10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

_______________________________________________________________

FORM 10-Q

__________________________________________________

(Mark One)

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

For the quarterly period ended June 30, 2013

OR

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

For the transition period from  to

Commission file number: 000-54025

_________________________________________________________________ 

Fox Chase Bancorp, Inc.

(Exact name of registrant as specified in its charter)

_________________________________________________________________

Maryland	35-2379633
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4390 Davisville Road, Hatboro, Pennsylvania	19040
(Address of principal executive offices)	(Zip Code)

(215) 682-7400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

_______________________________________________________________

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 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 ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definition 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 [X ]
Non-Accelerated Filer [  ]	Smaller Reporting Company [   ]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o    No  ý

As of August 1, 2013, there were 12,142,600 shares of the registrant’s common stock outstanding.

FOX CHASE BANCORP, INC.
	Table of Contents
		Page No.
Part I. Financial Information
Item 1.	Financial Statements	3
	Consolidated Statements of Condition at June 30, 2013 (Unaudited) and December 31, 2012	3
	Consolidated Statements of Operations for the Six Months Ended June 30, 2013 and 2012 (Unaudited)	4
	Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2013 and 2012 (Unaudited)	5
	Consolidated Statements of Changes in Equity for the Six Months Ended June 30, 2013 and 2012 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012 (Unaudited)	7
	Notes to the Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
Item 4.	Controls and Procedures	42
Part II. Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	43
Signatures

2

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

FOX CHASE BANCORP, INC.

Consolidated Statements of Condition

(In Thousands, Except Share Data)

		June 30, 2013			December 31, 2012
		(Unaudited)
ASSETS
	Cash and due from banks	$	213		$	162
	Interest-earning demand deposits in other banks	8,859			24,928
	Total cash and cash equivalents	9,072			25,090
	Investment securities available-for-sale	10,475			12,491
	Mortgage related securities available-for-sale	273,037			283,616
	Mortgage related securities held-to-maturity (fair value of $63,704 at June 30, 2013 and $29,451 at December 31, 2012)	64,225			28,369
	Loans held for sale	3,157			—
	Loans, net of allowance for loan losses of $10,498 at June 30, 2013 and $11,170 at December 31, 2012	701,112			683,865
	Federal Home Loan Bank stock, at cost	9,610			8,097
	Bank-owned life insurance	14,310			14,077
	Premises and equipment, net	10,084			10,443
	Assets acquired through foreclosure	9,948			8,524
	Real estate held for investment	1,620			1,620
	Accrued interest receivable	3,301			3,223
	Mortgage servicing rights, net	169			170
	Deferred tax asset, net	7,361			2,953
	Other assets	4,873			5,803
	Total Assets	$	1,122,354		$	1,088,341
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
	Deposits	$	700,614		$	687,409
	Short-term borrowings	70,300			70,500
	Federal Home Loan Bank advances	140,000			110,000
	Other borrowed funds	30,000			30,000
	Advances from borrowers for taxes and insurance	1,831			1,699
	Accrued interest payable	303			330
	Accrued expenses and other liabilities	5,880			6,938
	Total Liabilities	948,928			906,876
STOCKHOLDERS’ EQUITY
	Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at June 30, 2013 and December 31, 2012)	—			—
	Common stock ($.01 par value; 60,000,000 shares authorized, 12,142,600 shares issued and outstanding at June 30, 2013 and 12,356,564 shares issued and outstanding at December 31, 2012)	146			146
	Additional paid-in capital	136,743			136,132
	Treasury stock, at cost (2,468,172 shares at June 30, 2013 and 2,249,600 shares at December 31, 2012)	(33,436		)	(29,733		)
	Common stock acquired by benefit plans	(9,694		)	(10,228		)
	Retained earnings	82,076			80,608
	Accumulated other comprehensive (loss) income, net	(2,409		)	4,540
	Total Stockholders’ Equity	173,426			181,465
	Total Liabilities and Stockholders’ Equity	$	1,122,354		$	1,088,341

See accompanying notes to the unaudited consolidated financial statements.

3

FOX CHASE BANCORP, INC.

Consolidated Statements of Operations

(In Thousands, Except Per Share Data)

(Unaudited)

		Three Months Ended June 30,					Six Months Ended June 30,
		2013			2012		2013			2012
INTEREST INCOME
	Interest and fees on loans	$	8,016		$	8,362	$	16,078		$	17,210
	Interest on mortgage related securities	1,751			1,955		3,489			3,934
	Interest on investment securities available-for-sale
	Taxable	58			78		129			171
	Nontaxable	—			14		—			33
	Other interest income	—			2		1			5
	Total Interest Income	9,825			10,411		19,697			21,353
INTEREST EXPENSE
	Deposits	1,141			1,637		2,318			3,408
	Short-term borrowings	17			5		49			10
	Federal Home Loan Bank advances	549			688		1,051			1,442
	Other borrowed funds	251			410		499			842
	Total Interest Expense	1,958			2,740		3,917			5,702
	Net Interest Income	7,867			7,671		15,780			15,651
	Provision (credit) for loan losses	(783		)	1,291		(143		)	2,566
	Net Interest Income after Provision (Credit) for Loan Losses	8,650			6,380		15,923			13,085
NONINTEREST INCOME
	Service charges and other fee income	462			385		823			774
	Net gain on sale of assets acquired through foreclosure	185			98		181			127
	Income on bank-owned life insurance	117			118		233			237
	Equity in earnings of affiliate	165			120		335			235
	Net gain on sale of investment securities (includes $171 and $532 for the three and six months ended June 30, 2013, respectively and $2,340 for the three and six months ended June 30, 2012, accumulated other comprehensive income reclassification for unrealized holdings gains)	171			2,340		532			2,340
	Other	39			19		89			61
	Total Noninterest Income	1,139			3,080		2,193			3,774
NONINTEREST EXPENSE
	Salaries, benefits and other compensation	3,480			3,353		6,985			6,692
	Occupancy expense	393			420		840			879
	Furniture and equipment expense	117			138		241			290
	Data processing costs	367			472		765			918
	Professional fees	488			489		776			958
	Marketing expense	78			106		108			152
	FDIC premiums	165			201		350			382
	Assets acquired through foreclosure expense	2,810			38		3,095			153
	Loss on extinguishment of debt	—			3,018		—			3,018
	Other	409			464		822			897
	Total Noninterest Expense	8,307			8,699		13,982			14,339
	Income Before Income Taxes	1,482			761		4,134			2,520
	Income tax provision (includes $63 and $186 for the three and six months ended June 30, 2013, respectively and $863 for the three and six months ended June 30, 2012, income tax expense from reclassification items)	438			222		1,263			794
	Net Income	$	1,044		$	539	$	2,871		$	1,726
Earnings per share:
	Basic	0.09			0.05		0.25			0.15
	Diluted	0.09			0.05		0.25			0.15

See accompanying notes to the unaudited consolidated financial statements.

4

FOX CHASE BANCORP, INC.

Consolidated Statements of Comprehensive Income

(In Thousands, Unaudited)

		Three Months Ended June 30,						Six Months Ended June 30,
		2013			2012			2013			2012
Net income		$	1,044		$	539		$	2,871		$	1,726
Other comprehensive (loss) income:
	Unrealized holding (losses) gains on securities available for sale	(7,490		)	27			(10,188		)	(172		)
	Tax Effect	2,633			6			3,585			70
	Net of Tax Amount	(4,857		)	33			(6,603		)	(102		)
	Reclassification adjustments for net investment securities gains included in net income	(171		)	(2,426		)	(532		)	(2,426		)
	Tax Effect	63			863			186			863
	Net of Tax Amount	(108		)	(1,563		)	(346		)	(1,563		)
	Reclassification adjustment for loss included in net income for other-than temporary impaired investment sold, net	—			86			—			86
	Tax Effect	—			(33		)	—			(33		)
	Net of Tax Amount	—			53			—			53
Other comprehensive loss		(4,965		)	(1,477		)	(6,949		)	(1,612		)
Comprehensive (loss) income		$	(3,921	)	$	(938	)	$	(4,078	)	$	114

See accompanying notes to the unaudited consolidated financial statements.

5

FOX CHASE BANCORP, INC.

Consolidated Statements of Changes in Equity

Six Months Ended June 30, 2013 and 2012

(In Thousands, Unaudited)

	Common Stock		Additional Paid in Capital			Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings			Accumulated Other Comprehensive Income, net			Total Equity
BALANCE - DECEMBER 31, 2011	$	146	$	134,871		$	(19,822	)	$	(11,541	)	$	77,971		$	6,567		$	188,192
Purchase of treasury stock	—		—			(5,934		)	—			—			—			(5,934		)
Stock based compensation expense	—		590			—			—			—			—			590
Unallocated ESOP shares committed to employees	—		109			—			312			—			—			421
Issuance of stock for vested equity awards	—		(134		)	—			146			(12		)	—			—
Common stock issued for exercise of vested stock options	—		203			—			—			—			—			203
Tax benefit from exercise of stock options and vesting of restricted stock	—		29			—			—			—			—			29
Dividends paid ($0.08 per share)	—		—			—			—			(968		)	—			(968		)
Net income	—		—			—			—			1,726			—			1,726
Other comprehensive loss	—		—			—			—			—			(1,612		)	(1,612		)
BALANCE - JUNE 30, 2012	$	146	$	135,668		$	(25,756	)	$	(11,083	)	$	78,717		$	4,955		$	182,647
	Common Stock		Additional Paid in Capital			Treasury Stock			Common Stock Acquired by Benefit Plans			Retained Earnings			Accumulated Other Comprehensive Income (Loss), net			Total Equity
BALANCE - DECEMBER 31, 2012	$	146	$	136,132		$	(29,733	)	$	(10,228	)	$	80,608		$	4,540		$	181,465
Purchase of treasury stock	—		—			(3,703		)	—			—			—			(3,703		)
Stock based compensation expense	—		507			—			—			—			—			507
Unallocated ESOP shares committed to employees	—		235			—			312			—			—			547
Issuance of stock for vested equity awards	—		(217		)	—			222			(5		)	—			—
Common stock issued for exercise of vested stock options	—		51			—			—			—			—			51
Tax benefit from exercise of stock options and vesting of restricted stock	—		35			—			—			—			—			35
Dividends paid ($0.12 per share)	—		—			—			—			(1,398		)	—			(1,398		)
Net income	—		—			—			—			2,871			—			2,871
Other comprehensive loss	—		—			—			—			—			(6,949		)	(6,949		)
BALANCE - JUNE 30, 2013	$	146	$	136,743		$	(33,436	)	$	(9,694	)	$	82,076		$	(2,409	)	$	173,426

See accompanying notes to the unaudited consolidated financial statements.

6

FOX CHASE BANCORP, INC.

Consolidated Statements of Cash Flows

(In Thousands, Unaudited)

	Six Months Ended June 30,
	2013			2012
Cash Flows From Operating Activities
Net income	$	2,871		$	1,726
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses	(143		)	2,566
Valuation adjustment for assets acquired through foreclosure	2,991			45
Depreciation	396			430
Net amortization of securities premiums and discounts	1,451			1,424
(Benefit) provision for deferred income taxes	(637		)	685
Stock compensation from benefit plans	1,054			1,011
Net gain on sale of assets acquired through foreclosure	(181		)	(127		)
Net gains on sales of investment securities	(532		)	(2,340		)
Income on bank-owned life insurance	(233		)	(237		)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(35		)	—
Decrease in mortgage servicing rights, net	1			72
Decrease (increase) in accrued interest receivable and other assets	912			(565		)
(Decrease) increase in accrued interest payable, accrued expenses and other liabilities	(1,050		)	125
Net Cash Provided by Operating Activities	6,865			4,815
Cash Flows from Investing Activities
Investment securities - available-for-sale:
Proceeds from sales	—			6,157
Proceeds from maturities, calls and principal repayments	2,000			8,516
Mortgage related securities – available-for-sale:
Purchases	(49,821		)	(122,835		)
Proceeds from sales	9,517			69,067
Proceeds from maturities, calls and principal repayments	39,597			35,041
Mortgage related securities – held-to-maturity:
Purchases	(41,354		)	—
Proceeds from maturities, calls and principal repayments	5,321			5,714
Net (increase) decrease in loans	(5,499		)	16,280
Purchases of loans and loan participations	(19,955		)	(11,753		)
Net (increase) decrease in Federal Home Loan Bank stock	(1,513		)	787
Purchases of premises and equipment	(54		)	(505		)
Additions to assets acquired through foreclosure	(703		)	(35		)
Proceeds from sales and payments on assets acquired through foreclosure	1,459			1,126
Net Cash (Used in) Provided by Investing Activities	(61,005		)	7,560
Cash Flows from Financing Activities
Net increase in deposits	13,205			52,909
Increase in advances from borrowers for taxes and insurance	132			415
Principal payments on other borrowed funds	—			(20,000		)
Proceeds from Federal Home Loan Bank advances	30,000			—
Principal payments on Federal Home Loan Bank advances	—			(38,278		)
Net (decrease) increase in short-term borrowings	(200		)	6,500
Tax benefit from exercise of stock options and vesting of restricted stock	35			—
Common stock issued for exercise of stock options	51			203
Purchase of treasury stock	(3,703		)	(5,934		)
Cash dividends paid	(1,398		)	(968		)
Net Cash Provided by (Used in) Financing Activities	38,122			(5,153		)
Net (Decrease) Increase in Cash and Cash Equivalents	(16,018		)	7,222
Cash and Cash Equivalents – Beginning	25,090			7,586
Cash and Cash Equivalents – Ending	$	9,072		$	14,808
Supplemental Disclosure of Cash Flow Information
Interest paid	$	3,944		$	5,883
Income taxes paid	$	1,400		$	1,440
Transfers of loans to assets acquired through foreclosure	$	4,990		$	6,751
Transfer of loans to loans held for sale	$	3,157		$	—
Net charge-offs	$	529		$	3,416

See accompanying notes to the unaudited consolidated financial statements.

7

FOX CHASE BANCORP, INC

Notes to the Unaudited Consolidated Financial Statements

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION

Fox Chase Bancorp, Inc. (the “Bancorp”) is a Maryland corporation that was incorporated in March 2010 to be the successor corporation to old Fox Chase Bancorp, Inc. (“Old Fox Chase Bancorp”), a federal corporation and the former stock holding company for Fox Chase Bank (the “Bank”), upon completion of the mutual-to-stock conversion of Fox Chase MHC, the former mutual holding company for Fox Chase Bank.

