##### Table of Contents



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, 2010
 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
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED SEPTEMBER 30, 2010
 TABLE OF CONTENTS
 PagePART IItem 1.Business
    
    
    1Item 1A.Risk Factors
    
    
    27Item 1B.Unresolved Staff Comments
    
    
    27Item 2.Properties
    
    
    28Item 3.Legal Proceedings
    
    
    28Item 4.[Reserved]
    
    
    28PART IIItem 5.Market for the Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    29Item 6.Selected Financial Data
    
    
    30Item 7.Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    31Item 7A.Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 8.Financial Statements and Supplementary Data
    
    
    41Item 9.Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    69Item 9A.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
    
    
    72Item 14.Principal Accounting Fees and Services
    
    
    72PART IVItem 15.Exhibits and Financial Statement Schedules
    
    
    73SIGNATURES
    
    
    74EX 23-1EX-31.1EX-31.1EX-32
  i




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##### Table of Contents



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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##### Table of Contents



Competition
    Lending Activities
 Loan Portfolio Composition.
 2




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##### Table of Contents



As of September 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(Dollars in Thousands)Real estate loans:ResidentialSingle-family
    
    $
    336,081
    
    
    
    65.0
    %
    
    $
    343,155
    
    
    
    68.2
    %
    
    $
    333,885
    
    
    
    68.9
    %
    
    $
    302,420
    
    
    
    71.3
    %
    
    $
    283,745
    
    
    
    72.2
    %Multi-family
    
    
    1,807
    
    
    
    0.3
    
    
    
    1,997
    
    
    
    0.4
    
    
    
    2,392
    
    
    
    0.5
    
    
    
    2,589
    
    
    
    0.6
    
    
    
    2,933
    
    
    
    0.7Construction
    
    
    4,752
    
    
    
    0.9
    
    
    
    2,912
    
    
    
    0.6
    
    
    
    8,346
    
    
    
    1.7
    
    
    
    6,093
    
    
    
    1.4
    
    
    
    6,987
    
    
    
    1.8Lot loans
    
    
    1,986
    
    
    
    0.4
    
    
    
    1,141
    
    
    
    0.2
    
    
    
    1,167
    
    
    
    0.2
    
    
    
    483
    
    
    
    0.1
    
    
    
    626
    
    
    
    0.2Home equity
    
    
    90,511
    
    
    
    17.5
    
    
    
    92,343
    
    
    
    18.4
    
    
    
    92,254
    
    
    
    19.1
    
    
    
    95,453
    
    
    
    22.5
    
    
    
    95,865
    
    
    
    24.4Commercial real estate
    
    
    75,450
    
    
    
    14.6
    
    
    
    54,341
    
    
    
    10.8
    
    
    
    37,799
    
    
    
    7.8
    
    
    
    12,869
    
    
    
    3.0
    
    
    
    922
    
    
    
    0.2Total real estate loans
    
    
    510,587
    
    
    
    98.7
    %
    
    
    495,889
    
    
    
    98.6
    %
    
    
    475,843
    
    
    
    98.2
    %
    
    
    419,907
    
    
    
    99.0
    %
    
    
    391,078
    
    
    
    99.5
    %Non-real estate loans:Commercial business loans
    
    
    4,327
    
    
    
    0.8
    
    
    
    4,982
    
    
    
    1.0
    
    
    
    6,584
    
    
    
    1.4
    
    
    
    2,440
    
    
    
    0.6
    
    
    
    
    
    
    
    0.0Consumer
non-real estate loans
    
    
    1,980
    
    
    
    0.5
    
    
    
    2,242
    
    
    
    0.4
    
    
    
    1,955
    
    
    
    0.4
    
    
    
    1,881
    
    
    
    0.4
    
    
    
    1,815
    
    
    
    0.5Total consumer loans
    
    
    6,307
    
    
    
    1.3
    %
    
    
    7,224
    
    
    
    1.4
    %
    
    
    8,539
    
    
    
    1.8
    %
    
    
    4,321
    
    
    
    1.0
    %
    
    
    1,815
    
    
    
    0.5
    %Total loans receivable
    
    
    516,894
    
    
    
    100.0
    %
    
    
    503,113
    
    
    
    100.0
    %
    
    
    484,382
    
    
    
    100.0
    %
    
    
    424,228
    
    
    
    100.0
    %
    
    
    392,893
    
    
    
    100.0
    %Less:Loans in process
    
    
    (3,426
    )
    
    
    
    
    
    
    (1,873
    )
    
    
    
    
    
    
    (5,108
    )
    
    
    
    
    
    
    (2,794
    )
    
    
    
    
    
    
    (4,941
    )Deferred loan fees
    
    
    (871
    )
    
    
    
    
    
    
    (755
    )
    
    
    
    
    
    
    (428
    )
    
    
    
    
    
    
    (448
    )
    
    
    
    
    
    
    (546
    )Allowance for loan losses
    
    
    (2,504
    )
    
    
    
    
    
    
    (2,094
    )
    
    
    
    
    
    
    (1,988
    )
    
    
    
    
    
    
    (1,933
    )
    
    
    
    
    
    
    (1,956
    )Total loans receivable net
    
    $
    510,093
    
    
    
    
    
    
    $
    498,391
    
    
    
    
    
    
    $
    476,858
    
    
    
    
    
    
    $
    419,053
    
    
    
    
    
    
    $
    385,450
 3




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##### Table of Contents



Contractual Maturities
 Principal Balance
    
    
    Principal Repayments Contractually Due in Year(s) Ended September 30,at September 30,
    
    
    
    
    
    
    
    
    
    
    2013-
    
    
    
    
    
    
    
    
    
    2025-and2010
    
    
    2011
    
    
    2012
    
    
    2015
    
    
    2016-2019
    
    
    2020-2024
    
    
    Thereafter(In Thousands)Residential real estate loans:Single-family
    
    $
    336,081
    
    
    $
    5,040
    
    
    $
    5,376
    
    
    $
    18,145
    
    
    $
    41,330
    
    
    $
    59,138
    
    
    $
    207,052Multi-family
    
    
    1,807
    
    
    
    27
    
    
    
    29
    
    
    
    98
    
    
    
    222
    
    
    
    318
    
    
    
    1,113Construction
    
    
    4,752
    
    
    
    71
    
    
    
    76
    
    
    
    257
    
    
    
    585
    
    
    
    836
    
    
    
    2,927Lot loans
    
    
    1,986
    
    
    
    107
    
    
    
    117
    
    
    
    401
    
    
    
    900
    
    
    
    461
    
    
    
    Mortgage-backed Securities
    
    
    131,628
    
    
    
    1,974
    
    
    
    2,238
    
    
    
    7,371
    
    
    
    16,585
    
    
    
    23,298
    
    
    
    80,162Home equity lines of credit
    
    
    9,511
    
    
    
    8,786
    
    
    
    9,330
    
    
    
    17,301
    
    
    
    41,485
    
    
    
    13,609
    
    
    
    Commercial real estate
    
    
    75,450
    
    
    
    2,717
    
    
    
    2,943
    
    
    
    10,339
    
    
    
    23,922
    
    
    
    35,529
    
    
    
    Commercial business loans
    
    
    4,327
    
    
    
    156
    
    
    
    61
    
    
    
    402
    
    
    
    37
    
    
    
    433
    
    
    
    3,238Consumer and other loans
    
    
    1,980
    
    
    
    244
    
    
    
    261
    
    
    
    906
    
    
    
    446
    
    
    
    123
    
    
    
    Total(1)
    
    $
    648,522
    
    
    $
    19,122
    
    
    $
    20,431
    
    
    $
    55,220
    
    
    $
    125,512
    
    
    $
    133,745
    
    
    $
    294,492
 
 (1)
    
    With respect to the $629.5 million of loans with principal maturities contractually due after
September 30, 2011, $569.2 million have fixed rates of interest and $60.3 million have
adjustable or floating rates of interest.   Origination, Purchase and Sale of Loans.
  4




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##### Table of Contents



Year Ended September 30,2010
    
    
    2009(In Thousands)Real estate loan originations:Residential:Single-family
    
    $
    55,744
    
    
    $
    65,740Multi-family
    
    
    
    
    
    
    Construction
    
    
    8,268
    
    
    
    12,685Lot loans
    
    
    
    
    
    
    Home equity
    
    
    35,098
    
    
    
    38,217Commercial real estate
    
    
    31,076
    
    
    
    29,966Commercial business loans
    
    
    4,327
    
    
    
    5,508Consumer non-real estate loans (1)
    
    
    671
    
    
    
    916Total loan originations
    
    
    135,184
    
    
    
    153,032Purchases of mortgage-backed securities
    
    
    14,986
    
    
    
    Total loan originations, and purchases
    
    
    150,170
    
    
    
    153,032Principal loan and mortgage-backed securities repayments
    
    
    168,848
    
    
    
    180,999Sales of loans and mortgage-backed securities
    
    
    
    
    
    
    1,905Total principal repayments and sales
    
    
    168,848
    
    
    
    182,904Net increase in loans and mortgage-backed securities
    
    $
    (18,678
    )
    
    $
    (29,872
    )
 
 (1)
    
    Includes installment vehicle loans, secured and unsecured personal loans and lines of credit. Loan Underwriting Policies.
 5




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##### Table of Contents



Single Family Residential Real Estate Lending.
    6




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##### Table of Contents



Multi-family Residential Real Estate Lending.
 Construction Loans.
    Home Equity.
 Commercial Real Estate Loans.
 7




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##### Table of Contents



Commercial Business Loans
   8




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##### Table of Contents



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




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##### Table of Contents



Foreclosed Real Estate
 10




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##### Table of Contents



As of September 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars in Thousands)Residential real estate loans:Non-accrual loans
    
    $
    1,716
    
    
    $
    335
    
    
    $
    244
    
    
    $
    
    
    
    $
    Accruing loans 90 days overdue
    
    
    147
    
    
    
    1,446
    
    
    
    192
    
    
    
    
    
    
    
    Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,863
    
    
    
    1,781
    
    
    
    436
    
    
    
    
    
    
    
    Commercial loans:Non-accrual loans
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    
    
    
    
    
    
    
    
    815
    
    
    
    
    
    
    
    Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    312
    
    
    
    
    
    
    
    815
    
    
    
    
    
    
    
    Consumer loans:Non-accrual loans
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    
    
    
    
    119
    
    
    
    7
    
    
    
    28
    
    
    
    18Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    110
    
    
    
    119
    
    
    
    7
    
    
    
    28
    
    
    
    18Total non-performing loans:Non-accrual loans
    
    
    2,138
    
    
    
    335
    
    
    
    244
    
    
    
    
    
    
    
    Accruing loans 90 days overdue
    
    
    147
    
    
    
    1,565
    
    
    
    1,014
    
    
    
    28
    
    
    
    18Troubled debt restructurings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    2,285
    
