10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2012

OR

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

For the transition period from             to            

Commission file number 001-33003

CITIZENS COMMUNITY BANCORP, INC.

(Exact name of registrant as specified in its charter)

Maryland	20-5120010
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

2174 EastRidge Center, Eau Claire, WI 54701

(Address of principal executive offices)

715-836-9994

(Registrant’s telephone number, including area code)

(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 and 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

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

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

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

At August 13, 2012 there were 5,135,550 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

CITIZENS COMMUNITY BANCORP, INC.

FORM 10-Q

June 30, 2012

INDEX

		Page
		Number
Part I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and September 30, 2011		3
	Consolidated Statements of Operations (Unaudited) for the three and nine months ended June 30, 2012 and 2011		4
	Consolidated Statement of Comprehensive Income (Unaudited) for the nine months ended June 30, 2012 and 2011		5
	Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the nine months ended June 30, 2012		6
	Consolidated Statements of Cash Flows (Unaudited) for the nine months ended June 30, 2012 and 2011		7
	Condensed Notes to Consolidated Financial Statements (Unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		47
Item 4.	Controls and Procedures		49
Part II – OTHER INFORMATION			49
Item 1.	Legal Proceedings		49
Item 1A.	Risk Factors		50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 3.	Defaults Upon Senior Securities		50
Item 4.	Mine Safety Disclosures		50
Item 5.	Other Information		50
Item 6.	Exhibits		50
SIGNATURES			51

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PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CITIZENS COMMUNITY BANCORP, INC.

Consolidated Balance Sheets

June 30, 2012 (unaudited) and September 30, 2011

(derived from audited financial statements)

(in thousands, except share data)

	June 30, 2012			September 30, 2011
Assets
Cash and cash equivalents	$	20,855		$	31,763
Other interest-bearing deposits		—			9,543
Securities available for sale (at fair value)		67,436			44,338
Federal Home Loan Bank stock		4,426			5,787
Loans receivable		431,380			431,746
Allowance for loan losses		(5,702	)		(4,898	)
Loans receivable, net		425,678			426,848
Office properties and equipment, net		5,699			6,696
Accrued interest receivable		1,543			1,508
Intangible assets		288			483
Foreclosed and repossessed assets, net		1,002			1,360
Other assets		6,439			8,231
TOTAL ASSETS	$	533,366		$	536,557
Liabilities and Stockholders’ Equity
Liabilities:
Deposits	$	426,697		$	448,973
Federal Home Loan Bank advances		48,150			30,400
Other liabilities		4,423			4,296
Total liabilities		479,270			483,669
Stockholders’ equity:
Common stock—5,133,050 and 5,133,570 shares, respectively		51			51
Additional paid-in capital		53,949			53,934
Retained earnings		1,324			1,323
Unearned deferred compensation		(86	)		(102	)
Accumulated other comprehensive loss		(1,142	)		(2,318	)
Total stockholders’ equity		54,096			52,888
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	533,366		$	536,557

See accompanying condensed notes to unaudited consolidated financial statements.

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Operations (unaudited)

Three and Nine Months Ended June 30, 2012 and 2011

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	June 30,			June 30,			June 30,			June 30,
	2012			2011			2012			2011
Interest and dividend income:
Interest and fees on loans	$	6,247		$	6,773		$	19,409		$	21,038
Interest on investments		446			431			1,135			1,646
Total interest and dividend income		6,693			7,204			20,544			22,684
Interest expense:
Interest on deposits		1,274			1,711			4,115			5,545
Interest on borrowed funds		324			433			982			1,494
Total interest expense		1,598			2,144			5,097			7,039
Net interest income		5,095			5,060			15,447			15,645
Provision for loan losses		900			1,364			3,540			4,614
Net interest income after provision for loan losses		4,195			3,696			11,907			11,031
Noninterest income:
Total fair value adjustments and other-than-temporary impairment		107			126			(2,644	)		(1,288	)
Portion of loss (gain) recognized in other comprehensive loss (income) (before tax)		(107	)		(126	)		1,971			717
Net gains on sale of available for sale securities		11			281			91			516
Net gains (losses) on available for sale securities		11			281			(582	)		(55	)
Service charges on deposit accounts		400			386			1,127			1,095
Insurance commissions		35			25			49			73
Loan fees and service charges		133			70			354			349
Other		166			138			448			364
Total noninterest income		745			900			1,396			1,826
Noninterest expense:
Salaries and related benefits		2,237			2,128			6,600			6,238
Occupancy		617			606			1,838			1,915
Office		279			311			857			1,019
Data processing		389			250			1,120			605
Amortization of core deposit intangible		28			84			194			250
Advertising, marketing and public relations		47			26			147			94
FDIC premium assessment		124			279			518			822
Professional services		349			299			894			865
Other		284			310			1,115			990
Total noninterest expense		4,354			4,293			13,283			12,798
Income before provision for income tax		586			303			20			59
Provision for income taxes		237			127			19			42
Net income attributable to common stockholders	$	349		$	176		$	1		$	17
Per share information:
Basic earnings	$	0.07		$	0.03		$	—		$	—
Diluted earnings	$	0.07		$	0.03		$	—		$	—
Dividends paid	$	—		$	—		$	—		$	—

See accompanying condensed notes to unaudited consolidated financial statements.

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Other Comprehensive Income (unaudited)

Nine Months Ended June 30, 2012 and 2011

(in thousands, except per share data)

	Nine Months Ended
	June 30, 2012		June 30, 2011
Net income attributable to common stockholders	$	1	$	17
Other comprehensive income, net of tax:
Securities available for sale
Net unrealized gains arising during period		715		2,391
Reclassification adjustment for gains included in net income		54		310
Change for realized losses on securities available for sale for other-than-temporary impairment write-down		404		342
Unrealized gains on securities		1,173		3,043
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)		3		—
Total other comprehensive income, net of tax		1,176		3,043
Comprehensive income	$	1,177	$	3,060

See accompanying condensed notes to unaudited consolidated financial statements.

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statement of

Changes in Stockholders’ Equity (unaudited)

Nine Months Ended June 30, 2012

(in thousands, except Shares)

													Accumulated
						Additional				Unearned			Other			Total
	Common Stock					Paid-in		Retained		Deferred			Comprehensive			Stockholders’
	Shares			Amount		Capital		Earnings		Compensation			Income (loss)			Equity
Balance, October 1, 2011		5,133,570		$	51	$	53,934	$	1,323	$	(102	)	$	(2,318	)	$	52,888
Net Income									1								1
Other comprehensive income														1,176			1,176
Forfeiture of unvested shares - 520 shares		(520	)
Stock option expense							15										15
Amortization of restricted stock											16						16
Balance, June 30, 2012		5,133,050		$	51	$	53,949	$	1,324	$	(86	)	$	(1,142	)	$	54,096

See accompanying condensed notes to unaudited consolidated financial statements.

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CITIZENS COMMUNITY BANCORP, INC.

Consolidated Statements of Cash Flows (unaudited)

Nine Months Ended June 30, 2012 and 2011

(in thousands, except per share data)

	Nine Months Ended
	June 30,			June 30,
	2012			2011
Cash flows from operating activities:
Net income attributable to common stockholders	$	1		$	17
Adjustments to reconcile net income to net cash provided by operating activities:
Net accretion (amortization) of premium/discount on securities		481			(20	)
Depreciation		780			840
Provision for loan losses		3,540			4,614
Net realized gain on sale of securities		(91	)		(516	)
Other-than-temporary impairment on mortgage-backed securities		673			620
Amortization of core deposit intangible		194			250
Amortization of restricted stock		16			2
Stock based compensation expense		15			1
Loss on sale of office properties		134			—
Net gains from disposals of foreclosed properties		(32	)		(35	)
Provision for valuation allowance on foreclosed properties		144			135
Decrease in accrued interest receivable and other assets		1,044			1,424
Increase in other liabilities		130			378
Total adjustments		7,028			7,693
Net cash from operating activities		7,029			7,710
Cash flows from investing activities:
Purchase of securities available for sale		(47,521	)		(60,998	)
Net decrease (increase) in interest-bearing deposits		9,543			(9,543	)
Proceeds from sale of securities available for sale		18,200			45,041
Principal payments on securities available for sale		7,116			9,791
Proceeds from sale of FHLB stock		1,361			—
Proceeds from sale of foreclosed properties		1,421			763
Net (increase) decrease in loans		(3,616	)		18,959
Net capital expenditures		(380	)		(510	)
Net cash received from sale of office properties		465			—
Net cash from investing activities		(13,411	)		3,503
Cash flows from financing activities:
Net increase (decrease) in Federal Home Loan Bank advances		17,750			(28,900	)
Net decrease in deposits		(22,276	)		(17,228	)
Net cash from financing activities		(4,526	)		(46,128	)
Net decrease in cash and cash equivalents		(10,908	)		(34,915	)
Cash and cash equivalents at beginning of period		31,763			72,438
Cash and cash equivalents at end of period	$	20,855		$	37,523
Supplemental cash flow information:
Cash paid during the year for:
Interest on deposits	$	4,103		$	5,558
Interest on borrowings	$	988		$	1,581
Income taxes	$	21		$	8
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$	1,284		$	1,750

See accompanying condensed notes to unaudited consolidated financial statements.

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CITIZENS COMMUNITY BANCORP, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Citizens Community Bancorp was a successor to Citizens Community Federal as a result of a regulatory restructuring into the mutual holding company form, which was effective on March 29, 2004. Originally, Citizens Community Federal was a credit union. In December 2001, Citizens Community Federal converted to a federal mutual savings bank. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization. In 2006, Citizens Community Bancorp completed its second-step mutual to stock conversion.

The consolidated income of the Company is principally derived from the income of the Company’s wholly owned subsidiary. The Bank originates residential and consumer loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 26 full-service offices; eight stand-alone locations and 18 branches predominantly located inside Walmart Supercenters.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through August 13, 2012, the date on which the financial statements were available to be issued. As of August 13, 2012, there were no subsequent events which required recognition or disclosure.

The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated, all amounts are in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to; external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Securities – Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses deemed other than

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temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

In estimating other-than-temporary impairment, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of the other-than-temporary impairment (“OTTI”) that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on mortgage and consumer loans is discontinued at the time the loan is over 91 days delinquent. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account less than 92 days delinquent. Interest on impaired loans considered troubled debt restructurings (“TDRs”) that are not 92 days delinquent is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 180 days past due. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 120 days past due.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in the portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the ALL balance required using past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs. All TDRs are individually evaluated for impairment. See Note 3 “Loans, Allowance for Loan Losses and Impaired Loans” for information on what we consider to be a TDR. If a TDR loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 91+ days past due,

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and certain TDRs that are less than 91+ days delinquent; the likelihood of the loan migrating to over 91 days past due is also factored in determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Foreclosed and Repossessed Assets, net – Assets acquired through, or instead of loan foreclosure, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and included in non-interest expense, other on the consolidated statements of operations. Foreclosed and repossessed asset balances were $1,002 and $1,360 at June 30, 2012 and September 30, 2011, respectively.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6 for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. The Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plan.

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards – In June 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, “Presentation of Comprehensive Income”. ASU 2011-05 requires the presentation of comprehensive income in either a single continuous financial statement or two separate, but consecutive financial statements. ASU 2011-05 also includes a provision requiring the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which deferred this requirement in order to allow the FASB more time to determine whether reclassification adjustments should be required to be presented on the face of the financial statements. For public entities, ASUs 2011-05 and 2011-12 are effective for fiscal years, and interim periods beginning after December 15, 2011, and are required to be applied retrospectively. Early adoption is permitted. The Company has adopted ASUs 2011-05 and 2011-12 effective October 31, 2011, electing to present a consolidated statement of comprehensive income or loss separate from, but consecutive to, its statement of operations. The adoption of ASUs 2011-05 and 2011-12 had no material effect on the Company’s results of operations, financial position or cash flows.

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In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. The amended guidance does not modify the requirements for when fair value measurements apply, rather it generally represents clarifications on how to measure and disclose fair value under Topic 820, “Fair Value Measurement”. Respective disclosure requirements are essentially the same. However, some of the specific amendments address the application of existing fair value measurement requirements. Other specific amendments change a particular principal or requirement for measuring fair value, or for disclosing information about fair value measurements. ASU 2011-04 is intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. This guidance is effective prospectively for annual and interim periods beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860); Reconsideration of Effective Control for Repurchase Agreements”. Under the amended guidance, a transferor maintains effective control over transferred financial assets if there is an agreement between both entities which obligates the transferor to repurchase the financial assets before maturity. In addition, the following requirements must be met: (a) the financial asset to be repurchased or redeemed is the same or substantially the same as that transferred, (b) the agreement is to repurchase or redeem the transferred financial asset before maturity at a fixed or determinable price, and (c) the agreement is entered into contemporaneously with, or in contemplation of the transfer. This guidance is effective prospectively for transactions, or modifications of existing transactions, that occur on or after the first interim or annual period beginning on or after December 15, 2011. The Company adopted this guidance effective October 1, 2011. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

NOTE 2 – FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2- Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, the Company utilizes independent third party valuation analyses to support the Company’s estimates and judgments in determining fair value (Level 3 inputs).

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Assets Measured on a Recurring Basis

Level 3 assets measured on a recurring basis are certain investments for which little or no market activity exists or whose value of the underlying collateral is not market observable. Management’s valuation uses both observable as well as unobservable inputs to assist in the Level 3 valuation of mortgage backed securities held by the Bank, employing a methodology that considers future cash flows along with risk-adjusted returns. The inputs in this methodology are as follows: ability and intent to hold to maturity, mortgage underwriting rates, market prices/conditions, loan type, loan-to-value, strength of borrower, loan age, delinquencies, prepayment/cash flows, liquidity, expected future cash flows, rating agency actions, and a discount rate, which is assumed to be approximately equal to the coupon rate for each security. The Company had an independent valuation of all Level 3 securities in the current quarter. Based on this valuation, no additional other than temporary impairment existed during the three months ended June 30, 2012.

The following tables present the financial instruments measured at fair value on a recurring basis as of June 30, 2012 and September 30, 2011:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Instruments		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2012:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	14,656	$	—	$	14,656	$	—
U.S. Agency Floating Rate Bonds		11,677		—		11,677		—
Fannie Mae mortgage-backed securities		11,845		—		11,845		—
Freddie Mac mortgage-backed securities		12,142		—		12,142		—
Non-agency mortgage-backed securities		7,416		—		—		7,416
General Obligation Municipal Bonds		7,361		—		7,361		—
Revenue Municipal Bonds		2,339		—		2,339		—
Total	$	67,436	$	—	$	60,020	$	7,416
September 30, 2011:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	9,983	$	—	$	9,983	$	—
U.S. Agency Floating Rate Bonds		25,212		—		25,212		—
Non-agency mortgage-backed securities		9,143		—		—		9,143
Total	$	44,338	$	—	$	35,195	$	9,143

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The following table presents a reconciliation of non-agency mortgage-backed securities held by the Bank measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine month periods ended June 30, 2012 and 2011:

	Nine Months Ended
	June 30, 2012			June 30, 2011
Balance beginning of period	$	9,143		$	24,999
Total gains or losses (realized/unrealized):
Included in earnings		(673	)		(620	)
Included in other comprehensive loss		1,379			5,417
Sales		—			(13,633	)
Payments, accretion and amortization		(2,433	)		(5,780	)
Balance end of period	$	7,416		$	10,383

Assets Measured on a Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2012 and September 30, 2011:

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
June 30, 2012:
Foreclosed and repossessed assets, net	$	1,002	$	—	$	—	$	1,002
Loans restructured in a troubled debt restructuring		7,415		—		—		7,415
Total	$	8,417	$	—	$	—	$	8,417
September 30, 2011:
Foreclosed and repossessed assets	$	1,360	$	—	$	—	$	1,360
Loans restructured in a troubled debt restructuring		6,018		—		—		6,018
Total	$	7,378	$	—	$	—	$	7,378

The fair value of TDRs is determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting TDRs.

The fair value of foreclosed and repossessed assets is determined by obtaining market price quotes from independent third parties wherever such quotes are available. Where such quotes are not available, the Company utilizes independent third party appraisals to support the Company’s estimates and judgments in determining fair value.

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Fair Values of Financial Instruments

ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are as follows:

Cash and Cash Equivalents

Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value.

Interest-Bearing Deposits

Fair value of interest bearing deposits is estimated based on their carrying amounts.

Federal Home Loan Bank (FHLB) Stock

Federal Home Loan Bank Stock is carried at cost, which is its redeemable fair value since the market for the stock is restricted (See Note 8 to the Company’s consolidated financial statements included in the Company’s Form 10-K filed with the Securities and Exchange Commission on December 21, 2011 for additional information).

Loans Receivable, net

Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification.

Accrued Interest Receivable and Payable

Due to their short-term nature, the carrying amounts of accrued interest receivable and payable, respectively, are considered to be a reasonable estimate of fair value.

Deposits

The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates.

Federal Home Loan Bank Advances

The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates its fair value.

Off-Balance-Sheet Instruments

The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amounts for fair value are presented.

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The carrying amount and estimated fair value of financial instruments as of the dates indicated were as follows:

	June 30, 2012				September 30, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	20,855	$	20,855	$	31,763	$	31,763
Interest-bearing deposits		—		—		9,543		9,543
Securities available for sale		67,436		67,436		44,338		44,338
FHLB stock		4,426		4,426		5,787		5,787
Loans receivable, net		425,678		453,809		426,848		453,112
Accrued interest receivable		1,543		1,543		1,508		1,508
Financial liabilities:
Deposits	$	426,697	$	432,255	$	448,973	$	454,933
FHLB advances		48,150		49,529		30,400		32,454
Accrued interest payable		120		120		114		114

NOTE 3 – LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

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Changes in the ALL for the periods presented below are as follows:

	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,907		$	2,991		$	4,898
Charge-offs		(1,424	)		(1,559	)		(2,983	)
Recoveries		28			219			247
Provision (1)		1,747			1,793			3,540
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Three Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, April 1, 2012	$	2,235		$	3,433		$	5,668
Charge-offs		(601	)		(380	)		(981	)
Recoveries		6			109			115
Provision (1)		618			282			900
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Allowance for Loan Losses at June 30, 2012:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	413		$	189		$	602
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,845		$	3,255		$	5,100
Loans Receivable as of June 30, 2012:
Ending balance (2)	$	278,384		$	152,996		$	431,380
Ending balance: individually evaluated for impairment	$	6,241		$	1,174		$	7,415
Ending balance: collectively evaluated for impairment	$	272,143		$	151,822		$	423,965

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	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,562		$	2,583		$	4,145
Charge-offs		(1,924	)		(2,359	)		(4,283	)
Recoveries		33			146			179
Provision (1)		2,107			2,507			4,614
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Three Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, April 1, 2011	$	1,687		$	2,817		$	4,504
Charge-offs		(729	)		(534	)		(1,263	)
Recoveries		3			47			50
Provision (1)		817			547			1,364
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Allowance for Loan Losses at June 30, 2011:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	409		$	287		$	696
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,369		$	2,590		$	3,959
Loans Receivable as of September 30, 2011:
Ending balance (2)	$	275,339		$	157,425		$	432,764
Ending balance: individually evaluated for impairment	$	5,429		$	1,233		$	6,662
Ending balance: collectively evaluated for impairment	$	269,910		$	156,192		$	426,102

(1) The Bank does not have historical data disaggregating provision for loan losses between real estate and consumer loans. Therefore, the provision for loan losses has been allocated between real estate and consumer loans for each period presented based on the ratio of real estate and consumer net loan charge-offs for that period.

(2) Ending loan balances above do not include deferred loan origination fees net of costs.

The Bank has originated substantially all loans currently recorded on the Company’s consolidated balance sheet. The Bank has not acquired any loans since 2005.

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Loans receivable as of the end of the periods shown below were as follows:

	Real Estate Loans				Consumer Loans				Total Loans
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
Performing loans
Performing TDR loans	$	5,517	$	3,191	$	1,100	$	914	$	6,617	$	4,105
Performing loans other		269,470		264,838		151,445		155,846		420,915		420,684
Total performing loans		274,987		268,029		152,545		156,760		427,532		424,789
Nonperforming loans (1)
Nonperforming TDR loans		724		2,238		74		319		798	$	2,557
Nonperforming loans other		2,673		3,452		377		948		3,050		4,400
Total nonperforming loans		3,397		5,690		451		1,267		3,848		6,957
Total loans	$	278,384	$	273,719	$	152,996	$	158,027	$	431,380	$	431,746

(1) Nonperforming loans are defined as loans that (a) are 91+ days past due and nonaccruing, or (b) TDR loans restructured at a 0% interest rate that were 91+ days past due and nonaccruing at the time of restructuring.