The Bancorp’s primary business is holding the common stock of the Bank and making two loans to the Fox Chase Bank Employee Stock Ownership Plan (the "ESOP").  The Bancorp is authorized to pursue other business activities permissible by laws and regulations for savings and loan holding companies.

The Bancorp and the Bank (collectively referred to as the “Company”) provide a wide variety of financial products and services to individuals and businesses through the Bank’s eleven branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, Media and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Company competes with other financial institutions and other companies that provide financial services.  The Bank also owns approximately 45% of Philadelphia Mortgage Advisors (“PMA”), a mortgage banker located in Plymouth Meeting, Pennsylvania and Ocean City, New Jersey.

The Company is subject to regulations of certain federal banking agencies.  These regulations can and do change significantly from period to period.  The Company also undergoes periodic examinations by regulatory agencies which may subject them to further changes with respect to asset valuations, amounts of required loan loss allowances and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations.  Pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the regulation and supervision of federal savings institutions, such as the Bank, was transferred from the Office of Thrift Supervision to the Office of the Comptroller of the Currency, the agency that regulates national banks, in July 2011.  As a result, the Office of the Comptroller of the Currency has primary responsibility for examining the Bank and implementing and enforcing many of the laws and regulations applicable to federal savings associations.  In addition, pursuant to the provisions of the Dodd-Frank Act, savings and loan holding companies, such as the Bancorp, are now regulated by the Board of Governors of the Federal Reserve System.

The consolidated financial statements include the accounts of the Bancorp and the Bank.  The Bank’s operations include the accounts of its wholly owned subsidiaries, Fox Chase Financial, Inc., Fox Chase Service Corporation, 104 S. Oakland Ave., LLC and Davisville Associates, LLC.  Fox Chase Financial Inc. is a Delaware-chartered investment holding company and its sole purpose is to manage and hold investment securities.  Fox Chase Service Corporation is a Pennsylvania-chartered company and its purposes are to facilitate the Bank’s investment in PMA and, for regulatory purposes, to hold commercial loans.  At June 30, 2013, Fox Chase Service Corporation held $20.0 million in commercial loans.  104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  All material inter-company transactions and balances have been eliminated in consolidation.  Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

During 2013 and 2012, the Bank engaged in certain business activities with PMA.  These activities included providing a warehouse line of credit to PMA, as well as acquiring residential mortgage and home equity loans from PMA.  The Bank recorded interest income from PMA on the warehouse line of $185,000 and $175,000 for the six months ended June 30, 2013 and 2012, respectively, as well as loan satisfaction fees, which are recorded in service charges and other fee income, from PMA of $27,000 and $28,000 for the six months ended June 30, 2013 and 2012, respectively.  In addition, the Bank acquired total loans from PMA of $11.6 million during the six months ended June 30, 2012, which includes the cost of the loans.  The Bank did not acquire any loans from PMA during the six months ended June 30, 2013.

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles (“GAAP”).  The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term

8

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION (CONTINUED)

relate to the determination of the allowance for loan losses, the valuation and realizability of deferred tax assets, the evaluation of other-than-temporary impairment and the valuation of investment securities and assets acquired through foreclosure.

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 13, 2013.   These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP.  The results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other period.

Per Share Information

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period.  Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.  Unallocated shares in the ESOP and shares purchased to fund the Bancorp’s Equity Incentive Plans are not included in either basic or diluted earnings per share.

The following table presents the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Three Months Ended June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
	(Unaudited)
Net income	$	1,044,000		$	539,000		$	2,871,000		$	1,726,000
Weighted-average common shares outstanding (1)	12,184,658			12,671,404			12,254,601			12,775,182
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(594,696		)	(659,744		)	(602,781		)	(667,877		)
Shares purchased by trust	(327,818		)	(387,540		)	(333,035		)	(390,947		)
Weighted-average common shares used to calculate basic earnings per share	11,262,144			11,624,120			11,318,785			11,716,358
Dilutive effect of:
Restricted stock awards	37,713			41,827			36,157			37,668
Stock option awards	189,709			84,676			188,854			72,824
Weighted-average common shares used to calculate diluted earnings per share	11,489,566			11,750,623			11,543,796			11,826,850
Earnings per share-basic	$	0.09		$	0.05		$	0.25		$	0.15
Earnings per share-diluted	$	0.09		$	0.05		$	0.25		$	0.15
Outstanding common stock equivalents having no dilutive effect	1,134,946			947,639			1,137,357			963,650
(1) Excludes treasury stock.

9

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of June 30, 2013 and December 31, 2012 are summarized as follows: 

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	11	$	—		$	—	$	311
Corporate securities	10,167		22		(25		)	—		10,164
	10,467		33		(25		)	—		10,475
Private label commercial mortgage related securities	2,177		14		—			—		2,191
Agency residential mortgage related securities	274,570		3,011		(6,735		)	—		270,846
Total mortgage related securities	276,747		3,025		(6,735		)	—		273,037
Total available-for-sale securities	$	287,214	$	3,058	$	(6,760	)	$	—	$	283,512
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
Total mortgage related securities	64,225		571		(1,092		)	—		63,704
Total held-to-maturity securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	14	$	—		$	—	$	314
Corporate securities	12,207		91		(121		)	—		12,177
	12,507		105		(121		)	—		12,491
Private label commercial mortgage related securities	6,119		78		—			—		6,197
Agency residential mortgage related securities	270,461		7,023		(65		)	—		277,419
Total mortgage related securities	276,580		7,101		(65		)	—		283,616
Total available-for-sale securities	$	289,087	$	7,206	$	(186	)	$	—	$	296,107
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	28,369	$	1,082	$	—		$	—	$	29,451
Total mortgage related securities	28,369		1,082		—			—		29,451
Total held-to-maturity securities	$	28,369	$	1,082	$	—		$	—	$	29,451

10

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	2,597		(2		)	2,977		(23		)	5,574		(25		)
	2,597		(2		)	2,977		(23		)	5,574		(25		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total available-for-sale securities	$	225,297	$	(6,737	)	$	2,977	$	(23	)	$	228,274	$	(6,760	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total held-to-maturity securities	$	39,991	$	(1,092	)	$	—	$	—		$	39,991	$	(1,092	)
Total Temporarily Impaired Securities	$	265,288	$	(7,829	)	$	2,977	$	(23	)	$	268,265	$	(7,852	)
	At December 31, 2012
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,879		(121		)	2,879		(121		)
	—		—			2,879		(121		)	2,879		(121		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total available-for-sale securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	—		—			—		—			—		—
Total mortgage related securities	—		—			—		—			—		—
Total held-to-maturity securities	$	—	$	—		$	—	$	—		$	—	$	—
Total Temporarily Impaired Securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)

11

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

During the three months ended June 30, 2013, the Company sold four mortgage related securities with an amortized cost of $2.5 million and recognized gross gains of $171,000. During the six months ended June 30, 2013, the Company sold seven mortgage related securities with an amortized cost of $9.0 million and recognized gross gains of $532,000.

The Company evaluates a variety of factors when concluding whether a security is other-than-temporarily impaired.  These factors include, but are not limited to, the type and purpose of the security, the underlying rating of the issuer, and the presence of credit enhancements.

At June 30, 2013, gross unrealized losses totaled $7.9 million .  One corporate security, with a fair value of $3.0 million and an unrealized loss position of $23,000, had an unrealized loss position for twelve months or longer as of June 30, 2013.  This security has a rating of “Baa2”.  The remaining securities in an unrealized loss position at June 30, 2013 have been in an unrealized loss position for less than twelve months.  These securities consist of: 1) one corporate security with a fair value of $2.6 million, unrealized loss of $2,000 and a rating of "A2" and 2) 96 agency residential mortgage related securities whose fair value primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment.  The fair value of these agency residential mortgage related securities totaled $262.7 million and the unrealized loss totaled $7.8 million. The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity.  Upon review of the attributes of the individual securities, the Company concluded these securities were not other-than-temporarily impaired.

As of June 30, 2013, the Company held two private label commercial mortgage related securities ("CMBS") with an amortized cost of $2.2 million.  These securities had a net unrealized gain of $14,000 at June 30, 2013 and both individual securities were held at an unrealized gain.  As of December 31, 2012, the Company held three private label CMBS with an amortized cost of $6.1 million.  These securities had a net unrealized gain of $78,000 at December 31, 2012 and all individual securities were held at an unrealized gain.

The Company evaluates current characteristics of each of these private label securities such as delinquency and foreclosure levels, credit enhancement, projected losses, coverage and actual and projected cash flows, on a quarterly basis.  It is possible that the underlying collateral of these securities will perform worse than current expectations, which may lead to adverse changes in cash flows on these securities and potential future other-than-temporary impairment losses.  Events that may trigger material declines in fair values for these securities in the future would include but are not limited to deterioration of credit metrics, significantly higher levels of default and severity of loss on the underlying collateral, deteriorating credit enhancement and loss coverage ratios, or further illiquidity.

12

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following schedules provide a summary of the components of net investment securities gains (losses) in the Company’s consolidated statements of operations for the three and six month periods ended June 30, 2013 and 2012.

	Three Months Ended June 30, 2013												Six Months Ended June 30, 2013
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—
Corporate securities	—		—			—		—		—			—		—			—		—		—
	—		—			—		—		—			—		—			—		—		—
Private label residential mortgage related security	—		—			—		—		—			—		—			—		—		—
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total securities available-for-sale	$	171	$	—		$	—	$	—	$	171		$	532	$	—		$	—	$	—	$	532
	Three Months Ended June 30, 2012												Six Months Ended June 30, 2012
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	64	$	—		$	—	$	—	$	64		$	64	$	—		$	—	$	—	$	64
Corporate securities	—		—			—		—		—			—		—			—		—		—
	64		—			—		—		64			64		—			—		—		64
Private label residential mortgage related security	—		(87		)	—		—		(87		)	—		(87		)	—		—		(87		)
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	2,363		—			—		—		2,363			2,363		—			—		—		2,363
Total mortgage related securities	2,363		(87		)	—		—		2,276			2,363		(87		)	—		—		2,276
Total securities available-for-sale	$	2,427	$	(87	)	$	—	$	—	$	2,340		$	2,427	$	(87	)	$	—	$	—	$	2,340

13

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at June 30, 2013 and December 31, 2012 by contractual maturity are as follows:

		Available for Sale				Held to Maturity
		Amortized Cost		Fair Value		Amortized Cost		Fair Value
		(In thousands)
June 30, 2013	(Unaudited)
Due in one year or less		$	1,975	$	1,995	$	—	$	—
Due after one year through five years		8,492		8,480		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,747		273,037		64,225		63,704
		$	287,214	$	283,512	$	64,225	$	63,704
At December 31, 2012
Due in one year or less		$	2,019	$	2,032	$	—	$	—
Due after one year through five years		10,488		10,459		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,580		283,616		28,369		29,451
		$	289,087	$	296,107	$	28,369	$	29,451

Securities with a carrying value of $8.5 million and $8.3 million at June 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

Securities with a carrying value of $37.3 million and $46.6 million at June 30, 2013 and December 31, 2012, respectively, were used to secure other borrowed funds.   See Note 7.

NOTE 3 - LOANS

The composition of net loans at June 30, 2013, and December 31, 2012 is provided below:

	June 30, 2013			December 31, 2012
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	140,439		$	158,828
Multi-family and commercial	400,969			368,948
Construction	7,281			22,591
	548,689			550,367
Consumer loans	24,388			30,585
Commercial and industrial loans	138,527			113,820
Total loans	711,604			694,772
Deferred loan origination cost, net	6			263
Allowance for loan losses	(10,498		)	(11,170		)
Net loans	$	701,112		$	683,865

14

NOTE 3 - LOANS (CONTINUED)

The following table presents changes in the allowance for loan losses:

	Six Months Ended June 30,						Year Ended December 31,
	2013			2012			2012
	(In thousands)
	(Unaudited)
Balance, beginning	$	11,170		$	12,075		$	12,075
Provision (credit) for loan losses	(143		)	2,566			3,478
Loans charged off	(566		)	(3,426		)	(4,527		)
Recoveries	37			10			144
Balance, ending	$	10,498		$	11,225		$	11,170

The following tables present changes in the allowance for loan losses by loan segment for the six months ended June 30, 2013 and the year ended December 31, 2012.

	Six Months Ended June 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
Provision (credit) for loan losses	(116		)	871			(451		)	4			(436		)	(15		)	(143		)
Loans charged off	(58		)	(463		)	—			(45		)	—			—			(566		)
Recoveries	10			8			—			19			—			—			37
Balance, ending	$	478		$	6,743		$	422		$	210		$	2,194		$	451		$	10,498
	Year Ended December 31, 2012
	One- to Four- Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	1,760		$	6,112		$	869		$	455		$	2,657		$	222		$	12,075
Provision (credit) for loan losses	286			1,064			252			1,659			(27		)	244			3,478
Loans charged off	(1,408		)	(887		)	(340		)	(1,892		)	—			—			(4,527		)
Recoveries	4			38			92			10			—			—			144
Balance, ending	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170

15

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the breakdown of impaired loans by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2,525	$	457	$	—	$	2,982	$	2,900	$	82
Multi-family and commercial	2,978		6,794		—		9,772		9,416		356
Construction	4,305		—		—		4,305		4,305		—
Consumer loans	181		14		—		195		154		41
Commercial and industrial	—		—		—		—		—		—
Total	$	9,989	$	7,265	$	—	$	17,254	$	16,775	$	479
December 31, 2012
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	3,355	$	507	$	—	$	3,862	$	3,862	$	—
Multi-family and commercial	5,284		6,867		—		12,151		11,770		381
Construction	6,434		—		—		6,434		6,434		—
Consumer loans	2,051		14		—		2,065		203		1,862
Commercial and industrial	—		—		—		—		—		—
Total	$	17,124	$	7,388	$	—	$	24,512	$	22,269	$	2,243

For the six months ended June 30, 2013 and 2012, the average recorded investment in impaired loans was $18.4 million and $27.1 million, respectively.  The interest income recognized on these impaired loans was $211,000 and $168,000 for the six months ended June 30, 2013 and 2012, respectively.

Loans on which the accrual of interest has been discontinued amounted to $10.0 million at June 30, 2013 and $17.1 million at December 31, 2012.  If interest on such loans had been recorded in accordance with contractual terms, interest income would have increased by $374,000 and $1.5 million for the six months ended June 30, 2013 and the year ended December 31, 2012, respectively.  There were no loans past due 90 days or more and still accruing interest at June 30, 2013 or December 31, 2012.