    
    $
    1,900
    
    
    $
    1,258
    
    
    $
    28
    
    
    $
    18Total non-performing loans to total loans
    
    
    .28
    %
    
    
    .38
    %
    
    
    .26
    %
    
    
    n/m
    *
    
    
    n/m
    *Total real estate owned, net of related
reserves
    
    $
    186
    
    
    $
    747
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans and other real
estate owned to total assets
    
    
    .30
    %
    
    
    .32
    %
    
    
    .15
    %
    
    
    n/m
    *
    
    
    n/m
    *
 
 *
    
    Not material   11




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##### Table of Contents



Year Ended September 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(Dollars In Thousands)Total loans outstanding at end of period
    
    $
    516,894
    
    
    $
    503,113
    
    
    $
    484,382
    
    
    $
    424,228
    
    
    $
    392,893Average loans outstanding
    
    
    510,004
    
    
    
    493,748
    
    
    
    454,305
    
    
    
    408,561
    
    
    
    383,237Allowance for loan losses, beginning of year
    
    $
    2,094
    
    
    $
    1,988
    
    
    $
    1,933
    
    
    $
    1,956
    
    
    $
    1,968Provision for loan losses
    
    
    600
    
    
    
    400
    
    
    
    85
    
    
    
    
    
    
    
    Charge-offs:Single family
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial real estate and multi family
residential
    
    
    (147
    )
    
    
    (288
    )
    
    
    
    
    
    
    
    
    
    
    Construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Commercial business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Home equity
    
    
    
    
    
    
    
    
    
    
    (13
    )
    
    
    (1
    )
    
    
    Consumer non-real estate
    
    
    (52
    )
    
    
    (33
    )
    
    
    (27
    )
    
    
    (35
    )
    
    
    (20
    )Total charge-offs
    
    
    (199
    )
    
    
    (321
    )
    
    
    (40
    )
    
    
    (36
    )
    
    
    (20
    )Recoveries of loans previously charged off
    
    
    9
    
    
    
    27
    
    
    
    10
    
    
    
    13
    
    
    
    8Allowance for loan losses, end of year
    
    $
    2,504
    
    
    $
    2,094
    
    
    $
    1,988
    
    
    $
    1,933
    
    
    $
    1,956Allowance for loan losses as a percent non-performing loans
    
    
    109.58
    %
    
    
    110.21
    %
    
    
    158.03
    %
    
    
    6,903.57
    %
    
    
    10,866.67
    %Ratio of net charge-offs during the period to average loans outstanding during the
period
    
    
    0.04
    %
    
    
    0.06
    %
    
    
    0.01
    %
    
    
    0.01
    %
    
    
    0.00
    %
  As of September 30,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Loan
    
    
    
    
    
    
    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
    
    $
    798
    
    
    
    65.0
    %
    
    $
    808
    
    
    
    68.2
    %
    
    $
    422
    
    
    
    68.9
    %
    
    $
    303
    
    
    
    71.3
    %
    
    $
    286
    
    
    
    72.2
    %Multi-family residential
    
    
    18
    
    
    
    0.3
    
    
    
    20
    
    
    
    0.4
    
    
    
    24
    
    
    
    0.5
    
    
    
    5
    
    
    
    0.6
    
    
    
    6
    
    
    
    0.7Construction
    
    
    7
    
    
    
    0.9
    
    
    
    4
    
    
    
    0.6
    
    
    
    13
    
    
    
    1.7
    
    
    
    9
    
    
    
    1.4
    
    
    
    10
    
    
    
    1.8Lot loans
    
    
    5
    
    
    
    0.4
    
    
    
    3
    
    
    
    0.2
    
    
    
    3
    
    
    
    0.2
    
    
    
    1
    
    
    
    0.1
    
    
    
    2
    
    
    
    0.2Home equity
    
    
    405
    
    
    
    17.5
    
    
    
    357
    
    
    
    18.4
    
    
    
    202
    
    
    
    19.1
    
    
    
    240
    
    
    
    22.5
    
    
    
    242
    
    
    
    24.4Commercial real estate
    
    
    906
    
    
    
    14.6
    
    
    
    542
    
    
    
    9.7
    
    
    
    396
    
    
    
    7.8
    
    
    
    207
    
    
    
    3.0
    
    
    
    43
    
    
    
    0.2Commercial business loans
    
    
    4
    
    
    
    0.8
    
    
    
    104
    
    
    
    2.1
    
    
    
    188
    
    
    
    1.4
    
    
    
    24
    
    
    
    0.6
    
    
    
    
    
    
    
    Consumer non-real estate
loans
    
    
    22
    
    
    
    0.5
    
    
    
    21
    
    
    
    0.4
    
    
    
    20
    
    
    
    0.4
    
    
    
    17
    
    
    
    0.5
    
    
    
    16
    
    
    
    0.5Unallocated
    
    
    339
    
    
    
    
    
    
    
    235
    
    
    
    
    
    
    
    720
    
    
    
    
    
    
    
    1,126
    
    
    
    
    
    
    
    1,351
    
    
    
    Total loans receivable
    
    $
    2,504
    
    
    
    100.0
    %
    
    $
    2,094
    
    
    
    100.0
    %
    
    $
    1,988
    
    
    
    100.0
    %
    
    $
    1,932
    
    
    
    100.0
    %
    
    $
    1,956
    
    
    
    100.0
    %
  12




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##### Table of Contents



Investment Activities
    September 30,2010
    
    
    2009
    
    
    2008Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value(In thousands)Mortgage-backed securities and
collateralized mortgage
obligations (CMOs)
    
    $
    131,604
    
    
    $
    138,539
    
    
    $
    163,215
    
    
    $
    169,995
    
    
    $
    214,691
    
    
    $
    212,572U.S. Government Sponsored Enterprises(GSE) Agency Notes
    
    
    108,807
    
    
    
    109,530
    
    
    
    82,602
    
    
    
    82,857
    
    
    
    54,314
    
    
    
    54,076Municipal securities
    
    
    16,462
    
    
    
    17,188
    
    
    
    22,592
    
    
    
    23,317
    
    
    
    24,940
    
    
    
    24,897Equity securities
    
    
    355
    
    
    
    343
    
    
    
    355
    
    
    
    311
    
    
    
    842
    
    
    
    842U.S. Government Money Market funds
    
    
    20,261
    
    
    
    20,261
    
    
    
    6,417
    
    
    
    6,417
    
    
    
    12
    
    
    
    12FHLB stock
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,574
    
    
    
    16,574Total investment and mortgage-backed
securities and FHLB stock
    
    $
    293,585
    
    
    $
    301,957
    
    
    $
    291,277
    
    
    $
    298,993
    
    
    $
    311,373
    
    
    $
    308,973
  Amounts at September 30, 2010 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 other
Debt securities:Mortgage-backed
securities and
CMOs
    
    $
    194
    
    
    
    3.97
    %
    
    $
    13,434
    
    
    
    4.26
    %
    
    $
    32,743
    
    
    
    4.59
    %
    
    $
    85,233
    
    
    
    4.52
    %U.S. Government
Agency
Notes
    
    
    14,986
    
    
    
    0.43
    %
    
    
    13,000
    
    
    
    1.63
    %
    
    
    22,000
    
    
    
    2.83
    %
    
    
    58,820
    
    
    
    3.11
    %Municipal securities
    
    
    1,447
    
    
    
    5.43
    %
    
    
    1,275
    
    
    
    4.92
    %
    
    
    1,325
    
    
    
    5.24
    %
    
    
    12,416
    
    
    
    4.79
    %Total
    
    $
    16,627
    
    
    
    0.91
    %
    
    $
    27,709
    
    
    
    3.06
    %
    
    $
    56,068
    
    
    
    3.91
    %
    
    $
    156,469
    
    
    
    4.04
    %
  13




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##### Table of Contents



Sources of Funds
 General.
 Deposits.
  14




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##### Table of Contents



As of September 30,2010
    
    
    2009Amount
    
    
    Percent ofDeposits
    
    
    Amount
    
    
    Percent ofDeposits(Dollars in Thousands)Passbook and club accounts
    
    $
    3,739
    
    
    
    0.7
    %
    
    $
    2,940
    
    
    
    0.6
    %NOW and interest-bearing
checking accounts
    
    
    53,897
    
    
    
    10.2
    
    
    
    46,100
    
    
    
    9.9Non-interest-bearing checking
accounts
    
    
    17,014
    
    
    
    3.2
    
    
    
    12,364
    
    
    
    2.6Money market demand accounts
    
    
    133,540
    
    
    
    25.3
    
    
    
    76,055
    
    
    
    16.3Certificates of deposit:3 month
    
    
    971
    
    
    
    0.2
    
    
    
    1,212
    
    
    
    0.36 month
    
    
    3,182
    
    
    
    0.6
    
    
    
    2,600
    
    
    
    0.67 month
    
    
    24,942
    
    
    
    4.7
    
    
    
    39,214
    
    
    
    8.49 month
    
    
    9,006
    
    
    
    1.7
    
    
    
    11,323
    
    
    
    2.412 month
    
    
    34,742
    
    
    
    6.6
    
    
    
    71,419
    
    
    
    15.315 month
    
    
    5,513
    
    
    
    1.0
    
    
    
    4,102
    
    
    
    0.917 month
    
    
    4,816
    
    
    
    0.9
    
    
    
    6,965
    
    
    
    1.518 month
    
    
    4,245
    
    
    
    0.8
    
    
    
    14,113
    
    
    
    3.020 month
    
    
    28,479
    
    
    
    5.4
    
    
    
    22,913
    
    
    
    4.924 month
    
    
    7,576
    
    
    
    1.4
    
    
    
    4,929
    
    
    
    1.127 month
    
    
    
    
    
    
    0.0
    
    
    
    19
    
    
    
    0.036 month
    
    
    46,507
    
    
    
    8.8
    
    
    
    41,429
    
    
    
    8.948 month
    
    
    48,448
    
    
    
    9.2
    
    
    
    24,377
    
    
    
    5.260 month
    
    
    29,239
    
    
    
    5.5
    
    
    
    18,979
    
    
    
    4.1Other
    
    
    100
    
    
    
    0.0
    
    
    
    100
    
    
    
    0.0Retirement accounts:Money market deposit accounts
    
    
    2,540
    
    
    
    0.5
    
    
    
    1,377
    
    
    
    0.3Certificates of deposit
    
    
    69,604
    
    
    
    13.3
    
    
    
    64,071
    
    
    
    13.7Total deposits
    
    $
    528,100
    
    
    
    100.0
    %
    
    $
    466,601
    
    
    
    100.0
    %
  15




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##### Table of Contents



Percentage of
    
    
    WeightedAverageAmount
    
    
    Total Deposits
    
    
    Nominal Rate(Dollars in Thousands)Passbook and club accounts
    
    $
    3,739
    
    
    
    0.7
    %
    
    
    0.81
    %NOW and interest-bearing checking accounts
    
    
    53,897
    
    
    
    10.2
    
    
    
    0.13Non-interest-bearing checking accounts
    
    
    17,015
    
    
    
    3.2
    
    
    
    0.00Money market deposits accounts(1)
    
    
    136,079
    
    
    
    25.8
    
    
    
    0.52Total
    
    $
    210,730
    
    
    
