UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20429
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2007
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-29709
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-3028464
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
271 Main Street, Harleysville, Pennsylvania 19438
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(Address of principal executive offices)
(Zip Code)
(215) 256-8828
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer [_] Accelerated filer [_] Non-accelerated filer [X]
Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [_] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.01 Par Value, 3,735,894 shares outstanding as of February 12,
2008
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
Index
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PAGE(S)
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Part I FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Condensed Consolidated Statements of
Financial Condition as of December 31, 2007, and
September 30, 2007 1
Unaudited Condensed Consolidated Statements of Income
for the Three Months Ended December 31, 2007 and 2006 2
Unaudited Condensed Consolidated Statements of
Comprehensive Income for the Three Months Ended
December 31, 2007 and 2006 3
Unaudited Condensed Consolidated Statement of
Stockholders' Equity for the Three Months Ended
December 31, 2007 4
Unaudited Condensed Consolidated Statements of
Cash Flows for the Three Months Ended
December 31, 2007 and 2006 5
Notes to Unaudited Condensed Consolidated Financial
Statements 6 - 16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17 - 19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 19 - 20
Item 4. Control and Procedures 21
Part II OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 1A. Risk Factors 22
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds 22
Item 3. Defaults upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other information 23
Item 6. Exhibits 23
Signatures 24
Harleysville Savings Financial Corporation
Unaudited Condensed Consolidated Statements of Financial Condition
December 31, September 30,
(In thousands, except share data) 2007 2007
-------------- --------------
Assets
Cash and amounts due from depository institutions $ 1,465 $ 1,647
Interest bearing deposits in other banks 9,509 6,670
-------------- --------------
Total cash and cash equivalents 10,974 8,317
Investment securities held to maturity (fair value -
December 31, $115,132; September 30, $109,305) 113,234 108,693
Investment securities available-for-sale at fair value 1,521 1,910
Mortgage-backed securities held to maturity (fair value -
December 31, $193,850; September 30, $188,612) 194,940 192,842
Mortgage-backed securities available-for-sale at fair value 795 817
Loans receivable (net of allowance for loan losses -
December 31, $1,924; September 30, $1,932) 428,916 419,053
Accrued interest receivable 4,055 4,047
Federal Home Loan Bank stock - at cost 13,999 14,140
Office properties and equipment, net 9,875 9,917
Prepaid expenses and other assets 13,579 13,808
-------------- --------------
TOTAL ASSETS $ 791,888 $ 773,544
============== ==============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 440,500 $ 424,035
Advances 298,711 298,609
Accrued interest payable 1,541 1,556
Advances from borrowers for taxes and insurance 3,267 1,247
Accounts payable and accrued expenses 630 1,056
-------------- --------------
Total liabilities 744,649 726,503
-------------- --------------
Stockholders' equity:
Preferred Stock: $.01 par value;
12,500,000 shares authorized; none issued
Common stock: $.01 par value; 25,000,000 shares authorized;
3,921,177 shares issued 39 39
Additional Paid-in capital 8,032 8,044
Treasury stock, at cost (Dec. 2007, 193,700 shares; Sept. 2007, 203,658) (3,151) (3,316)
Retained earnings - partially restricted 42,533 42,363
Accumulated other comprehensive loss (214) (89)
-------------- --------------
Total stockholders' equity 47,239 47,041
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 791,888 $ 773,544
============== ==============
See notes to unaudited condensed consolidated financial statements.
page -1-
Harleysville Savings Financial Corporation
Unaudited Condensed Consolidated Statements of Income
For the Three Months Ended
(In thousands, except per share data) December 31,
---------------------------
2007 2006
---- ----
INTEREST INCOME:
Interest on mortgage loans $ 4,585 $ 4,213
Interest on commercial loans 308 41
Interest on mortgage-backed securities 2,281 2,444
Interest on consumer and other loans 1,516 1,510
Interest on taxable investments 1,451 1,257
Interest on tax-exempt investments 351 360
Dividends on investment securities 9 16
------------ ------------
Total interest income 10,501 9,841
------------ ------------
Interest Expense:
Interest on deposits 4,145 3,710
Interest on borrowings 3,486 3,306
------------ ------------
Total interest expense 7,631 7,016
------------ ------------
Net Interest Income 2,870 2,825
Provision for loan losses -- --
------------ ------------
Net Interest Income after Provision
for Loan Losses 2,870 2,825
------------ ------------
Other Income:
Customer service fees 164 130
Income on bank-owned life insurance 131 118
Other income 204 125
------------ ------------
Total other income 499 373
------------ ------------
Other Expenses:
Salaries and employee benefits 1,320 1,255
Occupancy and equipment 266 253
Deposit insurance premiums 12 13
Data processing 119 156
Other 669 583
------------ ------------
Total other expenses 2,386 2,260
------------ ------------
Income before Income Taxes 983 938
Income tax expense 182 181
------------ ------------
Net Income $ 801 $ 757
============ ============
Basic Earnings Per Share $ 0.22 $ 0.20
============ ============
Diluted Earnings Per Share $ 0.21 $ 0.19
============ ============
Dividends Per Share $ 0.17 $ 0.17
============ ============
See notes to unaudited condensed consolidated financial statements.