An aging analysis of the Company’s real estate and consumer loans as of June 30, 2012 and September 30, 2011 is as follows:

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3  months and Accruing
June 30, 2012:
Real estate loans	$	2,393	$	1,085	$	3,062	$	6,540	$	271,854	$	278,394	$	—
Consumer loans		2,124		433		376		2,933		150,053		152,986		—
Total	$	4,517	$	1,518	$	3,438	$	9,473	$	421,907	$	431,380	$	—
Sepember 30, 2011:
Real estate loans	$	3,867	$	1,877	$	3,452	$	9,196	$	264,523	$	273,719	$	—
Consumer loans		2,517		868		948		4,333		153,694		158,027		—
Total	$	6,384	$	2,745	$	4,400	$	13,529	$	418,217	$	431,746	$	—

At June 30, 2012, the Company has identified $7,415 of TDR loans as impaired, including $6,617 of performing TDRs. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of June 30, 2012 and September 30, 2011 is as follows:

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer		Total		Real Estate		Consumer		Total		Real Estate		Consumer		Total
Recorded investment at June 30, 2012	$	2,735	$	377	$	3,112	$	3,506	$	797	$	4,303	$	6,241	$	1,174	$	7,415
Unpaid balance at June 30, 2012		2,735		377		3,112		3,506		797		4,303		6,241		1,174		7,415
Recorded investment at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Unpaid balance at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Average recorded investment; three months ended June 30, 2012		2,874		389		3,263		2,922		734		3,656		5,796		1,123		6,919
Average recorded investment; three months ended June 30, 2011		3,627		356		3,983		1,867		974		2,841		5,494		1,330		6,824
Average recorded investment; nine months ended June 30, 2012		3,176		442		3,618		2,660		762		3,422		5,836		1,204		7,040
Average recorded investment; nine months ended June 30, 2011		2,296		289		2,585		1,455		956		2,411		3,751		1,245		4,996
Interest income received; three months ended June 30, 2012		12		4		16		23		6		29		35		10		45
Interest income received; three months ended June 30, 2011		10		3		13		6		1		7		16		4		20
Interest income received; nine months ended June 30, 2012		34		14		48		58		14		72		92		28		120
Interest income received; nine months ended June 30, 2011	$	61	$	9	$	70	$	17	$	16	$	33	$	78	$	25	$	103

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Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Company grants a concession to that borrower that the Company would not otherwise consider except for the borrower’s financial difficulties. Concessions include extension of loan terms, renewals of existing balloon loans, reductions in interest rate and consolidation of existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 11 delinquent TDRs with a recorded investment of $764 at June 30, 2012, compared to 17 such loans with a recorded investment of $1,720 at September 30, 2011. A summary of loans modified in a troubled debt restructuring as of June 30, 2012 and during the three and nine months then ended is as follows:

	Real Estate			Consumer			Total
June 30, 2012 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	3,506		$	950		$	4,456
Principal payments		(165	)		(116	)		(281	)
Charge-offs		(79	)		(65	)		(144	)
Advances		9			10			19
New restructured (1)		63			223			286
Class transfers (2)		1,318			(59	)		1,259
Transfers between accrual/non-accrual		865			157			1,022
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,923		$	283		$	2,206
Principal payments		(31	)		(89	)		(120	)
Charge-offs		(366	)		(144	)		(510	)
Advances		7			1			8
New restructured (1)		56			106			162
Class transfers (2)		0			74			74
Transfers between accrual/non-accrual		(865	)		(157	)		(1,022	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,429		$	1,233		$	6,662
Principal payments		(196	)		(205	)		(401	)
Charge-offs		(445	)		(209	)		(654	)
Advances		16			11			27
New restructured (1)		119			329			448
Class transfers (2)		1,318			15			1,333
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

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	Real Estate			Consumer			Total
June 30, 2012 and
Three Months then Ended:
Accruing / Performing:
Beginning balance	$	3,376		$	767		$	4,143
Principal payments		(48	)		(68	)		(116	)
Charge-offs		0			0			0
Advances		8			0			8
New restructured (1)		56			157			213
Class transfers (2)		961			0			961
Transfers between accrual/non-accrual		1,164			244			1,408
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,972		$	304		$	2,276
Principal payments		0			0			0
Charge-offs		(143	)		(51	)		(194	)
Advances		3			0			3
New restructured (1)		56			74			130
Class transfers (2)		0			(9	)		(9	)
Transfers between accrual/non-accrual		(1,164	)		(244	)		(1,408	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,348		$	1,071		$	6,419
Principal payments		(48	)		(68	)		(116	)
Charge-offs		(143	)		(51	)		(194	)
Advances		11			0			11
New restructured (1)		112			231			343
Class transfers (2)		961			(9	)		952
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

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	Real Estate			Consumer			Total
June 30, 2011 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	1,402		$	415		$	1,817
Principal payments		(58	)		(104	)		(162	)
Charge-offs		0			(8	)		(8	)
Advances		27			7			34
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		(167	)		(4	)		(171	)
Ending balance	$	3,622		$	799		$	4,421
Non-accrual / Non-performing:
Beginning balance	$	1,312		$	144		$	1,456
Principal payments		(27	)		(24	)		(51	)
Charge-offs		0			(31	)		(31	)
Advances		46			4			50
New restructured (1)		0			0			0
Class transfers (2)		0			0			0
Transfers between accrual/non-accrual		491			88			579
Ending balance	$	1,822		$	181		$	2,003
Totals:
Beginning balance	$	2,714		$	559		$	3,273
Principal payments		(85	)		(128	)		(213	)
Charge-offs		0			(39	)		(39	)
Advances		73			11			84
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		324			84			408
Ending balance	$	5,444		$	980		$	6,424

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	June 30, 2012				June 30, 2011
	Number of Modifications		Recorded Investment		Number of Modifications		Recorded Investment
Troubled debt restructurings:
Real estate		43	$	6,241		33	$	5,429
Consumer		64		1,174		64		1,233
		107	$	7,415		97	$	6,662

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As an integral part of their examination process, various regulatory agencies review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.

NOTE 4 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale as of June 30, 2012 and September 30, 2011, respectively, were as follows:

Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2012
U.S. Agency mortgage-backed securities	$	14,271	$	385	$	—	$	14,656
U.S. Agency Floating Rate Bonds		11,485		192		—		11,677
Fannie Mae mortgage-backed securities		11,709		136		—		11,845
Freddie Mac mortgage-backed securities		12,058		84		—		12,142
Non-agency mortgage-backed securities		9,813		—		2,397		7,416
General Obligation Municipal Bonds		7,361		91		91		7,361
Revenue Municipal Bonds		2,297		42		—		2,339
Total investment securities	$	68,994	$	930	$	2,488	$	67,436
September 30, 2011
U.S. Agency mortgage-backed securities	$	9,719	$	264	$	—	$	9,983
U.S. Agency Floating Rate Bonds		25,215		24		27		25,212
Non-agency mortgage-backed securities		12,918		—		3,775		9,143
Total investment securities	$	47,852	$	288	$	3,802	$	44,338

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuers are assessed. Significant inputs used to measure the amount related to credit loss include, but are not limited to; default and delinquency rates of underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value that are considered temporary are recorded as separate components of equity, net of tax. If an impairment of a security is identified as other-than-temporary based on information available, such as the decline in the credit worthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the consolidated statement of operations. Losses other than credit will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will be required to sell the debt security before its anticipated recovery.

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A summary of the amount of other-than-temporary impairment related to credit losses on available for sale securities that have been recognized in earnings follows:

	Nine Months		Nine Months
	Ended		Ended
	June 30,		June 30,
	2012		2011
Beginning balance of the amount of OTTI related to credit losses	$	2,408	$	9,497
Credit portion of OTTI on securities for which OTTI was not previously recognized		673		620
Cash payments received on a security in excess of the security’s book value adjusted for previously recognized credit portion of OTTI		—		(50	)
Credit portion of OTTI on securities in default for which OTTI was previously recognized		—		(2,798	)
Credit portion of OTTI previously recognized on securities sold during the period		—		(4,861	)
Ending balance of the amount of OTTI related to credit losses	$	3,081	$	2,408

The Bank has pledged certain of its U.S. Agency securities as collateral against a borrowing line with the Federal Reserve Bank. However, as of June 30, 2012, there were no borrowings outstanding on the Federal Reserve line of credit.

NOTE 5 – FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank advances at June 30, 2012 and September 30, 2011 is as follows:

	As of		Weighted			As of		Weighted
Maturing during the fiscal year	June 30,		Average			September 30,		Average
Ended September 30,	2012		Rate			2011		Rate
2012	$	17,250		2.49	%	$	16,000		4.46	%
2013		6,750		3.99	%		6,750		3.99	%
2014		8,650		3.31	%		6,150		4.45	%
2015		11,500		1.18	%		1,500		4.05	%
After 2015		4,000		1.00	%		—		NA
Total fixed maturity	$	48,150				$	30,400
Advances with amortizing principal		—					—
Total	$	48,150				$	30,400

At June 30, 2012, the Bank’s available and unused portion of this borrowing agreement was approximately $142,300.

Maximum month-end amounts outstanding were $48,150 and $63,300 during the nine month periods ended June 30, 2012 and 2011, respectively.

Each advance is payable at the maturity date, with a prepayment penalty for fixed rate advances. Federal Home Loan Bank advances are secured by $264,500 of real estate mortgage loans.

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NOTE 6 – INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	Nine Months			Nine Months
	Ended			Ended
	June 30,			June 30,
	2012			2011
Current tax provision (benefit)
Federal	$	710		$	170
State		155			16
		865			186
Deferred tax provision (benefit)
Federal		(744	)		(145	)
State		(102	)		1
		(846	)		(144	)
Total	$	19		$	42

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	Nine Months				Nine Months
	Ended				Ended
	June 30,				June 30,
	2012				2011
Tax expense at statutory rate	$	7	34.0	%	$	20	34.0	%
State income taxes net of exception		1	5.4	%		3	5.4	%
Other permanent differences		11	55.5	%		3	4.5	%
Other		—	1.3	%		16	27.3	%
Total	$	19	96.2	%	$	42	71.2	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of June 30, 2012 and September 30, 2011, respectively:

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	June 30, 2012			September 30, 2011
Deferred tax assets:
Allowance for loan losses	$	2,245		$	1,928
Deferred loan costs/fees		387			366
Director/officer compensation plans		1,330			1,360
Net unrealized loss on securities available for sale		623			1,406
Impairment loss		574			72
Other		180			229
Deferred tax assets		5,339		$	5,361
Deferred tax liabilities:
Office properties and equipment		(781	)		(902	)
Federal Home Loan Bank stock		(64	)		(64	)
Core deposit intangible, net		21			(42	)
481a adjustment		(21	)		(82	)
Other		(69	)		(108	)
Deferred tax liabilities		(914	)		(1,198	)
Net deferred tax assets	$	4,425		$	4,163

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies” above. At June 30, 2012 and September 30, 2011, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of June 30, 2012, years open to examination by the Internal Revenue Service include all taxable years after the taxable year ended September 30, 2008. The years open to examination by state and local government authorities varies by jurisdiction. The Internal Revenue Service is currently examining the income tax returns for the year ended September 30, 2010.

The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remains open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of interest expense and miscellaneous expense, respectively. During the nine month periods ended June 30, 2012 and 2011, the Company did not recognize any interest or penalties related to income tax issues in its statements of operations. The Company has no accrual for the payments of interest and penalties related to income tax issues as of June 30, 2012 or September 30, 2011.

NOTE 7 – STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s Recognition and Retention Plan. This plan provides for the grant of up to 113,910 shares of the Company’s common stock to eligible participants under this plan. As of June 30, 2012, 90,927 restricted shares were issued and outstanding under this plan. Restricted shares previously granted were awarded at no cost to the employee and have a five-year vesting

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period from the grant date. The fair value of these previously granted restricted shares on the date of award was $7.04 per share for 63,783 shares and $6.18 for 6,832 shares. During the year ended September 30, 2011, 20,312 shares were granted to an eligible participant under this plan at a weighted average fair value of $5.24. Compensation expense related to these awards was $5 and $16 for the three and nine month periods ended June 30, 2012, respectively.

Of the 20,312 shares granted, 10,156 shares were granted during the quarter ended June 30, 2011. No shares were granted during either of the three or nine month periods ending June 30, 2012. There were no previously awarded shares that were forfeited in either of the three or nine month periods ending June 30, 2012 or 2011, respectively.

In February 2005, the Company’s stockholders also approved the Company’s 2004 Stock Option and Incentive Plan. This plan provides for the grant of nonqualified and incentive stock options and stock appreciation rights to eligible participants under the plan. The plan provides for the grant of awards for up to 284,778 shares of the Company’s common stock. At June 30, 2012, 248,635 options had been granted under this plan to eligible participants at a weighted-average exercise price of $6.70 per share. Options granted vest over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through June 30, 2012, since the plan’s inception, options for 72,995 shares of the Company’s common stock were vested, options for 41,794 shares were unvested, options for 129,288 shares were forfeited and options for 4,558 shares were exercised. Of the 248,635 options granted, 114,789 remained outstanding as of June 30, 2012.

The Company accounts for stock-based employee compensation related to the Company’s 2004 Stock Option and Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation for the three and nine month periods ended June 30, 2012 were $5 and $15, respectively.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2008 Equity Incentive Plan is 597,605 shares. Under the Plan, the Compensation Committee may grant stock options and stock appreciation rights that, upon exercise, result in the issuance of 426,860 shares of the Company’s common stock. The Committee may grant restricted stock and restricted stock units for an aggregate of 170,745 shares of Company common stock under this plan. In October 2008, the Compensation Committee suspended consideration of distributions or awards under this plan, and as of June 30, 2012, no grants or awards have been made to eligible participants under the 2008 Equity Incentive Plan.

NOTE 8 – OTHER COMPREHENSIVE INCOME (LOSS)

On October 1, 2011, the Company adopted ASU 2011-05, “Presentation of Comprehensive Income”. In addition to presenting the Consolidated Statements of Comprehensive Income herein, the following table shows the tax effects allocated to each component of other comprehensive income for the nine months ended June 30, 2012:

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	Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Unrealized holding losses arising during period	$	1,192		(477	)	$	715
Less: reclassification adjustment for gains included in net income		91		(37	)		54
Changes for realized losses on securities available for sale for OTTI write-down		673		(269	)		404
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)		5		(2	)		3
Other comprehensive income (loss)	$	1,961	$	(785	)	$	1,176

The changes in the accumulated balances for each component of other comprehensive income (loss) for the nine months ended June 30, 2012 were as follows:

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2011	$	(2,109	)	$	(209	)	$	(2,318	)
Current period other comprehensive income, net of tax		1,173			3			1,176
Ending balance, June 30, 2012	$	(936	)	$	(206	)	$	(1,142	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements contained in this report are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” and “would.” Such forward-looking statements in this report are inherently subject to many uncertainties in the Company’s operations and business environment. These uncertainties include general economic conditions, in particular, relating to consumer demand for the Bank’s products and services; the Bank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; the Bank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit the Bank’s operations and potential growth; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting policies and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies; further write-downs in the Bank’s mortgage-

27 | Page

backed securities portfolio; the Bank’s ability to implement its cost-savings and revenue enhancement initiatives; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Bank; fluctuation of the Company’s stock price; ability to attract and retain key personnel; ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended September 30, 2011 filed with the Securities and Exchange Commission on December 21, 2011. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this report or to update them to reflect events or circumstances occurring after the date of this report.

GENERAL

The following discussion sets forth management’s discussion and analysis of our consolidated financial condition as of June 30, 2012, and the consolidated results of operations for the three and nine months ended June 30, 2012, compared to the same periods in the fiscal year ended September 30, 2011. This discussion should be read in conjunction with the interim consolidated financial statements and the condensed notes thereto included with this report and with Management’s Discussion and Analysis of Financial Condition and Results of Operations and the financial statements and notes related thereto included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission on December 21, 2011.

PERFORMANCE SUMMARY

The following table sets forth our results of operations and related summary information for the three and nine month periods ended June 30, 2012 and 2011:

	Three Months Ended						Nine Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net income as reported	$	349		$	176		$	1		$	17
EPS - basic, as reported	$	0.07		$	0.03		$	—		$	—
EBS - diluted, as reported	$	0.07		$	0.03		$	—		$	—
Cash dividends paid	$	—		$	—		$	—		$	—
Return on average assets (annualized)		0.26	%		0.12	%		0.00	%		0.00	%
Return on average equity (annualized)		2.62	%		1.34	%		0.00	%		0.04	%
Efficiency ratio, as reported (1)		74.55	%		71.39	%		75.83	%		70.35	%

(1) Non-interest expense divided by the sum of net interest income plus non-interest income, excluding net impairment losses recognized in earnings.

A lower ratio indicates greater efficiency.

The following is a brief summary of some of the factors that affected our operating results in the three and nine month periods ended June 30, 2012. See the remainder of this section for a more thorough discussion. Unless otherwise stated, all monetary amounts in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, other than share and per share amounts, are stated in thousands.

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We reported net income of $349 for the three months ended June 30, 2012, compared to net income of $176 for the three months ended June 30, 2011. We reported net income of $1 and $17 for the nine months ended June 30, 2012 and 2011, respectively. Both basic and diluted earnings per share were $0.07 for the three months ended June 30, 2012 and $0.03 for the three months ended June 30, 2011. Both basic and diluted earnings per share were $0.00 and $0.00 for the nine months ended June 30, 2012 and 2011, respectively.

The return on average assets for the three months ended June 30, 2012 and 2011 was 0.26% and 0.12%, respectively. The return on average assets for the nine months ended June 30, 2012 and 2011 was 0.00% and 0.00%, respectively.

The return on average equity for the three months ended June 30, 2012 and 2011 was 2.62% and 1.34%, respectively. The return on average equity for the nine months ended June 30, 2012 and 2011 was 0.00% and 0.04%, respectively.

No cash dividends were declared or paid in either of the three or nine month periods ended June 30, 2012 and 2011, respectively.

Key factors behind these results were:

• Net interest income increased for the current three month period and decreased for the current nine month period compared to the comparable prior year periods. However, net interest margin increased for both the current three and nine month periods compared to the comparable prior year periods.

• We continue to see both rate and volume related decreases in both interest income on loans and interest expense on deposits. However, the net impact of volume decreases on net interest income is an increase of $59 and $401 for the three and nine month periods ended June 30, 2012, respectively. The net impact of the rate decreases was a reduction in net interest income of $24 and $599 for the three and nine month periods ended June 30, 2012, respectively. Reductions in fiscal year-to-date average Federal Home Loan Bank (“FHLB”) borrowings led to decreases in interest expense on borrowed funds of ($109) and ($512) for the three and nine month period ended June 30, 2012, respectively, over the comparable prior year periods.

• Net interest income was $5,095 for the three month period ended June 30, 2012, an increase of $35 or 0.7% from the three month period ended June 30, 2011. Net interest income was $15,447 for the nine month period ended June 30, 2012, a decrease of ($198) or (1.3%) from the nine month period ended June 30, 2011.

• The net interest margin of 3.92% for the three months ended June 30, 2012 represents a 26 bp increase from a net interest margin of 3.66% for the three months ended June 30, 2011. The net interest margin of 3.97% for the nine months ended June 30, 2012 represents a 25 bp increase from a net interest margin of 3.72% for the nine months ended June 30, 2011.

• Total loans were $431,380 at June 30, 2012, a decrease of ($366), or (0.08%) from September 30, 2011. Total deposits were $426,697 at June 30, 2012, a decrease of ($22,276) or (4.96%) from September 30, 2011.

• Net loan charge-offs decreased from $1,214 for the three months ended June 30, 2011 to $866 for the three months ended June 30, 2012. Net loan charge-offs decreased from $4,104 for the nine months ended June 30, 2011 to $2,736 for the nine months ended June 30, 2012. Continued lower levels of net loan charge-offs and non-performing loans led to a decreased provision for loan losses of $900 for the three month period ended June 30, 2012, compared to $1,364 for the three months ended June 30, 2011. Annualized net loan charge-offs as a percentage of average loans were 0.85% for the nine months ended June 30, 2012, compared to 1.24% for the nine months ended June 30, 2011. Net loan charge-offs decreased during the current year quarter over the prior year quarter, and were at levels lower than the seven previous quarters.

• Non-interest income decreased from $900 for the three months ended June 30, 2011 to $745 for the three months ended June 30, 2012. Non-interest income decreased from $1,826 for the nine months ended June 30, 2011 to $1,396 for the nine months ended June 30, 2012. The primary contributor in this decrease was $281 of gains on the sale of available for sale securities during the three months ended

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June 30, 2011 compared to the $11 gains during the three months ended June 30, 2012 and $55 in losses on the sale of available-for sale securities for the nine months ended June 30, 2011 compared to $582 in loss for the nine months ended June 30, 2012, respectively.

• Non-interest expense increased 1.42%, from $4,293 to $4,354 for the three month period ending June 30, 2012 compared to the three month period ending June 30, 2011. Non-interest expense increased 3.79%, from $12,798 to $13,283 for the nine month period ending June 30, 2012 compared to the nine month period ending June 30, 2011. These increases were primarily due to increased compensation costs necessary to meet increasing regulatory demands and higher levels of outsourced data processing costs necessary for improved data security and product expansions.

CRITICAL ACCOUNTING POLICIES

We have established certain accounting policies, which require use of estimates and judgment. In addition to the policies included in Note 1, “Nature of Business and Summary of Significant Accounting Policies,” to the Consolidated Financial Statements included as an exhibit to our Form 10-K annual report for the fiscal year ending September 30, 2011, our critical accounting policies are as follows:

Allowance for Loan Losses.

We maintain an allowance for loan losses to absorb probable incurred losses in our loan portfolio. The allowance is based on ongoing, quarterly assessments of the estimated probable incurred losses in the loan portfolio. In evaluating the level of the allowance for loan loss, we consider the types of loans and the amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral and prevailing economic conditions. We follow all applicable regulatory guidance, including the “Interagency Policy Statement on the Allowance for Loan and Lease Losses,” issued by the Federal Financial Institutions Examination Council (FFIEC). The Bank’s Allowance for Loan Losses Policy conforms to all applicable regulatory requirements. However, based on periodic examinations by regulators, the amount of the allowance for loan losses recorded during a particular period may be adjusted.

Our determination of the allowance for loan losses is based on (1) specific allowances for specifically identified and evaluated impaired loans and their corresponding estimated loss based on likelihood of default, payment history, and net realizable value of underlying collateral; and (2) a general allowance on loans not specifically identified in (1) above, based on historical loss ratios which are adjusted for qualitative and general economic factors. We continue to refine our allowance for loan losses methodology, with an increased emphasis on historical performance adjusted for applicable economic and qualitative factors.

Assessing the allowance for loan losses is inherently subjective as it requires making material estimates, including the amount and timing of future cash flows expected to be received on impaired loans, any of which estimates may be susceptible to significant change. In our opinion, the allowance, when taken as a whole, reflects estimated probable loan losses in our loan portfolio.

Available for Sale Securities.

Securities are classified as available for sale and are carried at fair value, with unrealized gains and losses reported in other comprehensive income (loss). Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

We evaluate all investment securities on a quarterly basis, and more frequently when economic conditions warrant, to determine if other-than-temporary impairment exists. A debt security is considered impaired if the fair value is less than its amortized cost at the report date. If impaired, we then assess whether the impairment is other-than-temporary.

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Current authoritative guidance provides that some portion of unrealized losses may be other-than-temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component is recorded in earnings as a component of other-than-temporary impairment in the consolidated statements of operations, while the loss component related to other market factors is recognized in other comprehensive income (loss), provided the Bank does not intend to sell the underlying debt security and it is “more likely than not” that the Bank will not have to sell the debt security prior to recovery of the unrealized loss.

We consider the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:

• The length of time, and extent to which, the fair value has been less than the amortized cost.

• Adverse conditions specifically related to the security, industry or geographic area.

• The historical and implied volatility of the fair value of the security.

• The payment structure of the debt security and the likelihood of the issuer or underlying borrowers being able to make payments that may increase in the future.

• The failure of the issuer of the security or the underlying borrowers to make scheduled interest or principal payments.

• Any changes to the rating of the security by a rating agency.

• Recoveries or additional declines in fair value subsequent to the balance sheet date.

Interest income on securities for which other-than-temporary impairment has been recognized in earnings is recognized at a rate commensurate with the expected future cash flows and amortized cost basis of the securities after the impairment.

Gains and losses on the sale of securities are recorded on the trade date and determined using the specific-identification method.

To determine if other-than-temporary impairment exists on a debt security, the Bank first determines if (1) it intends to sell the security or (2) it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of the conditions is met, the Bank will recognize other-than-temporary impairment in earnings equal to the difference between the security’s fair value and its adjusted cost basis. If neither of the conditions is met, the Bank determines (a) the amount of the impairment related to credit loss and (b) the amount of the impairment due to all other factors. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the amount of the other-than-temporary impairment that is recognized in earnings and is a reduction to the cost basis of the security. The amount of the total impairment related to all other factors (excluding credit loss) is included in other comprehensive income (loss).

We monitor our portfolio investments on an on-going basis and we obtain an independent valuation of our non-agency residential mortgage-backed securities. This analysis is utilized to ascertain whether any decline in market value is other-than-temporary. In determining whether an impairment is other-than-temporary, we consider the length of time and the extent to which the market value has been below cost, recent events specific to the issuer including investment downgrades by rating agencies and economic conditions within the issuer’s industry, whether it is more likely than not that we will be required to sell the security before there would be a recovery in value, and credit performance of the underlying collateral backing the securities, including delinquency rates, cumulative losses to date, and prepayment speed.

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The independent valuation process included:

• Obtaining individual loan level data directly from servicers and trustees, and making assumptions regarding the frequency of foreclosure, loss severity and conditional prepayment rate (both the entire pool and the loan group pertaining to the bond we hold).