    39.9
    %
    
    
    0.38
    %Certificate accounts maturing by quarter:December 31, 2010
    
    $
    34,614
    
    
    
    6.6
    %
    
    
    1.09
    %March 31, 2011
    
    
    42,527
    
    
    
    8.1
    
    
    
    1.01June 30, 2011
    
    
    33,654
    
    
    
    6.4
    
    
    
    1.96September 30, 2011
    
    
    47,459
    
    
    
    9.0
    
    
    
    2.73December 31, 2011
    
    
    28,364
    
    
    
    5.4
    
    
    
    2.59March 31, 2012
    
    
    12,459
    
    
    
    2.4
    
    
    
    2.20June 30, 2012
    
    
    10,622
    
    
    
    2.0
    
    
    
    2.47September 30, 2012
    
    
    5,921
    
    
    
    1.1
    
    
    
    3.15December 31, 2012
    
    
    7,887
    
    
    
    1.5
    
    
    
    3.33March 31, 2013
    
    
    11,329
    
    
    
    2.1
    
    
    
    3.23June 30, 2013
    
    
    8,320
    
    
    
    1.6
    
    
    
    3.17September 30, 2013
    
    
    7,642
    
    
    
    1.4
    
    
    
    2.91Thereafter
    
    
    66,572
    
    
    
    12.5
    
    
    
    3.00Total certificate accounts(1)
    
    
    317,370
    
    
    
    60.1
    
    
    
    2.31Total deposits
    
    $
    528,100
    
    
    
    100.0
    %
    
    
    1.54
    %
 
 (1)
    
    Includes retirement accounts.   Year Ended September 30,2010
    
    
    2009(In Thousands)Increase (decrease) before interest credited
    
    $
    53,598
    
    
    $
    30,793Interest credited
    
    
    7,901
    
    
    
    10,295Net deposit increase
    
    $
    61,499
    
    
    $
    41,088
 16




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##### Table of Contents



As of
    
    
    Amounts at September 30, 2010 MaturingSeptember 30,
    
    
    One Year2010
    
    
    or Less
    
    
    Two Years
    
    
    Three Years
    
    
    Thereafter(In Thousands)Certificate accounts:0.01% to 2.00%
    
    $
    145,296
    
    
    $
    115,032
    
    
    $
    28,411
    
    
    $
    716
    
    
    $
    1,1372.01% to 4.00%
    
    
    161,329
    
    
    
    38,743
    
    
    
    26,298
    
    
    
    33,089
    
    
    
    63,1994.01% to 6.00%
    
    
    10,745
    
    
    
    4,479
    
    
    
    2,657
    
    
    
    1,373
    
    
    
    2,236Total certificate accounts(1)
    
    $
    317,370
    
    
    $
    158,254
    
    
    $
    57,366
    
    
    $
    35,178
    
    
    $
    66,572
 
 (1)
    
    Includes retirement accounts.  At September 30, 2010WeightedAverageQuarter Ending:
    
    Amount
    
    
    Rate(Dollars in Thousands)December 31, 2010
    
    $
    4,929
    
    
    
    1.06
    %March 31, 2011
    
    
    7,021
    
    
    
    0.93June 30, 2011
    
    
    5,163
    
    
    
    1.87September 30, 2011
    
    
    8,117
    
    
    
    2.82After September 30, 2011
    
    
    34,054
    
    
    
    2.90Total certificates of deposit with balances of $100,000 or more
    
    $
    59,284
    
    
    
    2.41
    %
 Borrowings.
  17




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##### Table of Contents



September 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageBalance
    
    
    Rate
    
    
    Balance
    
    
    Rate(Dollars In Thousands)Advances
    
    $
    272,047
    
    
    
    4.33
    %
    
    $
    309,046
    
    
    
    4.31
    %
  Year Ended September 30,2010
    
    
    2009(In Thousands)Advances :Average balance outstanding
    
    $
    1,225
    
    
    $
    13,341Maximum amount outstanding at any
month-end during the period
    
    $
    10,000
    
    
    $
    37,800Weighted average interest rate during the period
    
    
    0.71
    %
    
    
    0.70
    %
 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




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##### Table of Contents



Limitations on Transactions with Affiliates.
  19




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##### Table of Contents



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




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##### Table of Contents



Regulation of the Bank
 General.
 Pennsylvania Savings Bank Law
   Interstate Acquisitions
 21




---



##### Table of Contents



FDIC Insurance Premiums
     22




---



##### Table of Contents



Capital Requirements
   Prompt Corrective Action.
 23




---



##### Table of Contents



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




---



##### Table of Contents



Federal and State Taxation
 General
 25




---



##### Table of Contents



Method of Accounting.
 Bad Debt Reserves.
 Distributions.
 Minimum Tax.
 Net Operating Loss Carryovers.
 Corporate Dividends-Received Deduction.
 Other Matters.
 Pennsylvania Taxation
 26




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##### Table of Contents



Subsidiary
  
 Item 1A. Risk Factors.
  
 Item 1B. Unresolved Staff Comments .
  27




---



##### Table of Contents



Item 2. Properties .
  Net Book Value ofProperty andLease
    
    LeaseholdExpiration
    
    Improvements atCounty
    
    Address
    
    Owned or Leased
    
    Date
    
    September 30, 2010
    
    
    Deposits(In Thousands)Montgomery
    
    1889 Ridge Pike
Royersford, Pennsylvania
    
    Owned
    
    
    
    $
    1,693
    
    
    $
    22,927Montgomery
    
    271 Main Street
Harleysville, Pennsylvania
    
    Owned
    
    
    
    
    968
    
    
    
    196,654Montgomery
    
    640 East Main Street
Lansdale, Pennsylvania
    
    Leased
    
    May 2043(1)
    
    
    801
    
    
    
    55,851Montgomery
    
    1550 Hatfield Valley Road
Hatfield, Pennsylvania
    
    Leased
    
    January 2064(1)
    
    
    791
    
    
    
    92,097Montgomery
    
    2301 West Main Street
Norristown, Pennsylvania
    
    Owned
    
    
    
    
    381
    
    
    
    92,816Montgomery
    
    3090 Main Street
Sumneytown, Pennsylvania
    
    Owned
    
    
    
    
    198
    
    
    
    58,269Bucks
    
    741 North County Line Road
Souderton, Pennsylvania
    
    Owned
    
    
    
    
    2,740
    
    
    
    9,486Total
    
    
    
    
    
    
    
    $
    7,572
    
    
    $
    528,100
 
 (1)
    
    The land at this office is leased; however, the Bank owns the building. 
 Item 3. Legal Proceedings .
  
 Item 4. [Reserved]
 28




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##### Table of Contents



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, 2010
    
    $
    15.85
    
    
    $
    14.00
    
    
    $
    14.57
    
    
    $
    0.19June 30, 2010
    
    
    16.20
    
    
    
    13.30
    
    
    
    15.29
    
    
    
    0.19March 31, 2010
    
    
    14.25
    
    
    
    13.06
    
    
    
    13.90
    
    
    
    0.19December 31, 2009
    
    
    14.37
    
    
    
    12.02
    
    
    
    13.86
    
    
    
    0.19September 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
    
    
    
    0.18
   Total Number of
    
    
    Maximum Number ofShares Purchased as
    
    
    Shares that May YetAverage
    
    
    Part of Publicly
    
    
    Be Purchased UnderTotal Number of
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    the Plans orPeriod
    
    Shares Purchased
    
    
    per Share
    
    
    Programs
    
    
    Programs(1)July 1-31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,492August 1-31, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,492September 1-30, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,492Total
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    50,942
 
 (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. 29




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##### Table of Contents



Item 6. Selected Financial Data .
 Selected Balance Sheet Data:
    
    As of September 30,(Dollars in thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Total Assets
    
    $
    857,140
    
    
    $
    830,007
    
    
    $
    825,675
    
    
    $
    773,544
    
    
    $
    775,638Mortgage-backed securities held to maturity
    
    
    130,819
    
    
    
    162,430
    
    
    
    213,933
    
    
    
    192,842
    
    
    
    219,494Mortgage-backed securities available-for-sale
    
    
    809
    
    
    
    785
    
    
    
    758
    
    
    
    818
    
    
    
    820Consumer loans receivable
    
    
    432,806
    
    
    
    441,138
    
    
    
    434,439
    
    
    
    405,672
    
    
    
    386,486Commercial loans
    
    
    79,791
    
    
    
    59,347
    
    
    
    44,407
    
    
    
    15,314
    
    
    
    920Allowance for loan losses
    
    
    2,504
    
    
    
    2,094
    
    
    
    1,988
    
    
    
    1,933
    
    
    
    1,956Investment securities held to maturity
    
    
    125,269
    
    
    
    105,194
    
    
    
    79,254
    
    
    
    108,693
    
    
    
    111,099Investment securities available-for-sale
    
    
    20,604
    
    
    
    6,728
    
    
    
    854
    
    
    
    1,910
    
    
    
    8,108Other investments (1)
    
    
    32,234
    
    
    
    22,316
    
    
    
    23,731
    
    
    
    20,810
    
    
    
    23,952Deposits
    
    
    528,100
    
    
    
    466,601
    
    
    
    425,513
    
    
    
    424,035
    
    
    
    429,254FHLB advances and other borrowings
    
    
    272,047
    
    
    
    309,046
    
    
    
    347,846
    
    
    
    298,609
    
    
    
    294,611Total stockholders equity
    
    
    53,351
    
    
    
    50,139
    
    
    
    47,209
    
    
    
    47,041
    
    
    
    48,471Book value per share
    
    
    14.47
    
    
    
    13.82
    
    
    
    13.23
    
    
    
    12.65
    
    
    
    12.59
 Year Ended September 30,Selected Operations Data:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Interest income
    
    $
    40,018
    
    
    $
    41,343
    
    
    $
    43,076
    
    
    $
    40,289
    
    
    $
    39,091Interest expense
    
    
    21,747
    
    
    
    24,886
    
    
    
    29,016
    
    
    
    28,806
    
    
    
    26,366Net interest income
    
    
    18,271
    
    
    
    16,457
    
    
    
    14,060
    
    
    
    11,483
    
    
    
    12,725Provision for loan losses
    
    
    600
    
    
    
    400
    
    
    
    85
    
    
    
    
    
    
    
    Net interest income after provision
for loan losses
    
    
    17,671
    
    
    
    16,057
    
    
    
    13,975
    
    
    
    11,483
    
    
    
    12,725Realized gain (loss) on securities, including
impairment
    
    
    
    
    
    
    (454
    )
    
    
    (179
    )
    
    
    160
    
    
    
    27Other income
    
    
    1,987
    
    
    
    1,925
    
    
    
    1,909
    
    
    
    1,730
    
    
    
    1,273Other expense
    
    
    12,702
    
    
    
    11,527
    
    
    
    10,094
    
    
    
    9,216
    
    
    
    8,568Income before taxes
    
    
    6,956
    
    
    
    6,001
    
    
    
    5,611
    
    
    
    4,157
    
    
    