page -2-
Harleysville Savings Financial Corporation
Unaudited Condensed Consolidated Statement of Comprehensive Income
Three Months Ended
December 31,
(In thousands) 2007 2006
----------------------------------------------------------------------------------------------------------
Net Income $ 801 $ 757
Other Comprehensive Income
Unrealized (loss) gain on securities, net of tax
2007, ($64); 2006, $20 (125)(1) 39(1)
-------- --------
Total Comprehensive Income $ 676 $ 796
======== ========
(1) Disclosure of reclassification amount, net of tax for the three months ended 2007 2006
-------- --------
Net unrealized gain (loss) arising during the three months ended $ (125) $ 39
Less: Reclassification adjustment for net gains included in net income
Net of tax expense -2007, $0; 2006, $0 -- --
-------- --------
Net unrealized (loss) gain on securities $ (125) $ 39
======== ========
page -3-
Harleysville Savings Financial Corporation
Unaudited Condensed Consolidated Statement of Stockholders' Equity
Accumulated
Other
Retained Compre-
Common Additional Earnings- hensive Total
Stock Common Paid-in Treasury Partially (Loss) / Stockholders'
(In thousands, except share and per share data) Shares Stock Capital Stock Restricted Income Equity
---------------------------------------------------------------------------------------------------------------------- ---------
Balance at October 1, 2007 3,921,177 $ 39 $ 8,044 $ (3,316) $ 42,363 $ (89) $ 47,041
Net Income 801 801
Dividends - $.17 per share (631) (631)
Option Compensation 20 20
Treasury Stock issued under
Dividend Reinvestment Plan (9,958 shares) (32) 165 133
Unrealized holding gain on
available - for- sale securities, net of tax (125) (125)
--------- --------- --------- --------- --------- --------- ---------
Balance at December 31, 2007 3,921,177 $ 39 $ 8,032 $ (3,151) $ 42,533 $ (214) $ 47,239
========= ========= ========= ========= ========= ========= =========
Accumulated
Other
Retained Compre-
Common Additional Earnings- hensive Total
Stock Common Paid-in Treasury Partially (Loss) / Stockholders'
(In thousands, except share and per share data) Shares Stock Capital Stock Restricted Income Equity
---------------------------------------------------------------------------------------------------------------------- ---------
Balance at October 1, 2006 3,921,177 $ 39 $ 7,992 $ (1,262) $ 41,715 $ (12) $ 48,472
Net Income 757 757
Dividends - $.17 per share (655) (655)
Option Compensation 32 32
Treasury stock issued for stock options
exercised (2,500 shares) (19) 43 24
Treasury Stock issued under
Dividend Reinvestment Plan (8,555 shares) (1) 149 148
Unrealized holding gain on
available - for- sale securities, net of tax 39 39
--------- --------- --------- --------- --------- --------- ---------
Balance at December 31, 2006 3,921,177 $ 39 $ 8,004 $ (1,070) $ 41,817 $ 27 $ 48,817
========= ========= ========= ========= ========= ========= =========
See notes to unaudited condensed consolidated financial statements.
page -4-
Harleysville Savings Financial Corporation
Unaudited Condensed Consolidated Statements of Cash Flows
Three Months Ended December 31,
-------------------------------
(In thousands) 2007 2006
------------ ------------
Operating Activities:
Net Income $ 801 $ 757
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 127 132
Deferred income taxes 47 (24)
Amortization of deferred loan fees 5 (2)
Net amortization of premiums and discounts 17 81
Increase in cash surrender value (131) (118)
Compensation charge on stock options 20 32
Changes in assets and liabilities which provided (used) cash:
(Decrease) Increase in accounts payable and accrued expenses (426) 11
Decrease in prepaid expenses and other assets 376 10
Decrease (increase) in accrued interest receivable (8) 209
Decrease in accrued interest payable (15) (132)
------------ ------------
Net cash provided by operating activities 813 956
Investing Activities:
Purchase of investment securities held to maturity (14,619) (2,475)
Proceeds from maturites of investment securities available-for-sale 222 --
Proceeds from sale of investment securities available-for-sale -- 5,653
Proceeds from redemtion of FHLB stock 141 998
Proceeds from maturities of investment securities held to maturity 7,964 18,458
Principal collected on long-term loans & mortgage-backed securities 22,446 24,444
Long-term loans originated or acquired (32,314) (20,095)
Purchases of premises and equipment (85) (2,130)
------------ ------------
Net cash (used in) provided by investing activities (16,245) 24,853
Financing Activities:
Net increase in demand deposits, NOW accounts
and savings accounts 372 2,721
Net increase (decrease) in certificates of deposit 16,093 (1,847)
Cash dividends (631) (654)
Proceeds from long-term debt 47,000 --
Repayment of long-term debt (46,898) (28,741)
Treasury stock delivered under Dividend Reinvestment and
employee stock plans 133 172
Net increase in advances from borrowers for taxes and insurance 2,020 1,790
------------ ------------
Net cash provided by (used in) financing activities 18,089 (26,559)
------------ ------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,657 (750)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,317 10,050
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 10,974 $ 9,300
============ ============
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest (credited and paid) $ 7,646 $ 7,147
Income taxes $ 300 $ --
See notes to consolidated financial statements.
page -5-
Harleysville Savings Financial Corporation
Notes to Unaudited Condensed Consolidated Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation -The unaudited condensed 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 condensed 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 months ended December 31, 2007 are not necessarily
indicative of the results which may be expected for the entire fiscal year
ending September 30, 2008 or any other period. The financial information should
be read in conjunction with the Annual Report on Form 10-K for the period ended
September 30, 2007.
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 statement and the reported amounts of income and
expenses during the reporting period. The most significant of these estimates is
the allowance for loan losses. Actual results could differ from those estimates.