At June 30, 2013, six troubled debt restructurings (“TDRs”), totaling $5.0 million, are excluded from the accruing TDR column above as they are included in the nonaccrual loans column.  Of this amount, $4.3 million relates to two construction loans.  The Bank has commitments of $423,000 to lend additional funds related to these construction loans.  Additionally, the Bank had four residential loan TDRs totaling $689,000 which are included in the nonaccrual loans and total impaired loans columns.

At December 31, 2012, seven TDRs totaling $6.9 million are excluded from the accruing TDR column as they are included in nonaccrual loans and total impaired loans columns.

16

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	200	$	1	$	—	$	201	$	277	$	478
Multi-family and commercial	596		713		—		1,309		5,434		6,743
Construction	350		—		—		350		72		422
Consumer loans	30				—		30		180		210
Commercial and industrial	—		—		—		—		2,194		2,194
Unallocated	—		—		—		—		451		451
Total allowance for loan losses	$	1,176	$	714	$	—	$	1,890	$	8,608	$	10,498
December 31, 2012	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	337	$	5	$	—	$	342	$	300	$	642
Multi-family and commercial	530		948		—		1,478		4,849		6,327
Construction	449		—		—		449		424		873
Consumer loans	10		1		—		11		221		232
Commercial and industrial	—		—		—		—		2,630		2,630
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	1,326	$	954	$	—	$	2,280	$	8,890	$	11,170

The Company may, under certain circumstances, restructure loans as a concession to borrowers who have experienced financial difficulty, which result in a TDR.  TDRs are impaired loans.  TDRs typically result from the Company’s loss mitigation activities, which, among other activities, could include extension of maturity, rate reductions, payment extension, and/or principal forgiveness.

At December 31, 2012, the Bank had fourteen TDRs, totaling $14.3 million. At June 30, 2013, twelve of these TDRs, totaling $11.8 million, remained. These TDRs consisted of:

•two construction loans totaling $4.3 million.

•four multi-family and commercial real estate loans totaling $6.8 million.

•five residential loans totaling $696,000.

•one consumer loan totaling $14,000.

In addition, there was one new residential loan TDR during the six months ended June 30, 2013, which totaled $450,000 at June 30, 2013. The Bank agreed to modified terms with the borrower, which included delayed repayment of principal and interest. The Bank had thirteen TDRs totaling $12.3 million at June 30, 2013.

17

NOTE 3 - LOANS (CONTINUED)

The following tables set forth a summary of the TDR activity for the six month periods ended June 30, 2013 and 2012. 

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
Multi-family and commercial	—	—		—		—	—		—	—		—		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
	Three Months Ended June 30, 2012								Six Months Ended June 30, 2012
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	107	$	107	—	$	—	3	$	400	$	400	—	$	—
Multi-family and commercial	—	—		—		—	—		1	519		519		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	107	$	107	—	$	—	4	$	919	$	919	—	$	—

18

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of June 30, 2013 and December 31, 2012.

	At June 30, 2013				At December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	1,373	$	145	$	18	$	284
Multi-family and commercial real estate	—		168		—		1,691
Construction	—		—		—		—
Consumer	115		10		23		51
Commercial and industrial	130		—		—		—
Total	$	1,618	$	323	$	41	$	2,026

We use six primary classifications for loans: pass, pass watch, special mention, substandard, doubtful and loss, of which three classifications are for problem loans: substandard, doubtful and loss. “Substandard loans” must have one or more well defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful loans” have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss.  A loan classified “loss” is considered uncollectible and of such little value that continuance as a loan of the institution is not warranted.  We also maintain a “special mention” category, described as loans which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention.  If we classify an asset as loss, it is recorded as a loan charged off in the current period.

The following tables set forth criticized and classified loans by segment as of June 30, 2013 and December 31, 2012. 

	At June 30, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	137,914	$	379,715	$	2,976	$	24,207	$	136,362	$	681,174
Special mention	—		14,097		—		—		2,165		16,262
Substandard	2,525		7,157		4,305		181		—		14,168
Doubtful	—		—		—		—		—		—
Total loans	$	140,439	$	400,969	$	7,281	$	24,388	$	138,527	$	711,604
	At December 31, 2012
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	155,473	$	347,150	$	16,157	$	28,534	$	110,032	$	657,346
Special mention	—		6,733		—		—		3,633		10,366
Substandard	3,355		15,065		6,434		2,051		155		27,060
Doubtful	—		—		—		—		—		—
Total loans	$	158,828	$	368,948	$	22,591	$	30,585	$	113,820	$	694,772

19

NOTE 4 - DERIVATIVES AND HEDGING

Interest Rate Swaps

On November 3, 2006, the Company entered an interest rate swap with a current notional amount of $914,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of one-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $154,000 and $203,000 at June 30, 2013 and December 31, 2012, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 “Financial Instruments.”

On October 12, 2011, the Company entered an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of one-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value loss position of $15,000 and $105,000 at June 30, 2013 and December 31, 2012, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations.  Hedge ineffectiveness resulted in income of $10,000 and a loss of $13,000 for the three months ended June 30, 2013 and June 30, 2012, respectively. Hedge ineffectiveness resulted in income of $14,000 and a loss of $7,000 for the six months ended June 30, 2013 and June 30, 2012, respectively.

Credit Derivatives

We have entered into agreements with a third-party financial institution whereby the financial institution enters into interest rate derivative contracts and foreign currency swap contracts with customers referred to them by us.  By the terms of the agreements, the financial institution has recourse to the Company for any exposure created under each swap contract in the event the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution.  These transactions represent credit derivatives and are a customary arrangement that allows financial institutions like us to provide access to interest rate and foreign currency swap transactions for our customers without creating the swap ourselves.  The Company records the fair value of credit derivatives in other liabilities on the consolidated statement of condition.   The Company recognizes changes in the fair value of credit derivatives, net of any fees received, as service charges and other fee income in the consolidated statements of operations.

At June 30, 2013, there were five variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $19.8 million, and remaining maturities ranging from 6 to 10 years.  At December 31, 2012, there were four variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $13.3 million, and remaining maturities ranging from 7 to 10 years.  The fair value of the swaps to the customers was an asset of  $751,000 and a liability of $213,000 as of June 30, 2013 and December 31, 2012, respectively, and all swaps were in receiving positions from the third-party financial institution at June 30, 2013.  As of June 30, 2013 and December 31, 2012, the fair value of the Company’s interest rate swap credit derivatives was a liability of $7,000 and $12,000, respectively.  During the three months ended June 30, 2013 and 2012, the Company recognized income of $5,000 and $2,000, respectively, from interest rate swap credit derivatives. During the six months ended June 30, 2013 and 2012, the Company recognized income of $6,000 and $2,000, respectively, from interest rate swap credit derivatives.

At June 30, 2013, there were two foreign currency swap transactions between the third-party financial institution and our customers with a notional amount aggregating approximately $150,000, and remaining maturity of 5 months.  The aggregate fair value of these swaps to the customers was a liability of $1,000 as of June 30, 2013.  At June 30, 2013, the fair value of the Company’s credit derivatives was $0.  At December 31, 2012, there were no foreign currency swap transactions between the third-party financial institution and our customers.  During the three months ended June 30, 2013 and 2012, the Company recognized income of $0 and $6,000, respectively, from foreign currency swap credit derivatives. During the six months ended June 30, 2013 and 2012, the Company recognized income of $2,000 and $29,000, respectively, from foreign currency swap credit derivatives.

The maximum potential payments by the Company to the financial institution under these credit derivatives are not estimable as they are contingent on future interest rates and exchange rates, and the agreement does not provide for a limitation of the maximum potential payment amount.

20

NOTE 5- MORTGAGE SERVICING ACTIVITY

Loans serviced for others are not included in the accompanying consolidated statements of condition.  The unpaid principal balances of these loans were $30.8 million and $41.8 million at June 30, 2013 and 2012, respectively, and $36.6 million at December 31, 2012.  The Company received fees, net of amortization, from the servicing of loans of ($2,800) and ($11,600) during the six months ended June 30, 2013 and June 30, 2012, respectively.

The following table summarizes mortgage servicing rights activity for the six months ended June 30, 2013 and 2012:

		Servicing Rights			Valuation Allowance			Net Carrying Value
		(In thousands, Unaudited)
Balance at	December 31, 2012	$	325		$	(155	)	$	170
Reductions		—			41			41
Amortization		(42		)	—			(42		)
Balance at	June 30, 2013	$	283		$	(114	)	$	169
Balance at	December 31, 2011	$	455		$	(139	)	$	316
Reductions		—			2			2
Amortization		(74		)	—			(74		)
Balance at	June 30, 2012	$	381		$	(137	)	$	244

At June 30, 2013, December 31, 2012 and June 30, 2012, the fair value of the mortgage servicing rights (“MSRs”) was $169,000, $170,000 and $245,000, respectively.  The fair value at these dates was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.  Mortgage loan prepayment speed is the annual rate at which borrowers are forecasted to repay their mortgage loan principal and is based on historical experience and current interest rates.  The discount rate used to determine the present value of future net servicing income is the required rate of return the market would expect for an asset with similar risk.  Both assumptions can, and generally will, change quarterly valuations as market conditions and interest rates change.

NOTE 6 - DEPOSITS

Deposits and their respective weighted average interest rate at June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013				December 31, 2012
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	126,702	—	%	$	108,176
NOW accounts	0.22		79,191		0.22		70,199
Money market accounts	0.20		89,146		0.19		97,318
Savings and club accounts	0.13		98,875		0.14		99,046
Brokered deposits	0.47		61,651		0.36		50,637
Certificates of deposit	1.47		245,049		1.59		262,033
	0.62	%	$	700,614	0.70	%	$	687,409

21

NOTE 7 - BORROWINGS

Federal Home Loan Bank Advances

Pursuant to collateral agreements with the Federal Home Loan Bank of Pittsburgh (the “FHLB”), advances are secured by qualifying first mortgage loans, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB.  As of June 30, 2013, the Bank had $197.2 million in qualifying collateral pledged against its advances.

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
(In thousands, Unaudited)
August 2014	$	10,000	0.52	%	Not Applicable	Not Applicable
September 2014	15,000		0.41	%	Not Applicable	Not Applicable
December 2014	15,000		0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49	%	Not Applicable	Not Applicable
April 2015	10,000		0.45	%	Not Applicable	Not Applicable
August 2015	10,000		0.68	%	Not Applicable	Not Applicable
March 2016	10,000		0.62	%	Not Applicable	Not Applicable
September 2016	5,000		0.75	%	Not Applicable	Not Applicable
June 2017	5,000		0.94	%	Not Applicable	Not Applicable
November 2017	15,000		3.62	%	August 2013	LIBOR + 0.10%
November 2017	15,000		3.87	%	August 2013	LIBOR + 0.10%
December 2017	20,000		2.83	%	September 2013	LIBOR + 0.11%
	$	140,000	1.55	%

For the borrowings which have a “Call Date” disclosed in the above table, if the borrowing is called, the Bank has the option to either pay off the borrowing without penalty or the borrowing’s fixed rate resets to a variable LIBOR based rate, as noted in the above table.  Subsequent to the call date, the borrowings are callable by the FHLB quarterly.  Accordingly, the contractual maturities above may differ from actual maturities.

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $384.4 million at June 30, 2013.  Additionally, as of June 30, 2013, the Bank has a maximum borrowing capacity of $53.2 million with the Federal Reserve Bank of Philadelphia through the Discount Window.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB of Pittsburgh in an amount equal to at least 4.60% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.0% of the Bank’s “eligible assets.”  As of June 30, 2013, the Company’s minimum stock obligation was $8.7 million and a maximum stock obligation was $14.7 million.  The Company held $9.6 million in FHLB stock at that date.

22

NOTE 7 - BORROWINGS (CONTINUED)

Other Borrowed Funds

Other borrowed funds obtained from large commercial banks under security repurchase agreements totaled $30 million at June 30, 2013.  These borrowings contractually mature with dates ranging from September 2018 through November 2018. As disclosed in the table below, two of the borrowings may be called by the lender based on the underlying agreements.  Accordingly, the contractual maturities below may differ from actual maturities.

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20	%	Not Applicable	Not Applicable
October 2018	5,000		3.15	%	July 2013	Quarterly
October 2018	5,000		3.27	%	Not Applicable	Not Applicable
November 2018	5,000		3.37	%	November 2013	Not Applicable
	$	30,000	3.30	%

Mortgage backed securities with a fair value of $37.3 million at June 30, 2013 were used to secure these other borrowed funds.

Short Term Borrowings

As of June 30, 2013 and December 31, 2012, the Company had $70.3 million and $70.5 million, respectively, of short-term borrowings.  The short-term borrowings, had blended weighted average rates of 0.32% and 0.30% at June 30, 2013 and December 31, 2012, respectively.  Short-term borrowings consist of overnight and term borrowings with an original maturity less than one year.  Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB.

NOTE 8 - STOCK BASED COMPENSATION

During the six months ended June 30, 2013, the Company recorded $507,000 of stock based compensation expense comprised of stock option expense of $198,000 and restricted stock expense of $309,000. This compares to $590,000 of stock based compensation expense comprised of stock option expense of $233,000 and restricted stock expense of $357,000 during the six months ended June 30, 2012.

The following is a summary of the Bancorp’s stock option activity and related information for the six months ended June 30, 2013.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2012	877,669		$	11.57	6.3 years	$	4,461,000
Granted	254,650		17.00
Exercised	(4,608	)	11.11
Forfeited/Cancelled	(100	)	12.94
Outstanding at June 30, 2013	1,127,611		$	12.80	6.7 years	$	4,741,000
Exercisable at June 30, 2013	623,273		$	11.28	4.8 years	$	3,565,000

23

NOTE 8 - STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of the Company’s unvested options as of June 30, 2013 and the changes therein during the six months then ended.

		Number of Stock Options		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	310,661		$	3.36
Granted		254,650		4.20
Vested		(60,973	)	3.11
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	504,338		$	3.82

Expected future expense relating to the 504,338 non-vested options outstanding as of June 30, 2013 is $1.7 million over a weighted average period of 4.1 years.

The fair value of the options granted in 2013 was estimated to be $4.20.  The fair value was based on the following assumptions:

Expected Dividend Yield	2.22	%
Expected Volatility	31.12	%
Risk-Free Interest Rate	1.19	%
Expected Option Life in Years	6.5

The following is a summary of the status of the Company’s restricted stock as of June 30, 2013 and changes therein during the six months then ended.

