UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended: September 30, 2009
 or
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number: 0-29709
 HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
 
 Pennsylvania
    
    23-3028464(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification Number)271 Main Street, Harleysville, Pennsylvania
    
    19438(Address of Principal Executive Offices)
    
    (Zip Code)
   Title of each class
    
    Name of each exchange on which registeredCommon Stock, $.01 par value per share
    
    The Nasdaq Stock Market, LLC
 o þ
 o þ
 þ o
 o o
 þ
  Large accelerated filer o   
    Accelerated filer o
    Non-accelerated filer o
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



HARLEYSVILLE SAVINGS FINANICAL CORPORATION
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2009
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    1Item 1A.
    
    Risk Factors
    
    
    26Item 1B.
    
    Unresolved Staff Comments
    
    
    26Item 2.
    
    Properties
    
    
    27Item 3.
    
    Legal Proceedings
    
    
    27Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    27PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    28Item 6.
    
    Selected Financial Data
    
    
    29Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    30Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    37Item 8.
    
    Financial Statements and Supplementary Data
    
    
    40Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    69Item 9A(T).
    
    Controls and Procedures
    
    
    69Item 9B.
    
    Other Information
    
    
    70PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    71Item 11.
    
    Executive Compensation
    
    
    71Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    71Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    71Item 14.
    
    Principal Accounting Fees and Services
    
    
    71PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    72SIGNATURES
    
    
    73




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##### 



Forward-Looking Statements
 This Annual Report on Form 10-K contains certain forward looking statements (as defined in the
Securities Exchange Act of 1934 and the regulations hereunder). Forward looking statements are not
historical facts but instead represent only the beliefs, expectations or opinions of Harleysville
Savings Financial Corporation and its management regarding future events, many of which, by their
nature, are inherently uncertain. Forward looking statements may be identified by the use of such
words as: believe, expect, anticipate, intend, plan, estimate, or words of similar
meaning, or future or conditional terms such as will, would, should, could, may,
likely, probably, or possibly. Forward looking statements include, but are not limited to,
financial projections and estimates and their underlying assumptions; statements regarding plans,
objectives and expectations with respect to future operations, products and services; and
statements regarding future performance. Such statements are subject to certain risks,
uncertainties and assumption, many of which are difficult to predict and generally are beyond the
control of Harleysville Savings Financial Corporation and its management, that could cause actual
results to differ materially from those expressed in, or implied or projected by, forward looking
statements. The following factors, among others, could cause actual results to differ materially
from the anticipated results or other expectations expressed in the forward looking statements: (1)
economic and competitive conditions which could affect the volume of loan originations, deposit
flows and real estate values; (2) the levels of non-interest income and expense and the amount of
loan losses; (3) competitive pressure among depository institutions increasing significantly; (4)
changes in the interest rate environment causing reduced interest margins; (5) general economic
conditions, either nationally or in the markets in which Harleysville Savings Financial Corporation
is or will be doing business, being less favorable than expected;(6) political and social unrest,
including acts of war or terrorism; or (7) legislation or changes in regulatory requirements
adversely affecting the business in which Harleysville Savings Financial Corporation will be
engaged. Harleysville Savings Financial Corporation undertakes no obligation to update these
forward looking statements to reflect events or circumstances that occur after the date on which
such statements were made.
  
 PART I
 
 Item 1. Business .
 General
  1




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##### 



Competition
    Lending Activities
 Loan Portfolio Composition.
 2




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##### 



As of September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Real estate loans:ResidentialSingle-family
    
    
    343,064
    
    
    
    68.2
    %
    
    
    333,756
    
    
    
    68.9
    %
    
    $
    302,271
    
    
    
    71.3
    %
    
    $
    283,595
    
    
    
    72.2
    %
    
    $
    268,546
    
    
    
    71.9
    %Multi-family
    
    
    1,997
    
    
    
    0.4
    
    
    
    2,392
    
    
    
    0.5
    
    
    
    2,589
    
    
    
    0.6
    
    
    
    2,933
    
    
    
    0.7
    
    
    
    2,893
    
    
    
    0.8Construction
    
    
    2,912
    
    
    
    0.6
    
    
    
    8,346
    
    
    
    1.7
    
    
    
    6,093
    
    
    
    1.4
    
    
    
    6,987
    
    
    
    1.8
    
    
    
    7,640
    
    
    
    2.0Lot loans
    
    
    1,141
    
    
    
    0.2
    
    
    
    1,167
    
    
    
    0.2
    
    
    
    483
    
    
    
    0.1
    
    
    
    626
    
    
    
    0.2
    
    
    
    801
    
    
    
    0.2Home equity
    
    
    92,434
    
    
    
    18.4
    
    
    
    92,383
    
    
    
    19.1
    
    
    
    95,602
    
    
    
    22.5
    
    
    
    96,015
    
    
    
    24.4
    
    
    
    91,304
    
    
    
    24.4Commercial real estate
    
    
    48,958
    
    
    
    9.7
    
    
    
    37,823
    
    
    
    7.8
    
    
    
    12,874
    
    
    
    3.0
    
    
    
    920
    
    
    
    0.2
    
    
    
    702
    
    
    
    0.2Total real estate loans
    
    
    490,506
    
    
    
    97.5
    %
    
    
    475,867
    
    
    
    98.2
    %
    
    
    419,912
    
    
    
    99.0
    %
    
    
    391,076
    
    
    
    99.5
    %
    
    
    371,886
    
    
    
    99.5
    %Non-real estate loans:Commercial business loans
    
    
    10,389
    
    
    
    2.1
    
    
    
    6,584
    
    
    
    1.4
    
    
    
    2,440
    
    
    
    0.6
    
    
    
    
    
    
    
    0.0
    
    
    
    
    
    
    
    0.0Consumer non-real estate
loans
    
    
    2,242
    
    
    
    0.4
    
    
    
    1,955
    
    
    
    0.4
    
    
    
    1,881
    
    
    
    0.4
    
    
    
    1,815
    
    
    
    0.5
    
    
    
    1,693
    
    
    
    0.5Total consumer loans
    
    
    12,631
    
    
    
    2.5
    %
    
    
    8,539
    
    
    
    1.8
    %
    
    
    4,321
    
    
    
    1.0
    %
    
    
    1,815
    
    
    
    0.5
    %
    
    
    1,693
    
    
    
    0.5
    %Total loans receivable
    
    
    503,137
    
    
    
    100.0
    %
    
    
    484,406
    
    
    
    100.0
    %
    
    
    424,233
    
    
    
    100.0
    %
    
    
    392,891
    
    
    
    100.0
    %
    
    
    373,579
    
    
    
    100.0
    %Less:Loans in process
    
    
    (1,873
    )
    
    
    
    
    
    
    (5,108
    )
    
    
    
    
    
    
    (2,794
    )
    
    
    
    
    
    
    (4,941
    )
    
    
    
    
    
    
    (4,934
    )Deferred loan fees
    
    
    (779
    )
    
    
    
    
    
    
    (452
    )
    
    
    
    
    
    
    (453
    )
    
    
    
    
    
    
    (544
    )
    
    
    
    
    
    
    (671
    )Allowance for loan losses
    
    
    (2,094
    )
    
    
    
    
    
    
    (1,988
    )
    
    
    
    
    
    
    (1,933
    )
    
    
    
    
    
    
    (1,956
    )
    
    
    
    
    
    
    (1,968
    )Total loans receivable net
    
    $
    498,391
    
    
    
    
    
    
    $
    476,858
    
    
    
    
    
    
    $
    419,053
    
    
    
    
    
    
    $
    385,450
    
    
    
    
    
    
    $
    366,006
 3




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##### 



Contractual Maturities
 Principal Balance
    
    
    Principal Repayments Contractually Due in Year(s) Ended September 30,at September 30,
    
    
    
    
    
    
    
    
    
    
    2012-
    
    
    
    
    
    
    
    
    
    
    2024-and2009
    
    
    2010
    
    
    2011
    
    
    2014
    
    
    2015-2018
    
    
    2019-2023
    
    
    Thereafter(In Thousands)Residential real estate
loans:Single-family
    
    $
    343,064
    
    
    $
    5,146
    
    
    $
    5,489
    
    
    $
    18,525
    
    
    $
    42,197
    
    
    $
    60,380
    
    
    $
    211,327Multi-family
    
    
    1,997
    
    
    
    30
    
    
    
    32
    
    
    
    108
    
    
    
    246
    
    
    
    351
    
    
    
    1,230Construction
    
    
    2,912
    
    
    
    43
    
    
    
    47
    
    
    
    157
    
    
    
    358
    
    
    
    513
    
    
    
    1,794Lot loans
    
    
    1,141
    
    
    
    62
    
    
    
    67
    
    
    
    230
    
    
    
    517
    
    
    
    265
    
    
    
    Mortgage-backed Securities
    
    
    163,215
    
    
    
    2,448
    
    
    
    2,775
    
    
    
    9,140
    
    
    
    20,565
    
    
    
    28,889
    
    
    
    99,398Home equity lines of credit
    
    
    92,434
    
    
    
    8,966
    
    
    
    9,520
    
    
    
    17,655
    
    
    
    42,335
    
    
    
    13,958
    
    
    
    Commercial real estate
    
    
    48,958
    
    
    
    1,762
    
    
    
    1,910
    
    
    
    6,707
    
    
    
    15,520
    
    
    
    23,059
    
    
    
    Commercial business loans
    
    
    10,389
    
    
    
    377
    
    
    
    405
    
    
    
    1,423
    
    
    
    3,293
    
    
    
    4,891
    
    
    
    Consumer and other loans
    
    
    2,242
    
    
    
    276
    
    
    
    296
    
    
    
    1,026
    
    
    
    504
    
    
    
    140
    
    
    
    Total(1)
    
    $
    666,352
    
    
    $
    19,110
    
    
    $
    20,541
    
    
    $
    54,971
    
    
    $
    125,535
    
    
    $
    132,446
    
    
    $
    313,749
 
 (1)
    
    With respect to the $647.2 million of loans with principal maturities contractually due after
September 30, 2010, $565.8 million have fixed rates of interest and $81.4 million have
adjustable or floating rates of interest.   Origination, Purchase and Sale of Loans.
   4




---



##### 



Year Ended September 30,2009
    
    
    2008(In Thousands)Real estate loan originations:Residential:Single-family
    
    $
    65,740
    
    
    $
    67,873Multi-family
    
    
    
    
    
    
    Construction
    
    
    12,685
    
    
    
    9,395Lot loans
    
    
    
    
    
    
    Home equity
    
    
    38,217
    
    
    
    33,500Commercial real estate
    
    
    29,966
    
    
    
    27,485Commercial business loans
    
    
    5,508
    
    
    
    4,279Consumer non-real estate loans (1)
    
    
    916
    
    
    
    1,084Total loan originations
    
    
    153,032
    
    
    
    143,616Purchases of mortgage-backed securities
    
    
    
    
    
    
    61,835Total loan originations, and purchases
    
    
    153,032
    
    
    
    205,451Principal loan and mortgage-backed securities repayments
    
    
    180,999
    
    
    
    134,885Sales of loans and mortgage-backed securities
    
    
    1,905
    
    
    
    1,268Total principal repayments and sales
    
    
    182,904
    
    
    
    136,153Net increase in loans and mortgage-backed securities
    
    $
    (29,872
    )
    
    $
    69,298
 
 (1)
    
    Includes installment vehicle loans, secured and unsecured personal loans and lines of credit. Loan Underwriting Policies.
 5




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##### 



Single Family Residential Real Estate Lending.
    Multi-family Residential Real Estate Lending.
 6




---



##### 



Construction Loans.
    Home Equity.
 Commercial Real Estate Loans.
 7




---



##### 



Commercial Business Loans
  8




---



##### 



Consumer Non-Real Estate Loans.
  Loan Fee and Servicing Income.
   Non-performing Loans and Real Estate Owned.
  9




---



##### 



Foreclosed Real Estate
 10




---



##### 



As of September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars in Thousands)Residential real estate loans:Non-accrual loans
    
    $
    335
    
    
    $
    244
    
    
    $
    
    
    