    5,457Income tax expense
    
    
    1,948
    
    
    
    1,285
    
    
    
    1,232
    
    
    
    911
    
    
    
    1,255Net income
    
    $
    5,008
    
    
    $
    4,716
    
    
    $
    4,379
    
    
    $
    3,246
    
    
    $
    4,202Earnings per share  basic
    
    $
    1.37
    
    
    $
    1.31
    
    
    $
    1.20
    
    
    $
    0.85
    
    
    $
    1.09Earnings per share  diluted
    
    
    1.36
    
    
    
    1.31
    
    
    


    1.20
    
    
    
    0.83
    
    
    
    1.08Dividends per share
    
    
    0.76
    
    
    
    0.73
    
    
    
    0.69
    
    
    
    0.68
    
    
    
    0.64
 Year Ended September 30,Selected Other Data:
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Return on average assets (2)
    
    
    0.59
    %
    
    
    0.57
    %
    
    
    0.54
    %
    
    
    0.42
    %
    
    
    0.55
    %Return on average equity (2)
    
    
    9.73
    %
    
    
    9.70
    %
    
    
    9.42
    %
    
    
    6.71
    %
    
    
    8.76
    %Dividend payout ratio
    
    
    55.41
    %
    
    
    55.60
    %
    
    
    57.26
    %
    
    
    80.02
    %
    
    
    58.72
    %Average equity to average assets (2)
    
    
    6.07
    %
    
    
    5.90
    %
    
    
    5.76
    %
    
    
    6.13
    %
    
    
    6.21
    %Interest rate spread (2)
    
    
    2.04
    %
    
    
    1.84
    %
    
    
    1.57
    %
    
    
    1.39
    %
    
    
    1.51
    %Net yield on interest-earning assets (2)
    
    
    2.21
    %
    
    
    2.04
    %
    
    
    1.79
    %
    
    
    1.58
    %
    
    
    1.71
    %Ratio of non-performing assets to
total assets at end of period
    
    
    0.30
    %
    
    
    0.32
    %
    
    
    0.15
    %
    
    
    0.00
    %
    
    
    0.00
    %Ratio of interest-earning assets to
interest-bearing liabilities at end of period
    
    
    106.47
    %
    
    
    106.45
    %
    
    
    105.93
    %
    
    
    104.75
    %
    
    
    105.61
    %Full service banking offices at end of period
    
    
    7
    
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    6
 
 (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. 30




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##### Table of Contents



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
 31




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##### Table of Contents



Investment Securities Impairment Valuation.
 Overview
    32




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##### Table of Contents



Results of Operations
   As of September
    
    
    For The Year Ended September 30,30, 2010
    
    
    2010
    
    
    2009
    
    
    2008Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Yield/Rate(Dollars in Thousands)Interest-earning assets:Mortgage loans (2)(3)
    
    
    5.71
    %
    
    $
    345,041
    
    
    $
    20,127
    
    
    
    5.83
    %
    
    $
    340,311
    
    
    $
    20,024
    
    
    
    5.88
    %
    
    $
    320,925
    
    
    $
    19,043
    
    
    
    5.93
    %Mortgage-backed securities
    
    
    4.51
    %
    
    
    148,137
    
    
    
    6,879
    
    
    
    4.64
    %
    
    
    190,934
    
    
    
    9,187
    
    
    
    4.81
    %
    
    
    211,563
    
    
    
    10,088
    
    
    
    4.77
    %Commercial loans
    
    
    5.92
    %
    
    
    70,404
    
    
    
    4,218
    
    
    
    5.99
    %
    
    
    51,103
    
    
    
    3,096
    
    
    
    6.06
    %
    
    
    26,492
    
    
    
    1,799
    
    
    
    6.79
    %Consumer and other
loans(3)
    
    
    4.66
    %
    
    
    106,758
    
    
    
    4,380
    
    
    
    4.10
    %
    
    
    106,216
    
    
    
    4,772
    
    
    
    4.49
    %
    
    
    108,747
    
    
    
    5,719
    
    
    
    5.26
    %Investments
    
    
    1.95
    %
    
    
    155,757
    
    
    
    4,414
    
    
    
    2.83
    %
    
    
    117,152
    
    
    
    4,264
    
    
    
    3.64
    %
    
    
    119,133
    
    
    
    6,427
    
    
    
    5.39
    %Total interest-earning assets
    
    
    4.59
    %
    
    
    826,097
    
    
    
    40,018
    
    
    
    4.84
    %
    
    
    805,716
    
    
    
    41,343
    
    
    
    5.13
    %
    
    
    786,860
    
    
    
    43,076
    
    
    
    5.47
    %Interest-bearing liabilities:Savings and money market
    
    
    0.52
    %
    
    
    110,095
    
    
    
    932
    
    
    
    0.85
    %
    
    
    67,509
    
    
    
    961
    
    
    
    1.42
    %
    
    
    54,669
    
    
    
    1,189
    
    
    
    2.17
    %Checking
    
    
    0.13
    %
    
    
    49,998
    
    
    
    85
    
    
    
    0.17
    %
    
    
    44,151
    
    
    
    172
    
    
    
    0.39
    %
    
    
    42,832
    
    
    
    367
    
    
    
    0.86
    %Certificates of deposit
    
    
    2.31
    %
    
    
    324,853
    
    
    
    8,017
    
    
    
    2.47
    %
    
    
    315,672
    
    
    
    9,824
    
    
    
    3.11
    %
    
    
    329,405
    
    
    
    13,662
    
    
    
    4.15
    %Total deposits
    
    
    1.59
    %
    
    
    484,946
    
    
    
    9,034
    
    
    
    1.86
    %
    
    
    427,332
    
    
    
    10,957
    
    
    
    2.26
    %
    
    
    426,906
    
    
    
    15,218
    
    
    
    3.56
    %Borrowings
    
    
    4.33
    %
    
    
    290,956
    
    
    
    12,713
    
    
    
    4.37
    %
    
    
    329,567
    
    
    
    13,929
    
    
    
    4.23
    %
    
    
    315,935
    
    
    
    13,798
    
    
    
    4.37
    %Total interest-bearing
liabilities
    
    
    2.54
    %
    
    
    775,902
    
    
    
    21,747
    
    
    
    2.80
    %
    
    
    756,899
    
    
    
    24,886
    
    
    
    3.29
    %
    
    
    742,841
    
    
    
    29,016
    
    
    
    3.90
    %Net interest income/interest
rate spread
    
    
    2.04
    %
    
    
    
    
    
    $
    18,271
    
    
    
    2.04
    %
    
    
    
    
    
    $
    16,457
    
    
    
    1.84
    %
    
    
    
    
    
    $
    14,060
    
    
    
    1.57
    %Net interest-earning
assets/net yield on
interest-earning assets(1)
    
    
    
    
    
    $
    50,195
    
    
    
    
    
    
    
    2.21
    %
    
    $
    48,817
    
    
    
    
    
    
    
    2.04
    %
    
    $
    44,019
    
    
    
    
    
    
    
    1.79
    %Ratio of interest-earning
assets to interest-bearing
liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    106.5
    %
    
    
    
    
    
    
    
    
    
    
    106.5
    %
    
    
    
    
    
    
    
    
    
    
    105.9
    %
 
 (1)
    
    Net interest income divided by average interest-earning assets.(2)
    
    Loan fee income is immaterial to this analysis.(3)
    
    There were 17 non-accruing loans totaling $2,138,000 at September 30, 2010, two non-accruing
loans totaling $335,000 at September 30, 2009 and one non-accruing loan totaling $244,000 at
September 2008. 33




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Fiscal 2010 Compared
    
    
    Fiscal 2009 Comparedto Fiscal 2009
    
    
    to Fiscal 2008Increase (Decrease)
    
    
    Increase (Decrease)(In Thousands)
    
    Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalInterest income on interest-earning assets:Mortgage loans (1)
    
    $
    272
    
    
    $
    (169
    )
    
    $
    103
    
    
    $
    1,139
    
    
    $
    (158
    )
    
    $
    981Mortgage-backed securities
    
    
    (1,997
    )
    
    
    (312
    )
    
    
    (2,309
    )
    
    
    (994
    )
    
    
    93
    
    
    
    (901
    )Commercial
    
    
    1,156
    
    
    
    (34
    )
    
    
    1,122
    
    
    
    1,467
    
    
    
    (170
    )
    
    
    1,297Consumer and other loans (1)
    
    
    24
    
    
    
    (415
    )
    
    
    (391
    )
    
    
    (130
    )
    
    
    (817
    )
    
    
    (947
    )Interest and dividends on Investments
    
    
    457
    
    
    
    (307
    )
    
    
    150
    
    
    
    (105
    )
    
    
    (2,058
    )
    
    
    (2,163
    )Total
    
    
    (88
    )
    
    
    (1,237
    )
    
    
    (1,325
    )
    
    
    1,377
    
    
    
    (3,110
    )
    
    
    (1,733
    )Interest expense on interest-bearing liabilities:Deposits
    
    
    241
    
    
    
    (2,164
    )
    
    
    (1,923
    )
    
    
    (54
    )
    
    
    (4,207
    )
    
    
    (4,261
    )Borrowings
    
    
    (1,709
    )
    
    
    493
    
    
    
    (1,216
    )
    
    
    519
    
    
    
    (388
    )
    
    
    131Total
    
    
    (1,468
    )
    
    
    (1,671
    )
    
    
    (3,139
    )
    
    
    465
    
    
    
    (4,595
    )
    
    
    (4,130
    )Net change in net interest income
    
    $
    1,380
    
    
    $
    434
    
    
    $
    1,814
    
    
    $
    912
    
    
    $
    1,485
    
    
    $
    2,397
 
 (1)
    
    There were 17 non-accruing loans totaling $2,138,000 at September 30, 2010, two non-accruing loans totaling $335,000 at
September 30, 2009 and one non-accruing loan totaling $244,000 at September 2008. 34




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Net Interest Income
  Interest Income
   Interest Expense
   Provision for Loan Losses
  Other Income
  35




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##### Table of Contents



Other Expenses
     Income Taxes
  Commitments and Off-Balance Sheet Arrangements
   36




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##### Table of Contents



Total AmountsCommitted(In Thousands)Letters of credit
    
    $
    405Commitments to originate loans
    
    
    16,086Unused portion of home equity lines of credit
    
    
    52,895Unused portion of commercial lines of credit
    
    
    6,638Undisbursed portion of construction loans in process
    
    
    2,926Total commitments
    
    $
    78,950
 37




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##### Table of Contents



Contractual Obligations
  Less Than
    
    
    1 to 3
    
    
    3 to 5
    
    
    After 5Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    Years(In Thousands)Lease agreements
    
    $
    684
    
    
    $
    130
    
    
    $
    275
    
    
    $
    279
    
    
    $
    Borrowings
    
    
    272,047
    
    
    
    21,853
    
    
    
    90,610
    
    
    
    42,237
    
    
    
    117,347Certificates of deposit
    
    
    317,370
    
    
    
    158,403
    
    
    
    92,394
    
    
    