Recent Accounting Pronouncements - In July 2006, the FASB issued FASB
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an
Interpretation of SFAS Statement No. 109 ("FIN 48"). FIN 48 prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken in a tax return. The Company
page -6-
must presume the tax position will be examined by the relevant tax authority and
determine whether it is more likely than not that the tax position will be
sustained upon examination, including resolution of any related appeals or
litigation processes, based on the technical merits of the position. A tax
position that meets the more-likely-than-not recognition threshold is measured
to determine the amount of benefit to recognize in the financial statements. FIN
48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosure and transition. FIN 48 is
effective for fiscal years beginning after December 15, 2006. The cumulative
effect of applying the provisions of FIN 48 represents a change in accounting
principle and shall be reported as an adjustment to the opening balance of
retained earnings. In May 2007, the FASB issued FASB Staff Position ("FSP") FIN
48-1 "Definition of Settlement in FASB Interpretation No. 48" (FSP FIN 48-1).
FSP FIN 48-1 provides guidance on how to determine whether a tax position is
effectively settled for the purpose of recognizing previously unrecognized tax
benefits. There was no impact on the Company's financial statements upon
adoption of FIN 48 as of October 1, 2007.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS No. 157"). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. The changes to current practice
resulting from the application of SFAS No. 157 relate to the definition of fair
value, the methods used to measure fair value and the expanded disclosures about
fair value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007. Earlier application
is encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. The provisions of SFAS No. 157 should be applied
prospectively as of the beginning of the fiscal year in which it is initially
applied, except for certain financial instruments which require retrospective
application as of the beginning of the fiscal year of initial application (a
limited form of retrospective application). The transition adjustment, measured
as the difference between the carrying amounts and the fair values of those
financial instruments at the date SFAS No. 157 is initially applied, should be
recognized as a cumulative-effect adjustment to the opening balance of retained
earnings. The Company is currently evaluating the impact of adopting SFAS No.
157 on its Consolidated Financial Statements.
In December 2007, the FASB issued proposed FASB Staff Position (FSP) 157-b,
"Effective Date of FASB Statement No. 157," that would permit a one-year
deferral in applying the measurement provisions of Statement No. 157 to
non-financial assets and non-financial liabilities (non-financial items) that
are not recognized or disclosed at fair value in an entity's financial
statements on a recurring basis (at least annually). Therefore, if the change in
fair value of a non-financial item is not required to be
page -7-
recognized or disclosed in the financial statements on an annual basis or more
frequently, the effective date of application of Statement 157 to that item is
deferred until fiscal years beginning after November 15, 2008 and interim
periods within those fiscal years. This deferral does not apply, however, to an
entity that applies Statement 157 in interim or annual financial statements
before proposed FSP 157-b is finalized. The Company is currently evaluating the
impact, if any, that the adoption of FSP 157-b will have on the Company's
operating income or net earnings.
In September 2006, the Emerging Issues Task Force (EITF) of FASB issued EITF
Issue No. 06-4, "Accounting for Deferred Compensation and Postretirement Benefit
Aspects of Endorsement Split Dollar Life Insurance Arrangements" (EITF 06-04).
EITF 06-4 requires the recognition of a liability related to the postretirement
benefits covered by an endorsement split-dollar life insurance arrangement. The
consensus highlights that the employer (who is also the policyholder) has a
liability for the benefit it is providing to its employee. As such, if the
policyholder has agreed to maintain the insurance policy in force for the
employee's benefit during his or her retirement, then the liability recognized
during the employee's active service period should be based on the future cost
of insurance to be incurred during the employee's retirement. Alternatively, if
the policyholder has agreed to provide the employee with a death benefit, then
the liability for the future death benefit should be recognized by following the
guidance in SFAS No. 106 or Accounting Principles Board (APB) Opinion No. 12, as
appropriate. For transition, an entity can choose to apply the guidance using
either of the following approaches: (a) a change in accounting principle through
retrospective application to all periods presented or (b) a change in accounting
principle through a cumulative-effect adjustment to the balance in retained
earnings at the beginning of the year of adoption. The disclosures are required
in fiscal years beginning after December 15, 2007, with early adoption
permitted. The Company is continuing to evaluate the impact of this statement on
its consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115." SFAS No. 159 permits entities to choose to measure many
financial instruments and certain other items at fair value. Unrealized gains
and losses on items for which the fair value option has been elected will be
recognized in earnings at each subsequent reporting date. SFAS No. 159 is
effective for our Company October 1, 2008. The Company is evaluating the impact
that the adoption of SFAS No. 159 will have on our consolidated financial
statements.
In June 2007, the Emerging Issues Task Force (EITF) reached a consensus on Issue
No. 06-11, "Accounting for Income Tax Benefits of Dividends on Share-Based
Payment Awards" ("EITF 06-11"). EITF 06-11 states that an entity should
recognize a realized tax benefit associated with dividends on nonvested equity
shares, nonvested equity share units and outstanding equity share options
charged to retained earnings
page -8-
as an increase in additional paid in capital. The amount recognized in
additional paid in capital should be included in the pool of excess tax benefits
available to absorb potential future tax deficiencies on share-based payment
awards. EITF 06-11 should be applied prospectively to income tax benefits of
dividends on equity-classified share-based payment awards that are declared in
fiscal years beginning after December 15, 2007. The Company expects that EITF
06-11 will not have an impact on its consolidated financial statements.
On September 7, 2006, the Task Force reached a conclusion on EITF Issue No.
06-5, "Accounting for Purchases of Life Insurance-Determining the Amount That
Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4,
Accounting for Purchases of Life Insurance" ("EITF 06-5"). The scope of EITF
06-5 consists of six separate issues relating to accounting for life insurance
policies purchased by entities protecting against the loss of "key persons". The
six issues are clarifications of previously issued guidance on FASB Technical
Bulletin No. 85-4. EITF 06-5 is effective for fiscal years beginning after
December 15, 2006. The adoption of this standard had no impact on the Company's
consolidated financial statements.