    $
    
    
    
    $
    Accruing loans 90 days overdue
    
    
    1,446
    
    
    
    192
    
    
    
    
    
    
    
    
    
    
    
    260Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,781
    
    
    
    436
    
    
    
    
    
    
    
    
    
    
    
    260Commercial loans:Non-accrual loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    
    
    
    
    815
    
    
    
    
    
    
    
    
    
    
    
    Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    815
    
    
    
    
    
    
    
    
    
    
    
    Consumer loans:Non-accrual loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    119
    
    
    
    7
    
    
    
    28
    
    
    
    18
    
    
    
    Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    119
    
    
    
    7
    
    
    
    28
    
    
    
    18
    
    
    
    Total non-performing loans:Non-accrual loans
    
    
    335
    
    
    
    244
    
    
    
    
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    1,565
    
    
    
    1,014
    
    
    
    28
    
    
    
    18
    
    
    
    260Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    1,900
    
    
    $
    1,258
    
    
    $
    28
    
    
    $
    18
    
    
    $
    260Total non-performing loans to total loans
    
    
    .38
    %
    
    
    .26
    %
    
    
    n/m
    *
    
    
    n/m
    *
    
    
    .07
    %Total real estate owned, net of related
reserves
    
    $
    747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans and other real estate owned to total assets
    
    
    .32
    %
    
    
    .15
    %
    
    
    n/m
    *
    
    
    n/m
    *
    
    
    .03
    %
 
 *
    
    Not material   11




---



##### 



Year Ended September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(Dollars In Thousands)Total loans outstanding at end of period
    
    
    503,137
    
    
    
    484,407
    
    
    
    424,233
    
    
    
    392,891
    
    
    
    373,579Average loans outstanding
    
    
    493,772
    
    
    
    454,320
    
    
    
    408,563
    
    
    
    383,236
    
    
    
    360,167Allowance for loan losses, beginning of year
    
    $
    1,988
    
    
    $
    1,933
    
    
    $
    1,956
    
    
    $
    1,968
    
    
    $
    1,977Provision for loan losses
    
    
    400
    
    
    
    85
    
    
    
    
    
    
    
    
    
    
    
    Charge-offs:Single family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate and multi family
residential
    
    
    (288
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    (13
    )
    
    
    (1
    )
    
    
    
    
    
    
    Consumer non-real estate
    
    
    (33
    )
    
    
    (27
    )
    
    
    (35
    )
    
    
    (20
    )
    
    
    (14
    )Total charge-offs
    
    
    (321
    )
    
    
    (40
    )
    
    
    (36
    )
    
    
    (20
    )
    
    
    (14
    )Recoveries of loans previously charged off
    
    
    27
    
    
    
    10
    
    
    
    13
    
    
    
    8
    
    
    
    5Allowance for loan losses, end of year
    
    $
    2,094
    
    
    $
    1,988
    
    
    $
    1,933
    
    
    $
    1,956
    
    
    $
    1,968Allowance for loan losses as a percent non-
performing loans
    
    
    110.21
    %
    
    
    158.03
    %
    
    
    6,903.57
    %
    
    
    10,866.67
    %
    
    
    756.92
    %Ratio of net charge-offs during the period to
average loans outstanding during the
period
    
    
    0.06
    %
    
    
    0.01
    %
    
    
    0.01
    %
    
    
    0.00
    %
    
    
    0.00
    %
  As of September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Loan
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    Loan
    
    
    
    
    
    
    LoanCategory
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    CategoryAmount
    
    
    as a %
    
    
    Amount
    
    
    as a %
    
    
    Amount
    
    
    as a %
    
    
    Amount
    
    
    as a %
    
    
    Amount
    
    
    as a %of
    
    
    of total
    
    
    of
    
    
    of total
    
    
    of
    
    
    of total
    
    
    of
    
    
    of total
    
    
    of
    
    
    of totalAllowance
    
    
    Loans
    
    
    Allowance
    
    
    Loans
    
    
    Allowance
    
    
    Loans
    
    
    Allowance
    
    
    Loans
    
    
    Allowance
    
    
    Loans(Dollars in Thousands)Single-family residential
    
    $
    808
    
    
    
    68.2
    %
    
    $
    422
    
    
    
    68.9
    %
    
    $
    303
    
    
    
    71.3
    %
    
    $
    286
    
    
    
    72.2
    %
    
    $
    301
    
    
    
    71.9
    %Multi-family residential
    
    
    20
    
    
    
    0.4
    
    
    
    24
    
    
    
    0.5
    
    
    
    5
    
    
    
    0.6
    
    
    
    6
    
    
    
    0.7
    
    
    
    6
    
    
    
    0.8Construction
    
    
    4
    
    
    
    0.6
    
    
    
    13
    
    
    
    1.7
    
    
    
    9
    
    
    
    1.4
    
    
    
    10
    
    
    
    1.8
    
    
    
    11
    
    
    
    2.0Lot loans
    
    
    3
    
    
    
    0.2
    
    
    
    3
    
    
    
    0.2
    
    
    
    1
    
    
    
    0.1
    
    
    
    2
    
    
    
    0.2
    
    
    
    2
    
    
    
    0.2Home equity
    
    
    357
    
    
    
    18.4
    
    
    
    202
    
    
    
    19.1
    
    
    
    240
    
    
    
    22.5
    
    
    
    242
    
    
    
    24.4
    
    
    
    243
    
    
    
    24.4Commercial real estate
    
    
    542
    
    
    
    9.7
    
    
    
    396
    
    
    
    7.8
    
    
    
    207
    
    
    
    3.0
    
    
    
    43
    
    
    
    0.2
    
    
    
    40
    
    
    
    0.2Commercial business loans
    
    
    104
    
    
    
    2.1
    
    
    
    188
    
    
    
    1.4
    
    
    
    24
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer non-real estate loans
    
    
    21
    
    
    
    0.4
    
    
    
    20
    
    
    
    0.4
    
    
    
    17
    
    
    
    0.5
    
    
    
    16
    
    
    
    0.5
    
    
    
    15
    
    
    
    0.5Unallocated
    
    
    235
    
    
    
    
    
    
    
    720
    
    
    
    
    
    
    
    1,126
    
    
    
    
    
    
    
    1,351
    
    
    
    
    
    
    
    1,350
    
    
    
    Total loans receivable
    
    $
    2,094
    
    
    
    100.0
    %
    
    $
    1,988
    
    
    
    100.0
    %
    
    $
    1,932
    
    
    
    100.0
    %
    
    $
    1,956
    
    
    
    100.0
    %
    
    $
    1,968
    
    
    
    100.0
    %
  12




---



##### 



Investment Activities
    September 30,2009
    
    
    2008
    
    
    2007Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)Mortgage-backed securities
    
    $
    163,215
    
    
    $
    169,995
    
    
    $
    214,691
    
    
    $
    212,572
    
    
    $
    193,660
    
    
    $
    189,430U.S. government and agency
obligations
    
    
    82,602
    
    
    
    82,857
    
    
    
    54,314
    
    
    
    54,076
    
    
    
    83,155
    
    
    
    82,834Municipal securities
    
    
    22,592
    
    
    
    23,317
    
    
    
    24,940
    
    
    
    24,897
    
    
    
    25,538
    
    
    
    26,472Equity securities
    
    
    355
    
    
    
    311
    
    
    
    842
    
    
    
    842
    
    
    
    1,334
    
    
    
    1,334Mutual Funds
    
    
    6,417
    
    
    
    6,417
    
    
    
    12
    
    
    
    12
    
    
    
    576
    
    
    
    576FHLB stock
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,574
    
    
    
    16,574
    
    
    
    14,140
    
    
    
    14,140Total investment and mortgage-backed
securities and FHLB stock
    
    $
    291,277
    
    
    $
    298,993
    
    
    $
    311,373
    
    
    $
    308,973
    
    
    $
    318,403
    
    
    $
    314,786
  Amounts at September 30, 2009 Which Mature inOver One
    
    
    
    
    
    
    OverYear
    
    
    
    
    
    
    FiveWeighted
    
    
    Through
    
    
    Weighted
    
    
    Through
    
    
    Weighted
    
    
    Over
    
    
    WeightedOne year
    
    
    Average
    
    
    Five
    
    
    Average
    
    
    Ten
    
    
    Average
    
    
    Ten
    
    
    AverageOr less
    
    
    Yield
    
    
    Years
    
    
    Yield
    
    
    Years
    
    
    Yield
    
    
    Years
    
    
    Yield(Dollars in Thousands)Bonds and otherDebt securities:Mortgage-backed securities
    
    $
    24,731
    
    
    
    5.12
    %
    
    $
    23,055
    
    
    
    4.24
    %
    
    $
    40,441
    
    
    
    4.56
    %
    
    $
    74,988
    
    
    
    5.07
    %U.S. government
agency obligations
    
    
    5,000
    
    
    
    4.21
    %
    
    
    8,000
    
    
    
    1.97
    %
    
    
    10,996
    
    
    
    3.65
    %
    
    
    58,606
    
    
    
    5.08
    %Municipal securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,898
    
    
    
    5.27
    %
    
    
    18,694
    
    
    
    4.99
    %Total
    
    $
    29,731
    
    
    
    4.97
    %
    
    $
    31,055
    
    
    
    3.66
    %
    
    $
    55,335
    
    
    
    4.43
    %
    
    $
    152,288
    
    
    
    5.06
    %
  13




---



##### 



Sources of Funds
 General.
 Deposits.
  14




---



##### 



As of September 30,2009
    
    
    2008Percent of
    
    
    
    
    
    
    Percent ofAmount
    
    
    Deposits
    
    
    Amount
    
    
    Deposits(Dollars in Thousands)Passbook and club accounts
    
    $
    2,940
    
    
    
    0.6
    %
    
    $
    2,641
    
    
    
    0.7
    %NOW and interest-bearing
checking accounts
    
    
    46,100
    
    
    
    9.9
    
    
    
    42,203
    
    
    
    9.9Non-interest-bearing checking
accounts
    
    
    12,364
    
    
    
    2.6
    
    
    
    10,964
    
    
    
    2.6Money market demand accounts
    
    
    76,055
    
    
    
    16.3
    
    
    
    50,928
    
    
    
    12.0Certificates of deposit:3 month
    
    
    1,212
    
    
    
    0.3
    
    
    
    584
    
    
    
    0.16 month
    
    
    2,600
    
    
    
    0.6
    
    
    
    1,840
    
    
    
    0.47 month
    
    
    39,214
    
    
    
    8.4
    
    
    
    69,257
    
    
    
    16.49 month
    
    
    11,323
    
    
    
    2.4
    
    
    
    15,488
    
    
    
    3.612 month
    
    
    71,419
    
    
    
    15.3
    
    
    
    19,327
    
    
    
    4.515 month
    
    
    4,102
    
    
    
    0.9
    
    
    
    6,113
    
    
    
    1.417 month
    
    
    6,965
    
    
    
    1.5
    
    
    
    40,895
    
    
    
    9.618 month
    
    
    14,113
    
    
    
    3.0
    
    
    
    14,039
    
    
    
    3.320 month
    
    
    22,913
    
    
    
    4.9
    
    
    
    18,811
    
    
    
    4.424 month
    
    
    4,929
    
    
    
    1.1
    
    
    
    3,037
    
    
    
    0.727 month
    
    
    19
    
    
    
    0.0
    
    
    
    582
    
    
    
    0.136 month
    
    
    41,429
    
    
    
    8.9
    
    
    
    30,048
    
    
    
    7.148 month
    
    
    24,377
    
    
    
    5.2
    
    
    
    33,636
    
    
    
    7.960 month
    
    
    18,979
    
    
    
    4.1
    
    
    
    8,591
    
    
    
    2.0Other
    
    
    100
    
    
    
    0.0
    
    
    
    203
    
    
    
    0.0Retirement accounts:Money market deposit accounts
    
    
    1,377
    
    
    
    0.3
    
    
    
    1,076
    
    
    
    0.3Certificates of deposit
    
    
    64,071
    
    
    
    13.7
    
    
    
    55,250
    
    
    