		Number of Restricted Shares		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	130,557		$	12.41
Granted		122,450		17.00
Vested		(18,250	)	11.92
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	234,757		$	14.84

Expected future compensation expense relating to the 234,757 restricted shares at June 30, 2013 is $3.1 million over a weighted average period of 4.2 years.

During the six months ended June 30, 2013, the Company granted 39,250 shares of performance based restricted stock to certain executive officers of the Company.

24

NOTE 9 - FAIR VALUE

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of the respective quarter ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each quarter end.

The Company determines the fair value of financial instruments using three levels of input:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

Level 3—Valuations are observed from unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at June 30, 2013 and December 31, 2012:

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate their fair value.

Investment and Mortgage Related Securities—Available-for-Sale and Held-to-Maturity

Fair values for investment securities and mortgage related securities are obtained from one external pricing service (“primary pricing service”) as the provider of pricing on the investment portfolio on a quarterly basis.  We generally obtain one quote per investment security.  If quoted market prices are not available, fair values are based on quoted market prices of comparable securities.  If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities.  We review the estimates of fair value provided by the primary pricing service to determine if they are representative of fair value based upon our general knowledge of market conditions and relative changes in interest rates and the credit environment.  The Company made no adjustments to the values obtained from the primary pricing service.

Loans Held for Sale

Loans held for sale are carried the lower of amortized cost or fair value. The fair value of loans held for sale, which equals their amortized cost, is based upon executed sales agreements with third party purchasers.

Loans Receivable, Net

To determine the fair values of loans that are not impaired, we employ discounted cash flow analyses that use interest rates and terms similar to those currently being offered to borrowers.  We do not record loans at fair value on a recurring basis.  We record fair value adjustments to loans on a nonrecurring basis to reflect full and partial charge-offs due to impairment.  For impaired loans, we use a variety of techniques to measure fair value, such as using the current appraised value of the collateral, agreements of sale, discounting the contractual cash flows, and analyzing market data that we may adjust due to specific characteristics of the loan or collateral.

FHLB Stock

The fair value of the FHLB stock is assumed to equal its cost, since the stock is nonmarketable but redeemable at its par value.

25

NOTE 9 - FAIR VALUE (CONTINUED)

Mortgage Servicing Rights

The fair value of the MSRs for these periods was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Financial Assets Acquired from Debtors

The fair value of financial assets acquired from debtors are determined using valuations obtained from a third party valuation firm who utilizes a discounted cash flow model to calculate the fair value of the assets.  The significant assumptions used in the valuation are the life expectancies of the insured parties, future premium payments and discount rates.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amount of accrued interest receivable and accrued interest payable approximates fair value.

Deposit Liabilities

Fair values for demand deposits (including NOW accounts), savings and club accounts and money market deposits are, by definition, equal to the amount payable on demand at the reporting date.  Fair values of fixed-maturity certificates of deposit, including brokered deposits, are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar instruments with similar maturities.

Short-term Borrowings, FHLB Advances and Other Borrowed Funds

Fair value of short-term borrowings, FHLB advances and other borrowed funds are estimated using discounted cash flow analyses, based on rates currently available to the Bank for advances with similar terms and remaining maturities.

Derivative Contracts

The fair values of derivative contracts are based upon the estimated amount the Company would receive or pay to terminate the contracts or agreements, taking into account underlying interest rates, creditworthiness of underlying customers for credit derivatives and, when appropriate, the creditworthiness of the counterparties.

Off-Balance Sheet Financial Instruments

Fair value of commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present creditworthiness of the counterparties.

26

NOTE 9 - FAIR VALUE (CONTINUED)

The estimated fair values of the Company’s financial instruments at June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	9,072	$	9,072	$	25,090	$	25,090
Available for sale securities:
Investment securities available-for-sale	Level 2	10,475		10,475		12,491		12,491
Private label commercial mortgage related securities	Level 3	2,191		2,191		6,197		6,197
Agency residential mortgage related securities	Level 2	270,846		270,846		277,419		277,419
Held to maturity securities:
Agency mortgage related securities	Level 2	64,225		63,704		28,369		29,451
Loans held for sale	Level 2	3,157		3,157		—		—
Loans receivable, net	Level 3	701,112		703,233		683,865		686,867
FHLB stock	Level 3	9,610		9,610		8,097		8,097
Accrued interest receivable	Level 3	3,301		3,301		3,223		3,223
Mortgage servicing rights	Level 2	169		169		170		170
Financial assets acquired from debtors	Level 3	3,208		3,208		3,714		3,714
Financial liabilities:
Savings and club accounts	Level 2	98,875		98,875		99,046		99,046
Demand, NOW and money market deposits	Level 2	295,039		295,039		275,693		275,693
Brokered deposits	Level 2	61,651		61,280		50,637		50,715
Certificates of deposit	Level 2	245,049		246,964		262,033		264,694
Short-term borrowings	Level 2	70,300		70,300		70,500		70,500
FHLB advances	Level 2	140,000		143,891		110,000		115,767
Other borrowed funds	Level 2	30,000		32,417		30,000		33,651
Accrued interest payable	Level 2	303		303		330		330
Derivative contracts	Level 2, 3	175		175		320		320

The following financial instruments were classified as Level 3 and carried at fair value as of June 30, 2013:

• Private label CMBS, the fair value of which are difficult to determine because they are not actively traded in securities markets.  The net unrealized gain in the private label CMBS portfolio was $14,000 and $78,000 at June 30, 2013 and December 31, 2012, respectively.

• Two commercial loans, since lending credit risk is not an observable input for these loans (see Note 4).  The unrealized gain on the two loans was $305,000 at June 30, 2013 compared to $293,000 at December 31, 2012.

• Financial assets acquired from debtors, which are valued using a discounted cash flow model which contains significant unobservable inputs.  Losses resulting from changes in fair value, totaling $3.2 million, for the six month period ended June 30, 2013, were recorded in assets acquired through foreclosure expense in the consolidated statements of operations.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $7,000 at June 30, 2013 and $12,000 at December 31, 2012.

27

NOTE 9 - FAIR VALUE (CONTINUED)

The following measures were made on a recurring basis as of June 30, 2013 and December 31, 2012.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	June 30, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available for Sale Securities:
Obligations of U.S. government agencies	$	311		$	—	$	311		$	—
Corporate securities	10,164			—		10,164			—
Private label commercial mortgage related securities	2,191			—		—			2,191
Agency residential mortgage related securities	270,846			—		270,846			—
Loans (1)	2,767			—		—			2,767
Financial assets acquired from debtors	3,208			—		—			3,208
Derivative contracts (1)	(175		)	—		(168		)	(7		)
Total	$	289,312		$	—	$	281,153		$	8,159
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2012			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available for Sale Securities:
Obligations of U.S. government agencies	$	314		$	—	$	314		$	—
Corporate securities	12,177			—		12,177			—
Private label commercial mortgage related securities	6,197			—		—			6,197
Agency residential mortgage related securities	277,419			—		277,419			—
Loans (1)	2,806			—		—			2,806
Financial assets acquired from debtors	3,714			—		—			3,714
Derivative contracts (1)	(320		)	—		(308		)	(12		)
Total	$	302,307		$	—	$	289,602		$	12,705

(1)          Such financial instruments are recorded at fair value as further described in Note 4.

The following measures were made on a non-recurring basis as of June 30, 2013 and December 31, 2012:

Loans, which were partially charged off at June 30, 2013 and December 31, 2012.  The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell.  These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

MSRs, the fair value of which was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Other real estate owned, for which we used Level 3 inputs, which consist of appraisals or agreements of sale.  Other real estate owned is initially recorded on our balance sheet at fair value, net of costs to sell, when we obtain control of the property.

28

NOTE 9 - FAIR VALUE (CONTINUED)

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description		Balance		(Level 1)		(Level 2)		(Level 3)
As of June 30, 2013	(Unaudited)			(In thousands)
Loans		$	730	$	—	$	—	$	730
Mortgage servicing rights		169		—		169		—
Other real estate owned		6,740		—		—		6,740
Total		$	7,639	$	—	$	169	$	7,470
As of December 31, 2012
Loans		$	2,951	$	—	$	—	$	2,951
Mortgage servicing rights		170		—		170		—
Other real estate owned		4,810		—		—		4,810
Total		$	7,931	$	—	$	170	$	7,761

The following tables include a roll forward of the financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3) for the periods of December 31, 2012 to June 30, 2013 and December 31, 2011 to June 30, 2012.

Six Months Ended June 30, 2013
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012	$	—		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions	—			—			—			1,994			—			1,994
Sales	—			—			—			—			—			—
Payments (received) made	—			(3,939		)	—			667			(51		)	(3,323		)
Premium amortization, net	—			(3		)	—			—			—			(3		)
Decrease/(increase) in value	—			(64		)	5			(3,167		)	12			(3,214		)
Ending balance, June 30, 2013	$	—		$	2,191		$	(7	)	$	3,208		$	2,767		$	8,159
Six Months Ended June 30, 2012
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2011	$	122		$	8,906		$	—		$	—		$	2,877		$	11,905
Purchases/additions	—			—			(13		)	1,789			—			1,776
Sales	(70		)	—			—			—			—			(70		)
Payments received	(7		)	(2,197		)	—			—			(47		)	(2,251		)
Premium amortization, net	—			(7		)	—			—			—			(7		)
Decrease/(increase) in value	(45		)	(24		)	—			—			33			(36		)
Ending balance, June 30, 2012	$	—		$	6,678		$	(13	)	$	1,789		$	2,863		$	11,317

There were no transfers made between levels during the six months ended June 30, 2013 or 2012.

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NOTE 10 – ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (ASU) No. 2013-01-Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update clarifies that the scope of ASU No. 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The Company has adopted this update and has determined it does not have an impact on the Company's consolidated financial statements or disclosures as the Company does not have any enforceable master netting arrangements or instruments that are offset in accordance with Section 210-20-45 or Section 815-10-45.

ASU No. 2013-02-Comprehensive Income (Topic 220)-Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. For the Company, the update is effective prospectively for reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. This guidance did not have a material impact on the Company's financial statements, but did result in revised presentation on the consolidated statements of operations of the items reclassified out of accumulated other comprehensive income.

ASU No. 2013-10-Derivatives and Hedging (Topic 815)-Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the Fed funds effective swap rate (OIS) to be used as a U.S. benchmark interest rate, in addition to the U.S. Treasury rate and LIBOR, for hedge accounting purposes. The ASU also permits using different benchmark rates for similar hedges. This ASU is effective immediately and may only be applied on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The impact of adopting this ASU is not material to the Company.

ASU No. 2013-11-Income Taxes (Topic 740)-Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). As a result of applying this ASU, an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss (NOL) or other tax credit carryforward when settlement in this manner is available under the tax law. The assessment of whether settlement is available under the tax law would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events (e.g., upcoming expiration of related NOL carryforwards). This classification should not affect an entity's analysis of the realization of its deferred tax assets. Gross presentation in the rollforward of unrecognized tax positions in the notes to the financial statements would still be required. For the Company, the update is effective prospectively for reporting periods beginning on or after January 1, 2014, and interim periods within those annual periods. Retrospective application is permitted. The impact of adopting this ASU will not be material to the Company.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements that are based on assumptions and may describe future plans, strategies and expectations of the Company.  These forward-looking statements are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions.  The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, changes in interest rates, national and regional economic conditions, legislative and regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area, changes in real estate market values in the Company’s market area, changes in relevant accounting principles and guidelines and the inability of third party service providers to perform their functions.  Additional factors that may affect our results are discussed in the sections titled “Risk Factors”

30

in the Company’s Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 13, 2013, and its other Securities and Exchange Commission reports.

These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies.  We consider the following to be our critical accounting policies.

Allowance for Loan Losses.  The allowance for loan losses is maintained at a level representing management’s best estimate of known and inherent losses in the portfolio, based upon management’s evaluation of the portfolio’s collectability.  Our methodology for assessing the appropriateness of the allowance for loan losses consists of an allowance on impaired loans and a general valuation allowance on the remainder of the portfolio.  Although we determine the amount of each element of the allowance separately, the entire allowance for loan losses is available for losses on the entire portfolio.

Loans are deemed impaired when, based on current information and events, it is probable that the Company will be unable to collect all proceeds due according to the contractual terms of the loan agreement or when a loan is classified as a troubled debt restructuring.  Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due.  Impairment is measured on a loan by loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan’s original effective interest rate, the loan’s obtainable market price or the fair value of the collateral less costs to sell if the loan is collateral dependent.  The Company establishes an allowance for loan losses in the amount of the difference between fair value of the impaired loan and the loan’s carrying amount.

We establish a general allowance for loans that are not considered impaired to recognize the inherent losses associated with lending activities.  This general valuation allowance is determined by segmenting the loan portfolio by loan type and assigning percentages, known as loss factors, to each category.  The percentages are adjusted for significant factors that, in management’s judgment, affect the collectability of the portfolio as of the evaluation date.  These significant factors include the size and composition of the loan portfolio, the Company’s loss experience by particular segment, trends and absolute levels of nonperforming loans, trends and absolute levels of classified and criticized loans, trends and absolute levels in delinquent loans, trends in risk ratings, trends in industry charge-offs and changes in existing general economic and business conditions affecting our lending areas and the national economy.  These loss factors are subject to ongoing evaluation to ensure their relevance in the current economic environment.  We perform this systematic analysis of the allowance on a quarterly basis.  These criteria are analyzed and the allowance is developed and maintained at the segment level.

Additional risk is associated with the analysis of the allowance for loan losses as such evaluations are highly subjective, and future adjustments to the allowance may be necessary if conditions differ substantially from the assumptions used in making the evaluations.  In addition, various regulatory agencies periodically review the Company’s allowance for loan losses.  Such agencies may require the Company to recognize adjustments to the allowance, based on their judgments at the time of their examination.

Deferred Income Taxes.  We use the asset and liability method of accounting for income taxes.  Under this method, deferred tax assets and liabilities 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 expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized.  We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets.  These judgments require us to make projections of future taxable income.  The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.

Valuation and Other-Than-Temporary Impairment of Investment Securities.  Investment securities are reviewed quarterly to determine whether the fair value is below the current carrying value.  When the fair value of any of our investment securities has

31

declined below its current carrying value, management is required to assess whether the decline is other-than-temporary.  A review of other-than-temporary impairment requires companies to make certain judgments regarding the nature of the decline, and the probability, extent and timing of a valuation recovery and our intent to sell the security or if it is more likely than not that the security will be required to be sold before recovery of its amortized cost.  Pursuant to these requirements, we assess valuation declines to determine the extent to which such changes are attributable to (1) fundamental factors specific to the issuer, such as financial condition, business prospects or other factors, or (2) market-related factors, such as required market yields, interest rates or equity market declines.  If the decline in the market value of a security is determined to be other-than-temporary, the credit portion of the impairment is written down through earnings and the non-credit portion is an adjustment to other comprehensive income.

