UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20429

FORM 10-Q

(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 0-29709

HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania		23-3028464
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

271 Main Street, Harleysville, Pennsylvania 19438
(Address of principal executive offices) (Zip Code)

(215) 256-8828

N/A

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, $.01 Par Value, 3,674,187 shares outstanding as of August 13, 2010

 

 

HARLEYSVILLE SAVINGS FINANCIAL CORPORATION

Index

		PAGE(S)
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Consolidated Statements of Financial Condition as of June 30, 2010, and September 30, 2009			1
Unaudited Consolidated Statements of Income for the Three and Nine Months Ended June 30, 2010 and 2009			2
Unaudited Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended June 30, 2010 and 2009			3
Unaudited Consolidated Statements of Stockholders’ Equity for the Nine Months Ended June 30, 2010 and 2009			4
Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2010 and 2009			5
Notes to Unaudited Consolidated Financial Statements			6 – 17
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18 – 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			20 – 21
Item 4. Controls and Procedures			22
Part II OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults upon Senior Securities			23
Item 4. (Removed and Reserved)			23
Item 5. Other Information			23
Item 6. Exhibits			23
Signatures			24
Exhibit 31.1
Exhibit 31.2
Exhibit 32.0

Harleysville Savings Financial Corporation

		June 30,				September 30,
(In thousands, except share data)		2010				2009
Assets
Cash and amounts due from depository institutions		$	3,646			$	3,222
Interest bearing deposits			11,014				6,220
Total cash and cash equivalents			14,660				9,442
Investment securities held to maturity (fair value — June 30, $141,123; September 30, $106,174)			139,728				105,194
Investment securities available-for-sale at fair value			3,516				6,728
Mortgage-backed securities held to maturity (fair value — June 30, $150,851; September 30, $169,210)			143,424				162,430
Mortgage-backed securities available-for-sale at fair value			787				785
Loans receivable (net of allowance for loan losses — June 30, $2,437; September 30, $2,094)			515,809				498,391
Accrued interest receivable			3,367				3,719
Federal Home Loan Bank stock — at cost			16,096				16,096
Foreclosed real estate			—				747
Office properties and equipment, net			12,229				10,486
Prepaid expenses and other assets			17,493				15,989
TOTAL ASSETS		$	867,109			$	830,007
Liabilities and Stockholders’ Equity
Liabilities:
Deposits		$	522,770			$	466,601
Long-term debt			283,730				309,046
Accrued interest payable			1,475				1,606
Advances from borrowers for taxes and insurance			5,737				1,445
Accounts payable and accrued expenses			909				1,170
Total liabilities			814,621				779,868
Commitments and contingencies
Stockholders’ equity:
Preferred Stock: $.01 par value; 7,500,000 shares authorized; none issued			—				—
Common stock: $.01 par value; 15,000,000 shares authorized; 3,921,177 shares issued; outstanding June 30, 2010 3,674,187 shares September 30, 2009 3,627,696 shares			39				39
Additional paid-in capital			8,085				8,002
Treasury stock, at cost (June 30, 2010, 246,990 shares; September 30, 2009, 293,481 shares)			(3,565	)			(4,202	)
Retained earnings — partially restricted			47,940				46,329
Accumulated other comprehensive income (loss)			(11	)			(29	)
Total stockholders’ equity			52,488				50,139
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	867,109			$	830,007

See notes to unaudited consolidated financial statements.