    13.0Total deposits
    
    $
    466,601
    
    
    
    100.0
    %
    
    $
    425,513
    
    
    
    100.0
    %
  15




---



##### 



WeightedPercentage of
    
    
    AverageAmount
    
    
    Total Deposits
    
    
    Nominal Rate(Dollars in Thousands)Passbook and club accounts
    
    $
    2,940
    
    
    
    0.6
    %
    
    
    0.91
    %NOW and interest-bearing checking accounts
    
    
    46,100
    
    
    
    9.9
    
    
    
    0.34Non-interest-bearing checking accounts
    
    
    12,364
    
    
    
    2.7
    
    
    
    0.00Money market deposits accounts(1)
    
    
    77,432
    
    
    
    16.6
    
    
    
    1.12Total
    
    $
    138,836
    
    
    
    29.8
    %
    
    
    0.76
    %Certificate accounts maturing by quarter:December 31, 2009
    
    $
    65,232
    
    
    
    14.0
    %
    
    
    2.39
    %March 31, 2010
    
    
    96,510
    
    
    
    20.7
    
    
    
    2.63June 30, 2010
    
    
    23,963
    
    
    
    5.1
    
    
    
    1.64September 30, 2010
    
    
    15,638
    
    
    
    3.4
    
    
    
    1.81December 31, 2010
    
    
    5,178
    
    
    
    1.1
    
    
    
    2.61March 31, 2011
    
    
    5,777
    
    
    
    1.2
    
    
    
    2.54June 30, 2011
    
    
    15,588
    
    
    
    3.3
    
    
    
    3.33September 30, 2011
    
    
    26,110
    
    
    
    5.6
    
    
    
    3.88December 31, 2011
    
    
    13,364
    
    
    
    2.9
    
    
    
    3.90March 31, 2012
    
    
    5,074
    
    
    
    1.1
    
    
    
    3.45June 30, 2012
    
    
    5,673
    
    
    
    1.2
    
    
    
    3.52September 30, 2012
    
    
    4,790
    
    
    
    1.0
    
    
    
    3.56Thereafter
    
    
    44,868
    
    
    
    9.6
    
    
    
    3.52Total certificate accounts(1)
    
    
    327,765
    
    
    
    70.2
    
    
    
    2.82Total deposits
    
    $
    466,601
    
    
    
    100.0
    %
    
    
    2.20
    %
 
 (1)
    
    Includes retirement accounts.   Year Ended September 30,2009
    
    
    2008(In Thousands)Increase (decrease) before interest credited
    
    $
    30,793
    
    
    $
    (13,740
    )Interest credited
    
    
    10,295
    
    
    
    15,218Net deposit increase
    
    $
    41,088
    
    
    $
    1,478
 16




---



##### 



Amounts at September 30, 2009 MaturingAs ofSeptember 30,
    
    
    One Year2009
    
    
    or Less
    
    
    Two Years
    
    
    Three Years
    
    
    Thereafter(In Thousands)Certificate accounts:0.01% to 2.00%
    
    $
    82,794
    
    
    $
    73,553
    
    
    $
    9,241
    
    
    $
    
    
    
    $
    2.01% to 4.00%
    
    
    220,228
    
    
    
    113,613
    
    
    
    39,036
    
    
    
    26,203
    
    
    
    41,3764.01% to 6.00%
    
    
    24,743
    
    
    
    14,177
    
    
    
    4,375
    
    
    
    2,699
    
    
    
    3,492Total certificate accounts(1)
    
    $
    327,765
    
    
    $
    201,343
    
    
    $
    52,652
    
    
    $
    28,902
    
    
    $
    44,868
 
 (1)
    
    Includes retirement accounts.  At September 30, 2009WeightedAverageAmount
    
    
    Rate(Dollars in Thousands)Quarter Ending:December 31, 2009
    
    $
    10,191
    
    
    
    2.20
    %March 31, 2010
    
    
    22,741
    
    
    
    2.64
    %June 30, 2010
    
    
    3,402
    
    
    
    1.38
    %September 30, 2010
    
    
    1,745
    
    
    
    1.74
    %After September 30, 2010
    
    
    22,057
    
    
    
    3.37
    %Total certificates of deposit with balances of $100,000 or more
    
    $
    60,136
    
    
    
    2.73
    %
 Borrowings.
  17




---



##### 



September 30,2009
    
    2008Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    AverageBalance
    
    Rate
    
    Balance
    
    Rate(Dollars In Thousands)Advances
    
    $
    309,046
    
    
    
    4.31
    %
    
    $
    347,846
    
    
    
    4.12
    %
  Year Ended September 30,2009
    
    2008(In Thousands)Advances :Average balance outstanding
    
    $
    13,341
    
    
    $
    16,934Maximum amount outstanding at any
month-end during the period
    
    $
    37,800
    
    
    $
    39,000Weighted average interest rate during the period
    
    
    0.70
    %
    
    
    2.96
    %
 Employees
  Regulation
 The references to laws and regulations which are applicable to the Company and the Bank set
forth below and elsewhere herein are brief summaries thereof which do not purport to be complete
and are qualified in their entirety by reference to such laws and regulations.
 Regulation of the Company
 General.
 BHCA Activities and Other Limitations.
 18




---



##### 



Limitations on Transactions with Affiliates.
  19




---



##### 



Capital Requirements.
  Financial Support of Affiliated Institutions.
 Sarbanes-Oxley Act of 2002.
 20




---



##### 



Regulation of the Bank
 General.
 Pennsylvania Savings Bank Law
   21




---



##### 



Interstate Acquisitions
 FDIC Insurance Premiums
    22




---



##### 



Capital Requirements
   Prompt Corrective Action.
 23




---



##### 



Loans-to-One Borrower Limitation
 Activities and Investments of Insured State-Chartered Banks
  Regulatory Enforcement Authority
 24




---



##### 



Federal and State Taxation
 General
 Method of Accounting.
 Bad Debt Reserves.
 Distributions.
 Minimum Tax.
 Net Operating Loss Carryovers.
 Corporate Dividends-Received Deduction.
 25




---



##### 



Other Matters.
 Pennsylvania Taxation
 Subsidiary
  
 Item 1A. Risk Factors.
  
 Item 1B. Unresolved Staff Comments .
  26




---



##### 



Item 2. Properties .
  Net Book Value ofLease
    
    Property and LeaseholdOwned or
    
    Expiration
    
    Improvements atCounty
    
    Address
    
    Leased
    
    Date
    
    September 30, 2009
    
    
    Deposits(In Thousands)Montgomery
    
    1889 Ridge PikeRoyersford, Pennsylvania
    
    Owned
    
    
    
    $
    2,714
    
    
    $
    24,016Montgomery
    
    271 Main StreetHarleysville, Pennsylvania
    
    Owned
    
    
    
    
    1,042
    
    
    
    168,976Montgomery
    
    640 East Main StreetLansdale, Pennsylvania
    
    Leased
    
    May 2043(1)
    
    
    828
    
    
    
    47,610Montgomery
    
    1550 Hatfield Valley RoadHatfield, Pennsylvania
    
    Leased
    
    January 2064(1)
    
    
    823
    
    
    
    83,462Montgomery
    
    2301 West Main StreetNorristown, Pennsylvania
    
    Owned
    
    
    
    
    486
    
    
    
    87,446Montgomery
    
    3090 Main StreetSumneytown, Pennsylvania
    
    Owned
    
    
    
    
    263
    
    
    
    55,091Total
    
    
    
    
    
    
    
    $
    6,156
    
    
    $
    466,601
 
 (1)
    
    The land at this office is leased; however, the Bank owns the building. 
 Item 3. Legal Proceedings .
  
 Item 4. Submission of Matters to a Vote of Security Holders
  27




---



##### 



PART II
 
 Item 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
   Cash DividendsFor The Quarter Ended
    
    High
    
    Low
    
    Close
    
    DeclaredSeptember 30, 2009
    
    $
    15.70
    
    
    $
    12.50
    
    
    $
    13.71
    
    
    $
    0.19June 30, 2009
    
    
    16.22
    
    
    
    10.54
    
    
    
    13.98
    
    
    
    0.18March 31, 2009
    
    
    14.24
    
    
    
    10.08
    
    
    
    11.64
    
    
    
    0.18December 31, 2008
    
    
    14.00
    
    
    
    11.12
    
    
    
    13.43
    
    
    
    0.18September 30, 2008
    
    $
    13.50
    
    
    $
    10.70
    
    
    $
    12.57
    
    
    $
    0.18June 30, 2008
    
    
    14.31
    
    
    
    11.85
    
    
    
    11.85
    
    
    
    0.17March 31, 2008
    
    
    13.99
    
    
    
    10.55
    
    
    
    13.50
    
    
    
    0.17December 31, 2007
    
    
    14.69
    
    
    
    12.00
    
    
    
    12.50
    
    
    
    0.17
   Total Number ofShares Purchased as
    
    
    Maximum Number ofTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    Shares that May Yet Beof Shares
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    Purchased Under the PlansPeriod
    
    Purchased
    
    
    per Share
    
    
    Programs
    
    
    or Programs(1)July 1-31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    66,351August 1-31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    66,351September 1-30, 2009
    
    
    10,200
    
    
    
    14.05
    
    
    
    
    
    
    
    56,151Total
    
    
    10,200
    
    
    $
    14.05
    
    
    
    
    
    
    
    56,151
 
 (1)
    
    On June 30, 2008, the Company announced its current program to repurchase up to 5.0% of the
outstanding shares of common stock of the Company, or 196,000 shares. The program does not
have an expiration date and all shares are purchased in the open market. 28




---



##### 



Item 6. Selected Financial Data .
 Selected Balance Sheet Data:
 As of September 30,(Dollars in thousands, except per share data)
    
    2009
    
    2008
    
    2007
    
    2006
    
    2005Total Assets
    
    $
    830,007
    
    
    $
    825,675
    
    
    $
    773,544
    
    
    $
    775,638
    
    
    $
    766,990Mortgage-backed securities held to maturity
    
    
    162,430
    
    
    
    213,933
    
    
    
    192,842
    
    
    
    219,494
    
    
    
    263,964Mortgage-backed securities available-for-sale
    
    
    785
    
    
    
    758
    
    
    
    818
    
    
    
    820
    
    
    
    1,045Consumer loans receivable
    
    
    441,138
    
    
    
    434,439
    
    
    
    405,672
    
    
    
    386,486
    
    
    
    368,034Commercial loans
    
    
    59,347
    
    
    
    44,407
    
    
    
    15,314
    
    
    
    920
    
    
    
    Allowance for loan losses
    
    
    2,094
    
    
    
    1,988
    
    
    
    1,933
    
    
    
    1,956
    
    
    
    1,968Investment securities held to maturity
    
    
    105,194
    
    
    
    79,254
    
    
    
    108,693
    
    
    
    111,099
    
    
    
    87,364Investment securities available-for-sale
    
    
    6,728
    
    
    
    854
    
    
    
    1,910
    
    
    
    8,108
    
    
    
    2,835Other investments (1)
    
    
    22,316
    
    
    
    23,731
    
    
    
    20,810
    
    
    
    23,952
    
    
    
    23,971Deposits
    
    
    466,601
    
    
    
    425,513
    
    
    
    424,035
    
    
    
    429,254
    
    
    
    418,980FHLB advances and other borrowings
    
    
    309,046
    
    
    
    347,846
    
    
    
    298,609
    
    
    
    294,611
    
    
    
    297,268Total stockholders equity
    
    
    50,139
    
    
    
    47,209
    
    
    
    47,041
    
    
    
    48,471
    
    
    
    47,576Book value per share
    
    
    13.82
    
    
    
    13.23
    
    
    
    12.65
    
    
    
    12.59
    
    
    
    12.20
 Selected Operations Data:
 Year Ended September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Interest income
    
    $
    41,343
    
    
    $
    43,076
    
    
    $
    40,289
    
    
    $
    39,091
    
    
    $
    35,902Interest expense
    
    
    24,886
    
    
    
    29,016
    
    
    
    28,806
    
    
    
    26,366
    
    
    