• Projecting cash flows based on these assumptions and stressing the cash flows under different time periods and requirements based on the class structure and credit enhancement features of the bond we hold.

• Identifying various price/yield scenarios based on the Bank’s book value and valuations based on both hold-to-maturity and current free market trade scenarios. Discount rates were determined based on the volatility and complexity of the security and the yields demanded by buyers in the market at the time of the valuation.

For non-agency residential mortgage-backed securities that are considered other-than-temporarily impaired and for which we have the ability and intent to hold these securities until the recovery of our amortized cost basis, we recognize other-than-temporary impairment in accordance with accounting principles generally accepted in the United States. Under these principles, we separate the amount of the other-than-temporary impairment into the amount that is credit related and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of expected future cash flows. The amount due to other factors is recognized in other comprehensive income (loss).

Income Taxes.

The assessment of tax assets and liabilities involves the use of estimates, assumptions, interpretations, and judgments concerning certain accounting pronouncements and federal and state tax codes. There can be no assurance that future events, such as court decisions or positions of federal and state taxing authorities, will not differ from management’s current assessment, the impact of which could be material to our consolidated results of our operations and reported earnings. We believe that the tax assets and liabilities are adequate and properly recorded in the accompanying consolidated financial statements. As of June 30, 2012, management does not believe a valuation allowance is necessary.

STATEMENT OF OPERATIONS ANALYSIS

Net Interest Income. Net interest income represents the difference between the dollar amount of interest earned on interest-bearing assets and the dollar amount of interest paid on interest-bearing liabilities. The interest income and expense of financial institutions are significantly affected by general economic conditions, competition, policies of regulatory authorities and other factors.

Interest rate spread and net interest margin are used to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on interest earning assets and the rate paid for interest-bearing liabilities that fund those assets. Net interest margin is expressed as the percentage of net interest income to average earning assets. Net interest margin exceeds interest rate spread because non-interest bearing sources of funds (“net free funds”), principally demand deposits and stockholders’ equity, also support interest income earning assets. The narrative below discusses net interest income, interest rate spread, and net interest margin for the three and nine month periods ended June 30, 2012 and 2011, respectively.

Net interest income was $5,095 for the three months ended June 30, 2012, compared to $5,060 for the three months ended June 30, 2011. Net interest income was $15,447 for the nine months ended June 30, 2012, compared to $15,645 for the nine months ended June 30, 2011. The net interest margin for the three months ended June 30, 2012 was 3.92% compared to 3.66% for the three months ended June 30, 2011. The net interest

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margin for the nine months ended June 30, 2012 was 3.97% compared to 3.72% for the nine months ended June 30, 2011. The increases in net interest margin were primarily attributable to corresponding increases in interest rate spread over the prior year periods. The primary factor contributing to the increase in interest rate spread between the periods was a decrease in the average balance of outstanding higher rate FHLB borrowings. $20,500 of FHLB borrowings have matured since December 31, 2010. As the outstanding FHLB borrowings continue to mature, we anticipate that they will be replaced, as needed, with lower FHLB rate borrowings as a source of funding, as demonstrated by an increase in FHLB borrowings of $13,050 during the quarter ended June 30, 2012 at lower weighted average rates.

As shown in the rate/volume analysis in the following pages, volume changes resulted in increases of $59 and $401 in net interest income for the three and nine month periods ended June 30, 2012, respectively, compared to the comparable prior year periods. The decrease and changes in the composition of interest earning assets resulted in $71 and $434 decreases in interest income for the three and nine months ended June 30, 2012, respectively, compared to the comparable prior year periods. Rate changes on interest earning assets decreased interest income by $440 and $1,706 for the three and nine month periods ended June 30, 2012, respectively. These decreases were partially offset by rate changes on interest-bearing liabilities that decreased interest expense by $416 and $1,107 over the same periods in the prior year, resulting in a net decrease of $24 and $599 in net interest income due to changes in interest rates during the three and nine month periods ended June 30, 2012, respectively. The decrease in our balance of certificates of deposit is the primary factor affecting volume changes during these same periods. Rate decreases on all asset and deposit categories are reflective of the current overall lower market interest rate environment versus the same period last year.

We have remained liability sensitive in the short term during the most recent two fiscal years, in which interest rates have declined to historically low levels. Continued low interest rates will enable us to experience a favorable interest rate margin.

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following Net Interest Income Analysis table presents interest income from average interest earning assets, expressed in dollars and yields, and interest expense on average interest-bearing liabilities, expressed in dollars and rates. Also presented is the weighted average yield on interest-earning assets, rates paid on interest-bearing liabilities and the resultant spread at June 30, 2012 for each of the three and nine-month periods shown below. No tax equivalent adjustments were made. Non-accruing loans have been included in the table as loans carrying a zero yield.

Average interest earning assets were $522,371 and $520,351 for the three and nine month periods ended June 30, 2012, respectively, compared to $553,904 and $562,588 for the comparable prior year periods. Interest income on interest earning assets was $6,693 and $20,544 for the three and nine month periods ended June 30, 2012, respectively, compared to $7,204 and $22,684 for the comparable prior year periods. Interest income is comprised primarily of interest income on loans and interest income on available for sale securities. Interest income on loans was $6,247 and $19,409 for the three and nine month periods ended June 30, 2012, respectively, compared to $6,773 and $21,038, respectively, for the comparable prior year periods. Interest income on available for sale securities was $434 and $1,075 for the three and nine month periods ended June 30, 2012, respectively, compared to $386 and $1,519 for the comparable prior year periods. The decrease in loan interest income was primarily due to decreased loan volumes and a continued lower interest rate environment. Decreases in interest income on available for sale securities were primarily due to two factors. First, we apply any interest payments we receive to principal on specific securities on which we had previously recorded other-than-temporary impairment. Also, we sold several higher risk non-agency mortgage backed securities and reinvested the proceeds in lower risk and lower yielding agency bonds during 2011.

Average interest bearing liabilities were $474,420 and $473,962 for the three and nine month periods ended June 30, 2012, respectively, compared to $511,534 and $522,739 for the comparable prior year periods. Interest expense on interest bearing liabilities was $1,598 and $5,097 for the three and nine month periods ended June 30, 2012, respectively, compared to $2,144 and $7,039 for the comparable prior year periods. Interest expense is comprised primarily of interest expense on money market accounts, certificates of deposit and FHLB advances. Decreases in interest expense in the current year periods were primarily due to maturities of higher rate FHLB advances which carry higher interest rates than deposits, increases in lower rate new FHLB advances, and lower balances and interest rates paid on money market accounts and certificates of deposit.

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For the three months ended June 30, 2012, interest expense on interest-bearing deposits decreased $169 from the volume and mix changes and decreased $268 from the impact of the rate environment, resulting in an aggregate decrease of $437 in interest expense on interest-bearing deposits. For the nine months ended June 30, 2012, interest expense on interest-bearing deposits decreased $539 from the volume and mix changes and decreased $891 from the impact of the rate environment, resulting in an aggregate decrease of $1,430 in interest expense on interest-bearing deposits. Average FHLB advances increased $3,762 and $10,025 for the three and nine month periods ended June 30, 2012, respectively, compared to the comparable prior year periods. Interest expense on FHLB advances was $324 and $982 for the three and nine month periods ended June 30, 2012, respectively, compared to $433 and $1,494 for the comparable prior year periods. The decreases were due to scheduled maturities on certain higher rate FHLB advances since 2011, partially offset by newer FHLB borrowings at lower interest rates.

NET INTEREST INCOME ANALYSIS

(Dollar amounts in thousands)

Three months ended June 30, 2012 compared to the three months ended June 30, 2011

	Three months ended June 30, 2012							Three months ended June 30, 2011
			Interest		Average					Interest		Average
	Average		Income/		Yield/			Average		Income/		Yield/
	Balance		Expense		Rate			Balance		Expense		Rate
Average interest-earning assets:
Cash and cash equivalents	$	20,208	$	7		0.14	%	$	44,068	$	27		0.25	%
Loans		428,674		6,247		5.86	%		434,586		6,773		6.25	%
Interest-bearing deposits		1,245		2		0.65	%		8,438		17		0.81	%
Securities available for sale		67,524		434		2.59	%		61,025		386		2.54	%
FHLB stock		4,720		3		0.26	%		5,787		1		0.07	%
Total interest earning assets	$	522,371	$	6,693		5.15	%	$	553,904	$	7,204		5.22	%
Average interest-bearing liabilities:
Savings accounts	$	24,783	$	5		0.08	%	$	25,194	$	7		0.10	%
Demand deposits		30,266		1		0.01	%		23,488		1		0.02	%
Money market		145,782		183		0.50	%		167,929		406		0.97	%
CD’s		206,630		984		1.92	%		231,849		1,184		2.05	%
IRA’s		24,034		101		1.69	%		23,911		113		1.90	%
Total deposits		431,495		1,274		1.19	%		472,371		1,711		1.45	%
FHLB Advances		42,925		324		3.04	%		39,163		433		4.43	%
Total interest bearing liabilities	$	474,420	$	1,598		1.35	%	$	511,534	$	2,144		1.68	%
Net interest income			$	5,095						$	5,060
Interest rate spread						3.80	%						3.54	%
Net interest margin						3.92	%						3.66	%
Average interest-earning assets to average interest-bearing liabilities						1.10							1.08

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NET INTEREST INCOME ANALYSIS

(Dollar amounts in thousands)

Nine months ended June 30, 2012 compared to the nine months ended June 30, 2011

	Nine months ended June 30, 2012							Nine months ended June 30, 2011
	Average Balance		Interest Income/ Expense		Average Yield/ Rate			Average Balance		Interest Income/ Expense		Average Yield/ Rate
Average interest-earning assets:
Cash and cash equivalents	$	22,264	$	25		0.15	%	$	60,219	$	99		0.22	%
Loans	$	429,833	$	19,409		6.03	%	$	444,327	$	21,038		6.33	%
Interest-bearing deposits	$	5,141	$	29		0.75	%	$	4,475	$	25		0.75	%
Securities available for sale	$	57,830	$	1,075		2.48	%	$	47,780	$	1,519		4.25	%
FHLB stock	$	5,283	$	6		0.15	%	$	5,787	$	3		0.07	%
Total interest earning assets		520,351		20,544		5.27	%		562,588		22,684		5.39	%
Average interest-bearing liabilities:
Savings accounts		24,384		15		0.08	%	$	25,462	$	31		0.16	%
Demand deposits		26,757		3		0.01	%	$	22,701	$	7		0.04	%
Money market		149,623		670		0.60	%	$	161,259	$	1,265		1.05	%
CD’s		213,346		3,108		1.95	%	$	243,707	$	3,889		2.13	%
IRA’s		24,342		319		1.75	%	$	24,075	$	353		1.96	%
Total deposits		438,452		4,115		1.25	%		477,204		5,545		1.55	%
FHLB Advances		35,510		982		3.69	%	$	45,535	$	1,494		4.39	%
Total interest bearing liabilities		473,962		5,097		1.44	%		522,739		7,039		1.80	%
Net interest income			$	15,447						$	15,645
Interest rate spread						3.84	%						3.59	%
Net interest margin						3.97	%						3.72	%
Average interest-earning assets to average interest-bearing liabilities						1.10							1.08

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Rate/Volume Analysis. The following table presents the dollar amount of changes in interest income and interest expense for the components of interest-earning assets and interest-bearing liabilities that are presented in the preceding table. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: (1) changes in volume, which are changes in the average outstanding balances multiplied by the prior period rate (i.e. holding the initial rate constant); and (2) changes in rate, which are changes in average interest rates multiplied by the prior period volume (i.e. holding the initial balance constant). Changes due to both rate and volume which cannot be segregated have been allocated in proportion to the relationship of the dollar amounts of the change in each.

RATE / VOLUME ANALYSIS (1)

(Dollar amounts in thousands)

Three months ended June 30, 2012 compared to the three months ended June 30, 2011:

	Increase (decrease) due to
	Volume			Rate			Net
Interest income:
Cash and cash equivalents	$	(10	)	$	(10	)	$	(20	)
Loans		(91	)		(435	)		(526	)
Interest-bearing deposits		(12	)		(3	)		(15	)
Securities available for sale		42			6			48
FHLB stock		—			2			2
Total interest earning assets		(71	)		(440	)		(511	)
Interest expense:
Savings accounts		—			(2	)		(2	)
Demand deposits		—			—			—
Money market		(47	)		(176	)		(223	)
CD’s		(123	)		(77	)		(200	)
IRA’s		1			(13	)		(12	)
Total deposits		(169	)		(268	)		(437	)
FHLB Advances		39			(148	)		(109	)
Total interest bearing liabilities		(130	)		(416	)		(546	)
Net interest income	$	59		$	(24	)	$	35

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Nine months ended June 30, 2012 compared to the nine months ended June 30, 2011:

	Increase (decrease) due to
	Volume			Rate			Net
Interest income:
Cash and cash equivalents	$	(46	)	$	(28	)	$	(74	)
Loans		(673	)		(956	)		(1,629	)
Interest-bearing deposits		4			—			4
Securities available for sale		281			(725	)		(444	)
FHLB stock		—			3			3
Total interest earning assets		(434	)		(1,706	)		(2,140	)
Interest expense:
Savings accounts		(1	)		(15	)		(16	)
Demand deposits		1			(5	)		(4	)
Money market		(85	)		(510	)		(595	)
CD’s		(458	)		(323	)		(781	)
IRA’s		4			(38	)		(34	)
Total deposits		(539	)		(891	)		(1,430	)
FHLB Advances		(296	)		(216	)		(512	)
Total interest bearing liabilities		(835	)		(1,107	)		(1,942	)
Net interest income	$	401		$	(599	)	$	(198	)

(1) the change in interest due to both rate and volume has been allocated in proportion to the relationship to the dollar amounts of the change in each.

Provision for Loan Losses. We determine our provision for loan losses (“provision”, or “PLL”), based on our desire to provide an adequate allowance for loan losses (“ALL”) to reflect probable incurred credit losses in our loan portfolio. Based on increased historical charge off ratios and the negative influence of certain qualitative and general economic factors discussed above under “Critical Accounting Policies—Allowance for Loan Losses”, the provision necessary to ensure an adequate ALL continues to remain at elevated levels. Specifically, our customers’ ability to repay loans continues to be adversely affected by higher unemployment rates, and depressed housing prices are causing increases in collateral deficiencies on real estate loans. With both local and national unemployment rates improving slightly in recent quarters, we anticipate our actual charge-off experience to continue to remain stable throughout the remainder of the fiscal year ending September 30, 2012.

Net loan charge-offs for the three and nine month periods ended June 30, 2012 were $866 and $2,736, compared to $1,214 and $4,104 for the comparable prior year periods. Annualized net charge-offs to average loans were 0.85% for the nine months ended June 30, 2012 compared to 1.23% for the nine months ended June 30, 2011. Non-accrual loans were $3,848 at June 30, 2012 compared to $4,400 at September 30, 2011. The decrease is due to overall improvements in credit portfolio quality. Refer to the “Allowance for Loan Losses” and “Nonperforming Loans, Potential Problem Loans and Foreclosed Properties” sections below for more information related to non-performing loans.

We recorded provision for loan losses of $900 and $3,540 for the three and nine month periods ended June 30, 2012, respectively, compared to $1,364 and $4,614 for the comparable prior year periods. Management believes that the provision taken for these three and nine month periods is adequate in view of the present condition of the loan portfolio and the sufficiency of collateral supporting non-performing loans. We continually monitor non-performing loan relationships and will make provisions, as necessary, if changing facts and circumstances require a change in the ALL. In addition, a decline in the quality of our loan portfolio as a result of

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general economic conditions, factors affecting particular borrowers or our market areas, or otherwise, could affect the adequacy of our ALL. If there are significant charge-offs against the ALL, or we otherwise determine that the ALL is inadequate, we will need to record an additional PLL in the future. See the section below captioned “Allowance for Loan Losses” in this discussion for further analysis of the provision for loan losses.

Noninterest Income (Loss). The following table reflects the various components of non-interest income (loss) for the three and nine-month periods ended June 30, 2012 and 2011, respectively.

	Three months ended June 30,				%			Nine months ended June 30,						%
	2012		2011		Change			2012			2011			Change
Noninterest Income (Loss):
Net gains/(losses) on available for sale securities	$	11	$	281		(96.09	%)	$	(582	)	$	(55	)		958.18	%
Service charges on deposit accounts		400		386		3.63	%		1,127			1,095			2.92	%
Insurance commissions		35		25		40.00	%		49			73			(32.88	%)
Loan fees and service charges		133		70		90.00	%		354			349			1.43	%
Other		166		138		20.29	%		448			364			23.08	%
Total noninterest income	$	745	$	900		(17.22	%)	$	1,396		$	1,826			(23.55	%)

Noninterest income was $745 and $1,396 for the three and nine month periods ended June 30, 2012, respectively, compared to $900 and $1,826 for the comparable prior year periods. The decrease of ($155) during the three month periods resulted from a $281 gain on sale of available for sale securities in the three months ended June 30, 2011, partially offset by increases in loan fees and service charges of $63 during the current year quarter. The decrease of ($430) for the nine month periods was primarily due to an increase in securities related losses of ($527).

Noninterest Expense. The following table reflects the various components of noninterest expense for the three and nine month periods ended June 30, 2012 and 2011, respectively.

	Three months ended June 30,				%			Nine months ended June 30,				%
	2012		2011		Change			2012		2011		Change
Noninterest Expense:
Salaries and related benefits	$	2,237	$	2,128		5.12	%	$	6,600	$	6,238		5.80	%
Occupancy - net		617		606		1.82	%		1,838		1,915		(4.02	%)
Office		279		311		(10.29	%)		857		1,019		(15.90	%)
Data processing		389		250		55.60	%		1,120		605		85.12	%
Amortization of core deposit		28		84		(66.67	%)		194		250		(22.40	%)
Advertising, marketing and public relations		47		26		80.77	%		147		94		56.38	%
FDIC premium assessment		124		279		(55.56	%)		518		822		(36.98	%)
Professional services		349		299		16.72	%		894		865		3.35	%
Other		284		310		(8.39	%)		1,115		990		12.63	%
Total noninterest expense	$	4,354	$	4,293		1.42	%	$	13,283	$	12,798		3.79	%

Noninterest expense increased $61 (1.42%) and $485 (3.79%) for the three and nine month periods ended June 30, 2012, respectively, compared to the comparable prior year periods. The noninterest expense (annualized) to average assets ratios were 3.30% and 3.32% for the three and nine month periods ended June 30, 2012, respectively, compared to 3.05% and 2.98% for the comparable prior year periods. The increases in

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noninterest expense and the noninterest expense (annualized) to average assets ratios in the current year periods were primarily attributable to; (a) increased data processing costs, (b) decreased FDIC premium assessments due to decreased deposit volume, and (c) increases in compensation costs. The increased data processing costs are a result of the 2011 migration to a service bureau data processing model and enhancements to the Bank’s business continuity plan. Compensation costs were higher for both time frames as a result of an increase in the number of full time equivalent employees due to increased regulatory demands.

Income Taxes. Income tax expense was $237 and $19 for the three and nine months ended June 30, 2012, respectively, compared to income tax expense of $127 and $42, respectively, for the comparable prior year periods. The changes resulted from the changes in pre-tax income and loss items discussed above.

BALANCE SHEET ANALYSIS

Loans. Loans decreased by $366, or (0.08%), to $431,380 as of June 30, 2012 from $431,746 at September 30, 2011. At June 30, 2012, the loan portfolio was comprised of $278,394 of loans secured by real estate, or 64.5% of total loans, and $152,986 of consumer loans, or 35.5% of total loans. At September 30, 2011, the loan portfolio mix included real estate loans of $273,719, or 63.4% of total loans, and consumer loans of $158,027, or 36.6% of total loans. We continue to experience reduced loan demand in our markets, consistent with decreased loan demand throughout the United States.

Allowance for Loan Losses. The loan portfolio is our primary asset subject to credit risk. To address this credit risk, we maintain an ALL for probable and inherent credit losses through periodic charges to our earnings. These charges are shown in our consolidated statements of operations as PLL. See “Provision for Loan Losses” earlier in this Report. We attempt to control, monitor and minimize credit risk through the use of prudent lending standards, a thorough review of potential borrowers prior to lending and ongoing and timely review of payment performance. Asset quality administration, including early identification of loans performing in a substandard manner, as well as timely and active resolution of problems, further enhances management of credit risk and minimization of loan losses. Any losses that occur and that are charged off against the ALL are periodically reviewed with specific efforts focused on achieving maximum recovery of both principal and interest.

At least quarterly, we review the adequacy of the ALL. Based on an estimate computed pursuant to the requirements of ASC 450-10, “Accounting for Contingencies” and ASC 310-10, “Accounting by Creditors for Impairment of a Loan”, the analysis of the ALL consists of three components: (i) specific credit allocation established for expected losses relating to specific individual loans for which the recorded investment in the loan exceeds its fair value; (ii) general portfolio allocation based on historical loan loss experience for significant loan categories; and (iii) general portfolio allocation based on qualitative factors such as economic conditions and other factors specific to the markets in which we operate. We continue to refine our ALL methodology by introducing a greater level of granularity to the portfolio. For example, bifurcating consumer loans between indirect paper and other consumer loans; and segmenting real estate loans without an event of delinquency. The additional segmentation of the portfolio is intended to provide a more effective basis for the determination of qualitative factors. In addition, management evaluates its ALL methodology from time to time to assess whether modifications are appropriate in light of underwriting practices, market conditions, identifiable trends, regulatory pronouncements or other factors. Management periodically reviews its ALL methodology and may make modifications to it as necessary. We believe that any modifications or changes to the ALL methodology would be to enhance the ALL. However, any such modifications could result in materially different ALL levels in future periods.

The specific credit allocation for the ALL is based on a regular analysis of all loans that are considered TDRs. In compliance with ASC 310-10, the fair value of the loan is determined based on either the present value of expected cash flows discounted at the loan’s effective interest rate, the market price of the loan, or, if the loan is collateral dependent, the fair value of the underlying collateral less the cost of sale. At June 30, 2012 had 107 such loans, all secured by real estate or personal property. Their aggregate recorded investment is $7,415 as of June 30, 2012. The total for the 60 such individual loans where estimated fair value was less than their book value (i.e. we deemed impairment to exist) was $4,303 for which $602 in specific ALL was recorded as of June 30, 2012.

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At June 30, 2012, the ALL was $5,702, or 1.32% of the total loan portfolio, compared to ALL of $4,898, or 1.13% of the total loan portfolio, at September 30, 2011. This level was based on our analysis of the loan portfolio risk at June 30, 2012, taking into account the factors discussed above.

All of the factors we take into account in determining the ALL in general categories are subject to change; thus the allocations are management’s estimate of the loan loss categories in which the probable and inherent loss has occurred. Currently, management especially focuses on local and national unemployment rates and home prices, as management believes these factors currently have the most impact on our customers’ ability to repay loans and our ability to recover potential losses through collateral sales. As loan balances and estimated losses in a particular loan type decrease or increase and as the factors and resulting allocations are monitored by management, changes in the risk profile of the various parts of the loan portfolio may be reflected in the allowance allocated. The general component covers non-impaired loans and is based on historical loss experience adjusted for qualitative factors. In addition, management continues to refine the ALL estimation process as new information becomes available. These refinements could also cause increases or decreases in ALL. The unallocated portion of the ALL is intended to account for imprecision in the estimation process or relevant current information that may not have been considered in the process.