Valuation of Assets Acquired Through Foreclosure.  Assets acquired through foreclosure consist of other real estate owned and financial assets acquired from debtors.  Other real estate owned is carried at the lower of cost or fair value, less estimated selling costs.  The fair value of other real estate owned is determined using appraisals obtained from approved independent appraisers or agreements of sale, where applicable.  Financial assets acquired from debtors are carried at fair value under the fair value option in accordance with FASB ASC 825 “Financial Instruments”.  The fair value of financial assets acquired from debtors is determined using valuations obtained from a third party valuation firm who utilizes a discounted cash flow model. Changes in the fair value of assets acquired through foreclosure at future reporting dates or at the time of disposition will result in an adjustment in assets acquired through foreclosure expense or net gain (loss) on sale of assets acquired through foreclosure, respectively.

Comparison of Financial Condition at June 30, 2013 and December 31, 2012

Total assets were $1.1 billion at June 30, 2013 and December 31, 2012.  Total loans were $701.1 million at June 30, 2013, an increase of $17.2 million, or 2.5%, from $683.9 million at December 31, 2012.  Total commercial loans increased $41.4 million, or 8.2%, comprised of increases of $32.0 million in multi-family and commercial real estate loans and $24.7 million in commercial and industrial loans, partially offset by a decrease of $15.3 million in commercial construction loans.  One- to four-family residential mortgage loans decreased $18.4 million and consumer loans decreased $6.2 million due to normal amortization exceeding new loans originated.  The increase in total commercial loans is consistent with the Company’s focus on growing its commercial business portfolio.  Total investments were $347.7 million at June 30, 2013, an increase of $23.3 million, or 7.2%, from $324.5 million at December 31, 2012.  The increase was primarily from purchases of residential mortgage related securities.

Deposits increased $13.2 million, or 1.9%, from $687.4 million at December 31, 2012 to $700.6 million at June 30, 2013.  From December 31, 2012 to June 30, 2013, noninterest-bearing demand accounts increased $18.5 million, brokered deposits increased $11.0 million and NOW accounts increased $9.0 million.  Offsetting these increases were decreases in non-brokered certificates of deposit of $17.0 million and money market accounts of $8.2 million.  The increase in noninterest-bearing demand accounts is primarily due to deposits obtained from commercial borrowing relationships. The increase in brokered deposits is the result of the Company’s decision to continue to utilize this source of relatively low-cost funding.  The Company had brokered deposits of $61.7 million at June 30, 2013 with a weighted average rate of 0.47%.  The increase in NOW accounts is driven by increases in the Company’s Advantage Checking product.  The decrease in certificates of deposit and money market deposits is primarily due to the Company not offering pricing promotions and instead maintaining its rates at the midpoint of the market.  FHLB advances increased $30.0 million, or 27.3%, from $110.0 million at December 31, 2012 to $140.0 million at June 30, 2013 due to incremental term borrowings during 2013.

Stockholders’ equity decreased $8.0 million to $173.4 million at June 30, 2013 compared to $181.5 million at December 31, 2012 primarily due to stock repurchases of $3.7 million, dividends paid of $1.4 million and a decrease in accumulated other comprehensive income of $6.9 million, offset by net income of $2.9 million and stock-based compensation activity of $1.1 million for the six months ended June 30, 2013.

Comparison of Operating Results for the Three and Six Months Ended June 30, 2013 and 2012

General.  Net income increased $505,000, or 93.7%, to $1.0 million for the three months ended June 30, 2013, compared to $539,000 for the three months ended June 30, 2012.  The increase in net income was due to decreases in the provision for loan losses of $2.1 million and noninterest expense of $392,000 and an increase in net interest income of $196,000, offset primarily by a decrease in noninterest income of $1.9 million and an increase in income tax expense of $216,000.

Net income increased $1.1 million, or 66.3%, to $2.9 million for the six months ended June 30, 2013, compared to $1.7 million for the six months ended June 30, 2012.  The increase in net income was due to decreases in the provision for loan losses of $2.7 million and noninterest expense of $357,000 and an increase in net interest income of $129,000, offset primarily by a decrease in noninterest income of $1.6 million and an increase in income tax expense of $469,000.

32

Net Interest Income.  Net interest income increased $196,000, or 2.6%, to $7.9 million for the three months ended June 30, 2013 compared to $7.7 million for the same period in 2012, primarily due to a decrease in total interest expense of $782,000 offset by a decrease in total interest income of $586,000.  The decrease in total interest expense was due to a decrease in the cost of interest-bearing liabilities from 1.55% to 1.01% offset by a $71.6 million increase in average interest-bearing liabilities.  The decrease in the average cost of interest-bearing liabilities was due to a decrease in the average cost of borrowings from 3.18% to 1.67% and a decrease in the average cost of interest-bearing deposits from 1.16% to 0.79%.  The decrease in the average cost of borrowings is primarily due to the termination of FHLB advances and other borrowed funds, totaling $56.3 million, with an average cost of funds of 3.50%, during the three months ended June 30, 2012.  The decrease in the average cost of interest-bearing deposits reflects a reduction in the overall interest rate environment during 2011, 2012 and the first half of 2013 coupled with maturities of higher rate certificates of deposit and reduced rates on other deposit products. The decrease in total interest income was primarily due to a decrease in the yield on interest-earning assets from 4.34% to 3.80% offset by a $82.0 million increase in the average balance of interest-earning assets.  The decrease in yield was primarily due to decreases in the yields on total loans from 5.08% to 4.65% and mortgage-related securities from 2.78% to 2.12%.  The decrease in yield reflects a reduction in the overall interest rate environment during 2011, 2012 and the first half of 2013.  The increase in the average balance of interest-earning assets was primarily due to a $49.3 million increase in mortgage-related securities and a $36.9 million increase in total loans. 

Net interest income increased $129,000, or 0.8%, to $15.8 million for the six months ended June 30, 2013 compared to $15.7 million for the same period in 2012, primarily due to a decrease in total interest expense of $1.8 million offset by a decrease in total interest income of $1.7 million.  The decrease in total interest expense was due to a decrease in the cost of interest-bearing liabilities from 1.59% to 1.02% offset by a $59.1 million increase in average interest-bearing liabilities.  The decrease in the average cost of interest-bearing liabilities was due to a decrease in the average cost of borrowings from 3.18% to 1.66% and a decrease in the average cost of interest-bearing deposits from 1.20% to 0.80%.  The decrease in the average cost of borrowings is primarily due to the termination of FHLB advances and other borrowed funds, totaling $56.3 million, with an average cost of funds of 3.50%, during the three months ended June 30, 2012.  The decrease in the average cost of interest-bearing deposits reflects a reduction in the overall interest rate environment during 2011, 2012 and the first half of 2013 coupled with maturities of higher rate certificates of deposit and reduced rates on other deposit products. The decrease in total interest income was primarily due to a decrease in the yield on interest-earning assets from 4.36% to 3.80% offset by a $69.5 million increase in the average balance of interest-earning assets.  The decrease in yield was primarily due to decreases in the yields on total loans from 5.16% to 4.69% and mortgage-related securities from 2.83% to 2.13%.  The decrease in yield reflects a reduction in the overall interest rate environment during 2011, 2012 and the first half of 2013.  The increase in the average balance of interest-earning assets was primarily due to a $49.2 million increase in mortgage-related securities and a $27.2 million increase in total loans. 

33

The following table summarizes average balances and average yields and costs of interest-earning assets and interest-bearing liabilities for the three and six months ended June 30, 2013 and 2012.  Yields are not presented on a tax-equivalent basis.  Any adjustments necessary to present yields on a tax-equivalent basis are insignificant. 

	Three Months Ended June 30,														Six Months Ended June 30,
	2013							2012							2013							2012
				Interest and Dividends							Interest and Dividends							Interest and Dividends							Interest and Dividends
	Average Balance					Yield/ Cost		Average Balance					Yield/ Cost		Average Balance					Yield/ Cost		Average Balance					Yield/ Cost
Assets:	(Dollars in thousands)														(Dollars in thousands)
Interest-earning assets:
Interest-earning demand deposits	$	5,822		$	—	0.04	%	$	7,207		$	2	0.10	%	$	5,484		$	1	0.04	%	$	7,948		$	5	0.11	%
Mortgage-related securities
Available-for-sale	290,865			1,558		2.14	%	245,079			1,801		2.94	%	293,551			3,169		2.16	%	239,798			3,616		3.02	%
Held-to-maturity	40,245			193		1.92	%	36,688			154		1.68	%	33,690			320		1.90	%	38,263			318		1.66	%
Total mortgage-related securities	331,110			1,751		2.12	%	281,767			1,955		2.78	%	327,241			3,489		2.13	%	278,061			3,934		2.83	%
Taxable securities	20,713			58		1.14	%	22,059			78		1.40	%	20,841			129		1.24	%	23,998			171		1.43	%
Nontaxable securities	—			—		0.00	%	1,075			14		5.45	%	—			—		0.00	%	1,474			33		4.54	%
Loans:
Residential loans	146,185			1,684		4.61	%	181,603			2,254		4.97	%	150,972			3,526		4.67	%	186,837			4,646		4.97	%
Commercial loans	518,808			6,015		4.65	%	429,053			5,660		5.22	%	510,869			11,884		4.69	%	432,002			11,638		5.33	%
Consumer loans	25,591			317		4.95	%	43,074			448		4.16	%	27,593			668		4.84	%	43,431			926		4.26	%
Total Loans	690,584			8,016		4.65	%	653,730			8,362		5.08	%	689,434			16,078		4.69	%	662,270			17,210		5.16	%
Allowance for loan losses	(11,962		)					(11,597		)					(11,703		)					(11,947		)
Net loans	678,622			8,016				642,133			8,362				677,731			16,078				650,323			17,210
Total interest-earning assets	1,036,267			9,825		3.80	%	954,241			10,411		4.34	%	1,031,297			19,697		3.80	%	961,804			21,353		4.36	%
Noninterest-earning assets	51,250							43,375							49,565							43,116
Total assets	$	1,087,517						$	997,616						$	1,080,862						$	1,004,920
Liabilities and equity:
Interest-bearing liabilities:
NOW and money market deposit accounts	$	166,135		$	85	0.21	%	$	163,248		$	148	0.36	%	$	164,721		170		0.21	%	$	164,693		307		0.37	%
Savings accounts	98,331			33		0.13	%	95,797			71		0.30	%	98,458			66		0.14	%	90,907			134		0.30	%
Brokered deposits	67,769			100		0.59	%	16,288			25		0.62	%	63,824			183		0.58	%	13,225			44		0.66	%
Certificates of deposit	249,156			923		1.49	%	294,062			1,393		1.90	%	253,706			1,899		1.51	%	304,686			2,923		1.93	%
Total interest-bearing deposits	581,391			1,141		0.79	%	569,395			1,637		1.16	%	580,709			2,318		0.80	%	573,511			3,408		1.20	%
Short-term borrowings	26,632			17		0.25	%	9,300			5		0.22	%	37,851			49		0.26	%	9,735			10		0.21	%
FHLB advances	140,000			549		1.58	%	80,182			688		3.39	%	126,559			1,051		1.68	%	84,015			1,442		3.39	%
Other borrowed funds	30,000			251		3.35	%	47,556			410		3.41	%	30,000			499		3.36	%	48,778			842		3.42	%
Total borrowings	196,632			817		1.67	%	137,038			1,103		3.18	%	194,410			1,599		1.66	%	142,528			2,294		3.18	%
Total interest-bearing liabilities	778,023			1,958		1.01	%	706,433			2,740		1.55	%	775,119			3,917		1.02	%	716,039			5,702		1.59	%
Noninterest-bearing deposits	124,025							101,143							118,449							97,457
Other noninterest-bearing liabilities	6,727							4,712							7,632							5,100
Total liabilities	908,775							812,288							901,200							818,596
Stockholders’ equity	176,645							178,651							176,882							179,683
Accumulated comprehensive income	2,097							6,677							2,780							6,641
Total stockholder’s equity	178,742							185,328							179,662							186,324
Total liabilities and stockholders’ equity	$	1,087,517						$	997,616						$	1,080,862						$	1,004,920
Net interest income				$	7,867						$	7,671						$	15,780						$	15,651
Interest rate spread						2.79	%						2.79	%						2.78	%						2.77	%
Net interest margin						3.01	%						3.15	%						3.04	%						3.19	%
Average interest-earning assets to average interest-bearing liabilities						133.19	%						135.08	%						133.05	%						134.32	%

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Rate/Volume Analysis.  The following table sets forth the effects of changing rates and volumes on our net interest income.  The rate column shows the effects attributable to changes in rate (changes in rate multiplied by current volume).  The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate).  The net column represents the sum of the prior columns.  For purposes of this table, changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on the changes due to rate and the changes due to volume.