In March 2007, the FASB ratified Emerging Issues Task Force Issue No. 06-10
"Accounting for Collateral Assignment Split-Dollar Life Insurance Agreements:
(EITF 06-10). EITF 06-10 provides guidance for determining a liability for the
postretirement benefit obligation as well as recognition and measurement of the
associated asset on the basis of the terms of the collateral assignment
agreement. EITF 06-10 is effective for fiscal years beginning after December 15,
2007. The Company is currently assessing the impact of EITF 06-10 on its
consolidated financial position and results of operations.
In December of 2007, FASB issued statement No. 141 (R) "Business Combinations".
This Statement establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in the
acquiree. The Statement also provides guidance for recognizing and measuring the
goodwill acquired in the business combination and determines what information to
disclose to enable users of the financial statements to evaluate the nature and
financial effects of the business combination. The guidance will become
effective as of the beginning of a company's fiscal year beginning after
December 15, 2008. The Company believes that this new pronouncement will have an
immaterial impact on the Company's financial statements in future periods.
In December 2007, FASB issued statement No. 160 "Noncontrolling Interests in
Consolidated Financial Statements--an amendment of ARB No. 51". This Statement
establishes accounting and reporting standards for the noncontrolling interest
in a subsidiary and for the deconsolidation of a subsidiary. The guidance will
become effective as of the beginning of a company's fiscal year beginning after
December 15,
page -9-
2008. The Company believes that this new pronouncement will have an immaterial
impact on the Company's financial statements in future periods.
Staff Accounting Bulletin No. 110 (SAB 110) amends and replaces Question 6 of
Section D.2 of Topic 14, "Share-Based Payment," of the Staff Accounting Bulletin
series. Question 6 of Section D.2 of Topic 14 expresses the views of the staff
regarding the use of the "simplified" method in developing an estimate of
expected term of "plain vanilla" share options and allows usage of the
"simplified" method for share option grants prior to December 31, 2007. SAB 110
allows public companies which do not have historically sufficient experience to
provide a reasonable estimate to continue use of the "simplified" method for
estimating the expected term of "plain vanilla" share option grants after
December 31, 2007. SAB 110 is effective January 1, 2008.
Staff Accounting Bulletin No. 109 (SAB 109), "Written Loan Commitments Recorded
at Fair Value Through Earnings" expresses the views of the staff regarding
written loan commitments that are accounted for at fair value through earnings
under generally accepted accounting principles. To make the staff's views
consistent with current authoritative accounting guidance, the SAB revises and
rescinds portions of SAB No. 105, "Application of Accounting Principles to Loan
Commitments." Specifically, the SAB revises the SEC staff's views on
incorporating expected net future cash flows related to loan servicing
activities in the fair value measurement of a written loan commitment. The SAB
retains the staff's views on incorporating expected net future cash flows
related to internally-developed intangible assets in the fair value measurement
of a written loan commitment. The staff expects registrants to apply the views
in Question 1 of SAB 109 on a prospective basis to derivative loan commitments
issued or modified in fiscal quarters beginning after December 15, 2007. The
Company does not expect SAB 109 to have a material impact on its financial
statements.
page -10-
2. INVESTMENT SECURITIES HELD TO MATURITY
A comparison of amortized cost and approximate fair value of investment
securities with gross unrealized gains and losses, by maturities, is as follows:
December 31, 2007
Gross Gross
Amortized Unrealized Unrealized Approximate
(In thousands) Cost Gains Losses Fair Value
----------------------------------------------------------------------------------------
U.S. Government Agencies $ 88,168 $ 787 $ (19) $ 88,936
Tax-Exempt Obligations 25,066 1,248 (118) 26,196
------------ ------------ ------------ ------------
Total Investment Securities $ 113,234 $ 2,035 $ (137) $ 115,132
============ ============ ============ ============
September 30, 2007
Gross Gross
Amortized Unrealized Unrealized Approximate
(In thousands) Cost Gains Losses Fair Value
----------------------------------------------------------------------------------------
U.S. Government Agencies $ 83,155 $ 211 $ (533) $ 82,834
Tax Exempt Obligations 25,538 1,101 (167) 26,471
------------ ------------ ------------ ------------
Total Investment Securities $ 108,693 $ 1,312 $ (700) $ 109,305
============ ============ ============ ============
page -11-
3. INVESTMENT SECURITIES AVAILABLE-FOR-SALE
A comparison of amortized cost and approximate fair value of investment
securities with gross unrealized gains and losses, is as follows:
December 31, 2007
Gross Gross
Amortized Unrealized Unrealized
(In thousands) Cost Gains Losses Fair Value
----------------------------------------------------------------------------------------
Equity Securities $ 1,502 $ 1 $ (335) $ 1,168
Money Market Mutual Funds 353 353
------------ ------------ ------------ ------------
Total Investment Securities $ 1,855 $ 1 $ (335) $ 1,521
============ ============ ============ ============
September 30, 2007
Gross Gross
Amortized Unrealized Unrealized
(In thousands) Cost Gains Losses Fair Value
----------------------------------------------------------------------------------------
Equity Securities $ 1,501 $ 6 $ (173) $ 1,334
Money Market Mutual Funds 576 576
------------ ------------ ------------ ------------
Total Investment Securities $ 2,077 $ 6 $ (173) $ 1,910
============ ============ ============ ============
page -12-
4. MORTGAGE-BACKED SECURITIES HELD TO MATURITY
A comparison of amortized cost and approximate fair value of mortgage-backed
securities with gross unrealized gains and losses, is as follows:
December 31,2007
Gross Gross
Amortized Unrealized Unrealized Approximate
(In thousands) Cost Gains Losses Fair Value
------------------------------------------------------------------------------------------------