Nonperforming Loans, Potential Problem Loans and Foreclosed Properties. We practice early identification of non-accrual and problem loans in order to minimize the risk of loss. Non-performing loans are defined as non-accrual loans and restructured loans that were more than 91 days past due at the time of their restructure, or when management determines that such classification is warranted. The accrual of interest income is discontinued when a loan becomes more than 91 days past due as to principal and interest. When interest accruals are discontinued, interest credited to income is reversed. If collection is in doubt, cash receipts on non-accrual loans are used to reduce principal rather than become recorded as interest income. Restructuring a TDR loan typically involves the granting of some concession to the borrower involving a loan modification, such as payment schedule or interest rate changes. TDR loans may involve loans that have had a charge-off taken against the loan to reduce the carrying amount of the loan to fair market value as determined pursuant to ASC 310-10.

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The following table identifies the various components of non-performing assets and other balance sheet information as of the dates indicated below and changes in the ALL for the periods then ended:

	June 30, 2012 and Nine Months Then Ended			September 30, 2011 and Twelve Months Then Ended
Nonperforming assets:
Nonaccrual loans	$	3,848		$	4,400
Accruing loans past due 90 days or more		—			—
Total nonperforming loans (“NPLs”)		3,848			4,400
Other real estate owned		905			1,153
Other collateral owned		97			207
Total nonperforming assets (“NPAs”)	$	4,850		$	5,760
Troubled Debt Restructurings (“TDRs”)	$	7,415		$	6,662
Nonaccrual TDRs	$	798		$	1,855
Average outstanding loan balance	$	431,563		$	443,989
Loans, end of period	$	431,380		$	431,746
Total assets, end of period	$	533,366		$	536,557
ALL, at beginning of period	$	4,898		$	4,145
Loans charged off:
Real estate loans		(1,424	)		(2,476	)
Consumer loans		(1,559	)		(2,882	)
Total loans charged off		(2,983	)		(5,358	)
Recoveries of loans previously charged off:
Real estate loans		28			46
Consumer loans		219			201
Total recoveries of loans previously charged off:		247			247
Net loans charged off (“NCOs”)		(2,736	)		(5,111	)
Additions to ALL via provision for loan losses charged to operations		3,540			5,864
ALL, at end of period	$	5,702		$	4,898
Ratios:
ALL to NCOs (annualized)		1.56			0.96
NCOs (annualized) to average loans		0.85	%		1.15	%
ALL to total loans		1.32	%		1.13	%
NPLs to total loans		0.89	%		1.02	%
NPAs to total assets		0.91	%		1.07	%
Total Assets:	$	533,366		$	536,557

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Non-performing loans of $3,848 at June 30, 2012, which included $798 of non-performing troubled debt restructured loans, reflected a decrease of $552 from the non-performing loans balance of $4,400 at September 30, 2011. The non-performing loan relationships are secured primarily by collateral including residential real estate or the consumer assets financed by the loans.

Our non-performing assets were $4,850 at June 30, 2012, or 0.91% of total assets compared to $5,760, or 1.07% of total assets at September 30, 2011. The decreases since September 30, 2011 were primarily a result of decreasing nonaccrual loans, as well as a decrease in other real estate and other collateral owned.

Other real estate owned (OREO) decreased by $248, from $1,153 at September 30, 2011 to $905 at June 30, 2012. Other collateral owned decreased $110 during the nine months ended June 30, 2012 to $97 from the September 30, 2011 balance of $207. The decrease in OREO was primarily due to several large residential real estate properties sold during the period. The decrease in other collateral owned was largely due to more aggressive credit monitoring and collection practices along with general economic deterioration in the communities we serve. We continue to aggressively liquidate OREO and other collateral owned as part of our overall credit risk strategy.

We believe the favorable trends noted above in our nonperforming loans and nonperforming assets reflect our continued adherence to improved underwriting criteria and practices along with improvements in macroeconomic factors in our credit markets. We believe our current ALL is adequate to cover probable losses in our current loan portfolio.

Net charge offs for the three months ended June 30, 2012 were $866 compared to $1,214 for the three months ended June 30, 2011. Net charge offs for the nine months ended June 30, 2012 were $2,736 compared to $4,104 for the nine months ended June 30, 2011. The ratio of annualized net charge-offs to average loans receivable was 0.85% for both the three and nine month periods ended June 30, 2012, compared to 1.15% for the twelve months ended September 30, 2011. Improved net charge-offs during the current year periods were primarily a result of reduced delinquencies and overall credit quality improvement within the portfolio.

Securities Available for Sale. We manage our securities portfolio in an effort to enhance income, improve liquidity, and meet the Qualified Thrift Lender test.

Securities available for sale, which represents our entire investment portfolio, were $67,436 at June 30, 2012 compared with $44,338 at September 30, 2011. The securities in our non-agency residential mortgage-backed securities (MBS) portfolio were originally purchased throughout 2007 and early 2008 and are generally secured by prime 1-4 family residential mortgage loans. These securities were all rated “AAA” or the equivalent by major credit rating agencies at the time of their original purchase. As of June 30, 2012, the entire remaining book value of the non-agency residential MBS portfolio, which totaled $9,813, has been downgraded from investment grade to below investment grade. The market for these securities has depressed in response to stress and illiquidity in the financial markets and a general deterioration in economic conditions. Taking into consideration these developments, we have determined that it is likely the Bank will not collect all amounts due according to the contractual terms of these securities.

As part of our asset and liability management activities, we review our non-agency MBS portfolio on a monthly basis. We analyze credit risk, i.e. the likelihood of potential future OTTI adjustments and current market prices relative to our current book value. We also analyze the impact of these securities on our regulatory risk-based capital requirements.

During the three month period ended June 30, 2012, the results of our analysis indicated none of our remaining non-agency residential MBS, with an aggregate book value of approximately $9,813, had additional OTTI.

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Despite more favorable market prices in recent months on certain non-agency MBS, we believe that the remaining fair value of our non-agency MBS portfolio, totaling $7,416, is still subject to numerous risk factors outside of our control, such as market volatility and changes in the credit quality of underlying collateral. Future evaluations of fair value could result in additional OTTI losses.

On June 30, 2012, all six of our remaining securities included in our non-agency residential MBS portfolio have unrealized losses currently included in accumulated other comprehensive income. These losses represent a 24.4% decline in value in comparison to our amortized cost basis of these securities. While performance of the non-agency residential mortgage-backed securities has deteriorated and the securities have been subject to downgrades, these unrealized losses relate principally to the continued volatility of the securities markets and are not due to changes in the financial condition of the issuer, the quality of any underlying assets, or applicable credit enhancements.

The amortized cost and market values of our available for sale securities as of the periods indicated below were as follows:

	Amortized Cost		Fair Value
June 30, 2012
U.S. Agency mortgage-backed securities	$	14,271	$	14,656
U.S. Agency Floating rate bonds	$	11,485	$	11,677
Fannie Mae mortgage-backed securities		11,709		11,845
Freddie Mac mortgage-backed securities		12,058		12,142
Non-agency mortgage-backed securities		9,813		7,416
General Obligation Municipal Bonds		7,361		7,361
Revenue Municipal Bonds		2,297		2,339
Totals	$	68,994	$	67,436
September 30, 2011
U.S. Agency mortgage-backed securities	$	9,719	$	9,983
U.S. Agency Floating rate bonds		25,215		25,212
Non-agency mortgage-backed securities		12,918		9,143
Totals	$	47,852	$	44,338

As noted above, over the past several quarters, the rating agencies have revised downward their original ratings on thousands of mortgage-backed securities which were issued during the 2001-2007 time period. As of June 30, 2012, we held $7,416 in fair value of investments that were originally rated “Investment Grade” but have been downgraded to “Below Investment Grade” by at least one of three recognized rating agencies.

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The composition of our available-for-sale portfolios by credit rating as of the periods indicated was as follows:

	June 30, 2012				September 30, 2011
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Agency	$	49,522	$	50,320	$	34,934	$	35,195
AAA		3,655		3,685		—		—
AA		4,853		4,872		—		—
A		1,151		1,143
BBB		—		—		—		—
Below investment grade		9,813		7,416		12,918		9,143
Total	$	68,994	$	67,436	$	47,852	$	44,338

At June 30, 2012, the approximate aggregate fair value of the six remaining non-agency securities, for which other-than-temporary impairment of $3,081 has been previously recorded, was $7,416. The following table is a roll forward of the amount of other-than-temporary impairment, related to credit losses, recognized in earnings.

September 30, 2011, balance of OTTI related to credit losses	$	2,408
Credit portion of OTTI recognized during the nine months ended June 30, 2012		673
June 30, 2012, balance of OTTI related to credit losses	$	3,081

Utilizing a third party firm, we will continue to obtain an independent valuation of our non-agency MBS portfolio on a quarterly basis. Our management and Board of Directors will review and consider additional testing during future periods to determine if additional write-downs of the MBS portfolio are warranted.

At June 30, 2012, securities in the amount of $36,652 are pledged against a line of credit with the Federal Reserve Bank of Minneapolis. As of June 30, 2012, the line of credit had a zero balance.

Deposits. Deposits decreased to $426,697 at June 30, 2012, from $448,973 at September 30, 2011 due to our continued efforts to increase core deposits and allow higher rate CDs to mature without being replaced. Deposit activity by product and generated by in-store versus traditional branch locations as of June 30, 2012 was as follows:

	In-store			Traditional			Institutional			Total
Non-CD deposits	$	(9,501	)	$	3,893		$	—		$	(5,608	)
CD deposits - customer		(68	)		(8,609	)		—			(8,677	)
CD deposits - institutional		—			—			(7,585	)		(7,585	)
Total change in deposits	$	(9,569	)	$	(4,716	)	$	(7,585	)	$	(21,870	)

Through execution of our branch strategy, and by expanding our deposit product offerings, we continue to pursue core deposit relationships at current market rates. Institutional certificates of deposit as a funding source declined for the quarter, but remain a cost effective source of future funding.

The Bank had $498 in brokered deposits as of June 30, 2012 and zero brokered deposits as of September 30, 2011. Brokered deposit levels are within all regulatory directives thereon.

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Borrowed Funds. FHLB advances increased from $30,400 as of September 30, 2011, to $48,150 as of June 30, 2012, primarily as a result of new FHLB borrowings at lower interest rates than previous FHLB borrowings, The borrowings were utilized to improve liquidity and fund operations.

Stockholders’ Equity. Total stockholders’ equity was $54,096 at June 30, 2012, versus $52,888 at September 30, 2011. Total stockholders’ equity increased by $1,208, primarily as a result of favorable fair market value adjustments to our investment portfolio which are a component of other comprehensive income in equity.

Liquidity and Asset / Liability Management. Liquidity management refers to our ability to ensure cash is available in a timely manner to meet loan demand and depositors’ needs, and meet other financial obligations as they become due without undue cost, risk or disruption to normal operating activities. Asset / liability management refers to our ability to efficiently and effectively utilize customer deposits and other funding sources to generate sufficient risk-weighted yields on earning assets. We manage and monitor our short-term and long-term liquidity positions and needs through a regular review of maturity profiles, funding sources, and loan and deposit forecasts to minimize funding risk. A key metric we monitor is our liquidity ratio, calculated as cash and investments with maturities less than one-year divided by deposits with maturities less than one-year. At June 30, 2012, our liquidity ratio was 11.57%, above our targeted liquidity ratio of 10%.

Our primary sources of funds are deposits; amortization, prepayments and maturities of outstanding loans; other short-term investments and funds provided from operations. We use our sources of funds primarily to meet ongoing commitments, to pay maturing certificates of deposit and savings withdrawals, and to fund loan commitments. While scheduled payments from the amortization of loans and maturing short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Although $78,173 of our $226,412 (34.5%) CD portfolio as of June 30, 2012 will mature within the next 12 months, we have historically retained over 70% of our maturing CD’s. However, due to strategic pricing decisions regarding rate matching, our retention rate may decrease in the future due to our philosophy of building customer relationships – not just deposit accounts. Through new deposit product offerings to our branch customers, we are currently attempting to strengthen customer relationships while lengthening deposit maturities. In our present interest rate environment, and based on maturing yields this should also improve our cost of funds. We believe that our in-store branch network attracts core deposits and enhances long-term liquidity, a key component to our broader liquidity management strategy.

We maintain access to additional sources of funds including FHLB borrowings and lines of credit with the Federal Reserve Bank and Bankers’ Bank. We utilize FHLB borrowings to leverage our capital base, to provide funds for our lending and investment activities, and to manage our interest rate risk. Our borrowing arrangement with the FHLB calls for pledging certain qualified real estate loans, and borrowing up to 75% of the value of those loans, not to exceed 35% of the Bank’s total assets. Currently, we have approximately $142,300 available under this arrangement. We also maintain lines of credit of $30,300 with the Federal Reserve Bank and $13,500 with Bankers’ Bank as part of our contingency funding plan. The Federal Reserve Bank line of credit is based on 80% of the collateral value of the agency securities being held at the Federal Reserve Bank. The Bankers’ Bank line of credit is a discretionary line of credit.

Off-Balance Sheet Liabilities. Some of our financial instruments have off-balance sheet risk. These instruments include unused commitments for lines of credit, overdraft protection lines of credit and home equity lines of credit, as well as commitments to extend credit. As of June 30, 2012, the Company had $5,428 in unused commitments, compared to $4,409 in unused commitments as of September 30, 2011.

Capital Resources. As of June 30, 2012, we were “well capitalized” under applicable Prompt Corrective Action Provisions standards in all regulatory measured categories. Current Office of the Comptroller of Currency (“OCC”) guidance requires the Bank to apply significantly increased risk weighting factors to certain non-agency mortgage-backed securities whose prevailing bond agency ratings have been downgraded due to perceived increases in credit risk. This results in required risk based capital levels that are, in some cases, many times greater than the adjusted par value of the securities.

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	Actual					For Capital Adequacy Purposes						To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount			Ratio			Amount			Ratio
As of June 30, 2012 (Unaudited)
Total capital (to risk weighted assets)	$	58,401,000		15.0	%	$	31,216,000	>=		8.0	%	$	39,020,000	>=		10.0	%
Tier 1 capital (to risk weighted assets)		53,513,000		13.7	%		15,608,000	>=		4.0	%		23,412,000	>=		6.0	%
Tier 1 capital (to adjusted total assets)		53,513,000		10.0	%		21,319,000	>=		4.0	%		26,649,000	>=		5.0	%
As of September 30, 2011 (Audited)
Total capital (to risk weighted assets)	$	58,396,000		14.1	%	$	33,151,000	>=		8.0	%	$	41,439,000	>=		10.0	%
Tier 1 capital (to risk weighted assets)		54,182,000		13.1	%		16,575,000	>=		4.0	%		24,863,000	>=		6.0	%
Tier 1 capital (to adjusted total assets)		54,182,000		10.1	%		21,527,000	>=		4.0	%		26,909,000	>=		5.0	%

The Bank and the Company each continue to operate under Memoranda of Understanding (the “MOU”), issued December 23, 2009, by the Office of Thrift Supervision (“OTS”) (our former primary federal regulator). The MOU resulted from issues noted during the examination of the Bank conducted by the OTS, the report on which was dated July 27, 2009. The MOU identified the need for improved management and monitoring of (a) business and capital planning, (b) asset quality, (c) liquidity, and (d) concentrations of credit. The MOU also called for a formalized internal audit and compliance plan and prohibits the Bank from declaring dividends, and the Company from issuing debt without the prior consent of our primary regulator (now the Office of the Comptroller of the Currency “OCC”). Under the MOU, the Bank is required to maintain Tier 1 and Risk-based Capital levels of 8.0% and 10.0%, respectively, and is considered “Well Capitalized” by our primary regulator. The OCC initiated a full-scope safety and soundness and compliance examination of the Bank on March 12, 2012. The examination was completed on April 9, 2012, and the OCC issued its Report of Examination on June 29, 2012. The Report of Examination reflects the Bank has adequately addressed most of the issues noted in the MOU. Management continues to work closely with the OCC to address the remaining concerns in a timely manner.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time. Market interest rates change over time. Accordingly, our results of operations, like those of other financial institutions, are impacted by changes in interest rates and the interest rate sensitivity of our assets and liabilities. The risk associated with changes in interest rates and our ability to adapt to these changes is known as interest rate risk and is our most significant market risk.

How We Measure Our Risk of Interest Rate Changes. As part of our attempt to manage our exposure to changes in interest rates and comply with applicable regulations, we monitor our interest rate risk. In monitoring interest rate risk we continually analyze and manage assets and liabilities based on their payment streams and interest rates, the timing of their maturities, and their sensitivity to actual or potential changes in market interest rates.

In order to manage the potential for adverse effects of material and prolonged increases in interest rates on our results of operations, we adopted asset and liability management policies to better align the maturities and re-pricing terms of our interest-earning assets and interest-bearing liabilities. These policies are implemented by our Asset and Liability Management Committee. The Asset and Liability Management Committee is comprised of members of senior management. The Asset and Liability Management Committee establishes guidelines for and monitors the volume and mix of our assets and funding sources, taking into account relative costs and spreads, interest rate sensitivity and liquidity needs. The Committee’s objectives are to manage assets and funding sources to produce results that are consistent with liquidity, cash flow, capital adequacy, growth, risk and profitability goals. The Asset and Liability Management Committee meets on a regularly scheduled basis to review, among other things, economic conditions and interest rate outlook, current and projected liquidity needs and capital position, anticipated changes in the volume and mix of assets and liabilities and interest rate risk exposure limits versus current projections pursuant to net present value of portfolio equity analysis. At each meeting, the Committee recommends strategy changes, as appropriate, based on this review. The Committee is responsible for reviewing and reporting on the effects of the policy implementations and strategies to the Bank’s Board of Directors on a monthly basis.

In order to manage our assets and liabilities and achieve desired levels of liquidity, credit quality, cash flow, interest rate risk, profitability and capital targets, we have focused our strategies on:

• originating shorter-term secured consumer loans;

• managing our funding needs by utilizing core deposits and and borrowings as appropriate based on term and interest rate;

• reducing non-interest expense and managing our efficiency ratio;

• realigning supervision and control of our branch network by modifying their configuration, staffing, locations and reporting structure;

• improving our asset and collateral disposition practices; and

• focusing on sound and consistent loan underwriting practices based primarily on borrowers’ debt ratios, credit score and collateral values.

At times, depending on the level of general interest rates, the relationship between long- and short-term interest rates, market conditions and competitive factors, the Asset and Liability Management Committee may determine to increase the Bank’s interest rate risk position somewhat in order to maintain or improve its net interest margin.

As of June 30, 2012, $234,369 of loans in our portfolio included a payable-on-demand clause. We have not utilized the clause since fiscal 2000 because, in our view, it has not been appropriate. Therefore, the clause has had no impact on our liquidity and overall financial performance for the periods presented in this Report. The

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purpose behind the payable-on-demand clause is to provide the Bank with some protection against the impact on net interest margin of sharp and prolonged interest rate increases. The factors considered in determining whether and when to utilize the payable-on-demand clause include a significant, prolonged increase in market rates of interest; liquidity needs; a desire to restructure the balance sheet; an individual borrower’s unsatisfactory payment history; and, the remaining term to maturity. As of March 31, 2012, the Bank began offering balloon loans and at June 30, 2012, there are $3,706 in outstanding balloon loan balances.

The following table sets forth, at March 31, 2012 (the most recent date available), an analysis of our interest rate risk as measured by the estimated changes in Economic Value of Equity (EVE) resulting from gradual and sustained parallel shifts in the yield curve (up 300 basis points and down 100 basis points, measured in varying increments). As of June 30, 2012, due to the current level of interest rates, NPV estimates for decreases in interest rates greater than 100 basis points are not meaningful.

Change in Interest Rates in Basis Points (“bp”) Rate Shock in Rates (1)	Net Portfolio Value								Net Portfolio Value as $ of
	Amount		Change			Change			NPV Ratio			Change
	(Dollars in thousands)
+300 bp	$	43,471	$	(8,613	)		(17	%)		8.72	%		(107	) bp
+200 bp		47,426		(4,658	)		(9	%)		9.29	%		(50	)
+100 bp		38,786		(13,298	)		(26	%)		7.61	%		(218	)
0   bp		52,084		—			—			9.79	%		—
-100 bp		62,491		10,407			20	%		11.40	%		161

(1) Assumes a gradual change in interest rates over 12 months at all maturities.

The assumptions used to measure and assess interest rate risk include interest rates, loan prepayment rates, deposit decay (runoff) rates, and the market values of certain assets under differing interest rate scenarios.

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ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) that are designed to ensure that information required to be disclosed 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 Securities and Exchange Commission’s rules and forms, and that the information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating the disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have designed our disclosure controls and procedures to reach a level of reasonable assurance of achieving the desired control objectives. We carried out an evaluation as of June 30, 2012, under the supervision and with the participation of the Company’s management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2012 at reaching a level of reasonable assurance.

There was no change in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) during the Company’s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

On January 4, 2010, we received notice of a demand for arbitration by James G. Cooley, the Company’s former President and Chief Executive Officer, from the American Arbitration Association in connection with our termination of his employment and his employment agreement. As part of the demand, Mr. Cooley asserted claims against the Company (and certain members of the Company’s Board of Directors) related to breach of contract, wrongful discharge, defamation of character and intentional infliction of emotional distress. Mr. Cooley sought relief in the form of actual damages, punitive damages, attorneys’ fees, interest and reimbursement of costs. On March 1, 2010, Mr. Cooley initiated a declaratory judgment action in Wisconsin circuit court seeking a court determination as to whether the Company and certain members of the Company’s Board of Directors have a legal obligation to submit Mr. Cooley’s arbitration claims to an arbitrator. The declaratory judgment was dismissed on August 26, 2010, and the request for arbitration was subsequently withdrawn on August 26, 2010 as well.

On September 27, 2010, Mr. Cooley filed a lawsuit in the Eau Claire County Circuit court against the Company and the Bank and individual directors thereof, seeking damages for breach of employment contract, violation of public policy in the State of Wisconsin, defamation of character and intentional infliction of emotional distress, and punitive damages.

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On January 24, 2011, the court dismissed the defamation and infliction of emotional distress claims. The court subsequently reinstated post-termination claims of defamation, infliction of emotional distress and punitive damages. A trial date of October 1, 2012 has been scheduled in this matter.

Management continues to believe that the remaining aforementioned claims are without merit. Although the Company intends to vigorously defend against the remaining claims, no assurances can be given regarding the outcome of this matter.

In the normal course of business, the Company occasionally becomes involved in various legal proceedings. In our opinion, any liability from such proceedings would not have a material adverse effect on the business or financial condition of the Company.

Item 1A. RISK FACTORS

There are no material changes from the risk factors disclosed in Part I, Item 1A, “Risk Factors,” of the Company’s Form 10-K, for the fiscal year ended September 30, 2011. Please refer to that section for disclosures regarding the risks and uncertainties relating to our business.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

Not applicable.