Harleysville Savings Financial Corporation

		For the Three Months Ended								For the Nine Months Ended
		June 30,								June 30,
(In thousands, except per share data)		2010				2009				2010				2009
Interest Income:
Interest on mortgage loans		$	5,043			$	4,961			$	15,118			$	15,066
Interest on commercial loans			1,108				774				3,023				2,223
Interest on mortgage-backed securities			1,657				2,209				5,335				7,163
Interest on consumer and other loans			1,080				1,144				3,307				3,639
Interest on other taxable investments			802				572				2,562				2,134
Interest on tax-exempt investments			260				312				804				968
Dividends on investment securities			1				1				2				10
Total interest income			9,951				9,973				30,151				31,203
Interest Expense:
Interest on deposits			2,121				2,642				6,929				8,356
Interest on borrowings			3,169				3,486				9,655				10,460
Total interest expense			5,290				6,128				16,584				18,816
Net Interest Income			4,661				3,845				13,567				12,387
Provision for loan losses			150				90				450				290
Net Interest Income after Provision for Loan Losses			4,511				3,755				13,117				12,097
Other Income:
Customer service fees			176				161				488				497
Impairment of equity securities			—				—				—				(449	)
Gain on sale of investments			—				—				—				(11	)
Loss on sale of investments			—				—				—				20
Income on bank-owned life insurance			122				121				365				364
Other income			210				178				615				534
Total other income			508				460				1,468				955
Other Expenses:
Salaries and employee benefits			1,743				1,523				5,174				4,719
Occupancy and equipment			356				299				985				900
Deposit insurance premiums			229				604				682				861
Data processing			167				146				489				409
Other			710				541				2,175				1,798
Total other expenses			3,205				3,113				9,505				8,687
Income before Income Taxes			1,814				1,102				5,080				4,365
Income tax expense			500				246				1,392				930
Net Income		$	1,314			$	856			$	3,688			$	3,435
Basic Earnings Per Share		$	0.36			$	0.24			$	1.01			$	0.96
Diluted Earnings Per Share		$	0.36			$	0.24			$	1.01			$	0.95
Dividends Per Share		$	0.19			$	0.18			$	0.57			$	0.54

See notes to unaudited consolidated financial statements.

Harleysville Savings Financial Corporation

		Three Months Ended
		June 30,
(In thousands)		2010				2009
Net Income		$	1,314			$	856
Other Comprehensive Income
Unrealized (loss) gain on securities available for sale, net of tax (benefit) expense 2010, $19; 2009, $3 and reclassifications			(39	)(1)			6	(1)
Total Comprehensive Income		$	1,275			$	862
		2010				2009
(1) Disclosure of reclassification amount, net of tax for the three months ended:
Net unrealized (loss) gain arising during the three months ended		$	(58	)		$	9
Reclassification adjustment for net losses (gains) included in net income			—				—
			(58	)			9
Tax benefit (expense)			19				(3	)
Net unrealized (loss) gain on securities available for sale		$	(39	)		$	6

		Nine Months Ended
		June 30,
(In thousands)		2010				2009
Net Income		$	3,688			$	3,435
Other Comprehensive Income
Unrealized gain on securities available for sale, net of tax expense 2010, $10; 2009, $1 and reclassifications			18	(1)			2	(1)
Total Comprehensive Income		$	3,706			$	3,437
		2010				2009
(1) Disclosure of reclassification amount, net of tax for the six months ended:
Net unrealized gain (loss) arising during the nine months ended		$	28			$	(437	)
Reclassification adjustment for net losses included in net income			—				440
			28				3
Tax expense			(10	)			(1	)
Net unrealized gain on securities available for sale		$	18			$	2

See notes to unaudited consolidated financial statements.

Harleysville Savings Financial Corporation

		Common												Retained				Accumulated
		Stock								Additional				Earnings-				Other								Total
		Shares				Common				Paid-in				Partially				Comprehensive				Treasury				Stockholders’
(In thousands, except share and per share data)		Outstanding				Stock				Capital				Restricted				(Loss) / Income				Stock				Equity
Balance at October 1, 2009			3,627,696			$	39			$	8,002			$	46,329			$	(29	)		$	(4,202	)		$	50,139
Net income															3,688												3,688
Dividends — $.57 per share															(2,077	)											(2,077	)
Stock option compensation											124																124
Treasury Stock Purchase			(5,659	)																			(77	)			(77	)
Treasury stock delivered under ESOP			10,000																				137				137
Treasury stock delivered under reinvestment plan			31,200								3												427				430
Employee options exercised			10,950								(44	)											150				106
Change in unrealized holding loss on available-for-sale securities, net of reclassification and tax																			18								18
Balance at June 30, 2010			3,674,187			$	39			$	8,085			$	47,940			$	(11	)		$	(3,565	)		$	52,488