Collateralized mortgage obligations $ 16,124 $ 80 $ (159) $ 16,045
FHLMC pass-through certificates 95,877 375 (857) 95,395
FNMA pass-through certificates 82,704 96 (627) 82,173
GNMA pass-through certificates 235 2 237
------------ ------------ ------------ ------------
Total Mortgage-Backed Securities $ 194,940 $ 553 $ (1,643) $ 193,850
============ ============ ============ ============
September 30,2007
Gross Gross
Amortized Unrealized Unrealized Approximate
(In thousands) Cost Gains Losses Fair Value
------------------------------------------------------------------------------------------------
Collateralized mortgage obligations $ 16,471 $ 97 $ (299) $ 16,269
FHLMC pass-through certificates 89,533 164 (2,198) 87,499
FNMA pass-through certificates 86,586 12 (2,008) 84,590
GNMA pass-through certificates 252 2 254
------------ ------------ ------------ ------------
Total Mortgage-Backed Securities $ 192,842 $ 275 $ (4,505) $ 188,612
============ ============ ============ ============
page -13-
5. MORTGAGE-BACKED SECURITIES AVAILABLE-FOR-SALE
A comparison of amortized cost and approximate fair value of mortgage-backed
securities with gross unrealized gains and losses, is as follows:
December 31,2007
Gross Gross
Amortized Unrealized Unrealized
(In thousands) Cost Gains Losses Fair Value
--------------------------------------------------------------------------------------------
FNMA pass-through certificates $ 785 $ 10 $ -- $ 795
------------ ------------ ------------ ------------
Total Mortgage-Backed Securities $ 785 $ 10 $ -- $ 795
============ ============ ============ ============
September 30,2007
Gross Gross
Amortized Unrealized Unrealized
(In thousands) Cost Gains Losses Fair Value
--------------------------------------------------------------------------------------------
FNMA pass-through certificates $ 785 $ 32 $ -- $ 817
------------ ------------ ------------ ------------
Total Mortgage-Backed Securities $ 785 $ 32 $ -- $ 817
============ ============ ============ ============
6. LOANS RECEIVABLE
Loans receivable consist of the following:
(In thousands)
December 31, 2007 September 30, 2007
----------------- ------------------
Residential Mortgages $ 314,078 $ 305,341
Commercial Mortgages 18,696 15,314
Construction 3,988 6,093
Savings Account 1,036 977
Home Equity 73,673 74,218
Automobile and other 933 904
Home Equity Line of Credit 22,201 21,386
------------ ------------
Total 434,605 424,233
Undisbursed portion of loans in process (3,384) (2,795)
Deferred loan fees (381) (453)
Allowance for loan losses (1,924) (1,932)
------------ ------------
Loans Receivable - net $ 428,916 $ 419,053
============ ============
The total amount of loans being serviced for the benefit of others was
approximately $3.6 million at December 31, 2007 and September 30, 2007,
respectively.
The following schedule summarizes the changes in the allowance for loan losses:
Three Months Ended
December 31, 2007 September 30, 2007
----------------- ------------------
(In thousands)
Balance, beginning of period $ 1,933 $ 1,956
Amounts charged-off (13) (37)
Loan recoveries 4 13
------------ ------------
Balance, end of period $ 1,924 $ 1,932
============ ============
page -14-
7. DEPOSITS
Deposits are summarized as follows:
(In thousands)
December 31, 2007 September 30, 2007
----------------- ------------------
Non-interest bearing checking $ 11,296 $ 11,740
NOW accounts 15,680 13,711
Interest Checking accounts 27,082 25,750
Money Market Demand accounts 49,653 51,827
Passbook and Club accounts 2,553 2,864
Certificate accounts 334,236 318,143
------------ ------------
Total deposits $ 440,500 $ 424,035
============ ============
The aggregate amount of certificate accounts in denominations of more than
$100,000 at December 31, 2007 and September 30, 2007 amounted to approximately
$54.7 million and $53.6 million, respectively. Amounts in excess of $100,000 may
not be federally insured.
8. COMMITMENTS
At December 31, 2007, the following commitments were outstanding:
(In thousands)
Origination of mortgage loans $ 14,699
Unused line of credit loans 46,158
Loans in process 3,384
------------
Total $ 64,241
============
page -15-
9. EARNINGS PER SHARE
The following shares were used for the computation of earnings per share:
For the Three Months Ended
December 31,
---------------------------------
2007 2006
---- ----
Basic 3,721,413 3,854,322
Diluted 3,736,585 3,892,750
The difference between the number of shares used for computation of basic
earnings per share and diluted earnings per share represents the dilutive effect
of stock options.
10. ADVANCES
Advances consists of the following:
December 31, September 30,
2007 2007
(In thousands)
Weighted Weighted
Interest Interest
Maturing Period Amount Rate Amount Rate
-----------------------------------------------------------------------------
1 to 12 months $ 60,346 4.54% $ 69,227 5.07%
13 to 24 months 19,791 4.33% 20,043 4.37%
25 to 36 months 22,162 4.46% 17,410 4.50%
37 to 48 months 34,596 4.73% 23,595 4.99%
49 to 60 months 46,816 4.55% 58,334 4.48%
61 to 72 months 20,000 4.63% 20,000 4.63%
73 to 84 months 20,000 4.26% 20,000 4.26%
85 to 120 months 75,000 4.12% 70,000 4.50%
--------------------------------------------------
Total $ 298,711 4.49% $ 298,609 4.65%
==================================================
Federal Home Loan Bank (FHLB) advances are collateralized by Federal Home Loan
Bank ("FHLB") stock and substantially all first mortgage loans. The Company has
a line of credit with the FHLB of which $25.5 million out of $75.0 million was
used at December 31, 2007 and $31.5 million was used as of September 30, 2007,
for general purposes. Included in the table above at December 31, 2007 and
September 30, 2007 are convertible advances whereby the FHLB has the option at a
predetermined strike rate to convert the fixed interest rate to an adjustable
rate tied to London Interbank Offered Rate ("LIBOR"). The Company then has the
option to repay these advances if the FHLB converts the interest rate. These
advances are included in the periods in which they mature. The Company has a
total FHLB borrowing capacity of $522.1 million of which $258.7 million was used
as of December 31, 2007. In addition, there are three long-term advances from
other financial institutions that are secured by investment and mortgage-backed
securities totaling $40 million.