    22,747Net interest income
    
    
    16,457
    
    
    
    14,060
    
    
    
    11,483
    
    
    
    12,725
    
    
    
    13,155Provision for loan losses
    
    
    400
    
    
    
    85
    
    
    
    
    
    
    
    
    
    
    
    (40
    )Net interest income after provision
for loan losses
    
    
    16,057
    
    
    
    13,975
    
    
    
    11,483
    
    
    
    12,725
    
    
    
    13,195Realized gain (loss) on securities, including
impairment
    
    
    (454
    )
    
    
    (179
    )
    
    
    160
    
    
    
    27
    
    
    
    115Other income
    
    
    1,925
    
    
    
    1,909
    
    
    
    1,730
    
    
    
    1,273
    
    
    
    1,351Other expense
    
    
    11,527
    
    
    
    10,094
    
    
    
    9,216
    
    
    
    8,568
    
    
    
    7,965Income before taxes
    
    
    6,001
    
    
    
    5,611
    
    
    
    4,157
    
    
    
    5,457
    
    
    
    6,696Income tax expense
    
    
    1,285
    
    
    
    1,232
    
    
    
    911
    
    
    
    1,255
    
    
    
    1,693Net income
    
    $
    4,716
    
    
    $
    4,379
    
    
    $
    3,246
    
    
    $
    4,202
    
    
    $
    5,003Earnings per share  basic
    
    $
    1.31
    
    
    $
    1.20
    
    
    $
    0.85
    
    
    $
    1.09
    
    
    $
    1.29Earnings per share  diluted
    
    
    1.31
    
    
    
    1.20
    
    
    
    0.83
    
    
    
    1.08
    
    
    
    1.27Dividends per share
    
    
    0.73
    
    
    
    0.69
    
    
    
    0.68
    
    
    
    0.64
    
    
    
    0.58
 Selected Other Data:
 Year Ended September 30,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Return on average assets (2)
    
    
    0.57
    %
    
    
    0.54
    %
    
    
    0.42
    %
    
    
    0.55
    %
    
    
    0.67
    %Return on average equity (2)
    
    
    9.70
    %
    
    
    9.42
    %
    
    
    6.71
    %
    
    
    8.76
    %
    
    
    10.91
    %Dividend payout ratio
    
    
    55.60
    %
    
    
    57.26
    %
    
    
    80.02
    %
    
    
    58.72
    %
    
    
    44.96
    %Average equity to average assets (2)
    
    
    5.90
    %
    
    
    5.76
    %
    
    
    6.13
    %
    
    
    6.21
    %
    
    
    6.19
    %Interest rate spread (2)
    
    
    1.84
    %
    
    
    1.57
    %
    
    
    1.39
    %
    
    
    1.51
    %
    
    
    1.65
    %Net yield on interest-earning assets (2)
    
    
    2.04
    %
    
    
    1.79
    %
    
    
    1.58
    %
    
    
    1.71
    %
    
    
    1.82
    %Ratio of non-performing assets to
total assets at end of period
    
    
    0.32
    %
    
    
    0.15
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.03
    %Ratio of interest-earning assets to
interest-bearing liabilities at end of period
    
    
    106.45
    %
    
    
    105.93
    %
    
    
    104.75
    %
    
    
    105.61
    %
    
    
    105.35
    %Full service banking offices at end of period
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    5
 
 (1)
    
    Includes interest-bearing deposits at other depository institutions & stock of the Federal Home Loan Bank of Pittsburgh.(2)
    
    All ratios are based on average monthly balances during the indicated periods. 29




---



##### 



Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations .
  Critical Accounting Policies and Judgments
  Analysis and Determination of the Allowance for Loan Losses
  Specific Allowance Required for Certain Impaired or Collateral-Dependent Loans
 General Valuation Allowance on Certain Identified Problem Loans
 General Valuation Allowance on the Remainder of the Loan Portfolio
 30




---



##### 



Investment Securities Impairment Valuation.
 Overview
    31




---



##### 



Results of Operations
  As of September
    
    
    For The Year Ended September 30,30, 2009
    
    
    2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageRate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(Dollars in Thousands)Interest-earning assets:Mortgage loans (2)(3)
    
    
    5.76
    %
    
    $
    340,311
    
    
    $
    20,024
    
    
    
    5.88
    %
    
    $
    320,925
    
    
    $
    19,043
    
    
    
    5.93
    %
    
    $
    294,014
    
    
    $
    17,270
    
    
    
    5.87
    %Mortgage-backed securities
    
    
    4.83
    %
    
    
    190,934
    
    
    
    9,187
    
    
    
    4.81
    %
    
    
    211,563
    
    
    
    10,088
    
    
    
    4.77
    %
    
    
    204,546
    
    
    
    9,339
    
    
    
    4.57
    %Commercial loans
    
    
    6.05
    %
    
    
    51,103
    
    
    
    3,096
    
    
    
    6.06
    %
    
    
    26,492
    
    
    
    1,799
    
    
    
    6.79
    %
    
    
    8,839
    
    
    
    674
    
    
    
    7.63
    %Consumer and other loans(3)
    
    
    4.85
    %
    
    
    106,216
    
    
    
    4,772
    
    
    
    4.49
    %
    
    
    108,747
    
    
    
    5,719
    
    
    
    5.26
    %
    
    
    96,481
    
    
    
    6,035
    
    
    
    6.37
    %Investments
    
    
    3.57
    %
    
    
    117,152
    
    
    
    4,264
    
    
    
    3.64
    %
    
    
    119,133
    
    
    
    6,427
    
    
    
    5.39
    %
    
    
    122,748
    
    
    
    6,971
    
    
    
    5.68
    %Total interest-earning assets
    
    
    5.10
    %
    
    
    805,716
    
    
    
    41,343
    
    
    
    5.13
    %
    
    
    786,860
    
    
    
    43,076
    
    
    
    5.47
    %
    
    
    726.627
    
    
    
    40,289
    
    
    
    5.54
    %Interest-bearing liabilities:Savings and money market
    
    
    1.15
    %
    
    
    67,509
    
    
    
    961
    
    
    
    1.42
    %
    
    
    54,669
    
    
    
    1,189
    
    
    
    2.17
    %
    
    
    58,503
    
    
    
    1,552
    
    
    
    2.65
    %Checking
    
    
    0.33
    %
    
    
    44,151
    
    
    
    172
    
    
    
    0.39
    %
    
    
    42,832
    
    
    
    367
    
    
    
    0.86
    %
    
    
    51,198
    
    
    
    506
    
    
    
    0.97
    %Certificates of deposit
    
    
    2.82
    %
    
    
    315,672
    
    
    
    9,824
    
    
    
    3.11
    %
    
    
    329,405
    
    
    
    13,662
    
    
    
    4.15
    %
    
    
    307,567
    
    
    
    13,414
    
    
    
    4.36
    %Total deposits
    
    
    2.26
    %
    
    
    427,332
    
    
    
    10,957
    
    
    
    2.26
    %
    
    
    426,906
    
    
    
    15,218
    
    
    
    3.56
    %
    
    
    418,268
    
    
    
    15,472
    
    
    
    3.70
    %Borrowings
    
    
    4.31
    %
    
    
    329,567
    
    
    
    13,929
    
    
    
    4.23
    %
    
    
    315,935
    
    
    
    13,798
    
    
    
    4.37
    %
    
    
    275,429
    
    
    
    13,334
    
    
    
    4.84
    %Total interest-bearing
liabilities
    
    
    3.09
    %
    
    
    756,899
    
    
    
    24,886
    
    
    
    3.29
    %
    
    
    742,841
    
    
    
    29,016
    
    
    
    3.90
    %
    
    
    693,697
    
    
    
    28,806
    
    
    
    4.15
    %Net interest income/interest
rate spread
    
    
    2.01
    %
    
    
    
    
    
    $
    16,457
    
    
    
    1.84
    %
    
    
    
    
    
    $
    14,060
    
    
    
    1.57
    %
    
    
    
    
    
    $
    11,483
    
    
    
    1.39
    %Net interest-earning
assets/net 
yield on
interest-earning assets(1)
    
    
    
    
    
    $
    48,817
    
    
    
    
    
    
    
    2.04
    %
    
    $
    44,019
    
    
    
    
    
    
    
    1.79
    %
    
    $
    32,930
    
    
    
    
    
    
    
    1.58
    %Ratio of interest-earning
assets to interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106.5
    %
    
    
    
    
    
    
    
    
    
    
    105.9
    %
    
    
    
    
    
    
    
    
    
    
    104.7
    %
 
 (1)
    
    Net interest income divided by average interest-earning assets.(2)
    
    Loan fee income is immaterial to this analysis.(3)
    
    There were two non-accruing loans totaling $335,000 at September 30, 2009, one non-accruing
loan totaling $244,000 at September 2008, and there were no non-accruing loans at September
2007. 32




---



##### 



Fiscal 2009 Compared
    
    
    Fiscal 2008 Comparedto Fiscal 2008
    
    
    to Fiscal 2007Increase (Decrease)
    
    
    Increase (Decrease)(In Thousands)
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest income on interest-earning assets:Mortgage loans (1)
    
    $
    1,139
    
    
    
    (158
    )
    
    $
    981
    
    
    $
    1,595
    
    
    
    178
    
    
    $
    1,773Mortgage-backed securities
    
    
    (994
    )
    
    
    93
    
    
    
    (901
    )
    
    
    327
    
    
    
    422
    
    
    
    749Commercial
    
    
    1,467
    
    
    
    (170
    )
    
    
    1,297
    
    
    
    1,206
    
    
    
    (81
    )
    
    
    1,125Consumer and other loans (1)
    
    
    (130
    )
    
    
    (817
    )
    
    
    (947
    )
    
    
    713
    
    
    
    (1,029
    )
    
    
    (316
    )Interest and dividends on Investments

    
    (105
    )
    
    
    (2,058
    )
    
    
    (2,163
    )
    
    
    (201
    )
    
    
    (343
    )
    
    
    (544
    )Total
    
    
    1,377
    
    
    
    (3,110
    )
    
    
    (1,733
    )
    
    
    3,640
    
    
    
    (853
    )
    
    
    2,787Interest expense on interest-bearing liabilities:Deposits
    
    
    (54
    )
    
    
    (4,207
    )
    
    
    (4,261
    )
    
    
    312
    
    
    
    (566
    )
    
    
    (254
    )Borrowings
    
    
    519
    
    
    
    (388
    )
    
    
    131
    
    
    
    1,846
    
    
    
    (1,382
    )
    
    
    464Total
    
    
    465
    
    
    
    (4,595
    )
    
    
    (4,130
    )
    
    
    2,158
    
    
    
    (1,948
    )
    
    
    210Net change in net interest income
    
    $
    912
    
    
    $
    1,485
    
    
    $
    2,397
    
    
    $
    1,482
    
    
    $
    1,095
    
    
    $
    2,577
 
 (1)
    
    There were two non-accruing loans totaling $335,000 at September 30, 2009, one non-accruing loan totaling $244,000 at
September 2008, and there were no non-accruing loans at September 2007. 33




---



##### 



Net Interest Income
  Interest Income
   Interest Expense
   Provision for Loan Losses
  34




---



##### 



Other Income
     Other Expenses
     Income Taxes
  Commitments and Off-Balance Sheet Arrangements
  35




---



##### 



Total AmountsCommitted(In Thousands)Letters of credit
    
    $
    579Commitments to originate loans
    
    
    18,407Unused portion of home equity lines of credit
    
    
    48,265Unused portion of commercial lines of credit
    
    
    3,747Undisbursed portion of construction loans in process
    
    
    1,744Total commitments
    
    $
    72,742
 36




---



##### 



Contractual Obligations
  Less Than
    
    
    1 to 3
    
    
    3 to 5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    Years(In Thousands)Lease agreements
    
    $
    657
    
    
    $
    125
    
    
    $
    257
    
    
    $
    138
    
    
    $
    137Borrowings
    
    
    309,046
    
    
    
    36,998
    
    
    
    79,564
    
    
    
    59,252
    
    
    