    66,573
    
    
    
    $
    590,101
    
    
    $
    180,386
    
    
    $
    183,279
    
    
    $
    109,089
    
    
    $
    117,347
 Liquidity and Capital Resources
   
 Item 7A. Quantitative and Qualitative Disclosures about Market Risk .
 Asset and Liability Management
  38




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39




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##### Table of Contents



1 Year
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 5or less
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(In Thousands)Interest-earning assets:Mortgage loans
    
    $
    49,798
    
    
    $
    57,257
    
    
    $
    45,804
    
    
    $
    187,015
    
    
    $
    339,874Commercial loans
    
    
    33,708
    
    
    
    8,755
    
    
    
    22,797
    
    
    
    14,531
    
    
    
    79,791Mortgage-backed securities
    
    
    51,656
    
    
    
    40,787
    
    
    
    19,984
    
    
    
    19,201
    
    
    
    131,628Consumer and other loans
    
    
    66,277
    
    
    
    13,857
    
    
    
    6,336
    
    
    
    10,841
    
    
    
    97,311Investment securities and other investments
    
    
    118,713
    
    
    
    40,777
    
    
    
    12,263
    
    
    
    6,354
    
    
    
    178,107Total interest-earning assets
    
    
    320,152
    
    
    
    161,433
    
    
    
    107,184
    
    
    
    237,942
    
    
    
    826,711Interest-bearing liabilities:Passbook and Club accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,739
    
    
    
    3,739NOW and interest-bearing checking accounts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    53,897
    
    
    
    53,897Consumer Money Market Deposit accounts
    
    
    47,613
    
    
    
    
    
    
    
    
    
    
    
    54,941
    
    
    
    102,554Business Money Market Deposit accounts
    
    
    25,144
    
    
    
    
    
    
    
    
    
    
    
    8,381
    
    
    
    33,525Certificate accounts
    
    
    158,403
    
    
    
    92,394
    
    
    
    66,573
    
    
    
    
    
    
    
    317,370Borrowed money
    
    
    21,853
    
    
    
    90,610
    
    
    
    42,237
    
    
    
    117,347
    
    
    
    272,047Total interest-bearing liabilities
    
    
    253,013
    
    
    
    183,004
    
    
    
    108,810
    
    
    
    238,305
    
    
    
    783,132Repricing GAP during the period
    
    $
    67,139
    
    
    $
    (21,571
    )
    
    $
    (1,626
    )
    
    $
    (363
    )
    
    $
    43,579Cumulative GAP
    
    $
    67,139
    
    
    $
    45,568
    
    
    $
    43,942
    
    
    $
    43,597Ratio of GAP during the period to total assets
    
    
    7.83
    %
    
    
    -2.52
    %
    
    
    -0.19
    %
    
    
    -0.04
    %Ratio of cumulative GAP to total assets
    
    
    7.83
    %
    
    
    5.32
    %
    
    
    5.13
    %
    
    
    5.08
    %
 Impact of Inflation and Changing Prices
   40




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data .
 Report of Independent Registered Public Accounting Firm
 
    /s/ ParenteBeard LLC 
 41




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##### Table of Contents



Consolidated Statements of Financial Condition
 September 30,(In thousands, except share data)
    
    2010
    
    
    2009AssetsCash and amounts due from depository institutions
    
    $
    4,052
    
    
    $
    3,222Interest bearing deposits
    
    
    16,138
    
    
    
    6,220Total cash and cash equivalents
    
    
    20,190
    
    
    
    9,442Investments and mortgage-backed securities:Available for sale (amortized cost  2010, $21,401; 2009, $7,557)
    
    
    21,413
    
    
    
    7,513Held to maturity (fair value  2010, $264,448; 2009, $275,384)
    
    
    256,088
    
    
    
    267,624Loans receivable (net of allowance for loan losses 
2010, $2,504; 2009, $2,094
    
    
    510,093
    
    
    
    498,391Accrued interest receivable
    
    
    3,210
    
    
    
    3,719Federal Home Loan Bank stock  at cost
    
    
    16,096
    
    
    
    16,096Foreclosed real estate
    
    
    186
    
    
    
    747Office properties and equipment, net
    
    
    12,158
    
    
    
    10,486Prepaid expenses and other assets
    
    
    17,706
    
    
    
    15,989TOTAL ASSETS
    
    $
    857,140
    
    
    $
    830,007Liabilities and Stockholders EquityLiabilities:Deposits
    
    $
    528,100
    
    
    $
    466,601Long-term debt
    
    
    272,047
    
    
    
    309,046Accrued interest payable
    
    
    1,407
    
    
    
    1,606Advances from borrowers for taxes and insurance
    
    
    1,247
    
    
    
    1,445Accounts payable and accrued expenses
    
    
    988
    
    
    
    1,170Total liabilities
    
    
    803,789
    
    
    
    779,868Commitments and contingencies (Notes 12 & 13)Stockholders Equity:Preferred Stock: $.01 par value;
7,500,000 shares authorized; none issued
    
    
    
    
    
    
    Common stock: $.01 par value; 15,000,000
shares authorized; issued 3,921,177 shares: outstanding
2010 3,687,409 shares; 2009, 3,627,696 shares
    
    
    39
    
    
    
    39Additional paid-in capital
    
    
    8,126
    
    
    
    8,002Treasury stock, at cost (2010, 233,768 shares; 2009, 293,481 shares)
    
    
    (3,383
    )
    
    
    (4,202
    )Retained earnings  partially restricted
    
    
    48,562
    
    
    
    46,329Accumulated other comprehensive income (loss)
    
    
    7
    
    
    
    (29
    )Total stockholders equity
    
    
    53,351
    
    
    
    50,139TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    857,140
    
    
    $
    830,007
 See notes to consolidated financial statements.
 42




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##### Table of Contents



Consolidated Statements of Income
 Year Ended September 30,(In thousands, except share data)
    
    2010
    
    
    2009Interest Income:Interest and fees on mortgage loans
    
    $
    20,127
    
    
    $
    20,024Interest on mortgage-backed securities
    
    
    6,879
    
    
    
    9,187Interest on commercial loans
    
    
    4,218
    
    
    
    3,096Interest on consumer and other loans
    
    
    4,380
    
    
    
    4,772Interest on taxable investments
    
    
    3,385
    
    
    
    2,986Interest on tax-exempt investments
    
    
    1,026
    
    
    
    1,267Dividends on investment securities
    
    
    3
    
    
    
    11Total interest and dividend income
    
    
    40,018
    
    
    
    41,343Interest Expense:Interest on deposits
    
    
    9,034
    
    
    
    10,957Interest on borrowings
    
    
    12,713
    
    
    
    13,929Total interest expense
    
    
    21,747
    
    
    
    24,886Net Interest Income
    
    
    18,271
    
    
    
    16,457Provision for loan losses
    
    
    600
    
    
    
    400Net Interest Income, after Provision for Loan Losses
    
    
    17,671
    
    
    
    16,057Other Income:Customer service fees
    
    
    641
    
    
    
    663Impairment of equity securities
    
    
    
    
    
    
    (449
    )Realized losses on securities
    
    
    
    
    
    
    (5
    )Income on bank-owned life insurance
    
    
    512
    
    
    
    502Other income
    
    
    834
    
    
    
    760Total other income
    
    
    1,987
    
    
    
    1,471Other Expenses:Salaries and employee benefits
    
    
    6,946
    
    
    
    6,219Occupancy and equipment
    
    
    1,336
    
    
    
    1,199Deposit insurance premiums
    
    
    906
    
    
    
    1,085Data processing
    
    
    649
    
    
    
    567Other
    
    
    2,865
    
    
    
    2,457Total other expenses
    
    
    12,702
    
    
    
    11,527Income before Income Taxes
    
    
    6,956
    
    
    
    6,001Income tax expense
    
    
    1,948
    
    
    
    1,285Net Income
    
    $
    5,008
    
    
    $
    4,716Earnings Per Share:Basic
    
    $
    1.37
    
    
    $
    1.31Diluted
    
    $
    1.36
    
    
    $
    1.31Weighted Average Shares Outstanding:Basic
    
    
    3,658,300
    
    
    
    3,598,662Diluted
    
    
    3,685,004
    
    
    
    3,610,569
 See notes to consolidated financial statements.
 43




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##### Table of Contents



Consolidated Statements of Comprehensive Income
 Year Ended September 30,(In Thousands)
    
    2010
    
    
    2009Net Income
    
    $
    5,008
    
    
    $
    4,716Other Comprehensive IncomeUnrealized gain on securities available for sale, net of tax expense
2010, $19; 2009, $6
    
    
    36
    (1)
    
    
    12
    (1)Total Comprehensive Income
    
    $
    5,044
    
    
    $
    4,728(1)  Disclosure of reclassification amount, net of tax for the years ended:2010
    
    
    2009Net unrealized gain (loss) arising during the year
    
    $
    55
    
    
    $
    (436
    )Reclassification adjustment for net losses included in net income
    
    
    
    
    
    
    454$
    55
    
    
    $
    18Tax expense
    
    
    (19
    )
    
    
    (6
    )Net unrealized gain on securities available for sale
    
    $
    36
    
    
    $
    12
 See notes to consolidated financial statements.
 44




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##### Table of Contents



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, 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
    )
    
    $
    50,139Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,008
    
    
    
    
    
    
    
    
    
    
    
    5,008Dividends  $.76 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,775
    )
    
    
    
    
    
    
    
    
    
    
    (2,775
    )Stock option compensation
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167Treasury stock purchased
    
    
    (5,659
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (78
    )
    
    
    (78
    )Treasury stock delivered under ESOP
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137
    
    
    
    137Treasury stock delivered under dividend reinvestment plan
    
    
    41,089
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    554
    
    
    
    569Employee options exercised
    
    
    14,283
    
    
    
    
    
    
    
    (58
    )
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    148Change in unrealized holding loss
on available-for-sale securities, net
of reclassification and tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    36Balance at September 30, 2010
    
    
    3,687,409
    
    
    $
    39
    
    
    $
    8,126
    
    
    $
    48,562
    
    
    $
    7
    
    
    $
    (3,383
    )
    
    $
    53,351
 See notes to consolidated financial statements.
 45




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##### Table of Contents



Consolidated Statements of Cash Flows
 Year Ended September 30,(In Thousands)
    
    2010
    
    
    2009Operating Activities:Net Income
    
    $
    5,008
    
    
    $
    4,716Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    570
    
    
    
    469Provision for loan losses
    
    
    600
    
    
    
    400Realized (gains) losses on securities
    
    
    
    
    
    
    5Loss on impairment of equity securities
    
    
    
    
    
    
    449Loss on sale of foreclosed real estate
    
    
    159
    
    
    
    18Amortization of deferred loan fees
    
    
    96
    
    
    
    33Net amortization of premiums and discounts
    
    
    192
    
    
    
    142Increase in cash surrender value of bank owned life insurance
    
    
    (512
    )
    
    
    (502
    )Compensation charge on stock options
    
    
    167
    
    
    