11. REGULATORY CAPITAL REQUIREMENTS
Harleysville Savings Bank (the "Bank") is subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by regulators that, if undertaken, could have
a direct material effect on the Bank's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative
measures of the Bank's assets, liabilities and certain off-balance-sheet items
as calculated under regulatory accounting practices. The Bank's capital amounts
and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. Quantitative measures
established by regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios (set forth in the table below) of total Tier
1 capital (as defined in the regulations) to risk weighted assets (as defined),
and of Tier 1 capital (as defined) to assets (as defined). Management believes,
as of December 31, 2007, that the Bank meets all capital adequacy requirements
to which it is subject.
As of December 31, 2007, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based,
and Tier 1 leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the Bank's
category.
The Bank's actual capital amounts and ratios are also presented in the table.
To Be Considered Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
(In thousands)
Amount Ratio Amount Ratio Amount Ratio
------------------------------------------------------------------------------------------------------------------------------------
As of December 31, 2007
Tier 1 Capital (to assets) $ 47,125 6.03% $ 31,286 4.00% $ 39,107 5.00%
Tier 1 Capital (to risk weighted assets) 47,125 11.91% 15,827 4.00% 23,741 6.00%
Total Capital (to risk weighted assets) 49,049 12.40% 31,654 8.00% 39,568 10.00%
As of September 30, 2007
Tier 1 Capital (to assets) $ 46,797 6.02% $ 31,021 4.00% $ 38,776 5.00%
Tier 1 Capital (to risk weighted assets) 46,797 12.12% 15,443 4.00% 23,164 6.00%
Total Capital (to risk weighted assets) 48,729 12.62% 30,886 8.00% 38,607 10.00%
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations This report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of management
as well as assumptions made by and information currently available to
management. In addition, in those and other portions of this document, the words
"anticipate," "believe," "estimate," "intend," "should" and similar expressions,
or the negative thereof, as they relate to the Company or the Company's
management, are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future-looking events
and are subject to certain risks, uncertainties and assumptions. Should one or
more of these risks or uncertainties materialize or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected or intended. The
Company does not intend to update these forward-looking statements.
The Company's business consists of attracting deposits from the general public
through a variety of deposit programs and investing such deposits principally in
first mortgage loans secured by residential properties, commercial loans and
commercial lines of credit in the Company's primary market area. The Company
also originates a variety of consumer loans, predominately home equity loans and
lines of credit also secured by residential properties in the Company's primary
lending area. The Company serves its customers through its full-service branch
network as well as through remote ATM locations, the internet and telephone
banking.
Critical Accounting Policies and Judgments
------------------------------------------
The Company's consolidated financial statements are prepared based on the
application of certain accounting policies. Certain of these policies require
numerous estimates and strategic or economic assumptions that may prove
inaccurate or subject to variations and may significantly affect the Company's
reported results and financial position for the period or in future periods.
Changes in underlying factors, assumptions, or estimates in any of these areas
could have a material impact on the Company's future financial condition and
results of operations.
Analysis and Determination of the Allowance for Loan Losses - The allowance for
loan losses is a valuation allowance for probable losses inherent in the loan
portfolio. The Company evaluates the need to establish allowances against losses
on loans on a monthly basis. When additional allowances are necessary, a
provision for loan losses is charged to earnings.
Our methodology for assessing the appropriateness of the allowance for loan
losses consists of three key elements: (1) specific allowances for certain
impaired or collateral-dependent loans; (2) a general valuation allowance on
certain identified problem loans; and (3) a general valuation allowance on the
remainder of the loan portfolio. Although we determine the amount of each
element of the allowance separately, the entire allowance for loan losses is
available for the entire portfolio.
Specific Allowance Required for Certain Impaired or Collateral-Dependent Loans:
We establish an allowance for certain impaired loans for the amounts by which
the collateral value or observable market price are lower than the carrying
value of the loan. Under current accounting guidelines, a loan is defined as
impaired when, based on current information and events, it is probable that a
creditor will be unable to collect all amounts due under the contractual terms
of the loan agreement. At December 31, 2007 and September 30, 2007, no loans
were considered impaired.
General Valuation Allowance on Certain Identified Problem Loans - We also
establish a general allowance for classified loans that do not have an
individual allowance. We segregate these loans by loan category and assign
allowance percentages to each category based on inherent losses associated with
each type of lending and consideration that these loans, in the aggregate,
represent an above-average credit risk and that more of these loans will prove
to be uncollectible compared to loans in the general portfolio.
General Valuation Allowance on the Remainder of the Loan Portfolio - We
establish another general allowance for loans that are not classified to
recognize the inherent losses associated with lending activities, but which,
unlike specific allowances, has not been allocated to particular problem assets.