		Common												Retained				Accumulated
		Stock								Additional				Earnings-				Other								Total
		Shares				Common				Paid-in				Partially				Comprehensive				Treasury				Stockholders’
(In thousands, except share and per share data)		Outstanding				Stock				Capital				Restricted				(Loss) / Income				Stock				Equity
Balance at October 1, 2008			3,567,934			$	39			$	7,993			$	44,235			$	(41	)		$	(5,017	)		$	47,209
Net income															3,435												3,435
Dividends — $.54 per share															(1,936	)											(1,936	)
Stock option compensation											102																102
Treasury stock delivered under ESOP			10,000								(17	)											137				120
Treasury stock delivered under reinvestment plan			34,885								(47	)											478				431
Employee options exercised			2,084								(9	)											29				20
Change in unrealized holding loss on available-for-sale securities, net of reclassification and tax																			2								2
Balance at June 30, 2009			3,614,903			$	39			$	8,022			$	45,734			$	(39	)		$	(4,373	)		$	49,383

See notes to unaudited consolidated financial statements.

Harleysville Savings Financial Corporation

		Nine Months Ended June 30,
(In thousands)		2010				2009
Operating Activities:
Net Income		$	3,688			$	3,435
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			416				347
Provision for loan losses			450				290
Realized net gains on securities			—				(9	)
Loss on impairment of equity securities			—				449
Loss on sale of foreclosed real estate			159				—
Amortization of deferred loan fees			62				47
Net amortization of premiums and discounts			127				107
Increase in cash surrender value of bank owned life insurance			(365	)			(364	)
Compensation charge on stock options			124				102
Changes in assets and liabilities which provided (used) cash:
Decrease in accounts payable and accrued expenses			(261	)			(453	)
Increase in prepaid expenses and other assets			(1,139	)			(1,063	)
Decrease in accrued interest receivable			352				458
Decrease in accrued interest payable			(131	)			(71	)
Net cash provided by operating activities			3,482				3,275
Investing Activities:
Purchase of mortgage-backed securities held to maturity			(14,986	)			—
Purchase of investment securities held to maturity			(84,956	)			(25,000	)
Purchase of investment securities available-for-sale			(71,301	)			(55,050	)
Net purchase of FHLB stock			—				478
Proceeds from the redemption of investment securities available-for-sale			74,529				35,572
Proceeds from maturities of investment securities held to maturity			50,529				1,365
Proceeds from sale of foreclosed real estate			588				—
Principal collected on mortgage-backed securities			33,758				64,112
Principal collected on loans receivable			85,411				101,726
Loans originated or acquired			(103,341	)			(108,870	)
Purchases of premises and equipment			(2,159	)			(317	)
Net cash (used in) provided by investing activities			(31,928	)			14,016
Financing Activities:
Net increase in demand deposits, NOW accounts and savings accounts			71,307				17,606
Net (decrease) increase in certificates of deposit			(15,138	)			7,878
Cash dividends			(1,647	)			(1,505	)
Net decrease in short-term borrowings			—				(21,800	)
Proceeds from long-term debt			—				24,500
Repayment of long-term debt			(25,316	)			(34,458	)
Acquisition of treasury stock			(77	)			—
Treasury stock delivered under employee stock plans			243				140
Net increase in advances from borrowers for taxes and insurance			4,292				4,100
Net cash provided by (used in) financing activities			33,664				(3,539	)
INCREASE IN CASH AND CASH EQUIVALENTS			5,218				13,752
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR			9,442				9,374
CASH AND CASH EQUIVALENTS AT END OF YEAR		$	14,660			$	23,126
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest		$	16,715			$	12,887
Income taxes			1,175				1,203
Non — cash transfer of loans to real estate owned			—				567

See notes to consolidated financial statements.