Item 6. EXHIBITS

(a) Exhibits

31.1	Rule 13a-14(a) Certification of the Company’s Chief Executive Officer
31.2	Rule 13a-14(a) Certification of the Company’s Chief Financial Officer
32.1*	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002).
101**	The following materials from Citizens Community Bancorp, Inc.’s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2012 formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statement of Comprehensive Income; (iv) Consolidated Statement of Changes in Stockholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Condensed Notes to Consolidated Financial Statements

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* This certification is not “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

** Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CITIZENS COMMUNITY BANCORP, INC.
Date: August 13, 2012	By:	/s/ Edward H. Schaefer
		Edward H. Schaefer
		Chief Executive Officer
Date: August 13, 2012	By:	/s/ Mark C. Oldenberg
		Mark C. Oldenberg
		Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Edward H. Schaefer, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Citizens Community Bancorp, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 13, 2012	By:	/s/    Edward H. Schaefer
		Edward H. Schaefer
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEFFINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark C. Oldenberg, certify that:

1) I have reviewed this quarterly report on Form 10-Q of Citizens Community Bancorp, Inc.;

2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    August 13, 2012	By:	/s/ Mark C. Oldenberg
	Mark C. Oldenberg
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT

PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Citizens Community Bancorp, Inc. (the “Company”) certifies that the Quarterly Report of the Company on Form 10-Q for the quarter ended June 30, 2012, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended, and that the information contained in such report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in such report.

Date:    August 13, 2012	By:	/s/ Edward H. Schaefer
	Edward H. Schaefer
	Chief Executive Officer

Date:    August 13, 2012	By:	/s/ Mark C. Oldenberg
	Mark C. Oldenberg Chief Financial Officer

The above certifications are made solely for the purpose of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

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Investment Securities (Details Textual) (Federal Reserve Bank [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Federal Reserve Bank [Member]
Investment Securities (Textual) [Abstract]
Borrowings outstanding under line of credit facility	$ 0

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Other Comprehensive Income (Loss) (Details 1) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	$ (2,318)
Current period other comprehensive income, net of tax	1,177	3,060
Ending Balance	(1,142)
Unrealized Gains Losses on Securities [Member]
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	(2,109)
Current period other comprehensive income, net of tax	1,173
Ending Balance	(936)
Defined Benefit Plans [Member]
Changes in the accumulated balances for each component of other comprehensive income
Beginning Balance	(209)
Current period other comprehensive income, net of tax	3
Ending Balance	$ (206)

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Stock Based Compensation (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011	Feb. 28, 2005
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Grant of awards company's common stock	0		0			113,910
Weighted Average Fair value					$ 5.24
Stock Based Compensation (Textual) [Abstract]
Prospective issuance of shares of the Company's common stock under the 2008 Equity Incentive Plan			426,860
Aggregate stock which may be granted for restricted stock and units under the 2008 Equity Incentive Plan			170,745
Number of restricted shares on date of award, lot two	6,832		6,832
Fair value of the restricted shares on the date of award, lot two	$ 6.18		$ 6.18
Previously awarded shares forfeited	0	0	0	0
Shares granted to eligible participants	0	10,156	0		20,312
Number of restricted shares on date of award, lot one	63,783		63,783
Fair value of the restricted shares on the date of award, lot one	$ 7.04		$ 7.04
Number of shares reserved and available for issuance under the 2008 Equity Incentive Plan	597,605		597,605
2004 Stock Option and Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Compensation expense related to awards	$ 5		$ 15
Options granted			248,635
Grant of awards company's common stock						284,778
Weighted Average Fair value			$ 6.70
Vesting period of options granted			5 years
Expiry period of unexercised and nonqualified stock options			15 years
Expiry period of unexercised incentive stock options			10 years
Shares of the Company's common stock vested			72,995
Shares of the Company's common stock unvested			41,794
Number of shares forfeited under options in the plan			129,288
Number of options exercised under the plan			4,558
Number of options remained outstanding under the plan	114,789		114,789
Restricted shares [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted shares issued and outstanding	90,927		90,927
Compensation expense related to awards	$ 5		$ 16
Vesting period of options granted			5 years

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Loans Allowance for Loan Losses and Impaired Loans (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011
Bank impaired loans
With no related allowance recorded, Recorded investment	$ 3,112		$ 3,112		$ 4,122
With an allowance recorded, Recorded investment	4,303		4,303		2,540
Recorded investment, Total	7,415		7,415		6,662
With no related allowance recorded, unpaid principal balance	3,112		3,112		4,122
With an allowance recorded, unpaid principal balance	4,303		4,303		2,540
Unpaid principal balance, Total	7,415		7,415		6,662
With no related allowance recorded, Average recorded investment	3,263	3,983	3,618	2,585
With an allowance recorded, Average recorded investment	3,656	2,841	3,422	2,411
Average recorded investment, Total	6,919	6,824	7,040	4,996
With no related allowance recorded, Interest income recognized	16	13	48	70
With an allowance recorded, Interest income recognized	29	7	72	33
Interest income recognized, Total	45	20	120	103
Real Estate [Member]
Bank impaired loans
With no related allowance recorded, Recorded investment	2,735		2,735		3,616
With an allowance recorded, Recorded investment	3,506		3,506		1,813
Recorded investment, Total	6,241		6,241		5,429
With no related allowance recorded, unpaid principal balance	2,735		2,735		3,616
With an allowance recorded, unpaid principal balance	3,506		3,506		1,813
Unpaid principal balance, Total	6,241		6,241		5,429
With no related allowance recorded, Average recorded investment	2,874	3,627	3,176	2,296
With an allowance recorded, Average recorded investment	2,922	1,867	2,660	1,455
Average recorded investment, Total	5,796	5,494	5,836	3,751
With no related allowance recorded, Interest income recognized	12	10	34	61
With an allowance recorded, Interest income recognized	23	6	58	17
Interest income recognized, Total	35	16	92	78
Consumer [Member]
Bank impaired loans
With no related allowance recorded, Recorded investment	377		377		506
With an allowance recorded, Recorded investment	797		797		727
Recorded investment, Total	1,174		1,174		1,233
With no related allowance recorded, unpaid principal balance	377		377		506
With an allowance recorded, unpaid principal balance	797		797		727
Unpaid principal balance, Total	1,174		1,174		1,233
With no related allowance recorded, Average recorded investment	389	356	442	289
With an allowance recorded, Average recorded investment	734	974	762	956
Average recorded investment, Total	1,123	1,330	1,204	1,245
With no related allowance recorded, Interest income recognized	4	3	14	9
With an allowance recorded, Interest income recognized	6	1	14	16
Interest income recognized, Total	$ 10	$ 4	$ 28	$ 25

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Fair Value Accounting (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	$ 67,436	$ 44,338
U.S. Agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	14,656	9,983
U.S. Agency Floating Rate Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,677	25,212
Fannie Mae mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,845
Freddie Mac mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	12,142
Non-agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,416	9,143
General Obligation Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,361
Revenue Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	2,339
Fair Value, Measurements, Recurring [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	67,436	44,338
Fair Value, Measurements, Recurring [Member] | U.S. Agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	14,656	9,983
Fair Value, Measurements, Recurring [Member] | U.S. Agency Floating Rate Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,677	25,212
Fair Value, Measurements, Recurring [Member] | Fannie Mae mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,845
Fair Value, Measurements, Recurring [Member] | Freddie Mac mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	12,142
Fair Value, Measurements, Recurring [Member] | Non-agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,416	9,143
Fair Value, Measurements, Recurring [Member] | General Obligation Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,361
Fair Value, Measurements, Recurring [Member] | Revenue Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	2,339
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | U.S. Agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | U.S. Agency Floating Rate Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Fannie Mae mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Freddie Mac mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Non-agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | General Obligation Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Quoted Price in Active Market for Identical Instruments (Level 1) [Member] | Revenue Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	60,020	35,195
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	14,656	9,983
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. Agency Floating Rate Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,677	25,212
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Fannie Mae mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	11,845
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Freddie Mac mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	12,142
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Non-agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | General Obligation Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,361
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Revenue Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	2,339
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,416	9,143
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. Agency Floating Rate Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Fannie Mae mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Freddie Mac mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Non-agency mortgage-backed securities [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value	7,416	9,143
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | General Obligation Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Revenue Municipal Bonds [Member]
Assets Measured on a Recurring Basis
Securities available for sale, Fair Value

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Current tax provision / (benefit)
Federal	$ 710	$ 170
State	155	16
Current Income Tax Expense (Benefit), Total	865	186
Deferred tax (benefit)
Federal	(744)	(145)
State	(102)	1
Deferred Income Tax Expense (Benefit), Total	(846)	(144)
Total	$ 19	$ 42

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Investment Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	$ 68,994	$ 47,852
Gross Unrealized Gains	930	288
Gross Unrealized Losses	2,488	3,802
Estimated Fair Value	67,436	44,338
U.S. Agency mortgage-backed securities [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	14,271	9,719
Gross Unrealized Gains	385	264
Gross Unrealized Losses
Estimated Fair Value	14,656	9,983
U.S. Agency Floating Rate Bonds [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	11,485	25,215
Gross Unrealized Gains	192	24
Gross Unrealized Losses		27
Estimated Fair Value	11,677	25,212
Fannie Mae mortgage-backed securities [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	11,709
Gross Unrealized Gains	136
Gross Unrealized Losses
Estimated Fair Value	11,845
Freddie Mac mortgage-backed securities [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	12,058
Gross Unrealized Gains	84
Gross Unrealized Losses
Estimated Fair Value	12,142
Non-agency mortgage-backed securities [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	9,813	12,918
Gross Unrealized Gains
Gross Unrealized Losses	2,397	3,775
Estimated Fair Value	7,416	9,143
General Obligation Municipal Bonds [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	7,361
Gross Unrealized Gains	91
Gross Unrealized Losses	91
Estimated Fair Value	7,361
Revenue Municipal Bonds [Member]
Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale
Amortized Cost	2,297
Gross Unrealized Gains	42
Gross Unrealized Losses
Estimated Fair Value	$ 2,339

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Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Unrealized gains (losses) on securities:
Unrealized holding losses arising during period Before- Tax Amount	$ 1,192
Unrealized holding losses arising during period Tax Expense	(477)
Unrealized holding losses arising during period Net of Tax Amount	54	310
Less: reclassification adjustment for gains (losses)realized in net income Before- Tax Amount	91
Less: reclassification adjustment for gains (losses)realized in net income Tax Expense	(37)
Less: reclassification adjustment for gains (losses)realized in net income Net of Tax Amount	54
Changes for realized losses on securities available for sale for OTTI write-down Before- Tax Amount	673
Changes for realized losses on securities available for sale for OTTI write-down Tax Expense	(269)
Changes for realized losses on securities available for sale for OTTI write-down Tax Expense, Net of Tax Amount	404
Defined benefit plans:
Amortization of unrecognized prior service costs and related net gains (losses) Before- Tax Amount	3
Amortization of unrecognized prior service costs and related net gains (losses) Tax Expense	2
Amortization of unrecognized prior service costs and net gains (losses), Net Tax	(3)
Other comprehensive income Before- Tax Amount	1,961
Other comprehensive income Tax Expense	(785)
Comprehensive income	$ 1,177	$ 3,060

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Nature of Business and Summary of Significant Accounting Policies

9 Months Ended

Jun. 30, 2012

Nature of Business and Summary of Significant Accounting Policies [Abstract]

NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements include the accounts of Citizens Community Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Citizens Community Bancorp was a successor to Citizens Community Federal as a result of a regulatory restructuring into the mutual holding company form, which was effective on March 29, 2004. Originally, Citizens Community Federal was a credit union. In December 2001, Citizens Community Federal converted to a federal mutual savings bank. In 2004, Citizens Community Federal reorganized into the mutual holding company form of organization. In 2006, Citizens Community Bancorp completed its second-step mutual to stock conversion.

The consolidated income of the Company is principally derived from the income of the Company’s wholly owned subsidiary. The Bank originates residential and consumer loans and accepts deposits from customers, primarily in Wisconsin, Minnesota and Michigan. The Bank operates 26 full-service offices; eight stand-alone locations and 18 branches predominantly located inside Walmart Supercenters.

The Bank is subject to competition from other financial institutions and non-financial institutions providing financial products. Additionally, the Bank is subject to the regulations of certain regulatory agencies and undergoes periodic examination by those regulatory agencies.

In preparing these consolidated financial statements, we evaluated the events and transactions that occurred through August 13, 2012, the date on which the financial statements were available to be issued. As of August 13, 2012, there were no subsequent events which required recognition or disclosure.

The accompanying consolidated interim financial statements are unaudited. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Unless otherwise stated, all amounts are in thousands.

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to; external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Securities – Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

In estimating other-than-temporary impairment, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of the other-than-temporary impairment (“OTTI”) that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on mortgage and consumer loans is discontinued at the time the loan is over 91 days delinquent. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account less than 92 days delinquent. Interest on impaired loans considered troubled debt restructurings (“TDRs”) that are not 92 days delinquent is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 180 days past due. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 120 days past due.

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in the portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the ALL balance required using past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs. All TDRs are individually evaluated for impairment. See Note 3 “Loans, Allowance for Loan Losses and Impaired Loans” for information on what we consider to be a TDR. If a TDR loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 91+ days past due, and certain TDRs that are less than 91+ days delinquent; the likelihood of the loan migrating to over 91 days past due is also factored in determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Foreclosed and Repossessed Assets, net – Assets acquired through, or instead of loan foreclosure, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and included in non-interest expense, other on the consolidated statements of operations. Foreclosed and repossessed asset balances were $1,002 and $1,360 at June 30, 2012 and September 30, 2011, respectively.

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6 for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. The Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plan.

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards – In June 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, “Presentation of Comprehensive Income”. ASU 2011-05 requires the presentation of comprehensive income in either a single continuous financial statement or two separate, but consecutive financial statements. ASU 2011-05 also includes a provision requiring the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which deferred this requirement in order to allow the FASB more time to determine whether reclassification adjustments should be required to be presented on the face of the financial statements. For public entities, ASUs 2011-05 and 2011-12 are effective for fiscal years, and interim periods beginning after December 15, 2011, and are required to be applied retrospectively. Early adoption is permitted. The Company has adopted ASUs 2011-05 and 2011-12 effective October 31, 2011, electing to present a consolidated statement of comprehensive income or loss separate from, but consecutive to, its statement of operations. The adoption of ASUs 2011-05 and 2011-12 had no material effect on the Company’s results of operations, financial position or cash flows.

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. The amended guidance does not modify the requirements for when fair value measurements apply, rather it generally represents clarifications on how to measure and disclose fair value under Topic 820, “Fair Value Measurement”. Respective disclosure requirements are essentially the same. However, some of the specific amendments address the application of existing fair value measurement requirements. Other specific amendments change a particular principal or requirement for measuring fair value, or for disclosing information about fair value measurements. ASU 2011-04 is intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. This guidance is effective prospectively for annual and interim periods beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860); Reconsideration of Effective Control for Repurchase Agreements”. Under the amended guidance, a transferor maintains effective control over transferred financial assets if there is an agreement between both entities which obligates the transferor to repurchase the financial assets before maturity. In addition, the following requirements must be met: (a) the financial asset to be repurchased or redeemed is the same or substantially the same as that transferred, (b) the agreement is to repurchase or redeem the transferred financial asset before maturity at a fixed or determinable price, and (c) the agreement is entered into contemporaneously with, or in contemplation of the transfer. This guidance is effective prospectively for transactions, or modifications of existing transactions, that occur on or after the first interim or annual period beginning on or after December 15, 2011. The Company adopted this guidance effective October 1, 2011. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

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Income Taxes (Details 1) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income
Tax expense at statutory rate	$ 7	$ 20
State income taxes net of exception	1	3
Other permanent differences	11	3
Other		16
Total	$ 19	$ 42
Tax expense at statutory rate in percent	34.00%	34.00%
State income taxes net of exception in percent	5.40%	5.40%
Other permanent differences in percent	55.50%	4.50%
Other in percent	1.30%	27.30%
Total, in percent	96.20%	71.20%

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Fair Value Accounting (Details Textual) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Jun. 30, 2012
Fair Value Accounting (Textual) [Abstract]
Other than temporary impairment	$ 0

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Fair Value Accounting (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011	Jun. 30, 2011	Sep. 30, 2010
Financial assets:
Cash and cash equivalents, Carrying Amount	$ 20,855	$ 31,763	$ 37,523	$ 72,438
Cash and Cash Equivalents, Fair Value	20,855	31,763
Interest Bearing Deposits Carrying Value		9,543
Interest Bearing Deposits, Fair Value		9,543
Securities available for sale Carrying Amount	67,436	44,338
Securities available for sale, Fair Value	67,436	44,338
Loans receivable Carrying Amount	425,678	426,848
Loans Receivable, Fair Value	453,809	453,112
Federal home loan bank stock carrying amount	4,426	5,787
FHLB stock, Fair Value	4,426	5,787
Accrued interest receivable Carrying Amount	1,543	1,508
Accrued Interest Receivables, Fair Value	1,543	1,508
Financial liabilities:
Deposits, Carrying Amount	426,697	448,973
Deposits, Fair Value	432,255	454,933
FHLB advances, Carrying Amount	48,150	30,400
FHLB Fair Value	49,529	32,454
Accrued Interest Payable, Carrying Amount	120	114
Accrued Interest Payables Fair Value	$ 120	$ 114

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Income Taxes (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Deferred tax assets:
Allowance for loan losses	$ 2,245	$ 1,928
Deferred loan costs/fees	387	366
Director/officer compensation plans	1,330	1,360
Net unrealized loss on securities available for sale	623	1,406
Impairment loss	574	72
Other	180	229
Deferred tax assets	5,339	5,361
Deferred tax liabilities:
Office properties and equipment	(781)	(902)
Federal Home Loan Bank stock	(64)	(64)
Core deposit intangible, net	21	(42)
481a adjustment	(21)	(82)
Other	(69)	(108)
Deferred tax liabilities	(914)	(1,198)
Net deferred tax assets	$ 4,425	$ 4,163

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Loans Allowance for Loan Losses and Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011
Allowance for Loan Losses:
Beginning balance	$ 5,668	$ 4,504	$ 4,898	$ (4,898)
Charge-offs	(981)	(1,263)	(2,983)	(4,283)
Recoveries	115	50	247	179
Provision	900	1,364	3,540	4,614
Ending balance	5,702	4,655	5,702	4,655
Loans Receivable:
Ending balance	431,380		431,380		432,764
Ending balance: individually evaluated for impairment	7,415		7,415		6,662
Ending balance: collectively evaluated for impairment	423,965		423,965		426,102
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	602	696	602	696
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	5,100	3,959	5,100	3,959
Real Estate [Member]
Allowance for Loan Losses:
Beginning balance	2,235	1,687	1,907	1,562
Charge-offs	(601)	(729)	(1,424)	(1,924)
Recoveries	6	3	28	33
Provision	618	817	1,747	2,107
Ending balance	2,258	1,778	2,258	1,778
Loans Receivable:
Ending balance	278,384		278,384		275,339
Ending balance: individually evaluated for impairment	6,241		6,241		5,429
Ending balance: collectively evaluated for impairment	272,143		272,143		269,910
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	413	409	413	409
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	1,845	1,369	1,845	1,369
Consumer [Member]
Allowance for Loan Losses:
Beginning balance	3,433	2,817	2,991	2,583
Charge-offs	(380)	(534)	(1,559)	(2,359)
Recoveries	109	47	219	146
Provision	282	547	1,793	2,507
Ending balance	3,444	2,878	3,444	2,878
Loans Receivable:
Ending balance	152,996		152,996		157,425
Ending balance: individually evaluated for impairment	1,174		1,174		1,233
Ending balance: collectively evaluated for impairment	151,822		151,822		156,192
Financing Receivable, Allowance for Credit Loss, Additional Information [Abstract]
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	189	287	189	287
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$ 3,255	$ 2,590	$ 3,255	$ 2,590

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Loans Allowance for Loan Losses and Impaired Loans (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Loans receivable
Total loans	$ 431,380	$ 432,764
Performing loans [Member]
Loans receivable
Performing TDR loans	6,617	4,105
Performing loans other	420,915	420,684
Total loans	427,532	424,789
Nonperforming loans [Member]
Loans receivable
Performing TDR loans	798	2,557
Performing loans other	3,050	4,400
Total loans	3,848	6,957
Real Estate Loans [Member]
Loans receivable
Total loans	278,384	275,339
Real Estate Loans [Member] | Performing loans [Member]
Loans receivable
Performing TDR loans	5,517	3,191
Performing loans other	269,470	264,838
Total loans	274,987	268,029
Real Estate Loans [Member] | Nonperforming loans [Member]
Loans receivable
Performing TDR loans	724	2,238
Performing loans other	2,673	3,452
Total loans	3,397	5,690
Consumer Loans [Member]
Loans receivable
Total loans	152,996	157,425
Consumer Loans [Member] | Performing loans [Member]
Loans receivable
Performing TDR loans	1,100	914
Performing loans other	151,445	155,846
Total loans	152,545	156,760
Consumer Loans [Member] | Nonperforming loans [Member]
Loans receivable
Performing TDR loans	74	319
Performing loans other	377	948
Total loans	$ 451	$ 1,267

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Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Cash flows from operating activities:
Net income attributable to common stockholders	$ 1	$ 17
Adjustments to reconcile net income to net cash provided by operating activities:
Net accretion (amortization) of premium/discount on securities	481	(20)
Depreciation	780	840
Provision for loan losses	3,540	4,614
Net realized gain on sale of securities	(91)	(516)
Other-than-temporary impairment on mortgage-backed securities	673	620
Amortization of core deposit intangible	194	250
Amortization of restricted stock	16	2
Stock based compensation expense	15	1
Loss on sale of office properties	134
Net gains from disposals of foreclosed properties	(32)	(35)
Provision for valuation allowance on foreclosed properties	144	135
Decrease in accrued interest receivable and other assets	1,044	1,424
Increase in other liabilities	130	378
Total adjustments	7,028	7,693
Net cash provided by operating activities	7,029	7,710
Cash flows from investing activities:
Purchase of securities available-for-sale	(47,521)	(60,998)
Net decrease (increase) in interest-bearing deposits	9,543	(9,543)
Proceeds from sale of securities available-for-sale	18,200	45,041
Principal payments on securities available for sale	7,116	9,791
Proceeds from sale of FHLB stock	1,361
Proceeds from sale of foreclosed properties	1,421	763
Net (increase) decrease in loans	(3,616)	18,959
Net capital expenditures	(380)	(510)
Net cash received from sale of office properties	465
Net cash used in investing activities	(13,411)	3,503
Cash flows from financing activities:
Net increase (decrease) in Federal Home Loan Bank advances	17,750	(28,900)
Net decrease in deposits	(22,276)	(17,228)
Net cash used in financing activities	(4,526)	(46,128)
Net decrease in cash and cash equivalents	(10,908)	(34,915)
Cash and cash equivalents at beginning of period	31,763	72,438
Cash and cash equivalents at end of period	20,855	37,523
Cash paid during the year for:
Interest on deposits	4,103	5,558
Interest on borrowings	988	1,581
Income taxes	21	8
Supplemental noncash disclosure:
Transfers from loans receivable to foreclosed and repossessed assets	$ 1,284	$ 1,750