This general valuation allowance is determined by segregating the loans by loan
category and assigning allowance percentages based on our historical loss
experience, delinquency trends and management's evaluation of the collectibility
of the loan portfolio. The allowance may be adjusted for significant factors
that, in management's judgment, affect the collectibility of the portfolio as of
the evaluation date. These significant factors may include changes in lending
policies and procedures,
page -17-
changes in existing general economic and business conditions affecting our
primary lending areas, credit quality trends, collateral value, loan volumes and
concentrations, seasoning of the loan portfolio, recent loss experience in
particular segments of the portfolio, duration of the current business cycle and
bank regulatory examination results. The applied loss factors are reevaluated
monthly to ensure their relevance in the current economic environment.
Changes in Financial Position for the Three-Month Period Ended December 31, 2007
--------------------------------------------------------------------------------
Total assets at December 31, 2007 were $791.9 million, an increase of $18.3
million for the three-month period then ended. The increase was primarily due to
the retail growth in mortgage and commercial loans, resulting in an overall
increase in loans receivable of approximately $9.9 million. There was also an
increase in investments due to purchases less maturities of approximately $6.6
million. The increase was partially offset by a decrease in accounts payable and
accrued expenses of $426,000.
During the three-month period ended December 31, 2007, total deposits increased
by $16.5 million to $440.5 million. Advances from borrowers for taxes and
insurance also increased by $2.0 million. There was also an increase in advances
of $103,000.
Comparisons of Results of Operations for the Three Month Period Ended December
------------------------------------------------------------------------------
31, 2007 with the Three Month Period Ended December 31, 2006
------------------------------------------------------------
Net Interest Income
-------------------
The increase in the net interest income for the three-month period ended
December 31, 2007 when compared to the same period in 2006 can be attributed to
the increase in interest rate spread from 1.45% in 2006 to 1.46% in 2007. Net
interest income was $2.9 million for the three-month period ended December 31,
2007 compared to $2.8 million for the comparable period in 2006.
Non-Interest Income
-------------------
Non-interest income increased to $499,000 for the three-month period ended
December 31, 2007 from $373,000 for the comparable period in 2006. The increase
is primarily due to the fact that the Company had additional income related to
customers transaction accounts.
Non-Interest Expenses
---------------------
For the three-month period ended December 31, 2007, non-interest expenses
increased by $126,000 or 5.6% to $2.4 million compared to $2.3 million for the
same period in 2006. Management believes that these are reasonable increases in
the cost of operations after considering the impact of additional expenses
related to the Company's new commercial loan department. The annualized ratio of
non-interest expenses to average assets for the three-month period ended
December 31, 2007 and 2006 was 1.21% and 1.19%, respectively.
Income Taxes
------------
The Company made provisions for income taxes of $182,000 for the three-month
period ended December 31, 2007 compared to $181,000 for the comparable period in
2006. These provisions are based on the levels of pre-tax income, adjusted
primarily for tax-exempt interest income on investments.
page -18-
Liquidity and Capital Recourses
-------------------------------
For a financial institution, liquidity is a measure of the ability to fund
customers' needs for loans and deposit withdrawals. Harleysville Savings Bank
regularly evaluates economic conditions in order to maintain a strong liquidity
position. One of the most significant factors considered by management when
evaluating liquidity requirements is the stability of the Bank's core deposit
base. In addition to cash, the Bank maintains a portfolio of short-term
investments to meet its liquidity requirements. Harleysville Savings also relies
upon cash flow from operations and other financing activities, generally
short-term and long-term debt. Liquidity is also provided by investing
activities including the repayment and maturity of loans and investment
securities as well as the management of asset sales when considered necessary.
The Bank also has access to and sufficient assets to secure lines of credit and
other borrowings in amounts adequate to fund any unexpected cash requirements.
As of December 31, 2007, the Company had $64.2 million in commitments to fund
loan originations, disburse loans in process and meet other obligations.
Management anticipates that the majority of these commitments will be funded
within the next six months by means of normal cash flows and new deposits.
The Company invests excess funds in overnight deposits and other short-term
interest-earning assets, which provide liquidity to meet lending requirements.
The Company also has available borrowings with the Federal Home Loan Bank of
Pittsburgh up to the Company's maximum borrowing capacity, which was $522.1
million at December 31, 2007 of which $258.7 million was outstanding at December
31, 2007.
The Bank's net income for the three months ended December 31, 2007 of $801,000
increased the Bank's stockholders' equity to $47.2 million or 6% of total
assets. This amount is well in excess of the Bank's minimum regulatory capital
requirement.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
------------------------------------------------------------------
The Company has instituted programs designed to decrease the sensitivity of its
earnings to material and prolonged increases in interest rates. The principal
determinant of the exposure of the Company's earnings to interest rate risk is
the timing difference between the repricing or maturity of the Company's
interest-earning assets and the repricing or maturity of its interest-bearing
liabilities. If the maturities of such assets and liabilities were perfectly
matched, and if the interest rates borne by its assets and liabilities were
equally flexible and moved concurrently, neither of which is the case, the
impact on net interest income of rapid increases or decreases in interest rates
would be minimized. The Company's asset and liability management policies seek
to increase the interest rate sensitivity by shortening the repricing intervals
and the maturities of the Company's interest-earning assets. Although management
of the Company believes that the steps taken have reduced the Company's overall
vulnerability to increases in interest rates, the Company remains vulnerable to
material and prolonged increases in interest rates during periods in which its
interest rate sensitive liabilities exceed its interest rate sensitive assets.
The authority and responsibility for interest rate management is vested in the
Company's Board of Directors. The Chief Executive Officer implements the Board
of Directors' policies during the day-to-day operations of the Company. Each
month, the Chief Financial Officer ("CFO") presents the Board of Directors with
a report, which outlines the Company's asset and liability "gap" position in
various time periods. The "gap" is the difference between interest- earning
assets and interest-bearing liabilities which mature or reprice over a given
time period.
page -19-
The CFO also meets weekly with the Company's other senior officers to review and
establish policies and strategies designed to regulate the Company's flow of
funds and coordinate the sources, uses and pricing of such funds. The first
priority in structuring and pricing the Company's assets and liabilities is to
maintain an acceptable interest rate spread while reducing the effects of
changes in interest rates and maintaining the quality of the Company's assets.