Harleysville Savings Financial Corporation

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation — The unaudited consolidated financial statements include the accounts of Harleysville Savings Financial Corporation (the “Company”) and its subsidiary. Harleysville Savings Bank (the “Bank”) is the wholly owned subsidiary of the Company. The accompanying consolidated financial statements include the accounts of the Company, the Bank, and the Bank’s wholly owned subsidiaries, HSB Inc, a Delaware corporation which was formed in order to hold certain assets, Freedom Financial LLC that allows the Company to offer non deposit products and HARL LLC that allows the Bank to invest in equity investments. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions for Form 10-Q and therefore do not include information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary for a fair presentation of the consolidated financial statements have been included. The results of operations for the three and nine months ended June 30, 2010 are not necessarily indicative of the results which may be expected for the entire fiscal year ending September 30, 2010 or any other period. The financial information should be read in conjunction with the Company’s Annual Report on Form 10-K for the period ended September 30, 2009.

Use of Estimates in Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant of these estimates are the allowance for loan losses, the determination of other-than-temporary impairment on securities and the valuation of deferred tax assets. Actual results could differ from those estimates.

Reclassifications

Certain amounts in the prior period’s financial statements have been reclassified to conform with the current year’s classifications. The reclassifications had no effect on net income.

Subsequent Events

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of June 30, 2010 through the date of issuance of these financial statements for items that should potentially be recognized or disclosed in these financial statements.

New Accounting Standards

In October 2009, the FASB issued Accounting Standards Update (ASU) 2009-16, Transfers and Servicing (Topic 860) — Accounting for Transfers of Financial Assets. This Update amends the Accounting Standards (Codification) for the issuance of FASB Statement No. 166, Accounting for Transfers of Financial Assets-an amendment of FASB Statement No. 140. The amendments in this Update improve financial reporting by eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance and the exception that permitted sale accounting for certain mortgage securitizations when a transferor has not surrendered control over the transferred financial assets. In addition, the amendments require enhanced disclosures about the risks that a transferor continues to be exposed to because of its continuing involvement in transferred financial assets. Comparability and consistency in accounting for transferred financial assets will also be improved through clarifications of the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. This Update is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. Early application is not permitted. The Company is continuing to evaluate the impact that the adoption of this new guidance will have on our financial position and results of operations.

In October 2009, the FASB issued ASU 2009-17, Consolidations (Topic 810) — Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Update amends the Codification for the issuance of FASB Statement No. 167, Amendments to FASB Interpretation No. 46(R). The amendments in this Update replace the quantitative-based risks and rewards calculation for determining which reporting entity, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which reporting entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. An approach that is expected to be primarily qualitative will be more effective for identifying which reporting entity has a controlling financial interest in a variable interest entity. The amendments in this Update also require additional disclosures about a reporting entity’s involvement in variable interest entities, which will enhance the information provided to users of financial statements. This Update is effective at the start of a reporting entity’s first fiscal year beginning after November 15, 2009. Early application is not permitted. We do not expect the adoption of this new guidance to have an impact on our financial position or result of operations.

The FASB has issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This ASU requires some new disclosures and clarifies some existing disclosure requirements about fair value measurement as set forth in Codification Subtopic 820-10. The FASB’s objective is to improve these disclosures and, thus, increase the transparency in financial reporting. Specifically, ASU 2010-06 amends Codification Subtopic 820-10 to now require:

•

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.

In addition, ASU 2010-06 clarifies the requirements of the following existing disclosures:

•

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 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. Early adoption is permitted. We do not expect the adoption of this standard to have an impact on our financial position or results of operations.

