2000, between Fidelity Bancorp, Inc. and Fidelity Bank, PaSB and Michael A. Mooney (14)                                                                                                                                 
|10.19** |  | Severance Agreement, dated February 10, 2004, between Fidelity Bank, PaSB and Lisa L. Griffith (14)                                                                                                                                                            
|10.20** |  | Severance Agreement, dated December 19, 1997, between Fidelity Bank, PaSB and Anthony F. Rocco (14)                                                                                                                                                            
|10.21** |  | Severance Agreement, dated December 19, 1997, between Fidelity Bank, PaSB and Sandra L. Lee (14)                                                                                                                                                               
|10.22   |  | Letter Agreement, dated December 12, 2008, between Fidelity Bancorp, Inc. and United States Department of the Treasury, with respect to the issuance and sale of the Series B Preferred Stock
and the Warrant (15)                                             
|10.23** |  | Form of Waiver, executed by each of Messrs. Spencer, Rocco, and Mooney and Ms. Lee and Ms. Griffith (15)                                                                                                                                                       
|10.24** |  | Form of Letter Agreement, executed by each of Messrs. Spencer, Rocco, and Mooney and Ms. Lee and Ms. Griffith (15)                                                                                                                                             
|31.1    |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer                                                                                                                                                                                              



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|     |  |                                                                  
|---- |  | -----------------------------------------------------------------
|31.2 |  | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|32   |  | Section 1350 Certification                                       



|* | Not filed in accordance with the provisions of Item 601(b)(4)(iii) of Regulation S-K. The Company agrees to provide a copy of these documents to the Commission upon request.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Management contract or compensatory plan or arrangement.
|-- | --------------------------------------------------------

|(1) | Incorporated by reference from the exhibits attached to the Prospectus and Proxy Statement of the Company included in its Registration Statement on Form S-4 (SEC File
No. 33-55384) filed with the SEC on December 3, 1992 (the Registration Statement).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference from the identically numbered exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 2003.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Incorporated by reference from Exhibit 1 to the Companys Registration Statement on Form 8-A filed March 31, 2003.
|--- | ------------------------------------------------------------------------------------------------------------------

|(4) | Incorporated by reference to Exhibit 4.2 to Amendment No. 1 to the Companys Registration Statement on Form 8-A filed March 17, 2005.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

|(5) | Incorporated by reference from an exhibit to the Registration Statement on Form S-8 (SEC File No. 333-26383) filed with the SEC on May 2, 1997.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Incorporated by reference from an exhibit to the Registration Statement on Form S-8 for the year ended September 30, 1998 (SEC File No. 333-47841) filed with the SEC on
March 12, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | Incorporated by reference to an identically numbered exhibit to the Companys Annual Report on Form 10-K for the fiscal year ended September 30, 1998 filed with the SEC on
December 29, 1998.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Incorporated by reference from Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-71145) filed with the SEC on January 25, 1999.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-53934) filed with the SEC on January 19, 2001.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Incorporated by reference from Exhibit 4.1 to the Registration Statement on Form S-8 (SEC File No. 333-81572) filed with the SEC on January 29, 2002.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | Incorporated by reference from Exhibit 4.1 to Registration Statement on Form S-8 (SEC File No. 333-103448) filed with the SEC on February 26, 2003.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------

|(12) | Incorporated by reference from Exhibit 4.1 to Registration Statement on Form S-8 (SEC File No. 333-123168) filed with the SEC on March 7, 2005.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------

|(13) | Incorporated by reference to an identically numbered exhibit in Form 10-Q filed with the SEC on February 13, 2007.
|---- | ------------------------------------------------------------------------------------------------------------------

|(14) | Incorporated by reference to an identically numbered exhibit to the Registrants Annual Report on Form 10-K for the fiscal year ended September 30, 2007.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(15) | Incorporated by reference to an exhibit to the Registrants Current Report on Form 8-K filed December 12, 2008.
|---- | ---------------------------------------------------------------------------------------------------------------



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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.



| |  |                       |  |  |  |                        |  |                                                                
| |  | --------------------- |  |  |  | ---------------------- |  | ---------------------------------------------------------------
| |  |                       |  |  |  | FIDELITY BANCORP, INC.
| |  |                       |  | 
| |  | Date: August 14, 2009 |  |  |  | By:                    |  | /s/ Richard G. Spencer                                         
| |  |                       |  |  |  |                        |  | Richard G. Spencer President and Chief Executive
Officer       
| |  |                       |  | 
| |  | Date: August 14, 2009 |  |  |  | By:                    |  | /s/ Lisa L. Griffith                                           
| |  |                       |  |  |  |                        |  | Lisa L. Griffith Sr. Vice President and Chief
Financial Officer



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