The following table summarizes the amount of interest-earning assets and
interest-bearing liabilities outstanding as of December 31, 2007, which are
expected to mature, prepay or reprice in each of the future time periods shown.
Except as stated below, the amounts of assets or liabilities shown which mature
or reprice during a particular period were determined in accordance with the
contractual terms of the asset or liability. Adjustable and floating-rate assets
are included in the period in which interest rates are next scheduled to adjust
rather than in the period in which they are due, and fixed-rate loans and
mortgage-backed securities are included in the periods in which they are
anticipated to be repaid.
The passbook accounts, negotiable order of withdrawal ("NOW") accounts, interest
bearing accounts, and money market deposit accounts, are included in the "Over 5
Years" categories based on management's beliefs that these funds are core
deposits having significantly longer effective maturities based on the Company's
retention of such deposits in changing interest rate environments.
Generally, during a period of rising interest rates, a positive gap would result
in an increase in net interest income while a negative gap would adversely
affect net interest income. Conversely, during a period of falling interest
rates, a positive gap would result in a decrease in net interest income while a
negative gap would positively affect net interest income. However, the following
table does not necessarily indicate the impact of general interest rate
movements on the Company's' net interest income because the repricing of certain
categories of assets and liabilities is discretionary and is subject to
competitive and other pressures. As a result, certain assets and liabilities
indicated as repricing within a stated period may in fact reprice at different
rate levels.
1 Year 1 to 3 3 to 5 Over 5
or less Years Years Years Total
------------ ------------ ------------ ------------ ------------
Interest-earning assets
Mortgage loans $ 61,127 $ 51,688 $ 21,629 $ 179,634 $ 314,078
Commercial loans 7,029 2,216 944 8,507 18,696
Mortgage-backed securities 66,202 66,063 19,041 44,429 195,735
Consumer and other loans 45,398 27,171 7,582 21,680 101,831
Investment securities and other investments 62,880 41,647 19,545 26,729 150,801
------------ ------------ ------------ ------------ ------------
Total interest-earning assets 242,636 188,785 68,741 280,979 781,141
------------ ------------ ------------ ------------ ------------
Interest-bearing liabilities
Passbook and Club accounts -- -- -- 2,553 2,553
NOW and checking accounts -- -- -- 42,762 42,762
Consumer Money Market Deposit accounts 15,316 27,516 42,832
Business Money Market Deposit accounts 5,116 -- -- 1,705 6,821
Certificate accounts 276,335 50,914 6,987 -- 334,236
Borrowed money 67,384 41,549 74,779 114,999 298,711
------------ ------------ ------------ ------------ ------------
Total interest-bearing liabilities 364,151 92,463 81,766 189,535 727,915
------------ ------------ ------------ ------------ ------------
Repricing GAP during the period $ (121,515) $ 96,322 $ (13,025) $ 91,444 $ 53,226
============ ============ ============ ============ ============
Cumulative GAP $ (121,515) $ (25,193) $ (38,218) $ 53,226
============ ============ ============ ============
Ratio of GAP during the period to total assets -15.34% 12.16% -1.64% 11.55%
============ ============ ============ ============
Ratio of cumulative GAP to total assets -15.34% -3.18% -4.83% 6.72%
============ ============ ============ ============
page -20-
Item 4. Controls and Procedures
Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based
on such evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are designed to ensure
that information required to be disclosed by us in the reports that we file or
submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
regulations and are operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred
during the most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
page -21-
Part II OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 1A. Risk Factors
There are no material changes to the risk factors set
forth in Part 1, Item 1A, Risk Factors"' of the
Company's Form 10-K for the year ended September 30,
2007. Please refer to that section for disclosures
regarding the risk and uncertainties related to the
Company's business.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of Stockholders was held on January 23,
2008.
(c) There were 3,727,273 shares of Common Stock of the Company
eligible to be voted at the Annual Meeting and 3,149,857
shares were represented at the meeting by the holders
thereof, which constituted a quorum. The items voted upon at
the Annual Meeting and the vote for each proposal were as
follows:
1. Election of directors for a three-year term:
FOR WITHHELD
--- --------
Charlotte A. Hunsberger, Esq. 3,119,513 30,344
Edward J. Molnar 3,121,864 27,993
Name of each director whose term of office continued:
Sanford L. Alderfer
Mark R. Cummins
Ronald B. Geib
David J. Friesen
George W. Meschter
James L. Rittenhouse
2. Proposal to ratify the appointment by the board of
Beard Miller Company LLP as the Company's independent
auditors for the year ending September 30, 2008
FOR AGAINST ABSTAIN
--- ------- -------
3,136,241 8,580 5,036
The proposals were adopted by the stockholders of the
Company.
page -22-
Item 5. Other information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
No.
31.1 Certification of Chief Executive Officer
31.2 Certification of Chief Financial Officer
32.0 Section 1350 Certification of Chief
Executive Officer and Chief Financial Officer
page -23-
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARLEYSVILLE SAVINGS FINANCIAL CORPORATION
Date: February 13, 2008 By: /s/ Ronald B. Geib
-----------------------------------
Ronald B. Geib
Chief Executive Officer
Date:February 13, 2008 By: /s/ Brendan J. McGill
-----------------------------------
Brendan J. McGill
Senior Vice President
Treasurer and Chief Financial Officer
page -24-