    133,232Certificates of deposit
    
    
    327,765
    
    
    
    201,343
    
    
    
    81,554
    
    
    
    44,868
    
    
    
    $
    637,468
    
    
    $
    238,466
    
    
    $
    161,375
    
    
    $
    104,258
    
    
    $
    133,369
 
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk .
 Asset and Liability Management
     37




---



##### 



1 Year
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5or less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(In Thousands)Interest-earning assets:Mortgage loans
    
    $
    56,451
    
    
    $
    57,738
    
    
    $
    46,036
    
    
    $
    185,977
    
    
    $
    346,202Commercial loans
    
    
    25,311
    
    
    
    6,470
    
    
    
    15,344
    
    
    
    12,222
    
    
    
    59,347Mortgage-backed securities
    
    
    53,857
    
    
    
    55,773
    
    
    
    27,329
    
    
    
    26,256
    
    
    
    163,215Consumer and other loans
    
    
    59,228
    
    
    
    18,564
    
    
    
    8,611
    
    
    
    11,185
    
    
    
    97,588Investment securities and other investments
    
    
    84,066
    
    
    
    21,601
    
    
    
    23,016
    
    
    
    5,555
    
    
    
    134,238Total interest-earning assets
    
    
    278,913
    
    
    
    160,146
    
    
    
    120,336
    
    
    
    241,195
    
    
    
    800,590Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,940
    
    
    
    2,940NOW and interest-bearing checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46,100
    
    
    
    46,100Consumer Money Market Deposit accounts
    
    
    17,615
    
    
    
    
    
    
    
    
    
    
    
    35,750
    
    
    
    53,365Business Money Market Deposit accounts
    
    
    18,050
    
    
    
    
    
    
    
    
    
    
    
    6,017
    
    
    
    24,067Certificate accounts
    
    
    201,343
    
    
    
    81,554
    
    
    
    44,868
    
    
    
    
    
    
    
    327,765Borrowed money
    
    
    36,998
    
    
    
    79,564
    
    
    
    59,252
    
    
    
    133,232
    
    
    
    309,046Total interest-bearing liabilities
    
    
    274,006
    
    
    
    161,118
    
    
    
    104,120
    
    
    
    224,039
    
    
    
    763,283Repricing GAP during the period
    
    $
    4,907
    
    
    $
    (972
    )
    
    $
    16,216
    
    
    $
    17,156
    
    
    $
    37,307Cumulative GAP
    
    $
    4,907
    
    
    $
    3,935
    
    
    $
    20,151
    
    
    $
    37,307Ratio of GAP during the period to total assets
    
    
    0.59
    %
    
    
    -0.12
    %
    
    
    1.95
    %
    
    
    2.07
    %Ratio of cumulative GAP to total assets
    
    
    0.59
    %
    
    
    0.47
    %
    
    
    2.43
    %
    
    
    4.49
    %
 38




---



##### 



Liquidity and Capital Resources
   Impact of Inflation and Changing Prices
   39




---



##### 



Item 8. Financial Statements and Supplementary Data .
 Report of Independent Registered Public Accounting Firm
 
     
 40




---



##### 



Consolidated Statements of Financial Condition
 September 30,(In thousands, except share data)
    
    2009
    
    
    2008AssetsCash and amounts due from depository institutions
    
    $
    3,222
    
    
    $
    2,217Interest bearing deposits
    
    
    6,220
    
    
    
    7,157Total cash and cash equivalents
    
    
    9,442
    
    
    
    9,374Investment securities held to maturity
(fair value  2009, $106,174; 2008, $78,973)
    
    
    105,194
    
    
    
    79,254Investment securities available-for-sale at fair value
    
    
    6,728
    
    
    
    854Mortgage-backed securities held to maturity
(fair value  2009, $169,210; 2008, $211,814)
    
    
    162,430
    
    
    
    213,933Mortgage-backed securities available-for-sale at fair value
    
    
    785
    
    
    
    758Loans receivable (net of allowance for loan losses 
2009, $2,094; 2008, $1,988
    
    
    498,391
    
    
    
    476,858Accrued interest receivable
    
    
    3,719
    
    
    
    3,799Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,574Foreclosed real estate
    
    
    747
    
    
    
    Office properties and equipment, net
    
    
    10,486
    
    
    
    9,769Prepaid expenses and other assets
    
    
    15,989
    
    
    
    14,502TOTAL ASSETS
    
    $
    830,007
    
    
    $
    825,675Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    466,601
    
    
    $
    425,513Short-term borrowings
    
    
    
    
    
    
    21,800Long-term debt
    
    
    309,046
    
    
    
    326,046Accrued interest payable
    
    
    1,606
    
    
    
    1,686Advances from borrowers for taxes and insurance
    
    
    1,445
    
    
    
    1,483Accounts payable and accrued expenses
    
    
    1,170
    
    
    
    1,938Total liabilities
    
    
    779,868
    
    
    
    778,466Commitments and contingencies (Notes 16 & 17)Stockholders Equity:Preferred Stock: $.01 par value;
12,500,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock: $.01 par value; 25,000,000
shares authorized; issued 3,921,177 shares: outstanding
2009 3,627,696 shares; 2008 3,567,934 shares
    
    
    39
    
    
    
    39Additional paid-in capital
    
    
    8,002
    
    
    
    7,993Treasury stock, at cost (2009, 293,481 shares; 2008, 353,243 shares)
    
    
    (4,202
    )
    
    
    (5,017
    )Retained earnings  partially restricted
    
    
    46,329
    
    
    
    44,235Accumulated other comprehensive loss
    
    
    (29
    )
    
    
    (41
    )Total stockholders equity
    
    
    50,139
    
    
    
    47,209TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    830,007
    
    
    $
    825,675
 See notes to consolidated financial statements.
 41




---



##### 



Consolidated Statements of Income
 Year Ended September 30,(In thousands, except share data)
    
    2009
    
    
    2008Interest Income:Interest and fees on mortgage loans
    
    $
    20,024
    
    
    $
    19,043Interest on mortgage-backed securities
    
    
    9,187
    
    
    
    10,088Interest on commercial loans
    
    
    3,096
    
    
    
    1,799Interest on consumer and other loans
    
    
    4,772
    
    
    
    5,719Interest on taxable investments
    
    
    2,986
    
    
    
    5,008Interest on tax-exempt investments
    
    
    1,267
    
    
    
    1,360Dividends on investment securities
    
    
    11
    
    
    
    59Total interest and dividend income
    
    
    41,343
    
    
    
    43,076Interest Expense:Interest on deposits
    
    
    10,957
    
    
    
    15,218Interest on borrowings
    
    
    13,929
    
    
    
    13,798Total interest expense
    
    
    24,886
    
    
    
    29,016Net Interest Income
    
    
    16,457
    
    
    
    14,060Provision for loan losses
    
    
    400
    
    
    
    85Net Interest Income, after Provision for Loan Losses
    
    
    16,057
    
    
    
    13,975Other Income:Customer service fees
    
    
    663
    
    
    
    633Impairment of equity securities
    
    
    (449
    )
    
    
    (252
    )Realized gains (losses) on securities
    
    
    (5
    )
    
    
    73Income on bank-owned life insurance
    
    
    502
    
    
    
    499Other income
    
    
    760
    
    
    
    777Total other income
    
    
    1,471
    
    
    
    1,730Other Expenses:Salaries and employee benefits
    
    
    6,219
    
    
    
    5,757Occupancy and equipment
    
    
    1,199
    
    
    
    1,105Deposit insurance premiums
    
    
    1,085
    
    
    
    56Data processing
    
    
    567
    
    
    
    602Other
    
    
    2,457
    
    
    
    2,574Total other expenses
    
    
    11,527
    
    
    
    10,094Income before Income Taxes
    
    
    6,001
    
    
    
    5,611Income tax expense
    
    
    1,285
    
    
    
    1,232Net Income
    
    $
    4,716
    
    
    $
    4,379Earnings Per Share:Basic
    
    $
    1.31
    
    
    $
    1.20Diluted
    
    $
    1.31
    
    
    $
    1.20Weighted Average Shares Outstanding:Basic
    
    
    3,598,662
    
    
    
    3,643,363Diluted
    
    
    3,610,569
    
    
    
    3,663,469
 See notes to consolidated financial statements.
 42




---



##### 



Consolidated Statements of Comprehensive Income
 Year Ended September 30,(In Thousands)
    
    2009
    
    
    2008Net Income
    
    $
    4,716
    
    
    $
    4,379Other Comprehensive IncomeUnrealized gain on securities available for sale, net of tax expense
2009, $6; 2008, $25
    
    
    12
    (1)
    
    
    48
    (1)Total Comprehensive Income
    
    $
    4,728
    
    
    $
    4,427
  2009
    
    
    2008(1) Disclosure of reclassification amount, net of tax for the years ended:Net unrealized loss arising during the year
    
    $
    (436
    )
    
    $
    (106
    )Reclassification adjustment for net losses included in net income
    
    
    454
    
    
    
    179$
    18
    
    
    $
    73Tax (expense) benefit
    
    
    (6
    )
    
    
    (25
    )Net unrealized gain (loss) on securities
    
    $
    12
    
    
    $
    48
 See notes to consolidated financial statements.
 43




---



##### 



Consolidated Statements of Stockholders Equity
 Common
    
    
    
    
    
    
    
    
    
    
    Retained
    
    
    AccumulatedStock
    
    
    
    
    
    
    Additional
    
    
    Earnings-
    
    
    Other
    
    
    
    
    
    
    TotalShares
    
    
    Common
    
    
    Paid-in
    
    
    Partially
    
    
    Comprehensive
    
    
    Treasury
    
    
    Stockholders(In thousands, except share data)
    
    Outstanding
    
    
    Stock
    
    
    Capital
    
    
    Restricted
    
    
    Income (Loss)
    
    
    Stock
    
    
    EquityBalance at September 30, 2007
    
    
    3,717,519
    
    
    $
    39
    
    
    $
    8,044
    
    
    $
    42,363
    
    
    $
    (89
    )
    
    $
    (3,316
    )
    
    $
    47,041Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,379
    
    
    
    
    
    
    
    
    
    
    
    4,379Dividends  $.69 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,507
    )
    
    
    
    
    
    
    
    
    
    
    (2,507
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Treasury stock purchased
    
    
    (205,358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,556
    )
    
    
    (2,556
    )Treasury stock delivered under ESOP
    
    
    8,000
    
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    101Treasury stock delivered under
dividend reinvestment plan
    
    
    42,773
    
    
    
    
    
    
    
    (93
    )
    
    
    
    
    
    
    
    
    
    
    646
    
    
    
    553Employee options exercised
    
    
    5,000
    
    
    
    
    
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    51Change in unrealized holding loss
on available-for-sale securities, net
of reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    48
    
    
    
    
    
    
    
    48Balance at September 30, 2008
    
    
    3,567,934
    
    
    $
    39
    
    
    $
    7,993
    
    
    $
    44,235
    
    
    $
    (41
    )
    
    $
    (5,017
    )
    
    $
    47,209Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,716
    
    
    
    
    
    
    
    
    
    
    
    4,716Dividends  $.73 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,622
    )
    
    
    
    
    
    
    
    
    
    
    (2,622
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133Treasury stock purchased
    
    
    (10,200
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (144
    )
    
    
    (144
    )Treasury stock delivered under
ESOP
    
    
    10,000
    
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    120Treasury stock delivered under
dividend reinvestment plan
    
    
    44,711
    
    
    
    
    
    
    
    (38
    )
    
    
    
    
    
    
    
    
    
    
    613
    
    
    
    575Employee options exercised
    
    
    15,251
    
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    
    
    
    
    209
    
    
    
    140Change in unrealized holding loss
on available-for-sale securities, net
of reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    12Balance at September 30, 2009
    
    
    3,627,696
    
    
    $
    39
    
    
    $
    8,002
    
    
    $
    46,329
    
    
    $
    (29
    )
    
    $
    (4,202
    )
    
    $
    50,139
 See notes to consolidated financial statements.
 44




---



##### 



Consolidated Statements of Cash Flows
 Year Ended September 30,(In Thousands)
    