    133Changes in assets and liabilities which provided (used) cash:Decrease in accounts payable and accrued expenses
    
    
    (182
    )
    
    
    (768
    )Increase in prepaid expenses and other assets
    
    
    (1,205
    )
    
    
    (985
    )Decrease in accrued interest receivable
    
    
    509
    
    
    
    80Decrease in accrued interest payable
    
    
    (199
    )
    
    
    (80
    )Net cash provided by operating activities
    
    
    5,203
    
    
    
    4,110Investing Activities:Purchase of mortgage-backed securities held to maturity
    
    
    (14,986
    )
    
    
    Purchase of investment securities held to maturity
    
    
    (129,352
    )
    
    
    (54,170
    )Purchase of investment securities available-for-sale
    
    
    (131,264
    )
    
    
    (62,393
    )Net purchase (redemption) of FHLB stock
    
    
    
    
    
    
    478Proceeds from the sale of investment securities available-for-sale
    
    
    117,400
    
    
    
    56,055Proceeds from maturities of investment securities held to maturity
    
    
    109,434
    
    
    
    28,339Principal collected on mortgage-backed securities
    
    
    46,248
    
    
    
    51,247Principal collected on long-term loans
    
    
    122,600
    
    
    
    129,752Long-term loans originated or acquired
    
    
    (135,184
    )
    
    
    (153,032
    )Proceeds from sale of foreclosed real estate
    
    
    588
    
    
    
    549Purchases of premises and equipment
    
    
    (2,242
    )
    
    
    (1,186
    )Net cash used in investing activities
    
    
    (16,758
    )
    
    
    (4,361
    )Financing Activities:Net increase in demand deposits, NOW accounts
and savings accounts
    
    
    71,894
    
    
    
    31,024Net (decrease) increase in certificates of deposit
    
    
    (10,395
    )
    
    
    10,064Cash dividends
    
    
    (2,206
    )
    
    
    (2,047
    )Net decrease in short-term borrowings
    
    
    
    
    
    
    (21,800
    )Proceeds from long-term debt
    
    
    
    
    
    
    24,500Repayment of long-term debt
    
    
    (36,999
    )
    
    
    (41,500
    )Acquisition of treasury stock
    
    
    (78
    )
    
    
    (144
    )Treasury stock delivered under employee stock plans
    
    
    285
    
    
    
    260Net decrease in advances from borrowers for taxes and insurance
    
    
    (198
    )
    
    
    (38
    )Net cash provided by financing activities
    
    
    22,303
    
    
    
    319INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    10,748
    
    
    
    68CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR
    
    
    9,442
    
    
    
    9,374CASH AND CASH EQUIVALENTS AT END OF YEAR
    
    $
    20,190
    
    
    $
    9,442Supplemental Disclosure of Cash Flow InformationCash paid during the period for:Interest (credited and paid)
    
    $
    21,946
    
    
    $
    24,966Income taxes
    
    
    1,825
    
    
    
    1,203Non-cash transfer of loans to foreclosed real estate
    
    
    186
    
    
    
    1,314
 See notes to consolidated financial statements.
 46




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##### Table of Contents



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
  47




---



##### Table of Contents



Loans
  Interest Income on Loans 
  Deferred Loan Fees 
 Allowance for Loan Losses
   48




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##### Table of Contents



Foreclosed Real Estate
 Office Properties and Equipment
 Federal Home Loan Bank Stock 
   49




---



##### Table of Contents



Cash Surrender Value Of Bank Owned Life Insurance (BOLI)
 Income Taxes
  Transfers of Financial Assets
 Treasury Stock
 Accounting for Stock Options
  50




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##### Table of Contents



Year Ended September 30,2010
    
    
    2009Risk free interest rate of return
    
    
    2.88
    %
    
    
    3.20
    %Expected option life
    
    84  months
    
    
    84 monthsExpected volatility
    
    
    20
    %
    
    
    17
    %Expected dividends
    
    
    5.8
    %
    
    
    5.4
    %
  Earnings Per Share
 Year Ended September 30,2010
    
    
    2009Weighted average shares outstanding  basic
    
    
    3,658,300
    
    
    
    3,598,662Increase in shares due to dilutive stock options
    
    
    26,704
    
    
    
    11,907Weighted average shares outstanding  diluted
    
    
    3,685,004
    
    
    
    3,610,569
 Other Comprehensive Income
 Subsequent Events 
 Reclassifications
 Recent Accounting Pronouncements Transfers and Servicing (Topic 860)  Accounting for Transfers of Financial Assets. Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140
 Consolidations (Topic 810)  Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities Amendments to FASB Interpretation No. 46(R)
 51




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##### Table of Contents



Fair Value Measurements and Disclosures (Topic 820): Improving
Disclosures about Fair Value Measurements.
 
    
    A reporting entity to disclose separately the amounts of significant transfers in and
out of Level 1 and Level 2 fair value measurements and describe the reasons for the
transfers; and
 
    
    In the reconciliation for fair value measurements using significant unobservable inputs,
a reporting entity should present separately information about purchases, sales, issuances,
and settlements.
  
    
    For purposes of reporting fair value measurement for each class of assets and
liabilities, a reporting entity needs to use judgment in determining the appropriate
classes of assets and liabilities; and
 
    
    A reporting entity should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair value measurements.
  ASU 2010-18, Receivables (Topic 310):
  52




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##### Table of Contents



Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses,
   ending beginning
 3. INVESTMENT AND MORTGAGE-BACKED SECURITIES
  Available for sale securities:
 September 30, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueEquity securities
    
    $
    355
    
    
    $
    42
    
    
    $
    (54
    )
    
    $
    343Collateralized mortgage obligations
    
    
    785
    
    
    
    24
    
    
    
    
    
    
    
    809U.S. Government money market funds
    
    
    20,261
    
    
    
    
    
    
    
    
    
    
    
    20,261Total Available for Sale Securities
    
    $
    21,401
    
    
    $
    66
    
    
    $
    (54
    )
    
    $
    21,413
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueEquity securities
    
    $
    355
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    311Collateralized mortgage obligations
    
    
    785
    
    
    
    
    
    
    
    
    
    
    
    785U.S. Government money market funds
    
    
    6,417
    
    
    
    
    
    
    
    
    
    
    
    6,417Total Available for Sale Securities
    
    $
    7,557
    
    
    $
    48
    
    
    $
    (92
    )
    
    $
    7,513
 53




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##### Table of Contents



Held to maturity securities:
 September 30, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueMortgage-backed securities- U.S.
Government Sponsored
Enterprises (GSES)
    
    $
    110,732
    
    
    $
    6,755
    
    
    $
    
    
    
    $
    117,487Collateralized mortgage obligations
    
    
    20,087
    
    
    
    193
    
    
    
    (37
    )
    
    
    20,243Municipal bonds
    
    
    16,462
    
    
    
    773
    
    
    
    (47
    )
    
    
    17,188U.S. Government Agencies
    
    
    108,807
    
    
    
    768
    
    
    
    (45
    )
    
    
    109,530Total Held to Maturity Securities
    
    $
    256,088
    
    
    $
    8,489
    
    
    $
    (129
    )
    
    $
    264,448
 September 30, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair(In Thousands)
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    ValueMortgage-backed securities- U.S.
Government Sponsored
Enterprises (GSEs)
    
    $
    150,748
    
    
    $
    6,997
    
    
    $
    
    
    
    $
    157,745Collateralized mortgage obligations
    
    
    11,682
    
    
    
    55
    
    
    
    (272
    )
    
    
    11,465Municipal bonds
    
    
    22,592
    
    
    
    878
    
    
    
    (153
    )
    
    
    23,317U.S. Government Agencies
    
    
    82,602
    
    
    
    613
    
    
    
    ( 358
    )
    
    
    82,857Total Held to Maturity Securities
    
    $
    267,624
    
    
    $
    8,543
    
    
    $
    (783
    )
    
    $
    275,384
  Less than 12 Months
    
    
    12 Months or Longer
    
    
    
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    UnrealizedLosses
    
    
    Fair Value
    
    
    UnrealizedLosses
    
    
    TotalFair Value
    
    
    Unrealized LossesCollateralized mortgage obligations
    
    $
    8,262
    
    
    $
    (4
    )
    
    $
    1,530
    
    
    $
    (33
    )
    
    $
    9,792
    
    
    $
    (37
    )Municipal bonds
    
    
    378
    
    
    
    
    
    
    
    1,494
    
    
    
    (47
    )
    
    
    1,872
    
    
    
    (47
    )U.S. Government Agencies
    
    
    6,955
    
    
    
    (45
    )
    
    
    
    
    
    
    
    
    
    
    6,955
    
    
    
    (45
    )Subtotal debt securities
    
    
    15,595
    
    
    
    (49
    )
    
    
    3,024
    
    
    
    (80
    )
    
    
    18,619
    
    
    
    (129
    )Equity securities
    
    
    55
    
    
    
    (3
    )
    
    
    160
    
    
    
    (51
    )
    
    
    215
    
    
    
    (54
    )Total temporarily impaired securities
    
    $
    15,650
    
    
    $
    (52
    )
    
    $
    3,184
    
    
    $
    (131
    )
    
    $
    18,834
    
    
    $
    (183
    )
    54




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##### Table of Contents



Less than 12 Months
    
    
    12 Months or Longer
    
    
    
    
    
    Total(In Thousands)
    
    Fair Value
    
    
    Unrealized
Losses
    
    
    Fair Value
    
    
    Unrealized
Losses
    
    
    Total
Fair Value
    
    
    Unrealized
 LossesCollateralized mortgage obligations
    
    $
    2,264
    
    
    $
    (49
    )
    
    $
    6,576
    
    
    $
    (223
    )
    
    $
    8,840
    
    
    $
    (272
    )Municipal bonds
    
    
    1,000
    
    
    
    (3
    )
    
    
    3,036
    
    
    
    (150
    )
    
    
    4,036
    
    
    
    (153
    )U.S. Government Agencies
    
    
    29,637
    
    
    
    (358
    )
    
    
    
    
    
    
    
    
    
    
    29,637
    
    
    
    (358
    )Subtotal debt securities
    
    
    32,901
    
    
    
    (410
    )
    
    
    9,612
    
    
    
    (373
    )
    
    
    42,513
    
    
    
    (783
    )Equity Securities
    
    
    104
    
    
    
    (43
    )
    
    
    74
    
    
    
    (49
    )
    
    
    178
    
    
    
    (92
    )Total temporarily impaired securities
    
    $
    33,005
    
    
    $
    (453
    )
    
    $
    9,686
    
    
    $
    (422
    )
    
    $
    42,691
    
    
    $
    (875
    )
  September 30, 2010Amortized(In Thousands)
    
    Cost
    
    
    Fair ValueAvailable for sale:Due in one year or less
    
    $
    
    
    
    $
    Due after on year through five years
    
    
    
    
    
    
    Due after five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    785
    
    
    
    809Total
    
    $
    785
    
    
    $
    809Held to maturity:Due in one year or less
    
    $
    16,627
    
    
    $
    16,685Due after on year through five years
    
    
    27,709
    
    
    