ASU 2010-09, Subsequent Events (Topic 855): Amendments to Certain Recognition and Disclosure Requirements. The amendments in the ASU remove the requirement for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of U.S. GAAP.

All of the amendments in the ASU were effective upon issuance (February 24, 2010). The adoption of this new guidance did not have an impact on our financial position or result of operations.

ASU 2010-18, Receivables (Topic 310): Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset, codifies the consensus reached in EITF Issue No. 09-I, “Effect of a Loan Modification When the Loan Is Part of a Pool That Is Accounted for as a Single Asset.” The amendments to the Codification provide that modifications of loans that are accounted for within a pool under Subtopic 310-30 do not result in the removal of those loans from the pool even if the modification of those loans would otherwise be considered a troubled debt restructuring. An entity will continue to be required to consider whether the pool of assets in which the loan is included is impaired if expected cash flows for the pool change. ASU 2010-18 does not affect the accounting for loans under the scope of Subtopic 310-30 that are not accounted for within pools. Loans accounted for individually under Subtopic 310-30 continue to be subject to the troubled debt restructuring accounting provisions within Subtopic 310-40.

ASU 2010-18 is effective prospectively for modifications of loans accounted for within pools under Subtopic 310-30 occurring in the first interim or annual period ending on or after July 15, 2010. Early application is permitted. Upon initial adoption of ASU 2010-18, an entity may make a one-time election to terminate accounting for loans as a pool under Subtopic 310-30. This election may be applied on a pool-by-pool basis and does not preclude an entity from applying pool accounting to subsequent acquisitions of loans with credit deterioration. The Company is continuing to evaluate the impact that the adoption of this new guidance will have on our financial position and results of operations.

ASU 20100-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses, will help investors assess the credit risk of a company’s receivables portfolio and the adequacy of its allowance for credit losses held against the portfolios by expanding credit risk disclosures.

This ASU requires more information about the credit quality of financing receivables in the disclosures to financial statements, such as aging information and credit quality indicators. Both new and existing disclosures must be disaggregated by portfolio segment or class. The disaggregation of information is based on how a company develops its allowance for credit losses and how it manages its credit exposure.

The amendments in this update apply to all public and nonpublic entities with financing receivables. Financing receivables include loans and trade accounts receivable. However, short-term trade accounts receivable, receivables measured at fair value or lower of cost or fair value, and debt securities are exempt from these disclosure amendments.

The effective date of ASU 2010-20 differs for public and nonpublic companies. For public companies, the amendments that require disclosures as of the end of a reporting period are effective for periods ending on or after December 15, 2010. The amendments that require disclosures about activity that occurs during a reporting period are effective for periods beginning on or after December 15, 2010. For nonpublic companies, the amendments are effective for annual reporting periods ending on or after December 15, 2011. The Company is continuing to evaluate the impact that the adoption of this new guidance will have on our financial position and results of operations.

2. INVESTMENT SECURITIES HELD TO MATURITY

A comparison of amortized cost and approximate fair value of investment securities held to maturity with gross unrealized gains and losses, by maturities, is as follows:

		June 30, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In Thousands)		Cost				Gains				Losses				Fair Value
U.S. Government Agencies
Due 1 year or less		$	14,978			$	9			$	—			$	14,987
Due after 1 year through 5 years			13,000				173				—				13,173
Due after 5 years through 10 years			25,000				203				—				25,203
Due after 10 years through 15 years			64,991				348				(3	)			65,336
Due after 15 years			2,432				160				—				2,592
Tax Exempt Municipal Obligations
Due after 5 years through 10 years			4,563				111				—				4,674
Due after 10 years through 15 years			12,752				521				(19	)			13,254
Due after 15 years			2,012				—				(108	)			1,904
Total Investment Securities		$	139,728			$	1,525			$	(130	)		$	141,123