    2009
    
    
    2008Operating Activities:Net Income
    
    $
    4,716
    
    
    $
    4,379Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    469
    
    
    
    523Provision for loan losses
    
    
    400
    
    
    
    85Realized (gains) losses on securities
    
    
    5
    
    
    
    (73
    )Loss on impairment of equity securities
    
    
    449
    
    
    
    252Loss on sale of foreclosed real estate
    
    
    18
    
    
    
    Amortization of deferred loan fees
    
    
    33
    
    
    
    9Net amortization of premiums and discounts
    
    
    142
    
    
    
    147Increase in cash surrender value of bank owned life insurance
    
    
    (502
    )
    
    
    (499
    )Compensation charge on stock options
    
    
    133
    
    
    
    99Changes in assets and liabilities which provided (used) cash:(Decrease) increase in accounts payable and accrued expenses
    
    
    (768
    )
    
    
    882(Increase) decrease in prepaid expenses and other assets
    
    
    (985
    )
    
    
    189Decrease in accrued interest receivable
    
    
    80
    
    
    
    248(Decrease) increase in accrued interest payable
    
    
    (80
    )
    
    
    130Net cash provided by operating activities
    
    
    4,110
    
    
    
    6,371Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    
    
    
    
    (61,835
    )Purchase of investment securities held to maturity
    
    
    (54,170
    )
    
    
    (20,997
    )Purchase of investment securities available-for-sale
    
    
    (6,421
    )
    
    
    Net purchase (redemption) of FHLB stock
    
    
    478
    
    
    
    (2,434
    )Proceeds from the sale of investment securities available-for-sale
    
    
    83
    
    
    
    442Proceeds from maturities of investment securities held to maturity
    
    
    28,339
    
    
    
    42,408Proceeds from sale of foreclosed real estate
    
    
    549
    
    
    
    Principal collected on mortgage-backed securities
    
    
    51,247
    
    
    
    49,168Principal collected on long-term loans
    
    
    129,752
    
    
    
    85,717Long-term loans originated or acquired
    
    
    (153,032
    )
    
    
    (143,616
    )Purchases of premises and equipment
    
    
    (1,186
    )
    
    
    (760
    )Net cash used in investing activities
    
    
    (4,361
    )
    
    
    (51,907
    )Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    31,024
    
    
    
    1,920Net increase (decrease) in certificates of deposit
    
    
    10,064
    
    
    
    (442
    )Cash dividends
    
    
    (2,047
    )
    
    
    (1,954
    )Net decrease in short-term borrowings
    
    
    (21,800
    )
    
    
    (9,700
    )Proceeds from long-term debt
    
    
    24,500
    
    
    
    113,000Repayment of long-term debt
    
    
    (41,500
    )
    
    
    (54,063
    )Acquisition of treasury stock
    
    
    (144
    )
    
    
    (2,556
    )Treasury stock delivered under employee stock plan
    
    
    260
    
    
    
    152Net increase in advances from borrowers for taxes and insurance
    
    
    (38
    )
    
    
    236Net cash provided by financing activities
    
    
    319
    
    
    
    46,593INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    68
    
    
    
    1,057CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,374
    
    
    
    8,317CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    9,442
    
    
    $
    9,374Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    24,966
    
    
    $
    28,886Income taxes
    
    
    1,203
    
    
    
    1,183Non-cash transfer of loans to foreclosed real estate
    
    
    1,314
    
    
    
    
 See notes to consolidated financial statements.
 45




---



##### 



Notes to Consolidated Financial Statements
 1. Nature of Operations and Organizational Structure
  2. Summary of Significant Accounting Policies
 Principles of Consolidation
 Use of Estimates in Preparation of the Consolidated Financial Statements
 Significant Group Concentrations of Credit Risk 
 Cash and Cash Equivalents
 Interest-Bearing Deposits in Banks
 Investment and Mortgage-Backed Securities
 Held to Maturity
 Available for Sale
  46




---



##### 



Loans
  Interest Income on Loans 
  Deferred Loan Fees 
 Allowance for Loan Losses
   47




---



##### 



Foreclosed Real Estate
 Office Properties and Equipment
 Federal Home Loan Bank Stock 
   48




---



##### 



Cash Surrender Value Of Bank Owned Life Insurance (BOLI)
 Income Taxes
 Transfers of Financial Assets
 Treasury Stock
 Accounting for Stock Options
  Year Ended September 30,2009
    
    2008Risk free interest rate of return
    
    
    3.20
    %
    
    
    3.59
    %Expected option life
    
    84 months
    
    
    84 monthsExpected volatility
    
    
    17
    %
    
    
    17
    %Expected dividends
    
    
    5.4
    %
    
    
    5.4
    %
  Earnings Per Share
 49




---



##### 



Year Ended September 30,2009
    
    2008Weighted average shares outstanding  basic
    
    
    3,598,662
    
    
    
    3,643,363Increase in shares due to dilutive stock options
    
    
    11,907
    
    
    
    20,106Weighted average shares outstanding  diluted
    
    
    3,610,569
    
    
    
    3,663,469
 Other Comprehensive Income
 Subsequent Events 
 Reclassifications
 Recent
Accounting Pronouncements The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles  A
Replacement of FASB Statement No. 162 , Generally
Accepted Accounting Standards. FASB Accounting Standards
Codification
    50




---



##### 




    
    Amend the other-than-temporary impairment guidance for debt securities to make the
guidance more operational and improve the, presentation and disclosure in the financial
statements. The new guidance specifies that if a company does not have the intent to
sell a debt security prior to recovery and its more likely than not that it will not
have to sell the debt security prior to recovery, the security would not be considered
other-than-temporary impaired unless there is a credit loss. The credit loss component
of an other-than-temporary impaired debt security must be determined based on the
entitys best estimate of cash flows expected to be collected. Other-than-temporary
impairments attributed to credit losses are charged to earnings.
    
    Provide additional guidance for estimating fair value when the volume and level of
activity for the asset and liability have significantly decreased and for identifying
circumstances that indicate a transaction is not orderly. The new guidance does not
prescribe a methodology for making significant adjustments to transactions or quoted
prices when estimating fair value in these situations but states that a change in
valuation technique or the use of multiple valuation techniques may be appropriate.
    
    Require companies to provide the same fair value of financial instruments
disclosures presently required on an annual basis on a quarterly interim basis.
  Accounting for Transfers of Financial Assets, an
amendment of FASB Statement No. 140. Transfers and Servicing Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R). Consolidation Consolidation of Variable Interest Entities (revised
December 2003)  an interpretation of ARB No. 51
 51




---



##### 



Fair Value Measurements and Disclosures (Topic 820):
Measuring Liabilities at Fair Value.
     3. INVESTMENT SECURITIES HELD TO MATURITY
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue 1 year or less
    
    $
    5,000
    
    
    $
    98
    
    
    $
    
    
    
    $
    5,098Due after 1 year through 5 years
    
    
    8,000
    
    
    
    34
    
    
    
    
    
    
    
    8,034Due after 5 years through 10 years
    
    
    10,996
    
    
    
    4
    
    
    
    (80
    )
    
    
    10,920Due after 10 years through 15 years
    
    
    56,175
    
    
    
    299
    
    
    
    (278
    )
    
    
    56,196Due after 15 years
    
    
    2,431
    
    
    
    178
    
    
    
    
    
    
    
    2,609Tax Exempt ObligationsDue after 5 years through 10 years
    
    
    3,898
    
    
    
    170
    
    
    
    
    
    
    
    4,068Due after 10 years through 15
years
    
    
    16,303
    
    
    
    708
    
    
    
    (3
    )
    
    
    17,008Due after 15 years
    
    
    2,391
    
    
    
    
    
    
    
    (150
    )
    
    
    2,241Total Investment Securities
    
    $
    105,194
    
    
    $
    1,491
    
    
    $
    (511
    )
    
    $
    106,174
 52




---



##### 



September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueU.S. Government AgenciesDue after 1 year through 5 years
    
    $
    5,000
    
    
    $
    67
    
    
    $
    
    
    
    $
    5,067Due after 5 years through 10 years
    
    
    2,000
    
    
    
    5
    
    
    
    
    
    
    
    2,005Due after 10 years through 15 years
    
    
    38,497
    
    
    
    11
    
    
    
    (341
    )
    
    
    38,167Due after 15 years
    
    
    8,818
    
    
    
    64
    
    
    
    (44
    )
    
    
    8,838Tax Exempt ObligationsDue after 10 years through 15 years
    
    
    21,544
    
    
    
    592
    
    
    
    (109
    )
    
    
    22,027Due after 15 years
    
    
    3,395
    
    
    
    
    
    
    
    (526
    )
    
    
    2,869Total Investment Securities
    
    $
    79,254
    
    
    $
    739
    
    
    $
    (1,020
    )
    
    $
    78,973
  12 Months or LongerLess than 12 Months
    
    
    
    
    
    
    Unrealized
    
    
    Total
    
    
    TotalFair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Unrealized Losses(In Thousands)US Government agencies
    
    $
    29,637
    
    
    $
    (358
    )
    
    $
    
    
    
    $
    
    
    
    $
    29,637
    
    
    $
    (358
    )Tax exempt obligations
    
    
    1,000
    
    
    
    (3
    )
    
    
    3,036
    
    
    
    (150
    )
    
    
    4,036
    
    
    
    (153
    )Total
    
    $
    30,637
    
    
    $
    (361
    )
    
    $
    3,036
    
    
    $
    (150
    )
    
    $
    33,673
    
    
    $
    (511
    )
   12 Months or LongerLess than 12 Months
    
    
    
    
    
    
    Unrealized
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Unrealized LossesUS Government agencies
    
    $
    34,501
    
    
    $
    (385
    )
    
    $
    
    
    
    $
    
    
    
    $
    34,501
    
    
    $
    (385
    )Tax exempt obligations
    
    
    4,502
    
    
    
    (298
    )
    
    
    1,675
    
    
    
    (337
    )
    
    
    6,177
    
    
    
    (635
    )Total
    
    $
    39,003
    
    
    $
    (683
    )
    
    $
    1,675
    
    
    $
    (337
    )
    
    $
    40,678
    
    
    $
    (1,020
    )
 4. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    355
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    311Money Market Mutual Funds
    
    
    6,417
    
    
    
    
    
    
    
    
    
    
    
    6,417Total Investment Securities
    
    $
    6,772
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    6,728
 53




---



##### 



September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gain
    
    
    Losses
    
    
    Fair ValueEquity Securities
    
    $
    877
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    842Money Market Mutual Funds
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    12Total Investment Securities
    
    $
    889
    
    
    $
    46
    
    
    $
    (81
    )
    
    $
    854
  Less than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesEquity Securities
    
    $
    104
    
    
    $
    (43
    )
    
    $
    74
    
    
    $
    (49
    )
    
    $
    178
    
    
    $
    (92
    )
    Less than 12 Months
    
    
12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesEquity Securities
    
    $
    258
    
    
    $
    (14
    )
    
    $
    339
    
    
    $
    (67
    )
    
    $
    597
    
    
    $
    (81
    )
  5. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    11,681
    
    
    $
    54
    
    
    $
    (271
    )
    
    $
    11,464FHLMC pass-through certificates
    
    
    65,005
    
    
    
    3,270
    
    
    
    
    
    
    
    68,275FNMA pass-through certificates
    
    
    85,744
    
    
    
    3,728
    
    
    
    (1
    )
    
    
    89,471Total mortgage-backed securities
    
    $
    162,430
    
    
    $
    7,052
    
    
    $
    (272
    )
    
    $
    169,210
 54




---



##### 



September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueCollateralized mortgage obligations
    
    $
    14,708
    
    
    $
    8
    
    
    $
    (624
    )
    
    $
    14,092FHLMC pass-through certificates
    
    
    88,594
    
    
    
    283
    
    
    
    (826
    )
    
    
    88,051FNMA pass-through certificates
    
    
    110,431
    
    
    
    99
    
    
    
    (1,061
    )
    
    
    109,469GNMA pass-through certificates
    
    
    200
    
    
    
    2
    
    
    
    
    