	Three Months Ended   June 30, 2013									Six Months Ended   June 30, 2013
	Compared to									Compared to
	Three Months Ended   June 30, 2012									Six Months Ended   June 30, 2012
	Increase (Decrease)									Increase (Decrease)
	Due to									Due to
	Rate			Volume			Net			Rate			Volume			Net
Interest and Dividend Income:	(In thousands)
Interest-earning demand deposits	$	(2	)	$	—		$	(2	)	$	(3	)	$	(1	)	$	(4	)
Mortgage-related securities
Available-for-sale	(580		)	337			(243		)	(1,259		)	812			(447		)
Held-to-maturity	24			15			39			40			(38		)	2
Total mortgage-related securities	(556		)	352			(204		)	(1,219		)	774			(445		)
Taxable securities	(15		)	(5		)	(20		)	(19		)	(23		)	(42		)
Nontaxable securities	1			(15		)	(14		)	—			(33		)	(33		)
Loans:
Residential loans	(130		)	(440		)	(570		)	(229		)	(891		)	(1,120		)
Commercial loans	(816		)	1,171			355			(1,856		)	2,102			246
Consumer loans	51			(182		)	(131		)	79			(337		)	(258		)
Total loans	(895		)	549			(346		)	(2,006		)	874			(1,132		)
Total interest-earning assets	(1,467		)	881			(586		)	(3,247		)	1,591			(1,656		)
Interest Expense:
NOW and money market deposits	(66		)	3			(63		)	(137		)	—			(137		)
Savings accounts	(40		)	2			(38		)	(79		)	11			(68		)
Brokered deposits	(5		)	80			75			(28		)	167			139
Certificates of deposit	(257		)	(213		)	(470		)	(532		)	(492		)	(1,024		)
Total interest-bearing deposits	(368		)	(128		)	(496		)	(776		)	(314		)	(1,090		)
Short-term borrowings	2			10			12			9			30			39
FHLB advances	(646		)	507			(139		)	(1,112		)	721			(391		)
Other borrowed funds	(9		)	(150		)	(159		)	(22		)	(321		)	(343		)
Total borrowings	(653		)	367			(286		)	(1,125		)	430			(695		)
Total interest-bearing liabilities	(1,021		)	239			(782		)	(1,901		)	116			(1,785		)
Net change in net interest income	$	(446	)	$	642		$	196		$	(1,346	)	$	1,475		$	129

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Provision for Loan Losses. The Company recorded a provision (credit) for loan losses of ($783,000) and ($143,000) for the three and six months ended June 30, 2013, respectively, compared to $1.3 million and $2.6 million for the three and six months ended June 30, 2012.  The decrease in provision for the three and six months ended June 30, 2013 was primarily due to: (1) reduced provision related to nonperforming loans; (2) a reduction in nonperforming loans and criticized and classified loans; and (3) a reduction in general reserve loss factors for commercial and industrial loans during the three and six months ended June 30, 2013. The Company has experienced significant growth in its commercial and industrial segment of its loan portfolio since a middle market lending team was hired in the second half of 2009.  Initially, the general reserve loss factors for this segment were based on industry loss data and management judgment.  Beginning in 2012, such loss factors for this segment were based on actual Company loss experience adjusted by qualitative risk adjustment factors.  The strong credit performance of this segment, evidenced by the fact that the Company has experienced no loan charge-offs in this segment since December 31, 2011, has resulted in a decrease in the qualitative risk adjustment factors used in developing the general reserve loss factors during the three months ended June 30, 2013.

The following table provides information with respect to our nonperforming assets at the dates indicated. 

	At June 30, 2013			At December 31, 2012
	(Dollars in thousands)
Nonaccrual Loans:
One- to four-family real estate	$	2,525		$	3,355
Multi-family and commercial real estate	2,978			5,284
Construction	4,305			6,434
Consumer	181			2,051
Commercial and industrial	—			—
Total	9,989			17,124
Accruing loans past due 90 days or more:
Total	$	—		$	—
Nonperforming Loans	9,989			17,124
Assets Acquired Through Foreclosure	9,948			8,524
Total Nonperforming Assets	$	19,937		$	25,648
Total nonperforming loans to total loans	1.40		%	2.46		%
Total nonperforming loans to total assets	0.89			1.57
Total nonperforming assets to total assets	1.78			2.36
Impaired Loans:
Nonperforming loans	$	9,989		$	17,124
Troubled debt restructurings	7,265			7,388
Total impaired loans	$	17,254		$	24,512

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The following tables set forth our nonaccrual loans by state and loan segment at June 30, 2013 and December 31, 2012.

June 30, 2013
	One- to Four- Family Real Estate			Multi Family and Commercial Real Estate									Commercial and Industrial
							Construction			Consumer						Total
	Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount
	(Dollars in thousands)
Pennsylvania	5	$	1,209	3	$	1,486	2	$	4,305	5	$	157	—	$	—	15	$	7,157
New Jersey	5	1,148		2	388		—	—		—	—		—	—		7	1,536
Delaware	1	168		1	1,104		—	—		1	24		—	—		3	1,296
Total	11	$	2,525	6	$	2,978	2	$	4,305	6	$	181	—	$	—	25	$	9,989
December 31, 2012
	One- to Four- Family Real Estate			Multi Family and Commercial Real Estate									Commercial and Industrial
							Construction			Consumer						Total
	Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount		Number of Loans	Amount
	(Dollars in thousands)
Pennsylvania	7	$	1,399	1	$	1,380	2	$	6,434	8	$	189	—	$	—	18	$	9,402
New Jersey	7	1,956		4	2,738		—	—		—	—		—	—		11	4,694
Delaware	—	—		1	1,166		—	—		—	—		—	—		1	1,166
Other	—	—		—	—		—	—		3	1,862		—	—		3	1,862
Total	14	$	3,355	6	$	5,284	2	$	6,434	11	$	2,051	—	$	—	33	$	17,124

At June 30, 2013, nonperforming assets were comprised of the following:

• Two construction loans for residential developments, the largest of which is collateralized by land and improvements associated with a residential housing development located in Chester County, Pennsylvania. The other nonaccrual construction loan is collateralized by a residential housing development located in Montgomery County, Pennsylvania.

• Six multi-family and commercial real estate loans, the largest of which is secured by multi-use rental properties located in Montgomery County, Pennsylvania.

• Eleven one- to four-family loans, the largest of which is secured by a single-family home located in Montgomery County, Pennsylvania.

• Six consumer loans which are secured by second or third lien mortgage positions.

• Assets acquired through foreclosure consisting of five properties and eleven insurance policies, with a total carrying value of $9.9 million.

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The following table provides information about delinquencies in our loan portfolio at the dates indicated.

	At June 30, 2013				At December 31, 2012
	(Unaudited)
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
One- to four-family real estate	$	1,373	$	145	$	18	$	284
Multi-family and commercial real estate	—		168		—		1,691
Construction	—		—		—		—
Consumer	115		10		23		51
Commercial and industrial	130		—		—		—
Total	$	1,618	$	323	$	41	$	2,026

At June 30, 2013, delinquent loans were comprised of eleven different loan relationships.  Total delinquent loans decreased by $126,000 to $1.9 million at June 30, 2013 from $2.1 million at December 31, 2012.

Noninterest Income.  The following table summarizes noninterest income for the three and six months ended June 30, 2013 and 2012. 

	Three Months Ended   June 30,				$			%		Six Months Ended   June 30,				$			%
	2013		2012		Change			Change		2013		2012		Change			Change
	(Dollars in thousands)									(Dollars in thousands)
Service charges and other fee income	$	462	$	385	$	77		20.0	%	$	823	$	774	$	49		6.3	%
Net gain on sale of assets acquired through foreclosure	185		98		87			88.8		181		127		54			42.5
Income on bank-owned life insurance	117		118		(1		)	(0.8	)	233		237		(4		)	(1.7	)
Equity in earnings of affiliate	165		120		45			37.5		335		235		100			42.6
Net gain on sale of investment securities	171		2,340		(2,169		)	(92.7	)	532		2,340		(1,808		)	(77.3	)
Other	39		19		20			105.3		89		61		28			45.9
Total Noninterest Income	$	1,139	$	3,080	$	(1,941	)	(63.0	)%	$	2,193	$	3,774	$	(1,581	)	(41.9	)%

Noninterest income decreased $1.9 million from the three months ended June 30, 2012 compared to the same period in 2013. Net gain on sale of investment securities decreased $2.2 million due to the sale of $72.9 million of investment securities during the three months ended June 30, 2012 compared to the sale of $2.5 million of investment securities during the three months ended June 30, 2013. Offsetting this decrease was an increase in net gain on sale of assets acquired through foreclosure of $87,000. Service charges and other fee income increased $77,000, primarily due to increases in loan-related fees of $30,000 and deposit related fees of $47,000.  Equity in earnings of affiliate increased $45,000 due to increased income on the Bank’s investment in PMA as a result of higher mortgage loan volume. 

Noninterest income decreased $1.6 million from the six months ended June 30, 2012 compared to the same period in 2013. Net gain on sale of investment securities decreased $1.8 million due to the sale of $72.9 million of investment securities during the six months ended June 30, 2012 compared to the sale of $9.1 million of investment securities during the six months ended June 30, 2013. Offsetting this decrease was an increase in equity in earnings of affiliate of $100,000 due to increased income on the Bank’s investment in PMA as a result of higher mortgage loan volume.  Net gain on sale of assets acquired through foreclosure increased $54,000. Service charges and other fee income increased $49,000, primarily due to an increase in deposit related fees of $51,000. 

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Noninterest Expense.  The following table summarizes noninterest expense for the three and six months ended June 30, 2013 and 2012. 

	Three Months Ended June 30,				$			%		Six Months Ended June 30,				$			%
	2013		2012		Change			Change		2013		2012		Change			Change
	(Dollars in thousands)									(Dollars in thousands)
Salaries, benefits and other compensation	$	3,480	$	3,353	$	127		3.8	%	$	6,985	$	6,692	$	293		4.4	%
Occupancy expense	393		420		(27		)	(6.4	)	840		879		(39		)	(4.4	)
Furniture and equipment expense	117		138		(21		)	(15.2	)	241		290		(49		)	(16.9	)
Data processing costs	367		472		(105		)	(22.2	)	765		918		(153		)	(16.7	)
Professional fees	488		489		(1		)	(0.2	)	776		958		(182		)	(19.0	)
Marketing expense	78		106		(28		)	(26.4	)	108		152		(44		)	(28.9	)
FDIC premiums	165		201		(36		)	(17.9	)	350		382		(32		)	(8.4	)
Assets acquired through foreclosure expense	2,810		38		2,772			7,294.7		3,095		153		2,942			1,922.9
Loss on extinguishment of debt	—		3,018		(3,018		)	(100.0	)	—		3,018		(3,018		)	(100.0	)
Other	409		464		(55		)	(11.9	)	822		897		(75		)	(8.4	)
Total Noninterest Expense	$	8,307	$	8,699	$	(392	)	(4.5	)%	$	13,982	$	14,339	$	(357	)	(2.5	)%

Noninterest expense decreased $392,000 from the three months ended June 30, 2012 compared to the same period in 2013. Loss on extinguishment of debt was $3.0 million due to the extinguishment of debt totaling $56.3 million related to the termination of FHLB advances and other borrowed funds during the three months ended June 30, 2012. No debt was extinguished during the three months ended June 30, 2013. Data processing costs decreased $105,000 primarily due to the renegotiation of a data processing contract that became effective in January 2013. These decreases were offset by an increase in assets acquired through foreclosure expense of $2.8 million, which related to an increase in valuation adjustments on assets acquired through foreclosure.  Valuation adjustments on assets acquired through foreclosure totaled $2.8 million for the three months ended June 30, 2013, which was primarily driven by a $2.9 million valuation adjustment on insurance policies as the Company's quarterly valuation incorporated updated life expectations of the insured parties obtained during the three months ended June 30, 2013. No valuation adjustments were recognized during the three months ended June 30, 2012.  Salaries, benefits and other compensation increased $127,000, or 3.8%, for the three months ended June 30, 2013 compared to the three months ended June 30, 2012, primarily as a result of increased staffing costs. 

Noninterest expense decreased $357,000 from the six months ended June 30, 2012 compared to the same period in 2013. Loss on extinguishment of debt was $3.0 million due to the extinguishment of debt totaling $56.3 million during the six months ended June 30, 2012. No debt was extinguished during the six months ended June 30, 2013. Professional fees decreased $182,000 primarily due to lower loan work-out expense. Data processing costs decreased $153,000 primarily due to the renegotiation of a data processing contract that became effective in January 2013. These decreases were offset by an increase in assets acquired through foreclosure expense of $2.9 million, which related to an increase in valuation adjustments on assets acquired through foreclosure.  Valuation adjustments on assets acquired through foreclosure totaled $3.0 million for the six months ended June 30, 2013, which was primarily driven by a $3.2 million valuation adjustment on insurance policies as the Company's quarterly valuations incorporated updated life expectations of the insured parties obtained during the six months ended June 30, 2013. Valuation adjustments on assets acquired through foreclosure for the six months ended June 30, 2012 totaled $45,000.  Salaries, benefits and other compensation increased $293,000, or 4.4%, for the six months ended June 30, 2013 compared to the six months ended June 30, 2012, primarily as a result of increased staffing costs. 

Income Taxes. The income tax provision for the three and six months ended June 30, 2013 was $438,000 and $1.3 million, respectively, compared to $222,000 and $794,000 for the three and six months ended June 30, 2012, respectively.  The Bancorp’s effective income tax rate was 29.6% and 30.6% for the three and six months ended June 30, 2013, respectively, compared to 29.2% and 31.5% for the three and six months ended June 30, 2012, respectively.  These rates reflect the Company’s levels of tax-exempt income for both periods relative to the overall level of taxable income.

39

Liquidity and Capital Management

Liquidity Management.  Liquidity is the ability to meet current and future financial obligations of a short-term nature.  Our primary sources of funds consist of deposit inflows, loan repayments and sales, securities repayments, maturities and sales and funds available from the FHLB and Federal Reserve Bank.  While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit flows and loans and securities sales and prepayments are greatly influenced by general interest rates, economic conditions and competition.

The following table presents certain of our contractual obligations as of June 30, 2013 and December 31, 2012.

			Payments Due by Period
			Less Than One Year		One to Three Years		Three to Five Years		More Than Five Years
Contractual Obligations	Total
	(In thousands)
At June 30, 2013
Operating lease obligations (1)	$	1,113	$	438	$	675	$	—	$	—
FHLB advances and other borrowings (2)	254,195		73,511		85,919		64,487		30,278
Other long-term obligations (3)	3,936		1,674		2,262		—		—
Total	$	259,244	$	75,623	$	88,856	$	64,487	$	30,278
At December 31, 2012
Operating lease obligations (1)	$	1,280	$	399	$	845	$	36	$	—
FHLB advances and other borrowings (2)	225,308		73,517		65,725		55,291		30,775
Other long-term obligations (3)	2,272		1,952		320		—		—
Total	$	228,860	$	75,868	$	66,890	$	55,327	$	30,775

 _________________________________________________________________

(1)Represents lease obligations for operations center, one loan production office and equipment.

(2)Includes principal and projected interest payments.

(3)Represents obligations to the Company’s third party data processing provider (which was extended until December 2015 in January 2013) and other vendors.

We regularly adjust our investments in liquid assets and short-term borrowing position based upon our assessment of: (1) expected loan demand; (2) expected deposit flows; (3) cash flows on our loans and investments; (4) yields available on interest-earning deposits and securities; and (5) the objectives of our asset/liability management policy.  We use a variety of measures to assess our liquidity needs, which are provided to our Asset/Liability Management Committee on a regular basis.  Our policy is to maintain net liquidity of at least 50% of our funding obligations over the next month.  Additionally, our policy is to maintain an amount of cash and short-term marketable securities equal to at least 15% of net deposits and liabilities that will mature in one year or less.