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Loans Allowance for Loan Losses and Impaired Loans (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	$ 4,517	$ 6,384
2 Months Past Due	1,518	2,745
Greater Than 3 Months	3,438	4,400
Total Past Due	9,473	13,529
Current	421,907	418,217
Total Loan	431,380	431,746
Recorded Investment greater than 90 days and Accruing	0
Real estate loan [Member]
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	2,393	3,867
2 Months Past Due	1,085	1,877
Greater Than 3 Months	3,062	3,452
Total Past Due	6,540	9,196
Current	271,854	264,523
Total Loan	278,394	273,719
Recorded Investment greater than 90 days and Accruing	0
Consumer Loan [Member]
Aging analysis of the Bank's real estate and consumer loans
1 Month Past Due	2,124	2,517
2 Months Past Due	433	868
Greater Than 3 Months	376	948
Total Past Due	2,933	4,333
Current	150,053	153,694
Total Loan	152,986	158,027
Recorded Investment greater than 90 days and Accruing	$ 0

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Federal Home Loan Bank Advances (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Summary of Federal Home Loan Bank advances
Maturing during 2012	$ 17,250	$ 16,000
Maturing during 2013	6,750	6,750
Maturing during 2014	8,650	6,150
Maturing during 2015	11,500	1,500
Maturing After 2015	4,000
Weighted Average Rate 2012	2.49%	4.46%
Weighted Average Rate 2013	3.99%	3.99%
Weighted Average Rate 2014	3.31%	4.45%
Weighted Average Rate 2015	1.18%	4.05%
Weighted Average Rate After 2015	1.00%
Total fixed maturity	48,150	30,400
Advances with amortizing principal	0
Total	$ 48,150	$ 30,400

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Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Assets
Cash and cash equivalents	$ 20,855	$ 31,763
Other interest-bearing deposits		9,543
Securities available for sale (at fair value)	67,436	44,338
Federal Home Loan Bank stock	4,426	5,787
Loans receivable	431,380	431,746
Allowance for loan losses	(5,702)	(4,898)
Loans receivable, net	425,678	426,848
Office properties and equipment, net	5,699	6,696
Accrued interest receivable	1,543	1,508
Intangible assets	288	483
Foreclosed and repossessed assets, net	1,002	1,360
Other assets	6,439	8,231
TOTAL ASSETS	533,366	536,557
Liabilities:
Deposits	426,697	448,973
Federal Home Loan Bank advances	48,150	30,400
Other liabilities	4,423	4,296
Total liabilities	479,270	483,669
Stockholders' equity:
Common stock - 5,133,050 and 5,133,570 shares, respectively	51	51
Additional paid-in capital	53,949	53,934
Retained earnings	1,324	1,323
Unearned deferred compensation	(86)	(102)
Accumulated other comprehensive loss	(1,142)	(2,318)
Total stockholders' equity	54,096	52,888
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 533,366	$ 536,557

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Income Taxes (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Sep. 30, 2011
Income Taxes (Textual) [Abstract]
Valuation allowance	$ 0	$ 0
Examination by the Internal Revenue Service	All taxable years after the taxable year ended September 30, 2008
Percentage of likelihood	50.00%
Internal Revenue Service is currently examining the income tax returns	Sep. 30, 2010
Accrual for the payments of interest and penalties related to income tax issues	$ 0	$ 0

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Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Unearned Compensation	Accumulated Other Comprehensive Income (loss)
Beginning balance at Sep. 30, 2011	$ 52,888	$ 51	$ 53,934	$ 1,323	$ (102)	$ (2,318)
Beginning balance, shares at Sep. 30, 2011		5,133,570
Net Income	1			1
Other comprehensive income	1,176					1,176
Forfeiture of unvested shares - 520 shares		(520)
Stock option expense	15		15
Amortization of restricted stock	16				16
Ending balance at Jun. 30, 2012	$ 54,096	$ 51	$ 53,949	$ 1,324	$ (86)	$ (1,142)
Ending balance, shares at Jun. 30, 2012		5,133,050

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Loans Allowance for Loan Losses and Impaired Loans (Details 5) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012 Contract	Mar. 31, 2012	Sep. 30, 2011	Jun. 30, 2011 Contract	Sep. 30, 2010
Troubled Debt Restructuring
Number of Modifications	107			97
Recorded Investments	$ 7,415	$ 6,419	$ 6,662	$ 6,424	$ 3,273
Real Estate [Member]
Troubled Debt Restructuring
Number of Modifications	43			33
Recorded Investments	6,241	5,348	5,429	5,444	2,714
Consumer [Member]
Troubled Debt Restructuring
Number of Modifications	64			64
Recorded Investments	$ 1,174	$ 1,071	$ 1,233	$ 980	$ 559

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Income Taxes (Tables)

9 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

Income tax expense (benefit)

	Nine Months			Nine Months
	Ended			Ended
	June 30,			June 30,
	2012			2011
Current tax provision (benefit)
Federal	$	710		$	170
State		155			16
		865			186
Deferred tax provision (benefit)
Federal		(744	)		(145	)
State		(102	)		1
		(846	)		(144	)
Total	$	19		$	42

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income

	Nine Months				Nine Months
	Ended				Ended
	June 30,				June 30,
	2012				2011
Tax expense at statutory rate	$	7	34.0	%	$	20	34.0	%
State income taxes net of exception		1	5.4	%		3	5.4	%
Other permanent differences		11	55.5	%		3	4.5	%
Other		—	1.3	%		16	27.3	%
Total	$	19	96.2	%	$	42	71.2	%

Deferred Tax Assets and Liabilities

	June 30, 2012			September 30, 2011
Deferred tax assets:
Allowance for loan losses	$	2,245		$	1,928
Deferred loan costs/fees		387			366
Director/officer compensation plans		1,330			1,360
Net unrealized loss on securities available for sale		623			1,406
Impairment loss		574			72
Other		180			229
Deferred tax assets		5,339		$	5,361
Deferred tax liabilities:
Office properties and equipment		(781	)		(902	)
Federal Home Loan Bank stock		(64	)		(64	)
Core deposit intangible, net		21			(42	)
481a adjustment		(21	)		(82	)
Other		(69	)		(108	)
Deferred tax liabilities		(914	)		(1,198	)
Net deferred tax assets	$	4,425		$	4,163

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Loans Allowance for Loan Losses and Impaired Loans (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012 TDR	Sep. 30, 2011 TDR
Loans allowance for loan losses and impaired loans (Textual) [Abstract]
Impaired loan on fair value collateral carrying amount	$ 4,303	$ 2,540
Impaired Loans including troubled debt restructuring	6,617
Number of delinquent TDR	11	17
Recorded investment in delinquent TDR	$ 764	$ 1,720
Non Performing Loans [Member]
Loans allowance for loan losses and impaired loans (Textual) [Abstract]
Past due period & nonaccruing	91+ days
Past due, minimum period	91 days
TDR Loans [Member]
Loans allowance for loan losses and impaired loans (Textual) [Abstract]
Past due period & nonaccruing	91+ days
Past due, minimum period	91 days
Restructured interest rate	0.00%

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Nature of Business and Summary of Significant Accounting Policies (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012 Location Service_Office	Sep. 30, 2011
Nature of Business and Summary of Significant Accounting Policies (Textual) [Abstract]
Total number of service offices	26
Number of stand-alone locations	8
Number of in-store branch locations	18
Interest income discontinued over delinquent days	91 days
Interest income eligible for accrual less than days	92 days
Interest income recognized debt past due not more than days	92 days
Loans charged off past due more than days	180 days
Closed end loan charged off past due more than days	120 days
Foreclosed and repossessed asset balances	$ 1,002	$ 1,360

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Consolidated Statement of Changes in Stockholders' Equity (Unaudited) (Parenthetical)	9 Months Ended
	Jun. 30, 2012
Consolidated Statement of Changes in Stockholders' Equity [Abstract]
Forfeiture of unvested shares	520

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Consolidated Balance Sheets (Unaudited) (Parenthetical)	Jun. 30, 2012	Sep. 30, 2011
Consolidated Balance Sheets [Abstract]
Common stock, shares outstanding	5,133,050	5,133,570

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Nature of Business and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Jun. 30, 2012

Nature of Business and Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Citizens Community Federal. All significant inter-company accounts and transactions have been eliminated.

Use of Estimates

Use of Estimates – Preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future. Estimates are used in accounting for, among other items, fair value of financial instruments, the allowance for loan losses, valuation of acquired intangible assets, useful lives for depreciation and amortization, indefinite-lived intangible assets and long-lived assets, deferred tax assets, uncertain income tax positions and contingencies. Management does not anticipate any material changes to estimates made herein in the near term. Factors that may cause sensitivity to the aforementioned estimates include but are not limited to; external market factors such as market interest rates and employment rates, changes to operating policies and procedures, and changes in applicable banking regulations. Actual results may ultimately differ from estimates, although management does not generally believe such differences would materially affect the consolidated financial statements in any individual reporting period.

Securities

Securities – Securities are classified as available for sale when they might be sold before maturity. Securities available for sale are carried at fair value, with unrealized holding gains and losses deemed other than temporarily impaired due to non-credit issues being reported in other comprehensive income (loss), net of tax. Unrealized losses deemed other-than-temporary due to credit issues are reported in the Company’s earnings in the period in which the losses arise. Interest income includes amortization of purchase premium or accretion of purchase discount. Amortization of premiums and accretion of discounts are recognized in interest income using the interest method over the estimated lives of the securities.

In estimating other-than-temporary impairment, management considers: (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the Company’s ability and intent to hold the security for a period sufficient to allow for any anticipated recovery in fair value. The difference between the present values of the cash flows expected to be collected and the amortized cost basis is the credit loss. The credit loss is the portion of the other-than-temporary impairment (“OTTI”) that is recognized in operations and is a reduction to the cost basis of the security. The portion of other-than-temporary impairment related to all other factors is included in other comprehensive income (loss), net of the related tax effect.

Loans

Loans – Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at the principal balance outstanding, net of unearned interest, and deferred loan fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized in interest income using the interest method without anticipating prepayments.

Interest income on mortgage and consumer loans is discontinued at the time the loan is over 91 days delinquent. Past due status is based on the contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not received for a loan placed on nonaccrual status is reversed against interest income. Interest received on such loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual status. Loans are returned to accrual status when payments are made that bring the loan account less than 92 days delinquent. Interest on impaired loans considered troubled debt restructurings (“TDRs”) that are not 92 days delinquent is recognized as income as it accrues based on the revised terms of the loan over an established period of continued payment.

Real estate loans and open ended consumer loans are charged off to estimated net realizable value less estimated selling costs at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 180 days past due. Closed end consumer loans are charged off to net realizable value at the earlier of when (a) the loan is deemed by management to be uncollectible, or (b) the loan becomes greater than 120 days past due.

Allowance for Loan Losses

Allowance for Loan Losses – The allowance for loan losses (“ALL”) is a valuation allowance for probable and inherent credit losses in the portfolio. Loan losses are charged against the ALL when management believes that the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the ALL. Management estimates the ALL balance required using past loan loss experience; the nature, volume and composition of the loan portfolio; known and inherent risks in the portfolio; information about specific borrowers’ ability to repay; estimated collateral values; current economic conditions; and other relevant factors. The ALL consists of specific and general components. The specific component relates to loans that are individually classified as impaired. The general component covers non-impaired loans and is based on historical loss experience adjusted for certain qualitative factors. The entire ALL balance is available for any loan that, in management’s judgment, should be charged off.

A loan is impaired when full payment under the loan terms is not expected. Impaired loans consist of all TDRs. All TDRs are individually evaluated for impairment. See Note 3 “Loans, Allowance for Loan Losses and Impaired Loans” for information on what we consider to be a TDR. If a TDR loan is deemed to be impaired, a specific ALL allocation is established so that the loan is reported, net, at either (a) the present value of estimated future cash flows using the loan’s existing rate; or (b) at the fair value of collateral less estimated disposal costs, if repayment is expected solely from the underlying collateral of the loan. For TDRs less than 91+ days past due, and certain TDRs that are less than 91+ days delinquent; the likelihood of the loan migrating to over 91 days past due is also factored in determining the specific ALL allocation. Large groups of smaller balance homogeneous loans, such as non-TDR consumer and residential real estate loans are collectively evaluated for impairment, and accordingly, are not separately identified for impairment disclosures.

Foreclosed and Repossessed Assets, net

Foreclosed and Repossessed Assets, net – Assets acquired through, or instead of loan foreclosure, are initially recorded at fair value, less estimated costs to sell, which establishes a new cost basis. If the fair value declines subsequent to foreclosure or repossession, a valuation allowance is recorded through expense. Costs incurred after acquisition are expensed, and included in non-interest expense, other on the consolidated statements of operations. Foreclosed and repossessed asset balances were $1,002 and $1,360 at June 30, 2012 and September 30, 2011, respectively.

Income Taxes

Income Taxes – The Company accounts for income taxes in accordance with the Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes.” Under this guidance, deferred taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates that will apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date. See Note 6 for details on the Company’s income taxes.

The Company regularly reviews the carrying amount of its net deferred tax assets to determine if the establishment of a valuation allowance is necessary. If based on the available evidence, it is more likely than not that all or a portion of the Company’s net deferred tax assets will not be realized in future periods, a deferred tax valuation allowance would be established. Consideration is given to various positive and negative factors that could affect the realization of the deferred tax assets. In evaluating this available evidence, management considers, among other things, historical performance, expectations of future earnings, the ability to carry back losses to recoup taxes previously paid, the length of statutory carry forward periods, any experience with utilization of operating loss and tax credit carry forwards not expiring, tax planning strategies and timing of reversals of temporary differences. Significant judgment is required in assessing future earnings trends and the timing of reversals of temporary differences. The Company’s evaluation is based on current tax laws as well as management’s expectations of future performance.

Earnings Per Share

Earnings Per Share – Basic earnings per common share is net income or loss divided by the weighted average number of common shares outstanding during the period. Diluted earnings per common share include the dilutive effect of additional potential common shares issuable during the period, consisting of stock options outstanding under the Company’s stock incentive plan.

Reclassifications

Reclassifications – Certain items previously reported were reclassified for consistency with the current presentation.

Adoption of New Accounting Standards

Adoption of New Accounting Standards – In June 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-05, “Presentation of Comprehensive Income”. ASU 2011-05 requires the presentation of comprehensive income in either a single continuous financial statement or two separate, but consecutive financial statements. ASU 2011-05 also includes a provision requiring the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” which deferred this requirement in order to allow the FASB more time to determine whether reclassification adjustments should be required to be presented on the face of the financial statements. For public entities, ASUs 2011-05 and 2011-12 are effective for fiscal years, and interim periods beginning after December 15, 2011, and are required to be applied retrospectively. Early adoption is permitted. The Company has adopted ASUs 2011-05 and 2011-12 effective October 31, 2011, electing to present a consolidated statement of comprehensive income or loss separate from, but consecutive to, its statement of operations. The adoption of ASUs 2011-05 and 2011-12 had no material effect on the Company’s results of operations, financial position or cash flows.

Interim Disclosures about Fair Value Financial Instruments

In May 2011, the FASB issued ASU 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS”. The amended guidance does not modify the requirements for when fair value measurements apply, rather it generally represents clarifications on how to measure and disclose fair value under Topic 820, “Fair Value Measurement”. Respective disclosure requirements are essentially the same. However, some of the specific amendments address the application of existing fair value measurement requirements. Other specific amendments change a particular principal or requirement for measuring fair value, or for disclosing information about fair value measurements. ASU 2011-04 is intended to improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRS. This guidance is effective prospectively for annual and interim periods beginning after December 15, 2011. The Company adopted this guidance effective January 1, 2012. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In April 2011, the FASB issued ASU 2011-03, “Transfers and Servicing (Topic 860); Reconsideration of Effective Control for Repurchase Agreements”. Under the amended guidance, a transferor maintains effective control over transferred financial assets if there is an agreement between both entities which obligates the transferor to repurchase the financial assets before maturity. In addition, the following requirements must be met: (a) the financial asset to be repurchased or redeemed is the same or substantially the same as that transferred, (b) the agreement is to repurchase or redeem the transferred financial asset before maturity at a fixed or determinable price, and (c) the agreement is entered into contemporaneously with, or in contemplation of the transfer. This guidance is effective prospectively for transactions, or modifications of existing transactions, that occur on or after the first interim or annual period beginning on or after December 15, 2011. The Company adopted this guidance effective October 1, 2011. The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

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Document and Entity Information	9 Months Ended
	Jun. 30, 2012	Aug. 13, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Citizens Community Bancorp Inc.
Entity Central Index Key	0001367859
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,135,550

XML

Fair Value Accounting (Tables)

9 Months Ended

Jun. 30, 2012

Fair Value Accounting [Abstract]

Assets Measured on a Recurring Basis

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Instruments		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2012:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	14,656	$	—	$	14,656	$	—
U.S. Agency Floating Rate Bonds		11,677		—		11,677		—
Fannie Mae mortgage-backed securities		11,845		—		11,845		—
Freddie Mac mortgage-backed securities		12,142		—		12,142		—
Non-agency mortgage-backed securities		7,416		—		—		7,416
General Obligation Municipal Bonds		7,361		—		7,361		—
Revenue Municipal Bonds		2,339		—		2,339		—
Total	$	67,436	$	—	$	60,020	$	7,416
September 30, 2011:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	9,983	$	—	$	9,983	$	—
U.S. Agency Floating Rate Bonds		25,212		—		25,212		—
Non-agency mortgage-backed securities		9,143		—		—		9,143
Total	$	44,338	$	—	$	35,195	$	9,143

Reconciliation of residential mortgage-backed securities

	Nine Months Ended
	June 30, 2012			June 30, 2011
Balance beginning of period	$	9,143		$	24,999
Total gains or losses (realized/unrealized):
Included in earnings		(673	)		(620	)
Included in other comprehensive loss		1,379			5,417
Sales		—			(13,633	)
Payments, accretion and amortization		(2,433	)		(5,780	)
Balance end of period	$	7,416		$	10,383

Assets Measured on a Nonrecurring Basis

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
June 30, 2012:
Foreclosed and repossessed assets, net	$	1,002	$	—	$	—	$	1,002
Loans restructured in a troubled debt restructuring		7,415		—		—		7,415
Total	$	8,417	$	—	$	—	$	8,417
September 30, 2011:
Foreclosed and repossessed assets	$	1,360	$	—	$	—	$	1,360
Loans restructured in a troubled debt restructuring		6,018		—		—		6,018
Total	$	7,378	$	—	$	—	$	7,378

Carrying amount and estimated fair value of financial instruments

	June 30, 2012				September 30, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	20,855	$	20,855	$	31,763	$	31,763
Interest-bearing deposits		—		—		9,543		9,543
Securities available for sale		67,436		67,436		44,338		44,338
FHLB stock		4,426		4,426		5,787		5,787
Loans receivable, net		425,678		453,809		426,848		453,112
Accrued interest receivable		1,543		1,543		1,508		1,508
Financial liabilities:
Deposits	$	426,697	$	432,255	$	448,973	$	454,933
FHLB advances		48,150		49,529		30,400		32,454
Accrued interest payable		120		120		114		114

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Consolidated Statements of Operations (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Interest and Dividend Income:
Interest and fees on loans	$ 6,247	$ 6,773	$ 19,409	$ 21,038
Interest on investments	446	431	1,135	1,646
Total interest and dividend income	6,693	7,204	20,544	22,684
Interest expense:
Interest on deposits	1,274	1,711	4,115	5,545
Interest on borrowed funds	324	433	982	1,494
Total interest expense	1,598	2,144	5,097	7,039
Net interest income	5,095	5,060	15,447	15,645
Provision for loan losses	900	1,364	3,540	4,614
Net interest income after provision for loan losses	4,195	3,696	11,907	11,031
Noninterest income:
Total fair value adjustments and other-than-temporary impairment	107	126	(2,644)	(1,288)
Portion of loss (gain) recognized in other comprehensive loss (income) (before tax)	(107)	(126)	1,971	717
Net gains (losses) on sale of available for sale of securities	11	281	91	516
Net gains (losses) on available for sale securities	11	281	(582)	(55)
Service charges on deposit accounts	400	386	1,127	1,095
Insurance commissions	35	25	49	73
Loan fees and service charges	133	70	354	349
Other	166	138	448	364
Total noninterest income	745	900	1,396	1,826
Noninterest expense:
Salaries and related benefits	2,237	2,128	6,600	6,238
Occupancy	617	606	1,838	1,915
Office	279	311	857	1,019
Data processing	389	250	1,120	605
Amortization of core deposit	28	84	194	250
Advertising, marketing and public relations	47	26	147	94
FDIC premium assessment	124	279	518	822
Professional services	349	299	894	865
Other	284	310	1,115	990
Total noninterest expense	4,354	4,293	13,283	12,798
Income before provision for income tax	586	303	20	59
Provision for income taxes	237	127	19	42
Net income attributable to common stockholders	$ 349	$ 176	$ 1	$ 17
Per share information:
Basic earnings	$ 0.07	$ 0.03
Diluted earnings	$ 0.07	$ 0.03
Dividends paid

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Investment Securities

9 Months Ended

Jun. 30, 2012

Investment Securities [Abstract]

INVESTMENT SECURITIES

NOTE 4 – INVESTMENT SECURITIES

The amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale as of June 30, 2012 and September 30, 2011, respectively, were as follows:

Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2012
U.S. Agency mortgage-backed securities	$	14,271	$	385	$	—	$	14,656
U.S. Agency Floating Rate Bonds		11,485		192		—		11,677
Fannie Mae mortgage-backed securities		11,709		136		—		11,845
Freddie Mac mortgage-backed securities		12,058		84		—		12,142
Non-agency mortgage-backed securities		9,813		—		2,397		7,416
General Obligation Municipal Bonds		7,361		91		91		7,361
Revenue Municipal Bonds		2,297		42		—		2,339
Total investment securities	$	68,994	$	930	$	2,488	$	67,436
September 30, 2011
U.S. Agency mortgage-backed securities	$	9,719	$	264	$	—	$	9,983
U.S. Agency Floating Rate Bonds		25,215		24		27		25,212
Non-agency mortgage-backed securities		12,918		—		3,775		9,143
Total investment securities	$	47,852	$	288	$	3,802	$	44,338

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. As part of such monitoring, the credit quality of individual securities and their issuers are assessed. Significant inputs used to measure the amount related to credit loss include, but are not limited to; default and delinquency rates of underlying collateral, remaining credit support, and historical loss severities. Adjustments to market value that are considered temporary are recorded as separate components of equity, net of tax. If an impairment of a security is identified as other-than-temporary based on information available, such as the decline in the credit worthiness of the issuer, external market ratings, or the anticipated or realized elimination of associated dividends, such impairments are further analyzed to determine if credit loss exists. If there is a credit loss, it will be recorded in the consolidated statement of operations. Losses other than credit will continue to be recognized in other comprehensive income (loss), net of tax. Unrealized losses reflected in the preceding tables have not been included in results of operations because the unrealized loss was not deemed other-than-temporary. Management has determined that more likely than not, the Company neither intends to sell, nor will be required to sell the debt security before its anticipated recovery.