		September 30, 2009
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In Thousands)		Cost				Gains				Losses				Fair Value
U.S. Government Agencies
Due 1 year or less		$	5,000			$	98			$	—			$	5,098
Due after 1 year through 5 years			8,000				34				—				8,034
Due after 5 years through 10 years			10,996				4				(80	)			10,920
Due after 10 years through 15 years			56,175				299				(278	)			56,196
Due after 15 years			2,431				178				—				2,609
Tax Exempt Municipal Obligations
Due after 5 years through 10 years			3,898				170				—				4,068
Due after 10 years through 15 years			16,303				708				(3	)			17,008
Due after 15 years			2,391				—				(150	)			2,241
Total Investment Securities		$	105,194			$	1,491			$	(511	)		$	106,174

A summary of investments with unrealized losses, aggregated by category, at June 30, 2010 is as follows:

		Less than 12 Months								12 Months or Longer								Total				Total
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
US Government agencies		$	4,997			$	(3	)		$	—			$	—			$	4,997			$	(3	)
Tax exempt municipal obligations			—				—				3,268				(127	)			3,268				(127	)
Total		$	4,997			$	(3	)		$	3,268			$	(127	)		$	8,265			$	(130	)

At June 30, 2010, investment securities in a gross unrealized loss position consisted of 6 securities that at such date had an aggregate depreciation of 1.54% from the Company’s amortized cost basis. Management believes that the estimated fair value of the securities disclosed above is primarily dependent upon the movement in market interest rates. Management evaluated the length of time and the extent to which the fair value has been less than cost; the financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer. The Company does not have the intent to sell these securities prior to recovery and the Company does not believe it will be required to sell such securities prior to recovery. Management does not believe any individual unrealized loss as of June 30, 2010 represents an other-than-temporary impairment.

A summary of investments with unrealized losses, aggregated by category, at September 30, 2009 is as follows:

		Less than 12 Months								12 Months or Longer								Total				Total
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
US Government agencies		$	29,637			$	(358	)		$	—			$	—			$	29,637			$	(358	)
Tax exempt municipal obligations			1,000				(3	)			3,036				(150	)			4,036				(153	)
Total		$	30,637			$	(361	)		$	3,036			$	(150	)		$	33,673			$	(511	)

3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE

A comparison of amortized cost and approximate fair value of investment securities available for sale with gross unrealized gains and losses is as follows:

		June 30, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In Thousands)		Cost				Gain				Losses				Fair Value
Equity Securities of Financial Institutions		$	355			$	45			$	(63	)		$	337
Money Market Mutual Funds			3,179				—				—				3,179
Total Investment Securities		$	3,534			$	45			$	(63	)		$	3,516

		September 30, 2009
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In Thousands)		Cost				Gain				Losses				Fair Value
Equity Securities of Financial Institutions		$	355			$	48			$	(92	)		$	311
Money Market Mutual Funds			6,417				—				—				6,417
Total Investment Securities		$	6,772			$	48			$	(92	)		$	6,728

A summary of investments with unrealized losses, aggregated by category, at June 30, 2010 is as follows:

		Less than 12 Months								12 Months or Longer
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Equity Securities of Financial Institutions		$	54			$	(3	)		$	152			$	(60	)		$	206			$	(63	)

As of June 30, 2010 there were four equity securities in an unrealized loss position. Management evaluated the length of time and the extent to which the market value has been less than cost; the financial condition and near term prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential. The Company has the intent and ability to hold these securities until recovery. Management does not believe any individual unrealized loss as of June 30, 2010 represents an other-than-temporary impairment.