    
    
    202Total Mortgage-Backed Securities
    
    $
    213,933
    
    
    $
    392
    
    
    $
    (2,511
    )
    
    $
    211,814
  Less than 12 Months
    
    
12 Months or Longer
    
    
    Total
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized LossesMortgage-backed
securities
held to maturity
    
    $
    2,264
    
    
    $
    (49
    )
    
    $
    6,576
    
    
    $
    (223
    )
    
    $
    8,840
    
    
    $
    (272
    )
   TotalLess than 12 Months
    
    
    12 Months or Longer
    
    
    Total
    
    
    Unrealized(In Thousands)
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    Unrealized Losses
    
    
    Fair Value
    
    
    LossesMortgage-backed
securities
held to maturity
    
    $
    159,415
    
    
    $
    (2,412
    )
    
    $
    4,615
    
    
    $
    (99
    )
    
    $
    164,030
    
    
    $
    (2,511
    )
  55




---



##### 



6. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
  September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    
    
    
    $
    785Total mortgage-backed securities
    
    $
    785
    
    
    $
    
    
    
    $
    
    
    
    $
    785
 September 30, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueFNMA pass-through certificates
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758Total mortgage-backed securities
    
    $
    785
    
    
    $
    
    
    
    $
    (27
    )
    
    $
    758
 7. LOANS RECEIVABLE
  September 30,(In Thousands)
    
    2009
    
    
    2008Residential Mortgages
    
    $
    345,061
    
    
    $
    336,149Construction
    
    
    2,912
    
    
    
    8,346Lot Loans
    
    
    1,141
    
    
    
    1,167Home Equity
    
    
    92,434
    
    
    
    92,383Commercial Mortgages
    
    
    48,958
    
    
    
    37,823Commercial Business Loans
    
    
    10,389
    
    
    
    6,584Consumer Non-Real Estate
    
    
    2,242
    
    
    
    1,955Total
    
    
    503,137
    
    
    
    484,407Undisbursed portion of loans in process
    
    
    (1,873
    )
    
    
    (5,109
    )Deferred loan fees
    
    
    (779
    )
    
    
    (452
    )Allowance for loan losses
    
    
    (2,094
    )
    
    
    (1,988
    )Loans Receivable  net
    
    $
    498,391
    
    
    $
    476,858
   56




---



##### 



Year Ended September 30,(In Thousands)
    
    2009
    
    
    2008Balance, beginning of year
    
    $
    1,988
    
    
    $
    1,933Provision of loan losses
    
    
    400
    
    
    
    85Recoveries
    
    
    27
    
    
    
    10Charge offs
    
    
    (321
    )
    
    
    (40
    )Balance, end of year
    
    $
    2,094
    
    
    $
    1,988
  8. OFFICE PROPERTIES AND EQUIPMENT
  September 30,(In Thousands)
    
    2009
    
    
    2008Land
    
    $
    1,159
    
    
    $
    1,159Buildings
    
    
    7,349
    
    
    
    7,340Branch office in construction
    
    
    3,367
    
    
    
    2,430Furniture, fixtures and equipment
    
    
    4,499
    
    
    
    4,251Automobiles
    
    
    17
    
    
    
    25Total
    
    
    16,391
    
    
    
    15,205Less accumulated depreciation
    
    
    (5,905
    )
    
    
    (5,436
    )Net
    
    $
    10,486
    
    
    $
    9,769
  57




---



##### 



9. DEPOSITS
  September 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    Interest(Dollars in Thousands)
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateNon-interest bearing checking
accounts
    
    $
    12,364
    
    
    
    0.00
    %
    
    $
    10,963
    
    
    
    0.00
    %NOW accounts
    
    
    16,818
    
    
    
    0.12
    
    
    
    14,315
    
    
    
    0.25Interest bearing checking accounts
    
    
    29,282
    
    
    
    0.44
    
    
    
    27,888
    
    
    
    1.13Money market deposit accounts
    
    
    77,432
    
    
    
    1.12
    
    
    
    52,005
    
    
    
    1.47Passbook and club accounts
    
    
    2,940
    
    
    
    0.91
    
    
    
    2,641
    
    
    
    1.00Certificate of deposit accounts
    
    
    327,765
    
    
    
    2.82
    
    
    
    317,701
    
    
    
    3.49Total Deposits
    
    $
    466,601
    
    
    
    2.20
    %
    
    $
    425,513
    
    
    
    2.87
    %
  For the year ended September 30: 2010
    
    $
    201,3432011
    
    
    52,6522012
    
    
    28,9022013
    
    
    27,7352014
    
    
    17,133Total
    
    $
    327,765
   Year Ended September 30,(In Thousands)
    
    2009
    
    
    2008NOW, interest-bearing checking and MMDA accounts
    
    $
    961
    
    
    $
    2,212Passbook and club accounts
    
    
    172
    
    
    
    31Certificate accounts
    
    
    9,824
    
    
    
    12,975Total
    
    $
    10,957
    
    
    $
    15,218
 58




---



##### 



10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
   WeightedAmount
    
    
    Average Rate2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in Thousands)FHLB long-term debt:Fixed rate advances maturing:2010
    
    $
    30,358
    
    
    
    
    
    
    
    4.37
    %2011
    
    
    16,849
    
    
    
    
    
    
    
    4.34
    %2012
    
    
    55,793
    
    
    
    
    
    
    
    4.49
    %2013
    
    
    22,189
    
    
    
    
    
    
    
    3.62
    %2014
    
    
    14,856
    
    
    
    
    
    
    
    3.33
    %2015
    
    
    19,031
    
    
    
    
    
    
    
    3.82
    %2016
    
    
    10,000
    
    
    
    
    
    
    
    4.71
    %Maturing after 9/30/2016:
    
    
    89,970
    
    
    
    
    
    
    
    4.27
    %Total FHLB long-term debt
    
    
    259,046
    
    
    
    276,046
    
    
    
    4.21
    %
    
    
    4.25
    %Other long-term debt:Fixed rate advances maturing:2013
    
    
    15,000
    
    
    
    
    
    
    
    4.55
    %2014
    
    
    15,000
    
    
    
    
    
    
    
    4.80
    %Maturing after 9/30/2015:
    
    
    10,000
    
    
    
    
    
    
    
    4.37
    %Total other long-term debt fixed
    
    
    40,000
    
    
    
    40,000
    
    
    
    4.60
    %
    
    
    4.27
    %Adjustable long-term debt maturing:Maturing after 9/30/2015:
    
    
    10,000
    
    
    
    10,000
    
    
    
    5.78
    %
    
    
    4.37
    %Total other long-term debt
    
    $
    50,000
    
    
    $
    50,000
    
    
    
    4.84
    %
    
    
    4.29
    %Total Long-term Debt
    
    $
    309,046
    
    
    $
    326,046
    
    
    
    4.31
    %
    
    
    4.26
    %
  11. INCOME TAXES
  59




---



##### 



Year Ended September 30,2009
    
    
    2008Percentage
    
    
    
    
    
    
    Percentageof Pretax
    
    
    
    
    
    
    of Pretax(Dollars in Thousands)
    
    Amount
    
    
    Income
    
    
    Amount
    
    
    IncomeAt statutory rate
    
    $
    2,041
    
    
    
    34.0
    %
    
    $
    1,908
    
    
    
    34.0
    %Adjustments resulting from:Tax-exempt income
    
    
    (585
    )
    
    
    (9.8
    )
    
    
    (597
    )
    
    
    (10.6
    )Other
    
    
    (171
    )
    
    
    (2.8
    )
    
    
    (79
    )
    
    
    (1.4
    )Expense per consolidated
statements of income
    
    $
    1,285
    
    
    
    21.4
    %
    
    $
    1,232
    
    
    
    22.0
    %
  Year Ended September 30,(In thousands)
    
    2009
    
    
    2008Current
    
    $
    1,417
    
    
    $
    1,273Deferred
    
    
    (132
    )
    
    
    (41
    )Total Income Tax Expense
    
    $
    1,285
    
    
    $
    1,232
  September 30,(In thousands)
    
    2009
    
    
    2008Deferred Tax Assets:Deferred Loan Fees
    
    $
    20
    
    
    $
    37Allowance for Loan Losses
    
    
    712
    
    
    
    676Unrealized loss on investment securities
    
    
    15
    
    
    
    21Non-deductible capital losses
    
    
    89
    
    
    
    Securities impairment
    
    
    156
    
    
    
    86Other
    
    
    29
    
    
    
    32Sub-Total
    
    
    1,021
    
    
    
    852Deferred Tax Liabilities:Properties and equipment
    
    
    (545
    )
    
    
    (501
    )Sub-Total
    
    
    (545
    )
    
    
    (501
    )Total
    
    $
    476
    
    
    $
    351
 12. REGULATORY CAPITAL REQUIREMENTS
  60




---



##### 



To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(Dollars in Thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAt September 30, 2009Tier 1 Capital (to assets)
    
    $
    50,149
    
    
    
    6.06
    %
    
    $
    33,103
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    50,149
    
    
    
    11.26
    %
    
    
    17,809
    
    
    
    4.00
    %
    
    
    26,714
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    52,242
    
    
    
    11.73
    %
    
    
    35,618
    
    
    
    8.00
    %
    
    
    44,523
    
    
    
    10.00
    %At September 30, 2008Tier 1 Capital (to assets)
    
    $
    47,191
    
    
    
    5.69
    %
    
    $
    33,167
    
    
    
    4.00
    %
    
    $
    41,459
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    47,191
    
    
    
    10.97
    %
    
    
    17,203
    
    
    
    4.00
    %
    
    
    25,804
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    49,179
    
    
    
    11.44
    %
    
    
    34,406
    
    
    
    8.00
    %
    
    
    43,007
    
    
    
    10.00
    %
  13. RETIREMENT SAVINGS PLANS
  14. STOCK OPTIONS
    61




---



##### 



Year Ended September 30,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageOptions
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of year
    
    
    345,909
    
    
    $
    14.97
    
    
    
    282,349
    
    
    $
    15.54Exercised
    
    
    (15,250
    )
    
    
    9.22
    
    
    
    (5,000
    )
    
    
    8.87Canceled
    
    
    
    
    
    
    
    
    
    
    (10,918
    )
    
    
    15.61Granted
    
    
    74,612
    
    
    
    12.59
    
    
    
    79,478
    
    
    
    12.50Outstanding, end of year
    
    
    405,271
    
    
    $
    14.75
    
    
    
    345,909
    
    
    $
    14.97Options exercisable, end of year
    
    
    152,066
    
    
    $
    14.67
    
    
    
    145,666
    
    
    $
    14.45
  WeightedExercise
    
    
    Weighted
    
    
    AverageNumber of
    
    
    
    
    Price
    
    
    Average Remaining
    
    
    Exercise PriceOption Shares
    
    
    
    
    Range
    
    
    Contractual Life
    
    
    per Share31,882
    
    
    
    
    $
    8.10-12.00
    
    
    
    1.93
    
    
    $
    9.56181,306
    
    
    
    
    
    12.01-16.00
    
    
    
    7.86
    
    
    
    12.61192,083
    
    
    
    
    
    16.01-19.13
    
    
    
    6.08
    
    
    
    17.63405,271
    
    
    
    
    $
    8.10-19.13
    
    
    
    6.55
    
    
    $
    14.75
     15. COMMITMENTS
  62




---



##### 



Fiscal Year
    
    Rental Amount2010
    
    $
    124,6972011
    
    
    126,0202012
    
    
    130,8882013
    
    
    137,7022014
    
    
    137,702Total
    
    $
    657,009
 16. LEGAL CONTINGENCIES
  17. CONVERSION TO A STOCK SAVINGS BANK
  18. FAIR VALUE MEASUREMENTS AND DISCLOSURES
   63




---



##### 



(Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant
    
    
    (Level 3)Active Markets
    
    
    Other
    
    
    SignificantSeptember 30,
    
    
    for Identical
    
    
    Observable
    
    
    UnobservableDescription
    
    2009
    
    
    Assets
    
    
    Inputs
    
    
    InputsInvestment securities available for sale
    
    $
    6,728
    
    
    $
    6,728
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    785
    
    
    