A summary of the amount of other-than-temporary impairment related to credit losses on available for sale securities that have been recognized in earnings follows:

	Nine Months		Nine Months
	Ended		Ended
	June 30,		June 30,
	2012		2011
Beginning balance of the amount of OTTI related to credit losses	$	2,408	$	9,497
Credit portion of OTTI on securities for which OTTI was not previously recognized		673		620
Cash payments received on a security in excess of the security’s book value adjusted for previously recognized credit portion of OTTI		—		(50	)
Credit portion of OTTI on securities in default for which OTTI was previously recognized		—		(2,798	)
Credit portion of OTTI previously recognized on securities sold during the period		—		(4,861	)
Ending balance of the amount of OTTI related to credit losses	$	3,081	$	2,408

The Bank has pledged certain of its U.S. Agency securities as collateral against a borrowing line with the Federal Reserve Bank. However, as of June 30, 2012, there were no borrowings outstanding on the Federal Reserve line of credit.

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Loans, Allowance for Loan Losses and Impaired Loans

9 Months Ended

Jun. 30, 2012

Receivables [Abstract]

LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

NOTE 3 – LOANS, ALLOWANCE FOR LOAN LOSSES AND IMPAIRED LOANS

The ALL represents management’s estimate of probable and inherent credit losses in the Bank’s loan portfolio. Estimating the amount of the ALL requires the exercise of significant judgment and the use of estimates related to the amount and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience, and consideration of other qualitative factors such as current economic trends and conditions, all of which may be susceptible to significant change.

There are many factors affecting the ALL; some are quantitative, while others require qualitative judgment. The process for determining the ALL (which management believes adequately considers potential factors which result in probable credit losses), includes subjective elements and, therefore, may be susceptible to significant change. To the extent actual outcomes differ from management estimates, additional provision for loan losses could be required that could adversely affect the Company’s earnings or financial position in future periods. Allocations of the ALL may be made for specific loans but the entire ALL is available for any loan that, in management’s judgment, should be charged-off or for which an actual loss is realized.

Changes in the ALL for the periods presented below are as follows:

	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,907		$	2,991		$	4,898
Charge-offs		(1,424	)		(1,559	)		(2,983	)
Recoveries		28			219			247
Provision (1)		1,747			1,793			3,540
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Three Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, April 1, 2012	$	2,235		$	3,433		$	5,668
Charge-offs		(601	)		(380	)		(981	)
Recoveries		6			109			115
Provision (1)		618			282			900
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Allowance for Loan Losses at June 30, 2012:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	413		$	189		$	602
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,845		$	3,255		$	5,100
Loans Receivable as of June 30, 2012:
Ending balance (2)	$	278,384		$	152,996		$	431,380
Ending balance: individually evaluated for impairment	$	6,241		$	1,174		$	7,415
Ending balance: collectively evaluated for impairment	$	272,143		$	151,822		$	423,965

	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,562		$	2,583		$	4,145
Charge-offs		(1,924	)		(2,359	)		(4,283	)
Recoveries		33			146			179
Provision (1)		2,107			2,507			4,614
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Three Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, April 1, 2011	$	1,687		$	2,817		$	4,504
Charge-offs		(729	)		(534	)		(1,263	)
Recoveries		3			47			50
Provision (1)		817			547			1,364
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Allowance for Loan Losses at June 30, 2011:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	409		$	287		$	696
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,369		$	2,590		$	3,959
Loans Receivable as of September 30, 2011:
Ending balance (2)	$	275,339		$	157,425		$	432,764
Ending balance: individually evaluated for impairment	$	5,429		$	1,233		$	6,662
Ending balance: collectively evaluated for impairment	$	269,910		$	156,192		$	426,102

(1) The Bank does not have historical data disaggregating provision for loan losses between real estate and consumer loans. Therefore, the provision for loan losses has been allocated between real estate and consumer loans for each period presented based on the ratio of real estate and consumer net loan charge-offs for that period.

(2) Ending loan balances above do not include deferred loan origination fees net of costs.

The Bank has originated substantially all loans currently recorded on the Company’s consolidated balance sheet. The Bank has not acquired any loans since 2005.

Loans receivable as of the end of the periods shown below were as follows:

	Real Estate Loans				Consumer Loans				Total Loans
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
Performing loans
Performing TDR loans	$	5,517	$	3,191	$	1,100	$	914	$	6,617	$	4,105
Performing loans other		269,470		264,838		151,445		155,846		420,915		420,684
Total performing loans		274,987		268,029		152,545		156,760		427,532		424,789
Nonperforming loans (1)
Nonperforming TDR loans		724		2,238		74		319		798	$	2,557
Nonperforming loans other		2,673		3,452		377		948		3,050		4,400
Total nonperforming loans		3,397		5,690		451		1,267		3,848		6,957
Total loans	$	278,384	$	273,719	$	152,996	$	158,027	$	431,380	$	431,746

(1) Nonperforming loans are defined as loans that (a) are 91+ days past due and nonaccruing, or (b) TDR loans restructured at a 0% interest rate that were 91+ days past due and nonaccruing at the time of restructuring.

An aging analysis of the Company’s real estate and consumer loans as of June 30, 2012 and September 30, 2011 is as follows:

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3  months and Accruing
June 30, 2012:
Real estate loans	$	2,393	$	1,085	$	3,062	$	6,540	$	271,854	$	278,394	$	—
Consumer loans		2,124		433		376		2,933		150,053		152,986		—
Total	$	4,517	$	1,518	$	3,438	$	9,473	$	421,907	$	431,380	$	—
Sepember 30, 2011:
Real estate loans	$	3,867	$	1,877	$	3,452	$	9,196	$	264,523	$	273,719	$	—
Consumer loans		2,517		868		948		4,333		153,694		158,027		—
Total	$	6,384	$	2,745	$	4,400	$	13,529	$	418,217	$	431,746	$	—

At June 30, 2012, the Company has identified $7,415 of TDR loans as impaired, including $6,617 of performing TDRs. A loan is identified as impaired when, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Performing TDRs consist of loans that have been modified and are performing in accordance with the modified terms for a sufficient length of time, generally six months, or loans that were modified on a proactive basis. A summary of the Company’s impaired loans as of June 30, 2012 and September 30, 2011 is as follows:

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer		Total		Real Estate		Consumer		Total		Real Estate		Consumer		Total
Recorded investment at June 30, 2012	$	2,735	$	377	$	3,112	$	3,506	$	797	$	4,303	$	6,241	$	1,174	$	7,415
Unpaid balance at June 30, 2012		2,735		377		3,112		3,506		797		4,303		6,241		1,174		7,415
Recorded investment at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Unpaid balance at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Average recorded investment; three months ended June 30, 2012		2,874		389		3,263		2,922		734		3,656		5,796		1,123		6,919
Average recorded investment; three months ended June 30, 2011		3,627		356		3,983		1,867		974		2,841		5,494		1,330		6,824
Average recorded investment; nine months ended June 30, 2012		3,176		442		3,618		2,660		762		3,422		5,836		1,204		7,040
Average recorded investment; nine months ended June 30, 2011		2,296		289		2,585		1,455		956		2,411		3,751		1,245		4,996
Interest income received; three months ended June 30, 2012		12		4		16		23		6		29		35		10		45
Interest income received; three months ended June 30, 2011		10		3		13		6		1		7		16		4		20
Interest income received; nine months ended June 30, 2012		34		14		48		58		14		72		92		28		120
Interest income received; nine months ended June 30, 2011	$	61	$	9	$	70	$	17	$	16	$	33	$	78	$	25	$	103

Troubled Debt Restructuring – A TDR includes a loan modification where a borrower is experiencing financial difficulty and the Company grants a concession to that borrower that the Company would not otherwise consider except for the borrower’s financial difficulties. Concessions include extension of loan terms, renewals of existing balloon loans, reductions in interest rate and consolidation of existing Bank loans at modified terms. A TDR may be either on accrual or nonaccrual status based upon the performance of the borrower and management’s assessment of collectability. If a TDR is placed on nonaccrual status, it remains there until a sufficient period of performance under the restructured terms has occurred at which time it is returned to accrual status. There were 11 delinquent TDRs with a recorded investment of $764 at June 30, 2012, compared to 17 such loans with a recorded investment of $1,720 at September 30, 2011. A summary of loans modified in a troubled debt restructuring as of June 30, 2012 and during the three and nine months then ended is as follows:

	Real Estate			Consumer			Total
June 30, 2012 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	3,506		$	950		$	4,456
Principal payments		(165	)		(116	)		(281	)
Charge-offs		(79	)		(65	)		(144	)
Advances		9			10			19
New restructured (1)		63			223			286
Class transfers (2)		1,318			(59	)		1,259
Transfers between accrual/non-accrual		865			157			1,022
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,923		$	283		$	2,206
Principal payments		(31	)		(89	)		(120	)
Charge-offs		(366	)		(144	)		(510	)
Advances		7			1			8
New restructured (1)		56			106			162
Class transfers (2)		0			74			74
Transfers between accrual/non-accrual		(865	)		(157	)		(1,022	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,429		$	1,233		$	6,662
Principal payments		(196	)		(205	)		(401	)
Charge-offs		(445	)		(209	)		(654	)
Advances		16			11			27
New restructured (1)		119			329			448
Class transfers (2)		1,318			15			1,333
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer			Total
June 30, 2012 and
Three Months then Ended:
Accruing / Performing:
Beginning balance	$	3,376		$	767		$	4,143
Principal payments		(48	)		(68	)		(116	)
Charge-offs		0			0			0
Advances		8			0			8
New restructured (1)		56			157			213
Class transfers (2)		961			0			961
Transfers between accrual/non-accrual		1,164			244			1,408
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,972		$	304		$	2,276
Principal payments		0			0			0
Charge-offs		(143	)		(51	)		(194	)
Advances		3			0			3
New restructured (1)		56			74			130
Class transfers (2)		0			(9	)		(9	)
Transfers between accrual/non-accrual		(1,164	)		(244	)		(1,408	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,348		$	1,071		$	6,419
Principal payments		(48	)		(68	)		(116	)
Charge-offs		(143	)		(51	)		(194	)
Advances		11			0			11
New restructured (1)		112			231			343
Class transfers (2)		961			(9	)		952
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer			Total
June 30, 2011 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	1,402		$	415		$	1,817
Principal payments		(58	)		(104	)		(162	)
Charge-offs		0			(8	)		(8	)
Advances		27			7			34
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		(167	)		(4	)		(171	)
Ending balance	$	3,622		$	799		$	4,421
Non-accrual / Non-performing:
Beginning balance	$	1,312		$	144		$	1,456
Principal payments		(27	)		(24	)		(51	)
Charge-offs		0			(31	)		(31	)
Advances		46			4			50
New restructured (1)		0			0			0
Class transfers (2)		0			0			0
Transfers between accrual/non-accrual		491			88			579
Ending balance	$	1,822		$	181		$	2,003
Totals:
Beginning balance	$	2,714		$	559		$	3,273
Principal payments		(85	)		(128	)		(213	)
Charge-offs		0			(39	)		(39	)
Advances		73			11			84
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		324			84			408
Ending balance	$	5,444		$	980		$	6,424

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	June 30, 2012				June 30, 2011
	Number of Modifications		Recorded Investment		Number of Modifications		Recorded Investment
Troubled debt restructurings:
Real estate		43	$	6,241		33	$	5,429
Consumer		64		1,174		64		1,233
		107	$	7,415		97	$	6,662

As an integral part of their examination process, various regulatory agencies review the Bank’s ALL. Such agencies may require that changes in the ALL be recognized when such regulators’ credit evaluations differ from those of management based on information available to the regulators at the time of their examinations.

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Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Jun. 30, 2012

Other Comprehensive Income (Loss) [Abstract]

Tax Effects Allocated to Each Component of Other Comprehensive Income

	Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Unrealized holding losses arising during period	$	1,192		(477	)	$	715
Less: reclassification adjustment for gains included in net income		91		(37	)		54
Changes for realized losses on securities available for sale for OTTI write-down		673		(269	)		404
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)		5		(2	)		3
Other comprehensive income (loss)	$	1,961	$	(785	)	$	1,176

Changes in the accumulated balances for each component of other comprehensive income

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2011	$	(2,109	)	$	(209	)	$	(2,318	)
Current period other comprehensive income, net of tax		1,173			3			1,176
Ending balance, June 30, 2012	$	(936	)	$	(206	)	$	(1,142	)

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Loans Allowance for Loan Losses and Impaired Loans (Tables)

9 Months Ended

Jun. 30, 2012

Receivables [Abstract]

Changes in a specific component on impaired loans and a general component for non-impaired loans for the periods

	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,907		$	2,991		$	4,898
Charge-offs		(1,424	)		(1,559	)		(2,983	)
Recoveries		28			219			247
Provision (1)		1,747			1,793			3,540
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Three Months then Ended June 30, 2012:
Allowance for Loan Losses:
Beginning balance, April 1, 2012	$	2,235		$	3,433		$	5,668
Charge-offs		(601	)		(380	)		(981	)
Recoveries		6			109			115
Provision (1)		618			282			900
Ending balance, June 30, 2012	$	2,258		$	3,444		$	5,702
Allowance for Loan Losses at June 30, 2012:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	413		$	189		$	602
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,845		$	3,255		$	5,100
Loans Receivable as of June 30, 2012:
Ending balance (2)	$	278,384		$	152,996		$	431,380
Ending balance: individually evaluated for impairment	$	6,241		$	1,174		$	7,415
Ending balance: collectively evaluated for impairment	$	272,143		$	151,822		$	423,965

	Real Estate			Consumer			Total
Nine Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, October 1, 2011	$	1,562		$	2,583		$	4,145
Charge-offs		(1,924	)		(2,359	)		(4,283	)
Recoveries		33			146			179
Provision (1)		2,107			2,507			4,614
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Three Months then Ended June 30, 2011:
Allowance for Loan Losses:
Beginning balance, April 1, 2011	$	1,687		$	2,817		$	4,504
Charge-offs		(729	)		(534	)		(1,263	)
Recoveries		3			47			50
Provision (1)		817			547			1,364
Ending balance, June 30, 2011	$	1,778		$	2,877		$	4,655
Allowance for Loan Losses at June 30, 2011:
Amount of Allowance for Loan Losses arising from loans individually evaulated for impairment	$	409		$	287		$	696
Amount of Allowance for Loan Losses arising from loans collectively evaulated for impairment	$	1,369		$	2,590		$	3,959
Loans Receivable as of September 30, 2011:
Ending balance (2)	$	275,339		$	157,425		$	432,764
Ending balance: individually evaluated for impairment	$	5,429		$	1,233		$	6,662
Ending balance: collectively evaluated for impairment	$	269,910		$	156,192		$	426,102

(1) The Bank does not have historical data disaggregating provision for loan losses between real estate and consumer loans. Therefore, the provision for loan losses has been allocated between real estate and consumer loans for each period presented based on the ratio of real estate and consumer net loan charge-offs for that period.

(2) Ending loan balances above do not include deferred loan origination fees net of costs.

Loans receivable

	Real Estate Loans				Consumer Loans				Total Loans
	June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011		June 30, 2012		September 30, 2011
Performing loans
Performing TDR loans	$	5,517	$	3,191	$	1,100	$	914	$	6,617	$	4,105
Performing loans other		269,470		264,838		151,445		155,846		420,915		420,684
Total performing loans		274,987		268,029		152,545		156,760		427,532		424,789
Nonperforming loans (1)
Nonperforming TDR loans		724		2,238		74		319		798	$	2,557
Nonperforming loans other		2,673		3,452		377		948		3,050		4,400
Total nonperforming loans		3,397		5,690		451		1,267		3,848		6,957
Total loans	$	278,384	$	273,719	$	152,996	$	158,027	$	431,380	$	431,746

Aging analysis of the Bank real estate and consumer loans

	1 Month Past Due		2 Months Past Due		Greater Than 3 Months		Total Past Due		Current		Total Loans		Recorded Investment > 3  months and Accruing
June 30, 2012:
Real estate loans	$	2,393	$	1,085	$	3,062	$	6,540	$	271,854	$	278,394	$	—
Consumer loans		2,124		433		376		2,933		150,053		152,986		—
Total	$	4,517	$	1,518	$	3,438	$	9,473	$	421,907	$	431,380	$	—
Sepember 30, 2011:
Real estate loans	$	3,867	$	1,877	$	3,452	$	9,196	$	264,523	$	273,719	$	—
Consumer loans		2,517		868		948		4,333		153,694		158,027		—
Total	$	6,384	$	2,745	$	4,400	$	13,529	$	418,217	$	431,746	$	—

Bank impaired loans

	With No Related Allowance Recorded						With An Allowance Recorded						Totals
	Real Estate		Consumer		Total		Real Estate		Consumer		Total		Real Estate		Consumer		Total
Recorded investment at June 30, 2012	$	2,735	$	377	$	3,112	$	3,506	$	797	$	4,303	$	6,241	$	1,174	$	7,415
Unpaid balance at June 30, 2012		2,735		377		3,112		3,506		797		4,303		6,241		1,174		7,415
Recorded investment at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Unpaid balance at September 30, 2011		3,616		506		4,122		1,813		727		2,540		5,429		1,233		6,662
Average recorded investment; three months ended June 30, 2012		2,874		389		3,263		2,922		734		3,656		5,796		1,123		6,919
Average recorded investment; three months ended June 30, 2011		3,627		356		3,983		1,867		974		2,841		5,494		1,330		6,824
Average recorded investment; nine months ended June 30, 2012		3,176		442		3,618		2,660		762		3,422		5,836		1,204		7,040
Average recorded investment; nine months ended June 30, 2011		2,296		289		2,585		1,455		956		2,411		3,751		1,245		4,996
Interest income received; three months ended June 30, 2012		12		4		16		23		6		29		35		10		45
Interest income received; three months ended June 30, 2011		10		3		13		6		1		7		16		4		20
Interest income received; nine months ended June 30, 2012		34		14		48		58		14		72		92		28		120
Interest income received; nine months ended June 30, 2011	$	61	$	9	$	70	$	17	$	16	$	33	$	78	$	25	$	103

Troubled Debt Restructuring

	Real Estate			Consumer			Total
June 30, 2012 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	3,506		$	950		$	4,456
Principal payments		(165	)		(116	)		(281	)
Charge-offs		(79	)		(65	)		(144	)
Advances		9			10			19
New restructured (1)		63			223			286
Class transfers (2)		1,318			(59	)		1,259
Transfers between accrual/non-accrual		865			157			1,022
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,923		$	283		$	2,206
Principal payments		(31	)		(89	)		(120	)
Charge-offs		(366	)		(144	)		(510	)
Advances		7			1			8
New restructured (1)		56			106			162
Class transfers (2)		0			74			74
Transfers between accrual/non-accrual		(865	)		(157	)		(1,022	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,429		$	1,233		$	6,662
Principal payments		(196	)		(205	)		(401	)
Charge-offs		(445	)		(209	)		(654	)
Advances		16			11			27
New restructured (1)		119			329			448
Class transfers (2)		1,318			15			1,333
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer			Total
June 30, 2012 and
Three Months then Ended:
Accruing / Performing:
Beginning balance	$	3,376		$	767		$	4,143
Principal payments		(48	)		(68	)		(116	)
Charge-offs		0			0			0
Advances		8			0			8
New restructured (1)		56			157			213
Class transfers (2)		961			0			961
Transfers between accrual/non-accrual		1,164			244			1,408
Ending balance	$	5,517		$	1,100		$	6,617
Non-accrual / Non-performing:
Beginning balance	$	1,972		$	304		$	2,276
Principal payments		0			0			0
Charge-offs		(143	)		(51	)		(194	)
Advances		3			0			3
New restructured (1)		56			74			130
Class transfers (2)		0			(9	)		(9	)
Transfers between accrual/non-accrual		(1,164	)		(244	)		(1,408	)
Ending balance	$	724		$	74		$	798
Totals:
Beginning balance	$	5,348		$	1,071		$	6,419
Principal payments		(48	)		(68	)		(116	)
Charge-offs		(143	)		(51	)		(194	)
Advances		11			0			11
New restructured (1)		112			231			343
Class transfers (2)		961			(9	)		952
Transfers between accrual/non-accrual		0			0			0
Ending balance	$	6,241		$	1,174		$	7,415

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	Real Estate			Consumer			Total
June 30, 2011 and
Nine Months then Ended:
Accruing / Performing:
Beginning balance	$	1,402		$	415		$	1,817
Principal payments		(58	)		(104	)		(162	)
Charge-offs		0			(8	)		(8	)
Advances		27			7			34
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		(167	)		(4	)		(171	)
Ending balance	$	3,622		$	799		$	4,421
Non-accrual / Non-performing:
Beginning balance	$	1,312		$	144		$	1,456
Principal payments		(27	)		(24	)		(51	)
Charge-offs		0			(31	)		(31	)
Advances		46			4			50
New restructured (1)		0			0			0
Class transfers (2)		0			0			0
Transfers between accrual/non-accrual		491			88			579
Ending balance	$	1,822		$	181		$	2,003
Totals:
Beginning balance	$	2,714		$	559		$	3,273
Principal payments		(85	)		(128	)		(213	)
Charge-offs		0			(39	)		(39	)
Advances		73			11			84
New restructured (1)		962			369			1,331
Class transfers (2)		1,456			124			1,580
Transfers between accrual/non-accrual		324			84			408
Ending balance	$	5,444		$	980		$	6,424

(1) “New restructured” represent loans restructured during the current period that meet TDR criteria in accordance with the Bank’s policy at the time of the restructuring.

(2) “Class transfers” represent previously restructured loans that met TDR criteria per the Bank’s policy for the first time during the current period.

	June 30, 2012				June 30, 2011
	Number of Modifications		Recorded Investment		Number of Modifications		Recorded Investment
Troubled debt restructurings:
Real estate		43	$	6,241		33	$	5,429
Consumer		64		1,174		64		1,233
		107	$	7,415		97	$	6,662

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Stock-Based Compensation

9 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 7 – STOCK-BASED COMPENSATION

In February 2005, the Company’s stockholders approved the Company’s Recognition and Retention Plan. This plan provides for the grant of up to 113,910 shares of the Company’s common stock to eligible participants under this plan. As of June 30, 2012, 90,927 restricted shares were issued and outstanding under this plan. Restricted shares previously granted were awarded at no cost to the employee and have a five-year vesting period from the grant date. The fair value of these previously granted restricted shares on the date of award was $7.04 per share for 63,783 shares and $6.18 for 6,832 shares. During the year ended September 30, 2011, 20,312 shares were granted to an eligible participant under this plan at a weighted average fair value of $5.24. Compensation expense related to these awards was $5 and $16 for the three and nine month periods ended June 30, 2012, respectively.

Of the 20,312 shares granted, 10,156 shares were granted during the quarter ended June 30, 2011. No shares were granted during either of the three or nine month periods ending June 30, 2012. There were no previously awarded shares that were forfeited in either of the three or nine month periods ending June 30, 2012 or 2011, respectively.

In February 2005, the Company’s stockholders also approved the Company’s 2004 Stock Option and Incentive Plan. This plan provides for the grant of nonqualified and incentive stock options and stock appreciation rights to eligible participants under the plan. The plan provides for the grant of awards for up to 284,778 shares of the Company’s common stock. At June 30, 2012, 248,635 options had been granted under this plan to eligible participants at a weighted-average exercise price of $6.70 per share. Options granted vest over a five-year period from the grant date. Unexercised, nonqualified stock options expire within 15 years of the grant date and unexercised incentive stock options expire within 10 years of the grant date. Through June 30, 2012, since the plan’s inception, options for 72,995 shares of the Company’s common stock were vested, options for 41,794 shares were unvested, options for 129,288 shares were forfeited and options for 4,558 shares were exercised. Of the 248,635 options granted, 114,789 remained outstanding as of June 30, 2012.