A summary of investments with unrealized losses, aggregated by category, at September 30, 2009 is as follows:

		Less than 12 Months								12 Months or Longer								Total				Total
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Equity Securities of Financial Institutions		$	104			$	(43	)		$	74			$	(49	)		$	178			$	(92	)

4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY

A comparison of amortized cost and approximate fair value of mortgage-backed securities held to maturity with gross unrealized gains and losses, is as follows:

		June 30, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized				Approximate
(In Thousands)		Cost				Gains				Losses				Fair Value
Collateralized mortgage obligations		$	22,509			$	162			$	(330	)		$	22,341
FHLMC pass-through certificates			50,468				3,267				—				53,735
FNMA pass-through certificates			68,902				4,290				—				73,192
GNMA pass-through certificates			1,545				38				—				1,583
Total residential mortgage-backed securities		$	143,424			$	7,757			$	(330	)		$	150,851

		September 30, 2009
						Gross				Gross
		Amortized				Unrealized				Unrealized				Approximate
(In Thousands)		Cost				Gains				Losses				Fair Value
Collateralized mortgage obligations		$	11,681			$	54			$	(271	)		$	11,464
FHLMC pass-through certificates			65,005				3,270				—				68,275
FNMA pass-through certificates			85,744				3,728				(1	)			89,471
Total residential mortgage-backed securities		$	162,430			$	7,052			$	(272	)		$	169,210

A summary of securities with unrealized losses, aggregated by category, at June 30, 2010 is as follows:

		Less than 12 Months								12 Months or Longer								Total				Total
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Collateralized Mortgage Obligations held to maturity		$	13,263			$	(250	)		$	1,607			$	(80	)		$	14,870			$	(330	)

At June 30, 2010, collateralized mortgage obligations in a gross unrealized loss for less than twelve months consisted of 6 securities that at such date had an aggregate depreciation of 1.85% from the Company’s amortized cost basis. At June 30, 2010, collateralized mortgage obligations in a gross unrealized loss position for twelve months or longer consisted of one security that at such date had an aggregate depreciation of 4.76% from the Company’s amortized cost basis. Management believes that the estimated fair value of the securities disclosed above is primarily dependent upon the movement in market interest rates. Management evaluated the length of time and the extent to which the fair value has been less than cost; the financial condition and near term prospects of the issuer. The Company does not have the intent to sell these securities prior to recovery and the Company does not believe it will be required to sell such securities prior to recovery. Management does not believe any individual unrealized loss as of June 30, 2010 represents an other-than-temporary impairment.

A summary of securities with unrealized losses, aggregated by category, at September 30, 2009 is as follows:

		Less than 12 Months								12 Months or Longer								Total				Total
(In Thousands)		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Collateralized Mortgage Obligations held to maturity		$	2,264			$	(49	)		$	6,576			$	(223	)		$	8,840			$	(272	)

5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE

A comparison of amortized cost and approximate fair value of mortgage-backed securities available for sale with gross unrealized gains and losses, is as follows:

		June 30, 2010
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In thousands)		Cost				Gains				Losses				Fair Value
FNMA pass-through certificates		$	785			$	2			$	—			$	787
Total Residential Mortgage-Backed Securities		$	785			$	2			$	—			$	787

		September 30, 2009
						Gross				Gross
		Amortized				Unrealized				Unrealized
(In thousands)		Cost				Gains				Losses				Fair Value
FNMA pass-through certificates		$	785			$	—			$	—			$	785
Total Residential Mortgage-Backed Securities		$	785			$	—			$	—			$	785

6. LOANS RECEIVABLE

Loans receivable consist of the following:

		(In thousands)
		June 30, 2010				September 30, 2009
Residential Mortgages		$	349,639			$	346,202
Construction			4,269				2,912
Home Equity			89,633				92,434
Commercial Mortgages			58,304				48,958
Commercial Business Loans			17,239				10,389
Consumer Non-Real Estate			1,993				2,242
Total			521,077				503,137
Undisbursed portion of loans in process			(1,989	)			(1,873	)
Deferred loan fees			(842	)			(779	)
Allowance for loan losses			(2,437	)			(2,094	)
Loans Receivable — net		$	515,809			$	498,391