Our most liquid assets are cash and cash equivalents.  The levels of these assets depend on our operating, financing, lending and investing activities during any given period.  At June 30, 2013, cash and cash equivalents totaled $9.1 million.  Securities classified as available-for-sale, which provide additional sources of liquidity, totaled $283.5 million at June 30, 2013.   In addition, at June 30, 2013, we had the ability to borrow a total of approximately $384.4 million from the FHLB of which we had $140.0 million outstanding.  As of June 30, 2013, the Bank also had a maximum borrowing capacity of $53.2 million with the Federal Reserve Bank of Philadelphia, through the Discount Window.  Additionally, as of June 30, 2013, the Bank had overnight borrowing facilities with the FHLB of Pittsburgh and the Federal Reserve Bank as well as federal funds lines of credit with three other commercial banks.

At June 30, 2013, we had $137.6 million in commitments outstanding, which consisted of $16.8 million in home equity and consumer loan commitments, $107.1 million in commercial loan commitments, $13.2 million in standby letters of credit, and $554,000 in commercial letters of credit.

Certificates of deposit due within one year of June 30, 2013 totaled $183.4 million, including $32.6 million of brokered deposits, representing 59.8% of certificates of deposit at June 30, 2013, a decrease from 60.8% at December 31, 2012.  We believe the large percentage of certificates of deposit that mature within one year reflect customers’ hesitancy to invest their funds for long periods in the current low interest rate environment.  If these maturing deposits do not remain with us, we will be required to seek other sources of funds, including other certificates of deposit and borrowings.  Depending on market conditions, we may be required to

40

pay higher rates on such deposits or other borrowings than we currently pay on the certificates of deposit due on or before June 30,2014.

Our primary investing activities are the origination of loans and the purchase and sale of securities.  Our primary financing activities consist of activity in deposit accounts and borrowed funds.  Deposit flows are affected by the overall levels of interest rates, the interest rates and products offered by us and our local competitors and other factors.  We generally manage the pricing of our deposits to be competitive and to increase core deposit relationships.  Occasionally, we offer promotional rates on certain deposit products to attract deposits.

The Bancorp is a separate entity and apart from the Bank and must provide for its own liquidity.  As of June 30, 2013, the Bancorp had $23.9 million in cash and cash equivalents compared to $29.6 million as of December 31, 2012. In addition to its operating expenses, Bancorp may utilize its cash position for the payment of dividends or to repurchase common stock, subject to applicable restrictions.  Bancorp paid a cash dividend of $0.06 per outstanding share of common stock during the first and second quarters of 2013 and repurchased 218,572 shares of common stock during the six months ended June 30, 2013.

The Bancorp can receive dividends from the Bank.  Payment of such dividends to the Bancorp by the Bank is limited under federal law.  The amount that can be paid in any calendar year, without prior regulatory approval, cannot exceed the retained net earnings (as defined) for the year plus the preceding two calendar years.  The Bancorp believes that such restriction will not have an impact on the Bancorp’s ability to meet its ongoing cash obligations.

Capital Management.  The Bank is subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency, including a risk-based capital measure.  The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories.  At June 30, 2013, the Bank exceeded all applicable regulatory capital requirements and was considered a “well capitalized” institution under regulatory guidelines.

The following table presents the Bank’s capital ratios and the minimum capital requirements to be considered ‘‘well capitalized” under applicable regulatory guidelines as of June 30, 2013 and December 31, 2012.

	Ratio	Minimum to be Well Capitalized
June 30, 2013
Total risk-based capital (to risk-weighted assets)	19.98%	>10.0%
Tier 1 capital (to risk-weighted assets)	18.94%	> 6.0%
Tier 1 capital (to adjusted assets)	12.78%	> 5.0%
	Ratio	Minimum to be Well Capitalized
December 31, 2012
Total risk-based capital (to risk-weighted assets)	20.48%	>10.0%
Tier 1 capital (to risk-weighted assets)	19.45%	> 6.0%
Tier 1 capital (to adjusted assets)	12.90%	> 5.0%

Total stockholders’ equity to total assets was 15.5% at June 30, 2013 and 16.7% at December 31, 2012.  As a result of the mutual-to-stock conversion completed in June 2010, the Company has significant capital.  The Company’s financial condition and results of operations have been enhanced by the capital from the offering, resulting in increased net interest-earning assets.  However, the large increase in equity resulting from the capital raised in the conversion has and will continue to have an adverse impact on our return on equity until such funds can be deployed into higher yielding assets.  The Company may rely on capital management tools such as cash dividends and share repurchases as well as improving operating income to increase its return on equity.

The Dodd-Frank Act required the Federal Reserve Board to promulgate consolidated capital requirements for depository institution holding companies, including savings and loan holding companies, that are no less stringent, both quantitatively and in terms of components of capital, than those applicable to institutions themselves. In early July 2013, the Federal Reserve Board and the OCC approved revisions to their capital adequacy guidelines and prompt corrective action rules that implement

41

the revised standards of the Basel Committee on Banking Supervision, commonly called Basel III, and address relevant provisions of the Dodd-Frank Act. “Basel III” refers to two consultative documents released by the Basel Committee on Banking Supervision in December 2009, the rules released in December 2010, and loss absorbency rules issued in January 2011, which include significant changes to bank capital, leverage and liquidity requirements.

The rules include new risk-based capital and leverage ratios, which are effective January 1, 2015, and revise the definition of what constitutes “capital” for calculating those ratios. The proposed new minimum capital level requirements applicable to the Company and the Bank will be: (1) a new common equity Tier 1 capital ratio of 4.5%; (2) a Tier 1 capital ratio of 6% (increased from 4%); (3) a total capital ratio of 8% (unchanged from current rules); and (4) a Tier 1 leverage ratio of 4%. The rules eliminate the inclusion of certain instruments, such as trust preferred securities, from Tier 1 capital. Instruments issued prior to May 19, 2010 will be grandfathered for companies with consolidated assets of $15 billion or less. The rules also establish a “capital conservation buffer” of 2.5% above the new regulatory minimum capital requirements, which must consist entirely of common equity Tier 1 capital and would result in the following minimum ratios: (1) a common equity Tier 1 capital ratio of 7.0%, (2) a Tier 1 capital ratio of 8.5% and (3) a total capital ratio of 10.5%. The new capital conservation buffer requirement will be phased in beginning in January 2016 at 0.625% of risk-weighted assets and will increase by that amount each year until fully implemented in January 2019. An institution would be subject to limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses if its capital level falls below the buffer amount. These limitations establish a maximum percentage of eligible retained income that could be utilized for such actions.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with US generally accepted accounting principles, are not recorded in our financial statements.  These transactions involve, to varying degrees, elements of credit, interest rate and liquidity risk.  Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, letters of credit and lines of credit.

For the period ended June 30, 2013, we did not engage in any off-balance sheet transactions reasonably likely to have a material effect on our financial condition, results of operations or cash flows.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

At June 30, 2013, there has not been any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

Item 4.  Controls and Procedures

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based upon their evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”): (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  In addition, no change in the Company’s internal control over financial reporting occurred during the quarter ended June 30, 2013 that has materially affected, or is reasonably likely to materially effect, Company’s internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

Periodically, there have been various claims and lawsuits against us, such as claims to enforce liens, condemnation proceedings on properties in which we hold security interests, claims involving the making and servicing of real property loans and other issues incident to our business.  We are not a party to any pending legal proceedings that we believe would have a material adverse effect on our financial condition, results of operations or cash flows.

42

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect our business, financial condition or future results. As of June 30, 2013, the risk factors of the Company have not changed materially from those reported in the Company’s Annual Report on Form 10-K. The risks described in our Annual Report on Form 10-K are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides certain information with regard to shares repurchased by the Company in the second quarter of 2013.

Period	Total Number of Shares Purchased	Average Price Paid Per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (1)
April 1, 2013 through April 30, 2013	79,500	$16.76	79,500	346,601
May 1, 2013 through May 31, 2013	30,400	$16.79	30,400	316,201
June 1, 2013 through June 30,  2013	7,672	$16.68	7,672	308,529
Total	117,572	$16.76	117,572

(1)During 2011, the Company announced two repurchase programs under which it would repurchase, in the aggregate, up to 15% of the then-outstanding shares of the Company’s common stock from time to time, depending on market conditions.  On April 25, 2012, the Board of Directors approved an additional stock repurchase plan (the “April 2012 Plan”) under which it would repurchase up to 5% of the then-outstanding shares of the Company’s common stock (637,697 shares).  Under these plans, through June 30, 2013, the Company has purchased a total of 2.5 million shares at a cost of $33.4 million.  The April 2012 Plan will continue until it is completed or terminated by the Company’s Board of Directors.

Item 3.  Defaults upon Senior Securities

Not applicable.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

Not applicable.

Item 6.  Exhibits

3.1		Articles of Incorporation of Fox Chase Bancorp, Inc. (1)
3.2		Bylaws of Fox Chase Bancorp, Inc. (1)
4.0		Stock Certificate of Fox Chase Bancorp, Inc. (1)
31.1		Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0		Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
101.0 *		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Condition, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statement of Changes in Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Consolidated Financial Statements.
(1)	Incorporated by reference to this document from the exhibits to the Company’s Registration Statement on Form S-1 as initially filed with the Securities and Exchange Commission on March 12, 2010.
*	Furnished, not filed.

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SIGNATURES

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

		FOX CHASE BANCORP, INC.
Dated:	August 7, 2013	By:	/s/ Thomas M. Petro
			Thomas M. Petro
			President and Chief Executive Officer
			(principal executive officer)
Dated:	August 7, 2013	By:	/s/ Roger S. Deacon
			Roger S. Deacon
			Chief Financial Officer
			(principal financial officer)

44

EX-31.1

Exhibit 31.1

Certification

I, Thomas M. Petro, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of Fox Chase 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(s) 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 in 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(s) 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 7, 2013	/s/ Thomas M. Petro
		Thomas M. Petro
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Roger S. Deacon, certify that:
1.	I have reviewed this Quarterly Report on Form 10-Q of Fox Chase 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(s) 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 in 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(s) 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 7, 2013	/s/ Roger S. Deacon
		Roger S. Deacon
		Chief Financial Officer

EX-32.0

Exhibit 32.0

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Fox Chase Bancorp, Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2013, as filed with the Securities and Exchange Commission (the “Report”), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of the Company as of and for the period covered by the Report.

By:	/s/ Thomas M. Petro
	Thomas M. Petro
	President and Chief Executive Officer
	August 7, 2013
By:	/s/ Roger S. Deacon
	Roger S. Deacon
	Chief Financial Officer
	August 7, 2013

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STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

During the six months ended June 30, 2013, the Company recorded $507,000 of stock based compensation expense comprised of stock option expense of $198,000 and restricted stock expense of $309,000. This compares to $590,000 of stock based compensation expense comprised of stock option expense of $233,000 and restricted stock expense of $357,000 during the six months ended June 30, 2012.

The following is a summary of the Bancorp’s stock option activity and related information for the six months ended June 30, 2013.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2012	877,669		$	11.57	6.3 years	$	4,461,000
Granted	254,650		17.00
Exercised	(4,608	)	11.11
Forfeited/Cancelled	(100	)	12.94
Outstanding at June 30, 2013	1,127,611		$	12.80	6.7 years	$	4,741,000
Exercisable at June 30, 2013	623,273		$	11.28	4.8 years	$	3,565,000

NOTE 8 - STOCK BASED COMPENSATION (CONTINUED)

The following is a summary of the Company’s unvested options as of June 30, 2013 and the changes therein during the six months then ended.

		Number of Stock Options		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	310,661		$	3.36
Granted		254,650		4.20
Vested		(60,973	)	3.11
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	504,338		$	3.82

Expected future expense relating to the 504,338 non-vested options outstanding as of June 30, 2013 is $1.7 million over a weighted average period of 4.1 years.

The fair value of the options granted in 2013 was estimated to be $4.20.  The fair value was based on the following assumptions:

Expected Dividend Yield	2.22	%
Expected Volatility	31.12	%
Risk-Free Interest Rate	1.19	%
Expected Option Life in Years	6.5

The following is a summary of the status of the Company’s restricted stock as of June 30, 2013 and changes therein during the six months then ended.

		Number of Restricted Shares		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	130,557		$	12.41
Granted		122,450		17.00
Vested		(18,250	)	11.92
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	234,757		$	14.84

Expected future compensation expense relating to the 234,757 restricted shares at June 30, 2013 is $3.1 million over a weighted average period of 4.2 years.

During the six months ended June 30, 2013, the Company granted 39,250 shares of performance based restricted stock to certain executive officers of the Company.

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Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
INTEREST INCOME
Interest and fees on loans	$ 8,016	$ 8,362	$ 16,078	$ 17,210
Interest on mortgage related securities	1,751	1,955	3,489	3,934
Interest on investment securities available-for-sale
Taxable	58	78	129	171
Nontaxable	0	14	0	33
Other interest income	0	2	1	5
Total Interest Income	9,825	10,411	19,697	21,353
INTEREST EXPENSE
Deposits	1,141	1,637	2,318	3,408
Short-term borrowings	17	5	49	10
Federal Home Loan Bank advances	549	688	1,051	1,442
Other borrowed funds	251	410	499	842
Total Interest Expense	1,958	2,740	3,917	5,702
Net Interest Income	7,867	7,671	15,780	15,651
Provision (credit) for loan losses	(783)	1,291	(143)	2,566
Net Interest Income after Provision (Credit) for Loan Losses	8,650	6,380	15,923	13,085
NONINTEREST INCOME
Service charges and other fee income	462	385	823	774
Net gain on sale of assets acquired through foreclosure	185	98	181	127
Income on bank-owned life insurance	117	118	233	237
Equity in earnings of affiliate	165	120	335	235
Net gain on sale of investment securities (includes $171 and $532 for the three and six months ended June 30, 2013, respectively and $2,340 for the three and six months ended June 30, 2012, accumulated other comprehensive income reclassification for unrealized holdings gains)	171	2,340	532	2,340
Other	39	19	89	61
Total Noninterest Income	1,139	3,080	2,193	3,774
NONINTEREST EXPENSE
Salaries, benefits and other compensation	3,480	3,353	6,985	6,692
Occupancy expense	393	420	840	879
Furniture and equipment expense	117	138	241	290
Data processing costs	367	472	765	918
Professional fees	488	489	776	958
Marketing expense	78	106	108	152
FDIC premiums	165	201	350	382
Assets acquired through foreclosure expense	2,810	38	3,095	153
Loss on extinguishment of debt	0	3,018	0	3,018
Other	409	464	822	897
Total Noninterest Expense	8,307	8,699	13,982	14,339
Income Before Income Taxes	1,482	761	4,134	2,520
Income tax provision (includes $63 and $186 for the three and six months ended June 30, 2013, respectively and $863 for the three and six months ended June 30, 2012, income tax expense from reclassification items)	438	222	1,263	794
Net Income	$ 1,044	$ 539	$ 2,871	$ 1,726
Earnings per share:
Basic (in dollars per share)	$ 0.09	$ 0.05	$ 0.25	$ 0.15
Diluted (in dollars per share)	$ 0.09	$ 0.05	$ 0.25	$ 0.15

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

PRINCIPLES OF CONSOLIDATION AND PRESENTATION

PRINCIPLES OF CONSOLIDATION AND PRESENTATION

Fox Chase Bancorp, Inc. (the “Bancorp”) is a Maryland corporation that was incorporated in March 2010 to be the successor corporation to old Fox Chase Bancorp, Inc. (“Old Fox Chase Bancorp”), a federal corporation and the former stock holding company for Fox Chase Bank (the “Bank”), upon completion of the mutual-to-stock conversion of Fox Chase MHC, the former mutual holding company for Fox Chase Bank.