    28,448Due after five years through ten years
    
    
    56,068
    
    
    
    57,961Due after ten years
    
    
    155,684
    
    
    
    161,354Total
    
    $
    256,088
    
    
    $
    264,448
   55




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##### Table of Contents



4. LOANS RECEIVABLE
  September 30,(In Thousands)
    
    2010
    
    
    2009Residential Mortgages
    
    $
    337,888
    
    
    $
    345,152Construction
    
    
    4,752
    
    
    
    2,912Lot Loans
    
    
    1,986
    
    
    
    1,141Home Equity
    
    
    90,511
    
    
    
    92,343Commercial Mortgages
    
    
    75,450
    
    
    
    54,341Commercial Business Loans
    
    
    4,327
    
    
    
    4,982Consumer Non-Real Estate
    
    
    1,980
    
    
    
    2,242Total
    
    
    516,894
    
    
    
    503,113Undisbursed portion of loans in process
    
    
    (3,426
    )
    
    
    (1,873
    )Deferred loan fees
    
    
    (871
    )
    
    
    (755
    )Allowance for loan losses
    
    
    (2,504
    )
    
    
    (2,094
    )Loans Receivable  net
    
    $
    510,093
    
    
    $
    498,391
    Year Ended September 30,(In Thousands)
    
    2010
    
    
    2009Balance, beginning of year
    
    $
    2,094
    
    
    $
    1,988Provision of loan losses
    
    
    600
    
    
    
    400Recoveries
    
    
    9
    
    
    
    27Charge offs
    
    
    (199
    )
    
    
    (321
    )Balance, end of year
    
    $
    2,504
    
    
    $
    2,094
  56




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5. OFFICE PROPERTIES AND EQUIPMENT
  September 30,(In Thousands)
    
    2010
    
    
    2009Land
    
    $
    3,277
    
    
    $
    1,159Buildings
    
    
    10,152
    
    
    
    7,349Branch office in construction
    
    
    161
    
    
    
    3,367Furniture, fixtures and equipment
    
    
    5,025
    
    
    
    4,499Automobiles
    
    
    18
    
    
    
    17Total
    
    
    18,633
    
    
    
    16,391Less accumulated depreciation
    
    
    (6,475
    )
    
    
    (5,905
    )Net
    
    $
    12,158
    
    
    $
    10,486
  6. DEPOSITS
  September 30,2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedInterest
    
    
    
    
    
    
    Interest(Dollars in Thousands)
    
    Amount
    
    
    Rate
    
    
    Amount
    
    
    RateNon-interest bearing checking
Accounts
    
    $
    17,015
    
    
    
    0.00
    %
    
    $
    12,364
    
    
    
    0.00
    %NOW accounts
    
    
    21,320
    
    
    
    0.06
    
    
    
    16,818
    
    
    
    0.12Interest bearing checking accounts
    
    32,577
    
    
    
    0.12
    
    
    
    29,282
    
    
    
    0.44Money market deposit accounts
    
    
    136,079
    
    
    
    0.52
    
    
    
    77,432
    
    
    
    1.12Passbook and club accounts
    
    
    3,739
    
    
    
    0.81
    
    
    
    2,940
    
    
    
    0.91Certificate of deposit accounts
    
    317,370
    
    
    
    2.31
    
    
    
    327,765
    
    
    
    2.82Total Deposits
    
    $
    528,100
    
    
    
    1.54
    %
    
    $
    466,601
    
    
    
    2.20
    %
  For the year ended September 30:
    
    
    2011
    
    
    $
    158,2542012
    
    
    
    57,3662013
    
    
    
    35,1782014
    
    
    
    51,4522015
    
    
    
    15,120Total
    
    
    
    
    
    $
    317,370
  57




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Year Ended September 30,(In Thousands)
    
    2010
    
    
    2009NOW, interest-bearing checking and MMDA accounts
    
    $
    1,363
    
    
    $
    961Passbook and club accounts
    
    
    42
    
    
    
    172Certificate accounts
    
    
    7,629
    
    
    
    9,824Total
    
    $
    9,034
    
    
    $
    10,957
 7. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
   WeightedAmount
    
    
    Average Rate2010
    
    
    2009
    
    
    2010
    
    
    2009(Dollars in Thousands)FHLB long-term debt:Fixed rate advances maturing:2011
    
    $
    15,923
    
    
    
    
    
    
    
    4.37
    %2012
    
    
    54,440
    
    
    
    
    
    
    
    4.50
    %2013
    
    
    20,022
    
    
    
    
    
    
    
    3.64
    %2014
    
    
    13,729
    
    
    
    
    
    
    
    3.33
    %2015
    
    
    18,356
    
    
    
    
    
    
    
    3.83
    %2016
    
    
    10,000
    
    
    
    
    
    
    
    4.71
    %2017
    
    
    35,000
    
    
    
    
    
    
    
    4.57
    %Maturing after 9/30/2017:
    
    
    54,577
    
    
    
    
    
    
    
    4.08
    %Total FHLB long-term debt
    
    
    222,047
    
    
    
    259,046
    
    
    
    4.20
    %
    
    
    4.21
    %Other long-term debt:Fixed rate advances maturing:2014
    
    
    15,000
    
    
    
    
    
    
    
    4.80
    %Maturing after 9/30/2015:
    
    
    25,000
    
    
    
    
    
    
    
    4.48
    %Total other long-term debt fixed
    
    
    40,000
    
    
    
    40,000
    
    
    
    4.60
    %
    
    
    4.60
    %Adjustable long-term debt maturing:Maturing after 9/30/2015:
    
    
    10,000
    
    
    
    10,000
    
    
    
    5.99
    %
    
    
    5.78
    %Total other long-term debt
    
    $
    50,000
    
    
    $
    50,000
    
    
    
    4.88
    %
    
    
    4.84
    %Total Long-term Debt
    
    $
    272,047
    
    
    $
    309,046
    
    
    
    4.33
    %
    
    
    4.31
    %
  58




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8. INCOME TAXES
   Year Ended September 30,2010
    
    
    2009Percentage
    
    
    
    
    
    
    Percentageof Pretax
    
    
    
    
    
    
    of Pretax(Dollars in Thousands)
    
    Amount
    
    
    Income
    
    
    Amount
    
    
    IncomeAt statutory rate
    
    $
    2,365
    
    
    
    34.0
    %
    
    $
    2,041
    
    
    
    34.0
    %Adjustments resulting from:Tax-exempt income
    
    
    (513
    )
    
    
    (7.4
    )
    
    
    (585
    )
    
    
    (9.8
    )Other
    
    
    96
    
    
    
    1.4
    
    
    
    (171
    )
    
    
    (2.8
    )Expense per consolidated
statements of income
    
    $
    1,948
    
    
    
    28.0
    %
    
    $
    1,285
    
    
    
    21.4
    %
  Year Ended September 30,(In thousands)
    
    2010
    
    
    2009Current
    
    $
    1,873
    
    
    $
    1,417Deferred
    
    
    75
    
    
    
    (132
    )Total Income Tax Expense
    
    $
    1,948
    
    
    $
    1,285
  September 30,(In thousands)
    
    2010
    
    
    2009Deferred Tax Assets:Deferred Loan Fees
    
    $
    3
    
    
    $
    20Allowance for Loan Losses
    
    
    851
    
    
    
    712Unrealized loss on investment securities
    
    
    
    
    
    
    15Non-deductible capital losses
    
    
    47
    
    
    
    89Securities impairment
    
    
    156
    
    
    
    156Other
    
    
    69
    
    
    
    29Sub-Total
    
    
    1,126
    
    
    
    1,021Deferred Tax Liabilities:Unrealized gain on investment securities
    
    
    (4
    )
    
    
    Properties and equipment
    
    
    (740
    )
    
    
    (545
    )Sub-Total
    
    
    (744
    )
    
    
    ( 545
    )Total
    
    $
    382
    
    
    $
    476
 59




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##### Table of Contents



9. REGULATORY CAPITAL REQUIREMENTS
    To Be Considered WellCapitalized UnderFor Capital
    
    
    Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action Provisions(Dollars in Thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioAt September 30, 2010Tier 1 Capital (to assets)
    
    $
    53,330
    
    
    
    6.19
    %
    
    $
    34,440
    
    
    
    4.00
    %
    
    $
    43,050
    
    
    
    5.00
    %Tier 1 Capital (to risk weighted assets)
    
    
    53,330
    
    
    
    11.35
    %
    
    
    18,799
    
    
    
    4.00
    %
    
    
    28,199
    
    
    
    6.00
    %Total Capital (to risk weighted assets)
    
    
    55,834
    
    
    
    11.88
    %
    
    
    37,599
    
    
    
    8.00
    %
    
    
    46,999
    
    
    
    10.00
    %At 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
    %
  10. RETIREMENT SAVINGS PLANS
  11. STOCK OPTIONS AND EMPLOYEE STOCK PURCHASE PLAN
   60




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2010
    
    
    2009Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageOptions
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of year
    
    
    404,021
    
    
    $
    14.76
    
    
    
    345,909
    
    
    $
    14.97Exercised
    
    
    (14,283
    )
    
    
    9.54
    
    
    
    (15,250
    )
    
    
    9.22Canceled
    
    
    (417
    )
    
    
    13.13
    
    
    
    (1,250
    )
    
    
    13.12Granted
    
    
    110,989
    
    
    
    13.29
    
    
    
    74,612
    
    
    
    12.59Outstanding, end of year
    
    
    500,310
    
    
    $
    14.59
    
    
    
    404,021
    
    
    $
    14.76Options exercisable, end of year
    
    
    155,932
    
    
    $
    15.09
    
    
    
    150,816
    
    
    $
    14.70
  Exercise
    
    
    Weighted
    
    
    Weighted AverageNumber of
    
    Price
    
    
    Average Remaining
    
    
    Exercise PriceOption Shares
    
    Range
    
    
    Contractual Life
    
    
    per Share18,549
    
    
    8.10-12.00
    
    
    
    1.56
    
    
    $
    9.79289,678
    
    
    12.01-16.00
    
    
    
    7.76
    
    
    
    12.88192,083
    
    
    16.01-18.00
    
    
    
    5.08
    
    
    
    17.63500,310
    
    $
    8.10-18.00
    
    
    
    6.50
    
    
    $
    14.59
     61




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##### Table of Contents



12. COMMITMENTS
   Fiscal Year
    
    
    Rental Amount(In Thousands)2011
    
    
    $
    1302012
    
    
    
    1352013
    
    
    
    1402014
    
    
    
    1382015
    
    
    
    141Total
    
    
    
    
    
    $
    684
 13. LEGAL CONTINGENCIES
  14. RESTRICTED RETAINED EARNINGS
  15. FAIR VALUE MEASUREMENTS AND DISCLOSURES
  62




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(Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant Other
    
    
    (Level 3)Active Markets for
    
    
    Observable
    
    
    SignificantDescription
    
    Total
    
    
    Identical Assets
    
    
    Inputs
    
    
    Unobservable InputsSeptember 30, 2010Investment securities available for sale
    
    $
    20,604
    
    
    $
    20,604
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    809
    
    
    