The Company accounts for stock-based employee compensation related to the Company’s 2004 Stock Option and Incentive Plan using the fair-value-based method. Accordingly, management records compensation expense based on the value of the award as measured on the grant date and then the Company recognizes that cost over the vesting period for the award. The compensation cost recognized for stock-based employee compensation for the three and nine month periods ended June 30, 2012 were $5 and $15, respectively.

In February 2008, the Company’s stockholders approved the Company’s 2008 Equity Incentive Plan. The aggregate number of shares of common stock reserved and available for issuance under the 2008 Equity Incentive Plan is 597,605 shares. Under the Plan, the Compensation Committee may grant stock options and stock appreciation rights that, upon exercise, result in the issuance of 426,860 shares of the Company’s common stock. The Committee may grant restricted stock and restricted stock units for an aggregate of 170,745 shares of Company common stock under this plan. In October 2008, the Compensation Committee suspended consideration of distributions or awards under this plan, and as of June 30, 2012, no grants or awards have been made to eligible participants under the 2008 Equity Incentive Plan.

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Federal Home Loan Bank Advances

9 Months Ended

Jun. 30, 2012

Federal Home Loan Bank Advances [Abstract]

FEDERAL HOME LOAN BANK ADVANCES

NOTE 5 – FEDERAL HOME LOAN BANK ADVANCES

A summary of Federal Home Loan Bank advances at June 30, 2012 and September 30, 2011 is as follows:

	As of		Weighted			As of		Weighted
Maturing during the fiscal year	June 30,		Average			September 30,		Average
Ended September 30,	2012		Rate			2011		Rate
2012	$	17,250		2.49	%	$	16,000		4.46	%
2013		6,750		3.99	%		6,750		3.99	%
2014		8,650		3.31	%		6,150		4.45	%
2015		11,500		1.18	%		1,500		4.05	%
After 2015		4,000		1.00	%		—		NA
Total fixed maturity	$	48,150				$	30,400
Advances with amortizing principal		—					—
Total	$	48,150				$	30,400

At June 30, 2012, the Bank’s available and unused portion of this borrowing agreement was approximately $142,300.

Maximum month-end amounts outstanding were $48,150 and $63,300 during the nine month periods ended June 30, 2012 and 2011, respectively.

Each advance is payable at the maturity date, with a prepayment penalty for fixed rate advances. Federal Home Loan Bank advances are secured by $264,500 of real estate mortgage loans.

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Income Taxes

9 Months Ended

Jun. 30, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE 6 – INCOME TAXES

Income tax expense (benefit) for each of the periods shown below consisted of the following:

	Nine Months			Nine Months
	Ended			Ended
	June 30,			June 30,
	2012			2011
Current tax provision (benefit)
Federal	$	710		$	170
State		155			16
		865			186
Deferred tax provision (benefit)
Federal		(744	)		(145	)
State		(102	)		1
		(846	)		(144	)
Total	$	19		$	42

The provision for income taxes differs from the amount of income tax determined by applying statutory federal income tax rates to pretax income as result of the following differences:

	Nine Months				Nine Months
	Ended				Ended
	June 30,				June 30,
	2012				2011
Tax expense at statutory rate	$	7	34.0	%	$	20	34.0	%
State income taxes net of exception		1	5.4	%		3	5.4	%
Other permanent differences		11	55.5	%		3	4.5	%
Other		—	1.3	%		16	27.3	%
Total	$	19	96.2	%	$	42	71.2	%

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The following is a summary of the significant components of the Company’s deferred tax assets and liabilities as of June 30, 2012 and September 30, 2011, respectively:

	June 30, 2012			September 30, 2011
Deferred tax assets:
Allowance for loan losses	$	2,245		$	1,928
Deferred loan costs/fees		387			366
Director/officer compensation plans		1,330			1,360
Net unrealized loss on securities available for sale		623			1,406
Impairment loss		574			72
Other		180			229
Deferred tax assets		5,339		$	5,361
Deferred tax liabilities:
Office properties and equipment		(781	)		(902	)
Federal Home Loan Bank stock		(64	)		(64	)
Core deposit intangible, net		21			(42	)
481a adjustment		(21	)		(82	)
Other		(69	)		(108	)
Deferred tax liabilities		(914	)		(1,198	)
Net deferred tax assets	$	4,425		$	4,163

The Company regularly reviews the carrying amount of its deferred tax assets to determine if the establishment of a valuation allowance is necessary, as further discussed in Note 1 “Nature of Business and Summary of Significant Accounting Policies” above. At June 30, 2012 and September 30, 2011, respectively, management determined that no valuation allowance was necessary.

The Company’s income tax returns are subject to review and examination by federal, state and local government authorities. As of June 30, 2012, years open to examination by the Internal Revenue Service include all taxable years after the taxable year ended September 30, 2008. The years open to examination by state and local government authorities varies by jurisdiction. The Internal Revenue Service is currently examining the income tax returns for the year ended September 30, 2010.

The tax effects from uncertain tax positions can be recognized in the financial statements, provided the position is more likely than not to be sustained on audit, based on the technical merits of the position. The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. The Company applied the foregoing accounting standard to all of its tax positions for which the statute of limitations remains open as of the date of the accompanying consolidated financial statements.

The Company’s policy is to recognize interest and penalties related to income tax issues as components of interest expense and miscellaneous expense, respectively. During the nine month periods ended June 30, 2012 and 2011, the Company did not recognize any interest or penalties related to income tax issues in its statements of operations. The Company has no accrual for the payments of interest and penalties related to income tax issues as of June 30, 2012 or September 30, 2011.

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Other Comprehensive Income (Loss)

9 Months Ended

Jun. 30, 2012

Other Comprehensive Income (Loss) [Abstract]

OTHER COMPREHENSIVE INCOME (LOSS)

NOTE 8 – OTHER COMPREHENSIVE INCOME (LOSS)

On October 1, 2011, the Company adopted ASU 2011-05, “Presentation of Comprehensive Income”. In addition to presenting the Consolidated Statements of Comprehensive Income herein, the following table shows the tax effects allocated to each component of other comprehensive income for the nine months ended June 30, 2012:

	Before-Tax Amount		Tax Expense			Net-of-Tax Amount
Unrealized gains (losses) on securities:
Unrealized holding losses arising during period	$	1,192		(477	)	$	715
Less: reclassification adjustment for gains included in net income		91		(37	)		54
Changes for realized losses on securities available for sale for OTTI write-down		673		(269	)		404
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)		5		(2	)		3
Other comprehensive income (loss)	$	1,961	$	(785	)	$	1,176

The changes in the accumulated balances for each component of other comprehensive income (loss) for the nine months ended June 30, 2012 were as follows:

	Unrealized Gains  (Losses) on Securities			Defined Benefit Plans			Other Comprehensive Income (Loss)
Balance, October 1, 2011	$	(2,109	)	$	(209	)	$	(2,318	)
Current period other comprehensive income, net of tax		1,173			3			1,176
Ending balance, June 30, 2012	$	(936	)	$	(206	)	$	(1,142	)

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Loans Allowance for Loan Losses and Impaired Loans (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2012	Jun. 30, 2011
Troubled Debt Restructuring
Beginning balance	$ 6,419	$ 6,662	$ 3,273
Principal payments	(116)	(401)	(213)
Charge-offs	(194)	(654)	(39)
Advances	11	27	84
New restructured	343	448	1,331
Class Transfers	952	1,333	1,580
Transfers between accrual/non-accrual	0	0	408
Ending balance	7,415	7,415	6,424
Real Estate [Member]
Troubled Debt Restructuring
Beginning balance	5,348	5,429	2,714
Principal payments	(48)	(196)	(85)
Charge-offs	(143)	(445)	0
Advances	11	16	73
New restructured	112	119	962
Class Transfers	961	1,318	1,456
Transfers between accrual/non-accrual	0	0	324
Ending balance	6,241	6,241	5,444
Consumer [Member]
Troubled Debt Restructuring
Beginning balance	1,071	1,233	559
Principal payments	(68)	(205)	(128)
Charge-offs	(51)	(209)	(39)
Advances	0	11	11
New restructured	231	329	369
Class Transfers	(9)	15	124
Transfers between accrual/non-accrual	0	0	84
Ending balance	1,174	1,174	980
Performing [Member]
Troubled Debt Restructuring
Beginning balance	4,143	4,456	1,817
Principal payments	(116)	(281)	(162)
Charge-offs	0	(144)	(8)
Advances	8	19	34
New restructured	213	286	1,331
Class Transfers	961	1,259	1,580
Transfers between accrual/non-accrual	1,408	1,022	(171)
Ending balance	6,617	6,617	4,421
Performing [Member] | Real Estate [Member]
Troubled Debt Restructuring
Beginning balance	3,376	3,506	1,402
Principal payments	(48)	(165)	(58)
Charge-offs	0	(79)	0
Advances	8	9	27
New restructured	56	63	962
Class Transfers	961	1,318	1,456
Transfers between accrual/non-accrual	1,164	865	(167)
Ending balance	5,517	5,517	3,622
Performing [Member] | Consumer [Member]
Troubled Debt Restructuring
Beginning balance	767	950	415
Principal payments	(68)	(116)	(104)
Charge-offs	0	(65)	(8)
Advances	0	10	7
New restructured	157	223	369
Class Transfers	0	(59)	124
Transfers between accrual/non-accrual	244	157	(4)
Ending balance	1,100	1,100	799
Non Performing Loans [Member]
Troubled Debt Restructuring
Beginning balance	2,276	2,206	1,456
Principal payments	0	(120)	(51)
Charge-offs	(194)	(510)	(31)
Advances	3	8	50
New restructured	130	162	0
Class Transfers	(9)	74	0
Transfers between accrual/non-accrual	(1,408)	(1,022)	579
Ending balance	798	798	2,003
Non Performing Loans [Member] | Real Estate [Member]
Troubled Debt Restructuring
Beginning balance	1,972	1,923	1,312
Principal payments	0	(31)	(27)
Charge-offs	(143)	(366)	0
Advances	3	7	46
New restructured	56	56	0
Class Transfers	0	0	0
Transfers between accrual/non-accrual	(1,164)	(865)	491
Ending balance	724	724	1,822
Non Performing Loans [Member] | Consumer [Member]
Troubled Debt Restructuring
Beginning balance	304	283	144
Principal payments	0	(89)	(24)
Charge-offs	(51)	(144)	(31)
Advances	0	1	4
New restructured	74	106	0
Class Transfers	(9)	74	0
Transfers between accrual/non-accrual	(244)	(157)	88
Ending balance	$ 74	$ 74	$ 181

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Federal Home Loan Bank Advances (Tables)

9 Months Ended

Jun. 30, 2012

Federal Home Loan Bank Advances [Abstract]

A summary of Federal Home Loan Bank advances

	As of		Weighted			As of		Weighted
Maturing during the fiscal year	June 30,		Average			September 30,		Average
Ended September 30,	2012		Rate			2011		Rate
2012	$	17,250		2.49	%	$	16,000		4.46	%
2013		6,750		3.99	%		6,750		3.99	%
2014		8,650		3.31	%		6,150		4.45	%
2015		11,500		1.18	%		1,500		4.05	%
After 2015		4,000		1.00	%		—		NA
Total fixed maturity	$	48,150				$	30,400
Advances with amortizing principal		—					—
Total	$	48,150				$	30,400

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Fair Value Accounting (Details 1) (Asset-backed Securities [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Asset-backed Securities [Member]
Reconciliation of residential mortgage-backed securities
Balance beginning of period	$ 9,143	$ 24,999
Total gains or losses (realized/unrealized):
Included in earnings	(673)	(620)
Included in other comprehensive loss	1,379	5,417
Sales		(13,633)
Payments, accretion and amortization	(2,433)	(5,780)
Balance end of period	$ 7,416	$ 10,383

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Federal Home Loan Bank Advances (Details Textual) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Sep. 30, 2011
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Federal Home Loan Bank advances	$ 48,150		$ 30,400
Federal Home Loan Bank Advances (Textual) [Abstract]
Banks available and unused portion of borrowing agreement	142,300
Maximum month-end amounts outstanding	48,150	63,300
Mortgage Loans on Real Estate [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Federal Home Loan Bank advances	$ 264,500

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Consolidated Statements of Other Comprehensive Income (Unaudited) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Consolidated Statements of Other Comprehensive Income [Abstract]
Net income attributable to common stockholders	$ 1	$ 17
Securities available for sale
Net unrealized gains arising during period	715	2,391
Reclassification adjustment for gains included in net income	54	310
Change for realized losses on securities available for sale for Other-than-temporary impairment write-down	404	342
Unrealized gains on securities	1,173	3,043
Defined benefit plans:
Amortization of unrecognized prior service costs and net gains (losses)	3
Total other comprehensive income, net of tax	1,176	3,043
Comprehensive income	$ 1,177	$ 3,060

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Fair Value Accounting

9 Months Ended

Jun. 30, 2012

Fair Value Accounting [Abstract]

FAIR VALUE ACCOUNTING

NOTE 2 – FAIR VALUE ACCOUNTING

ASC Topic 820-10, “Fair Value Measurements and Disclosures” establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The statement describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2- Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3- Significant unobservable inputs that reflect the Company’s assumptions about the assumptions that market participants would use in pricing an asset or liability.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input within the valuation hierarchy that is significant to the fair value measurement.

The fair value of securities available for sale is determined by obtaining market price quotes from independent third parties wherever such quotes are available (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). Where such quotes are not available, the Company utilizes independent third party valuation analyses to support the Company’s estimates and judgments in determining fair value (Level 3 inputs).

Assets Measured on a Recurring Basis

Level 3 assets measured on a recurring basis are certain investments for which little or no market activity exists or whose value of the underlying collateral is not market observable. Management’s valuation uses both observable as well as unobservable inputs to assist in the Level 3 valuation of mortgage backed securities held by the Bank, employing a methodology that considers future cash flows along with risk-adjusted returns. The inputs in this methodology are as follows: ability and intent to hold to maturity, mortgage underwriting rates, market prices/conditions, loan type, loan-to-value, strength of borrower, loan age, delinquencies, prepayment/cash flows, liquidity, expected future cash flows, rating agency actions, and a discount rate, which is assumed to be approximately equal to the coupon rate for each security. The Company had an independent valuation of all Level 3 securities in the current quarter. Based on this valuation, no additional other than temporary impairment existed during the three months ended June 30, 2012.

The following tables present the financial instruments measured at fair value on a recurring basis as of June 30, 2012 and September 30, 2011:

			Quoted Prices in		Significant
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
	Fair		Instruments		Inputs		Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
June 30, 2012:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	14,656	$	—	$	14,656	$	—
U.S. Agency Floating Rate Bonds		11,677		—		11,677		—
Fannie Mae mortgage-backed securities		11,845		—		11,845		—
Freddie Mac mortgage-backed securities		12,142		—		12,142		—
Non-agency mortgage-backed securities		7,416		—		—		7,416
General Obligation Municipal Bonds		7,361		—		7,361		—
Revenue Municipal Bonds		2,339		—		2,339		—
Total	$	67,436	$	—	$	60,020	$	7,416
September 30, 2011:
Securities available for sale:
U.S. Agency mortgage-backed securities	$	9,983	$	—	$	9,983	$	—
U.S. Agency Floating Rate Bonds		25,212		—		25,212		—
Non-agency mortgage-backed securities		9,143		—		—		9,143
Total	$	44,338	$	—	$	35,195	$	9,143

The following table presents a reconciliation of non-agency mortgage-backed securities held by the Bank measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the nine month periods ended June 30, 2012 and 2011:

	Nine Months Ended
	June 30, 2012			June 30, 2011
Balance beginning of period	$	9,143		$	24,999
Total gains or losses (realized/unrealized):
Included in earnings		(673	)		(620	)
Included in other comprehensive loss		1,379			5,417
Sales		—			(13,633	)
Payments, accretion and amortization		(2,433	)		(5,780	)
Balance end of period	$	7,416		$	10,383

Assets Measured on a Nonrecurring Basis

The following tables present the financial instruments measured at fair value on a nonrecurring basis as of June 30, 2012 and September 30, 2011:

	Fair Value		Quoted Prices in Active Markets for Identical Instruments (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level  3)
June 30, 2012:
Foreclosed and repossessed assets, net	$	1,002	$	—	$	—	$	1,002
Loans restructured in a troubled debt restructuring		7,415		—		—		7,415
Total	$	8,417	$	—	$	—	$	8,417
September 30, 2011:
Foreclosed and repossessed assets	$	1,360	$	—	$	—	$	1,360
Loans restructured in a troubled debt restructuring		6,018		—		—		6,018
Total	$	7,378	$	—	$	—	$	7,378

The fair value of TDRs is determined by obtaining independent third party appraisals and/or internally developed collateral valuations to support the Company’s estimates and judgments in determining the fair value of the underlying collateral supporting TDRs.

The fair value of foreclosed and repossessed assets is determined by obtaining market price quotes from independent third parties wherever such quotes are available. Where such quotes are not available, the Company utilizes independent third party appraisals to support the Company’s estimates and judgments in determining fair value.

Fair Values of Financial Instruments

ASC 825-10 and ASC 270-10, Interim Disclosures about Fair Value Financial Instruments, require disclosures about fair value financial instruments and significant assumptions used to estimate fair value. The estimated fair values of financial instruments not previously disclosed are as follows:

Cash and Cash Equivalents

Due to their short-term nature, the carrying amounts of cash and cash equivalents are considered to be a reasonable estimate of fair value.

Interest-Bearing Deposits

Fair value of interest bearing deposits is estimated based on their carrying amounts.

Federal Home Loan Bank (FHLB) Stock

Federal Home Loan Bank Stock is carried at cost, which is its redeemable fair value since the market for the stock is restricted (See Note 8 to the Company’s consolidated financial statements included in the Company’s Form 10-K filed with the Securities and Exchange Commission on December 21, 2011 for additional information).

Loans Receivable, net

Fair value is estimated for portfolios of loans with similar financial characteristics. Loans are segregated by type such as real estate and consumer. The fair value of loans is calculated by discounting scheduled cash flows through the estimated maturity date using market discount rates reflecting the credit and interest rate risk inherent in the loan. The estimate of maturity is based on the Bank’s repayment schedules for each loan classification.

Accrued Interest Receivable and Payable

Due to their short-term nature, the carrying amounts of accrued interest receivable and payable, respectively, are considered to be a reasonable estimate of fair value.

Deposits

The fair value of deposits with no stated maturity, such as demand deposits, savings accounts, and money market accounts, is the amount payable on demand at the reporting date. The fair value of fixed rate certificate accounts is calculated by using discounted cash flows applying interest rates currently being offered on similar certificates.

Federal Home Loan Bank Advances

The fair value of long-term borrowed funds is estimated using discounted cash flows based on the Bank’s current incremental borrowing rates for similar borrowing arrangements. The carrying value of short-term borrowed funds approximates its fair value.

Off-Balance-Sheet Instruments

The fair value of off-balance sheet commitments would be estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements, the current interest rates, and the present creditworthiness of the customers. Since this amount is immaterial to the Company’s consolidated financial statements, no amounts for fair value are presented.

The carrying amount and estimated fair value of financial instruments as of the dates indicated were as follows:

	June 30, 2012				September 30, 2011
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	20,855	$	20,855	$	31,763	$	31,763
Interest-bearing deposits		—		—		9,543		9,543
Securities available for sale		67,436		67,436		44,338		44,338
FHLB stock		4,426		4,426		5,787		5,787
Loans receivable, net		425,678		453,809		426,848		453,112
Accrued interest receivable		1,543		1,543		1,508		1,508
Financial liabilities:
Deposits	$	426,697	$	432,255	$	448,973	$	454,933
FHLB advances		48,150		49,529		30,400		32,454
Accrued interest payable		120		120		114		114

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Fair Value Accounting (Details 2) (Fair Value, Measurements, Nonrecurring [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Sep. 30, 2011
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets	$ 1,002	$ 1,360
Loans restructured in a troubled debt restructuring	7,415	6,018
Assets, Fair Value Disclosure, Total	8,417	7,378
Quoted Price in Active Market for Identical Instruments (Level 1) [Member]
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets
Loans restructured in a troubled debt restructuring
Assets, Fair Value Disclosure, Total
Significant Other Observable Inputs (Level 2) [Member]
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets
Loans restructured in a troubled debt restructuring
Assets, Fair Value Disclosure, Total
Significant Unobservable Inputs (Level 3) [Member]
Assets Measured on a Nonrecurring Basis
Foreclosed and repossessed assets	1,002	1,360
Loans restructured in a troubled debt restructuring	7,415	6,018
Assets, Fair Value Disclosure, Total	$ 8,417	$ 7,378

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Investment Securities (Details 1) (Available-for-sale securities [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Jun. 30, 2012	Sep. 30, 2011
Available-for-sale securities [Member]
Summary of amount of other-than-temporary impairment related to credit losses on available-for-sale securities
Beginning balance of the amount of OTTI related to credit losses	$ 2,408	$ 9,497
Credit portion of OTTI on securities for which OTTI was not previously recognized	673	620
Cash payments received on a security in excess of the security book value adjusted for previously recognized credit portion of OTTI		(50)
Credit portion of OTTI on securities in default for which OTTI was previously recognized		(2,798)
Credit portion of OTTI previously recognized on securities sold during the period		(4,861)
Ending balance of the amount of OTTI related to credit losses	$ 3,081	$ 2,408

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Investment Securities (Tables)

9 Months Ended

Jun. 30, 2012

Investment Securities [Abstract]

Summary of amortized cost, estimated fair value and related unrealized gains and losses on securities available for sale

Description of Securities	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2012
U.S. Agency mortgage-backed securities	$	14,271	$	385	$	—	$	14,656
U.S. Agency Floating Rate Bonds		11,485		192		—		11,677
Fannie Mae mortgage-backed securities		11,709		136		—		11,845
Freddie Mac mortgage-backed securities		12,058		84		—		12,142
Non-agency mortgage-backed securities		9,813		—		2,397		7,416
General Obligation Municipal Bonds		7,361		91		91		7,361
Revenue Municipal Bonds		2,297		42		—		2,339
Total investment securities	$	68,994	$	930	$	2,488	$	67,436
September 30, 2011
U.S. Agency mortgage-backed securities	$	9,719	$	264	$	—	$	9,983
U.S. Agency Floating Rate Bonds		25,215		24		27		25,212
Non-agency mortgage-backed securities		12,918		—		3,775		9,143
Total investment securities	$	47,852	$	288	$	3,802	$	44,338

Summary of amount of other-than-temporary impairment related to credit losses on available-for-sale securities

	Nine Months		Nine Months
	Ended		Ended
	June 30,		June 30,
	2012		2011
Beginning balance of the amount of OTTI related to credit losses	$	2,408	$	9,497
Credit portion of OTTI on securities for which OTTI was not previously recognized		673		620
Cash payments received on a security in excess of the security’s book value adjusted for previously recognized credit portion of OTTI		—		(50	)
Credit portion of OTTI on securities in default for which OTTI was previously recognized		—		(2,798	)
Credit portion of OTTI previously recognized on securities sold during the period		—		(4,861	)
Ending balance of the amount of OTTI related to credit losses	$	3,081	$	2,408