    
    
    
    
    785
    
    
    
    Total
    
    $
    7,513
    
    
    $
    6,728
    
    
    $
    785
    
    
    $
    
   Cash and Cash Equivalents (Carried at Cost)
  Securities
  Loans Receivable (Carried at Cost)
  64




---



##### 



Federal Home Loan Bank Stock (Carried at Cost)
  Accrued Interest Receivable and Payable (Carried at Cost)
  Deposit Liabilities (Carried at Cost)
  Borrowings (Carried at Cost)
  Off-Balance Sheet financial Instruments (Disclosed at Cost)
   65




---



##### 



September 30,2009
    
    2008Carrying
    
    Estimated Fair
    
    Carrying
    
    Estimated Fair(In Thousands)
    
    Amount
    
    Value
    
    Amount
    
    ValueAssets:Cash and cash equivalents
    
    $
    9,442
    
    
    $
    9,442
    
    
    $
    9,374
    
    
    $
    9,374Investment securities held to maturity
    
    
    105,194
    
    
    
    106,174
    
    
    
    79,254
    
    
    
    78,973Investment securities available-for-sale
    
    
    6,728
    
    
    
    6,728
    
    
    
    854
    
    
    
    854Mortgage-backed securities held to maturity
    
    
    162,430
    
    
    
    169,210
    
    
    
    213,933
    
    
    
    211,814Mortgage-backed securities available-for-sale
    
    
    785
    
    
    
    785
    
    
    
    758
    
    
    
    758Loans receivable  net
    
    
    498,391
    
    
    
    512,512
    
    
    
    476,858
    
    
    
    474,411Federal Home Loan Bank stock
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,574
    
    
    
    16,574Accrued interest receivable
    
    
    3,719
    
    
    
    3,719
    
    
    
    3,799
    
    
    
    3,799Liabilities:Checking, passbook, club and NOW deposit accounts
    
    
    61,404
    
    
    
    61,404
    
    
    
    55,807
    
    
    
    55,807Money Market deposit accounts
    
    
    77,432
    
    
    
    77,432
    
    
    
    52,005
    
    
    
    52,005Certificate of deposit accounts
    
    
    327,765
    
    
    
    332,733
    
    
    
    317,701
    
    
    
    318,929Borrowings
    
    
    309,046
    
    
    
    331,330
    
    
    
    347,846
    
    
    
    357,376Accrued interest payable
    
    
    1,606
    
    
    
    1,606
    
    
    
    1,686
    
    
    
    1,686Off balance sheet financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 Limitations
   66




---



##### 



19. PARENT COMPANY CONDENSED FINANCIAL INFORMATION
  Condensed Statements of Financial Condition
 September 30,2009
    
    
    2008AssetsCash
    
    $
    31
    
    
    $
    47Investment in subsidiary
    
    
    50,589
    
    
    
    47,618Total Assets
    
    $
    50,620
    
    
    $
    47,665Liabilities & Stockholders EquityOther liabilities
    
    $
    481
    
    
    $
    456Stockholders equity
    
    
    50,139
    
    
    
    47,209Total Liabilities & Stockholders Equity
    
    $
    50,620
    
    
    $
    47,665
 Condensed Statements of Income:
 For the Year Ended September 30,2009
    
    
    2008Equity in income of subsidiary
    
    $
    5,169
    
    
    $
    4,788Other expense
    
    
    453
    
    
    
    409Net income
    
    $
    4,716
    
    
    $
    4,379
 Condensed Statements of Cash Flows
 For the Year Ended September 30,2009
    
    
    2008Net income
    
    $
    4,716
    
    
    $
    4,379(Decrease) increase in other liabilities
    
    
    (14
    )
    
    
    (10
    )Income of Harleysville Savings Bank
    
    
    (5,169
    )
    
    
    (4,788
    )Net cash used by operating activities
    
    
    (467
    )
    
    
    (419
    )Investing activities:Dividends received from subsidiary
    
    
    2,382
    
    
    
    4,629Net cash provided by investing activities
    
    
    2,382
    
    
    
    4,629Financing activities:Acquisition of treasury stock
    
    
    (144
    )
    
    
    (2,556
    )Issuance of treasury stock
    
    
    260
    
    
    
    152Dividends paid
    
    
    (2,047
    )
    
    
    (1,954
    )Net cash used in financing activities
    
    
    (1,931
    )
    
    
    (4,358
    )Net increase (decrease) in cash and cash equivalents
    
    
    (16
    )
    
    
    (148
    )Cash and cash equivalents at the beginning of the period
    
    
    47
    
    
    
    195Cash and cash equivalents at the end of the period
    
    $
    31
    
    
    $
    47
 67




---



##### 



20. Quarterly Financial Data (Unaudited)
  2009
    
    
    20081st
    
    
    2nd
    
    
    3rd
    
    
    4th
    
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4th(In Thousands)
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTRInterest Income
    
    $
    10,726
    
    
    $
    10,504
    
    
    $
    9,973
    
    
    $
    10,140
    
    
    $
    10,501
    
    
    $
    10,722
    
    
    $
    10,812
    
    
    $
    11,041Interest Expense
    
    
    6,541
    
    
    
    6,147
    
    
    
    6,128
    
    
    
    6,070
    
    
    
    7,631
    
    
    
    7,519
    
    
    
    7,056
    
    
    
    6,810Net Interest Income
    
    
    4,185
    
    
    
    4,357
    
    
    
    3,845
    
    
    
    4,070
    
    
    
    2,870
    
    
    
    3,203
    
    
    
    3,756
    
    
    
    4,231Provision for loan losses
    
    
    100
    
    
    
    100
    
    
    
    90
    
    
    
    110
    
    
    
    
    
    
    
    5
    
    
    
    35
    
    
    
    45Net interest income after
provision for loan losses
    
    
    4,085
    
    
    
    4,257
    
    
    
    3,755
    
    
    
    3,960
    
    
    
    2,870
    
    
    
    3,198
    
    
    
    3,721
    
    
    
    4,186Impairment of equity securities
    
    
    
    
    
    
    449
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    252
    
    
    
    Realize net gains(losses)
on securities
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    69Other Income
    
    
    471
    
    
    
    463
    
    
    
    460
    
    
    
    531
    
    
    
    499
    
    
    
    463
    
    
    
    453
    
    
    
    494Other expense
    
    
    2,754
    
    
    
    2,819
    
    
    
    3,113
    
    
    
    2,840
    
    
    
    2,386
    
    
    
    2,425
    
    
    
    2,554
    
    
    
    2,729Income before income taxes
    
    
    1,802
    
    
    
    1,461
    
    
    
    1,102
    
    
    
    1,637
    
    
    
    983
    
    
    
    1,240
    
    
    
    1,368
    
    
    
    2,020Income tax expense
    
    
    426
    
    
    
    258
    
    
    
    246
    
    
    
    355
    
    
    
    182
    
    
    
    206
    
    
    
    332
    
    
    
    512Net income
    
    $
    1,376
    
    
    $
    1,203
    
    
    $
    856
    
    
    $
    1,282
    
    
    $
    801
    
    
    $
    1,034
    
    
    $
    1,036
    
    
    $
    1,508Per Common Share:Earnings per share  basic
    
    $
    0.38
    
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.35
    
    
    $
    0.22
    
    
    $
    0.28
    
    
    $
    0.29
    
    
    $
    0.42Earnings per share  diluted
    
    $
    0.38
    
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.35
    
    
    $
    0.21
    
    
    $
    0.28
    
    
    $
    0.29
    
    
    $
    0.42
  68




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##### 



Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
  
 Item 9A(T). Controls and Procedures
   Report of Managements Assessment of Internal Control over Financial Reporting
  
    
    maintain records that accurately reflect the companys transactions;
    
    prepare financial statement and footnote disclosures in accordance with GAAP that can be
relied upon by external users;
    
    prevent and detect unauthorized acquisition, use or disposition of the companys assets
that could have a material effect on the financial statements.
 Internal Control-Integrated Framework
   69




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##### 



/s/ Ronald B. Geib

President and Chief Executive Officer
    
    
    
    /s/ Brendan J. McGill

Chief Financial Officer
 
 Item 9B. Other Information .
  70




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##### 



PART III
 
 Item 10. Directors, Executive Officers and Corporate Governance .
   
 Item 11. Executive Compensation .
  
 Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
  
 Item 13. Certain Relationships and Related Transactions and Directors Independence .
  
 Item 14. Principal Accounting Fees and Services .
  71




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##### 



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
           No.
    
    Description
    
    Location3.1
    
    Amended and Restated Articles of Incorporation
    
    
    (1
    )3.2
    
    Amended and Restated Bylaws
    
    
    (1
    )4.0
    
    Common Stock Certificate
    
    
    (2
    )10.1
    
    1995 Stock Option Plan*
    
    
    (3
    )10.2
    
    Amended and Restated 2000 Stock Option Plan*
    
    
    (4
    )10.3
    
    Amended and Restated 2005 Stock Option Plan*
    
    
    (4
    )10.4
    
    Profit Sharing Incentive Plan*
    
    
    (3
    )10.5
    
    Amended and Restated Employment Agreement between the Company,
the Bank and Ronald B. Geib*
    
    
    (4
    )10.6
    
    Form of Change in Control Agreement among Harleysville Savings Financial
Corporation, Harleysville Savings Bank and each of Brendan J. McGill, Stephen J.
Kopenhaver, Adrian D. Gordon and Sheri Strouse*
    
    
    (5
    )22.0
    
    Subsidiaries of the Registrant  Reference is made to Item 1. Business
- Subsidiaries of this Form 10-K for the required information
    
    
    23.1
    
    Consent of ParenteBeard LLC
    
    Filed herewith31.1
    
    Certification of Chief Executive Officer
    
    Filed herewith31.2
    
    Certification of Chief Financial Officer
    
    Filed herewith32.0
    
    Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer
    
    Filed herewith
 
 *
    
    Denotes management compensation plan or arrangement.(1)
    
    Incorporated herein by reference to the Companys Current Report on Form 8-K filed with the
Securities and Exchange Commission (SEC) on August 17, 2007.(2)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the SEC on
February 25, 2000.(3)
    
    Incorporated herein by reference to the Companys Annual Report on Form 10-K for the year
ended September 30, 2003, filed with the SEC on December 23, 2003.(4)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the SEC on
November 21, 2008.(5)
    
    Incorporated by reference to the Companys Current Report on Form 8-K filed with the SEC on
May 21, 2009.(b)
    
    ExhibitsThe exhibits listed under (a)(3) of this Item 15 are filed herewith.(c)
    
    Reference is made to (a)(2) of this Item 15. 72




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##### 



SIGNATURES
  HARLEYSVILLE SAVINGS
FINANCIAL CORPORATIONDecember 18, 2009
    By:
    /s/ Ronald B. GeibRonald B. GeibPresident and Chief Executive Officer  Name
    
    Title
    
    Date/s/ Edward J. Molnar

Edward J. Molnar
    
    Chairman of the Board
    
    December 18, 2009/s/ Ronald B. Geib

Ronald B. Geib
    
    President and Chief Executive Officer
(principal
executive officer)
    
    December 18, 2009/s/ Brendan J. McGill

Brendan J. McGill
    
    Executive Vice President, Treasurer
and Chief Financial
Officer

(principal financial and
principal
accounting officer)
    
    December 18, 2009/s/ Sanford L. Alderfer

Sanford L. Alderfer
    
    Director
    
    December 18, 2009/s/ Mark R. Cummins

Mark R. Cummins
    
    Director
    
    December 18, 2009/s/ Thomas D. Clemens

Thomas D. Clemens
    
    Director
    
    December 18, 2009
 73




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##### 



Name
    
    Title
    
    Date/s/ Charlotte A. Hunsberger

Charlotte A. Hunsberger
    
    Director
    
    December 18, 2009/s/ George W. Meschter

George W. Meschter
    
    Director
    
    December 18, 2009/s/ James L. Rittenhouse

James L. Rittenhouse
    
    Director
    
    December 18, 2009
 74