    
    
    
    
    809
    
    
    
    Total
    
    $
    21,413
    
    
    $
    20,604
    
    
    $
    809
    
    
    $
    September 30, 2009Investment securities available for sale
    
    $
    6,728
    
    
    $
    6,728
    
    
    $
    
    
    
    $
    Mortgage-backed securities available for sale
    
    
    785
    
    
    
    
    
    
    
    785
    
    
    
    Total
    
    $
    7,513
    
    
    $
    6,728
    
    
    $
    
    
    
    $
    
   63




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##### Table of Contents



(Level 1)
    
    
    (Level 2)Quoted Prices in
    
    
    Significant Other
    
    
    (Level 3)Active Markets for
    
    
    Observable
    
    
    SignificantDescription
    
    September 30, 2010
    
    
    Identical Assets
    
    
    Inputs
    
    
    Unobservable InputsImpaired Loans
    
    $
    186
    
    
    $
    
    
    
    $
    
    
    
    $
    186
   Cash and Cash Equivalents (Carried at Cost)
  Securities
  Loans Receivable (Carried at Cost)
   Federal Home Loan Bank Stock (Carried at Cost)
  Accrued Interest Receivable and Payable (Carried at Cost)
  Deposit Liabilities (Carried at Cost)
  64




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Borrowings (Carried at Cost)
  Off-Balance Sheet financial Instruments (Disclosed at Cost)
    September 30,2010
    
    
    2009Carrying
    
    
    Estimated Fair
    
    
    Carrying
    
    
    Estimated Fair(In Thousands)
    
    Amount
    
    
    Value
    
    
    Amount
    
    
    ValueAssets:Cash and cash equivalents
    
    $
    20,190
    
    
    $
    20,190
    
    
    $
    9,442
    
    
    $
    9,442Securities held to maturity
    
    
    256,088
    
    
    
    264,448
    
    
    
    267,624
    
    
    
    275,384Securities available-for-sale
    
    
    21,413
    
    
    
    21,413
    
    
    
    7,513
    
    
    
    7,513Loans receivable  net
    
    
    510,093
    
    
    
    530,294
    
    
    
    498,391
    
    
    
    512,512Federal Home Loan Bank stock
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096
    
    
    
    16,096Accrued interest receivable
    
    
    3,210
    
    
    
    3,210
    
    
    
    3,719
    
    
    
    3,719Liabilities:Checking, passbook, club and NOW deposit accounts
    
    
    74,651
    
    
    
    74,651
    
    
    
    61,404
    
    
    
    61,404Money Market deposit accounts
    
    
    136,079
    
    
    
    136,079
    
    
    
    77,432
    
    
    
    77,432Certificate of deposit accounts
    
    
    317,370
    
    
    
    325,881
    
    
    
    327,765
    
    
    
    332,733Borrowings
    
    
    272,047
    
    
    
    291,857
    
    
    
    309,046
    
    
    
    331,330Accrued interest payable
    
    
    1,407
    
    
    
    1,407
    
    
    
    1,606
    
    
    
    1,606Off balance sheet financial instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 65




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Limitations
   66




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16. PARENT COMPANY ONLY CONDENSED FINANCIAL INFORMATION
  (In Thousands)
    
    September 30,Condensed Statements of Financial Condition
    
    2010
    
    
    2009AssetsCash
    
    $
    62
    
    
    $
    31Investment in subsidiary
    
    
    53,714
    
    
    
    50,589Total Assets
    
    $
    53,776
    
    
    $
    50,620Liabilities & Stockholders EquityOther liabilities
    
    $
    425
    
    
    $
    481Stockholders equity
    
    
    53,351
    
    
    
    50,139Total Liabilities & Stockholders Equity
    
    $
    53,776
    
    
    $
    50,620For the Year Ended September 30,Condensed Statements of Income:
    
    2010
    
    
    2009Equity in income of subsidiary
    
    $
    5,513
    
    
    $
    5,169Other expense
    
    
    505
    
    
    
    453Net income
    
    $
    5,008
    
    
    $
    4,716For the Year Ended September 30,Condensed Statements of Cash Flows
    
    2010
    
    
    2009Net income
    
    $
    5,008
    
    
    $
    4,716(Decrease) increase in other liabilities
    
    
    16
    
    
    
    (14
    )Income of Harleysville Savings Bank
    
    
    (5,513
    )
    
    
    (5,169
    )Net cash used by operating activities
    
    
    (489
    )
    
    
    (467
    )Investing activities:Dividends received from subsidiary
    
    
    2,519
    
    
    
    2,382Net cash provided by investing activities
    
    
    2,519
    
    
    
    2,382Financing activities:Acquisition of treasury stock
    
    
    (78
    )
    
    
    (144
    )Issuance of treasury stock
    
    
    285
    
    
    
    260Dividends paid
    
    
    (2,206
    )
    
    
    (2,047
    )Net cash used in financing activities
    
    
    (1,999
    )
    
    
    (1,931
    )Net
increase (decrease) in cash and cash equivalents
    
    
    31
    
    
    
    (16
    )Cash and cash equivalents at the beginning of the
period
    
    
    31
    
    
    
    47Cash and cash equivalents at the end of the period
    
    $
    62
    
    
    $
    31
 67




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17. Quarterly Financial Data (Unaudited)
  2010
    
    
    20091st
    
    
    2nd
    
    
    3rd
    
    
    4th
    
    
    1st
    
    
    2nd
    
    
    3rd
    
    
    4th(In Thousands)
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTR
    
    
    QTRInterest Income
    
    $
    10,256
    
    
    $
    9,944
    
    
    $
    9,951
    
    
    $
    9,867
    
    
    $
    10,726
    
    
    $
    10,504
    
    
    $
    9,973
    
    
    $
    10,140Interest Expense
    
    
    5,869
    
    
    
    5,425
    
    
    
    5,290
    
    
    
    5,163
    
    
    
    6,541
    
    
    
    6,147
    
    
    
    6,128
    
    
    
    6,070Net Interest Income
    
    
    4,387
    
    
    
    4,519
    
    
    
    4,661
    
    
    
    4,704
    
    
    
    4,185
    
    
    
    4,357
    
    
    
    3,845
    
    
    
    4,070Provision for loan losses
    
    
    150
    
    
    
    150
    
    
    
    150
    
    
    
    150
    
    
    
    100
    
    
    
    100
    
    
    
    90
    
    
    
    110Net interest income after
provision for loan losses
    
    
    4,237
    
    
    
    4,369
    
    
    
    4,511
    
    
    
    4,554
    
    
    
    4,085
    
    
    
    4,257
    
    
    
    3,755
    
    
    
    3,960Impairment of equity securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    449
    
    
    
    
    
    
    
    Realize net gains(losses) on
securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    
    
    
    (14
    )Other Income
    
    
    502
    
    
    
    458
    
    
    
    508
    
    
    
    519
    
    
    
    471
    
    
    
    463
    
    
    
    460
    
    
    
    531Other expense
    
    
    3,070
    
    
    
    3,230
    
    
    
    3,205
    
    
    
    3,197
    
    
    
    2,754
    
    
    
    2,819
    
    
    
    3,113
    
    
    
    2,840Income before income taxes
    
    
    1,669
    
    
    
    1,597
    
    
    
    1,814
    
    
    
    1,876
    
    
    
    1,802
    
    
    
    1,461
    
    
    
    1,102
    
    
    
    1,637Income tax expense
    
    
    455
    
    
    
    437
    
    
    
    500
    
    
    
    556
    
    
    
    426
    
    
    
    258
    
    
    
    246
    
    
    
    355Net income
    
    $
    1,214
    
    
    $
    1,160
    
    
    $
    1,314
    
    
    $
    1,320
    
    
    $
    1,376
    
    
    $
    1,203
    
    
    $
    856
    
    
    $
    1,282Per Common Share:Earnings per share  basic
    
    $
    0.33
    
    
    $
    0.32
    
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.38
    
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.35Earnings per share  diluted
    
    $
    0.33
    
    
    $
    0.32
    
    
    $
    0.36
    
    
    $
    0.35
    
    
    $
    0.38
    
    
    $
    0.33
    
    
    $
    0.24
    
    
    $
    0.35
  68




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##### Table of Contents



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure .
  
 Item 9A. 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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##### Table of Contents



/s/ Ronald B. Geib
    
    /s/ Brendan J. McGillPresident and Chief Executive Officer
    
    Executive Vice President,Chief Operating and Financial Officer
 
 Item 9B. Other Information .
  70




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##### Table of Contents



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 .
   Equity Compensation Plan Information
 Number of securities remainingNumber of securities to be
    
    
    Weighted-average
    
    
    available for future issuanceissued upon exercise of
    
    
    exercise price of
    
    
    under equity compensation plansoutstanding options,
    
    
    outstanding options,
    
    
    (excluding securities reflected inPlan Category
    
    warrants and rights
    
    
    warrants and rights
    
    
    the first column)Equity compensation
plans approved by
security holders
    
    
    267,122
    
    
    $
    14.59
    
    
    
    500,310Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    267,122
    
    
    $
    14.59
    
    
    
    500,310
 71




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions and Directors Independence .
  
 Item 14. Principal Accounting Fees and Services .
  72




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##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    (1)
    
    The following financial statements are incorporated by reference from Item 8 hereof:
          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
    
    2009 Stock Incentive Plan*
    
    
    (5
    )10.5
    
    Profit Sharing Incentive Plan*
    
    
    (3
    )10.6
    
    Amended and Restated Employment Agreement among the Company,
the Bank and Ronald B. Geib*
    
    
    (4
    )10.7
    
    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*
    
    
    (6
    )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 definitive proxy statement filed with the SEC on
December 18, 2009.(6)
    
    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. 73




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##### Table of Contents



SIGNATURES
  HARLEYSVILLE SAVINGS FINANCIAL CORPORATIONDecember 17, 2010
    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 17, 2010/s/ Ronald B. Geib

Ronald B. Geib
    
    President and Chief Executive Officer (principal
executive officer)
    
    December 17, 2010/s/ Brendan J. McGill

Brendan J. McGill
    
    Executive Vice President, Chief
Operating and Financial Officer
(principal financial and principal
accounting officer)
    
    December 17, 2010/s/ Sanford L. Alderfer

Sanford L. Alderfer
    
    Director
    
    December 17, 2010/s/ Mark R. Cummins

Mark R. Cummins
    
    Director
    
    December 17, 2010/s/ Thomas D. Clemens

Thomas D. Clemens
    
    Director
    
    December 17, 2010
 74




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##### Table of Contents



Name
    
    Title
    
    Date/s/ Charlotte A. Hunsberger

Charlotte A. Hunsberger
    
    Director
    
    December 17, 2010/s/ George W. Meschter

George W. Meschter
    
    Director
    
    December 17, 2010/s/ James L. Rittenhouse

James L. Rittenhouse
    
    Director
    
    December 17, 2010
 75