The Bancorp’s primary business is holding the common stock of the Bank and making two loans to the Fox Chase Bank Employee Stock Ownership Plan (the "ESOP").  The Bancorp is authorized to pursue other business activities permissible by laws and regulations for savings and loan holding companies.

The Bancorp and the Bank (collectively referred to as the “Company”) provide a wide variety of financial products and services to individuals and businesses through the Bank’s eleven branches in Philadelphia, Richboro, Willow Grove, Warminster, Lahaska, Hatboro, Media and West Chester, Pennsylvania, and Ocean City, Marmora and Egg Harbor Township, New Jersey.  The operations of the Company are managed as a single business segment.  The Company competes with other financial institutions and other companies that provide financial services.  The Bank also owns approximately 45% of Philadelphia Mortgage Advisors (“PMA”), a mortgage banker located in Plymouth Meeting, Pennsylvania and Ocean City, New Jersey.

The Company is subject to regulations of certain federal banking agencies.  These regulations can and do change significantly from period to period.  The Company also undergoes periodic examinations by regulatory agencies which may subject them to further changes with respect to asset valuations, amounts of required loan loss allowances and operating restrictions resulting from the regulators’ judgments based on information available to them at the time of their examinations.  Pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the regulation and supervision of federal savings institutions, such as the Bank, was transferred from the Office of Thrift Supervision to the Office of the Comptroller of the Currency, the agency that regulates national banks, in July 2011.  As a result, the Office of the Comptroller of the Currency has primary responsibility for examining the Bank and implementing and enforcing many of the laws and regulations applicable to federal savings associations.  In addition, pursuant to the provisions of the Dodd-Frank Act, savings and loan holding companies, such as the Bancorp, are now regulated by the Board of Governors of the Federal Reserve System.

The consolidated financial statements include the accounts of the Bancorp and the Bank.  The Bank’s operations include the accounts of its wholly owned subsidiaries, Fox Chase Financial, Inc., Fox Chase Service Corporation, 104 S. Oakland Ave., LLC and Davisville Associates, LLC.  Fox Chase Financial Inc. is a Delaware-chartered investment holding company and its sole purpose is to manage and hold investment securities.  Fox Chase Service Corporation is a Pennsylvania-chartered company and its purposes are to facilitate the Bank’s investment in PMA and, for regulatory purposes, to hold commercial loans.  At June 30, 2013, Fox Chase Service Corporation held $20.0 million in commercial loans.  104 S. Oakland Ave., LLC is a New Jersey-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  Davisville Associates, LLC is a Pennsylvania-chartered limited liability company formed to secure, manage and hold foreclosed real estate.  All material inter-company transactions and balances have been eliminated in consolidation.  Prior period amounts are reclassified, when necessary, to conform with the current year’s presentation.

During 2013 and 2012, the Bank engaged in certain business activities with PMA.  These activities included providing a warehouse line of credit to PMA, as well as acquiring residential mortgage and home equity loans from PMA.  The Bank recorded interest income from PMA on the warehouse line of $185,000 and $175,000 for the six months ended June 30, 2013 and 2012, respectively, as well as loan satisfaction fees, which are recorded in service charges and other fee income, from PMA of $27,000 and $28,000 for the six months ended June 30, 2013 and 2012, respectively.  In addition, the Bank acquired total loans from PMA of $11.6 million during the six months ended June 30, 2012, which includes the cost of the loans.  The Bank did not acquire any loans from PMA during the six months ended June 30, 2013.

The Company follows accounting principles and reporting practices that are in compliance with U.S. generally accepted accounting principles (“GAAP”).  The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclose contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term

NOTE 1 - PRINCIPLES OF CONSOLIDATION AND PRESENTATION (CONTINUED)

relate to the determination of the allowance for loan losses, the valuation and realizability of deferred tax assets, the evaluation of other-than-temporary impairment and the valuation of investment securities and assets acquired through foreclosure.

These interim financial statements do not contain all necessary disclosures required by GAAP for complete financial statements and therefore should be read in conjunction with the audited financial statements and the notes thereto included in Fox Chase Bancorp, Inc.’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 13, 2013.   These financial statements include all normal and recurring adjustments which management believes were necessary in order to conform to GAAP.  The results for the six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other period.

Per Share Information

Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted-average common shares outstanding during the period.  Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock.  Unallocated shares in the ESOP and shares purchased to fund the Bancorp’s Equity Incentive Plans are not included in either basic or diluted earnings per share.

The following table presents the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Three Months Ended June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
	(Unaudited)
Net income	$	1,044,000		$	539,000		$	2,871,000		$	1,726,000
Weighted-average common shares outstanding (1)	12,184,658			12,671,404			12,254,601			12,775,182
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(594,696		)	(659,744		)	(602,781		)	(667,877		)
Shares purchased by trust	(327,818		)	(387,540		)	(333,035		)	(390,947		)
Weighted-average common shares used to calculate basic earnings per share	11,262,144			11,624,120			11,318,785			11,716,358
Dilutive effect of:
Restricted stock awards	37,713			41,827			36,157			37,668
Stock option awards	189,709			84,676			188,854			72,824
Weighted-average common shares used to calculate diluted earnings per share	11,489,566			11,750,623			11,543,796			11,826,850
Earnings per share-basic	$	0.09		$	0.05		$	0.25		$	0.15
Earnings per share-diluted	$	0.09		$	0.05		$	0.25		$	0.15
Outstanding common stock equivalents having no dilutive effect	1,134,946			947,639			1,137,357			963,650
(1) Excludes treasury stock.

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DEPOSITS (Tables)

6 Months Ended

Jun. 30, 2013

Banking and Thrift [Abstract]

Schedule of components of weighted average interest rate and balance of deposits

Deposits and their respective weighted average interest rate at June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013				December 31, 2012
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	126,702	—	%	$	108,176
NOW accounts	0.22		79,191		0.22		70,199
Money market accounts	0.20		89,146		0.19		97,318
Savings and club accounts	0.13		98,875		0.14		99,046
Brokered deposits	0.47		61,651		0.36		50,637
Certificates of deposit	1.47		245,049		1.59		262,033
	0.62	%	$	700,614	0.70	%	$	687,409

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FAIR VALUE

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

FAIR VALUE

FAIR VALUE

Management uses its best judgment in estimating the fair value of the Company’s financial instruments; however, there are inherent weaknesses in any estimation technique.  Therefore, for substantially all financial instruments, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction on the dates indicated.  The estimated fair value amounts have been measured as of the respective quarter ends, and have not been reevaluated or updated for purposes of these consolidated financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments subsequent to the respective reporting dates may be different than the amounts reported at each quarter end.

The Company determines the fair value of financial instruments using three levels of input:

Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that are accessible at the measurement date.

Level 2—Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, 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 for substantially the full term of the assets or liabilities.

Level 3—Valuations are observed from unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company’s assets and liabilities.  Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company’s disclosures and those of other companies may not be meaningful.  The following methods and assumptions were used to estimate the fair values of the Company’s financial instruments at June 30, 2013 and December 31, 2012:

Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate their fair value.

Investment and Mortgage Related Securities—Available-for-Sale and Held-to-Maturity

Fair values for investment securities and mortgage related securities are obtained from one external pricing service (“primary pricing service”) as the provider of pricing on the investment portfolio on a quarterly basis.  We generally obtain one quote per investment security.  If quoted market prices are not available, fair values are based on quoted market prices of comparable securities.  If quoted market prices are not available for comparable securities, fair value is based on quoted bids for the security or comparable securities.  We review the estimates of fair value provided by the primary pricing service to determine if they are representative of fair value based upon our general knowledge of market conditions and relative changes in interest rates and the credit environment.  The Company made no adjustments to the values obtained from the primary pricing service.

Loans Held for Sale

Loans held for sale are carried the lower of amortized cost or fair value. The fair value of loans held for sale, which equals their amortized cost, is based upon executed sales agreements with third party purchasers.

Loans Receivable, Net

To determine the fair values of loans that are not impaired, we employ discounted cash flow analyses that use interest rates and terms similar to those currently being offered to borrowers.  We do not record loans at fair value on a recurring basis.  We record fair value adjustments to loans on a nonrecurring basis to reflect full and partial charge-offs due to impairment.  For impaired loans, we use a variety of techniques to measure fair value, such as using the current appraised value of the collateral, agreements of sale, discounting the contractual cash flows, and analyzing market data that we may adjust due to specific characteristics of the loan or collateral.

FHLB Stock

The fair value of the FHLB stock is assumed to equal its cost, since the stock is nonmarketable but redeemable at its par value.

NOTE 9 - FAIR VALUE (CONTINUED)

Mortgage Servicing Rights

The fair value of the MSRs for these periods was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Financial Assets Acquired from Debtors

The fair value of financial assets acquired from debtors are determined using valuations obtained from a third party valuation firm who utilizes a discounted cash flow model to calculate the fair value of the assets.  The significant assumptions used in the valuation are the life expectancies of the insured parties, future premium payments and discount rates.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amount of accrued interest receivable and accrued interest payable approximates fair value.

Deposit Liabilities

Fair values for demand deposits (including NOW accounts), savings and club accounts and money market deposits are, by definition, equal to the amount payable on demand at the reporting date.  Fair values of fixed-maturity certificates of deposit, including brokered deposits, are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar instruments with similar maturities.

Short-term Borrowings, FHLB Advances and Other Borrowed Funds

Fair value of short-term borrowings, FHLB advances and other borrowed funds are estimated using discounted cash flow analyses, based on rates currently available to the Bank for advances with similar terms and remaining maturities.

Derivative Contracts

The fair values of derivative contracts are based upon the estimated amount the Company would receive or pay to terminate the contracts or agreements, taking into account underlying interest rates, creditworthiness of underlying customers for credit derivatives and, when appropriate, the creditworthiness of the counterparties.

Off-Balance Sheet Financial Instruments

Fair value of commitments to extend credit are estimated using the fees currently charged to enter into similar agreements, taking into account market interest rates, the remaining terms and present creditworthiness of the counterparties.

NOTE 9 - FAIR VALUE (CONTINUED)

The estimated fair values of the Company’s financial instruments at June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	9,072	$	9,072	$	25,090	$	25,090
Available for sale securities:
Investment securities available-for-sale	Level 2	10,475		10,475		12,491		12,491
Private label commercial mortgage related securities	Level 3	2,191		2,191		6,197		6,197
Agency residential mortgage related securities	Level 2	270,846		270,846		277,419		277,419
Held to maturity securities:
Agency mortgage related securities	Level 2	64,225		63,704		28,369		29,451
Loans held for sale	Level 2	3,157		3,157		—		—
Loans receivable, net	Level 3	701,112		703,233		683,865		686,867
FHLB stock	Level 3	9,610		9,610		8,097		8,097
Accrued interest receivable	Level 3	3,301		3,301		3,223		3,223
Mortgage servicing rights	Level 2	169		169		170		170
Financial assets acquired from debtors	Level 3	3,208		3,208		3,714		3,714
Financial liabilities:
Savings and club accounts	Level 2	98,875		98,875		99,046		99,046
Demand, NOW and money market deposits	Level 2	295,039		295,039		275,693		275,693
Brokered deposits	Level 2	61,651		61,280		50,637		50,715
Certificates of deposit	Level 2	245,049		246,964		262,033		264,694
Short-term borrowings	Level 2	70,300		70,300		70,500		70,500
FHLB advances	Level 2	140,000		143,891		110,000		115,767
Other borrowed funds	Level 2	30,000		32,417		30,000		33,651
Accrued interest payable	Level 2	303		303		330		330
Derivative contracts	Level 2, 3	175		175		320		320

The following financial instruments were classified as Level 3 and carried at fair value as of June 30, 2013:

• Private label CMBS, the fair value of which are difficult to determine because they are not actively traded in securities markets.  The net unrealized gain in the private label CMBS portfolio was $14,000 and $78,000 at June 30, 2013 and December 31, 2012, respectively.

• Two commercial loans, since lending credit risk is not an observable input for these loans (see Note 4).  The unrealized gain on the two loans was $305,000 at June 30, 2013 compared to $293,000 at December 31, 2012.

• Financial assets acquired from debtors, which are valued using a discounted cash flow model which contains significant unobservable inputs.  Losses resulting from changes in fair value, totaling $3.2 million, for the six month period ended June 30, 2013, were recorded in assets acquired through foreclosure expense in the consolidated statements of operations.

• Credit derivatives are valued based on creditworthiness of the underlying borrower which is a significant unobservable input.  The liability resulting from credit derivatives was $7,000 at June 30, 2013 and $12,000 at December 31, 2012.

NOTE 9 - FAIR VALUE (CONTINUED)

The following measures were made on a recurring basis as of June 30, 2013 and December 31, 2012.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	June 30, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available for Sale Securities:
Obligations of U.S. government agencies	$	311		$	—	$	311		$	—
Corporate securities	10,164			—		10,164			—
Private label commercial mortgage related securities	2,191			—		—			2,191
Agency residential mortgage related securities	270,846			—		270,846			—
Loans (1)	2,767			—		—			2,767
Financial assets acquired from debtors	3,208			—		—			3,208
Derivative contracts (1)	(175		)	—		(168		)	(7		)
Total	$	289,312		$	—	$	281,153		$	8,159
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2012			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available for Sale Securities:
Obligations of U.S. government agencies	$	314		$	—	$	314		$	—
Corporate securities	12,177			—		12,177			—
Private label commercial mortgage related securities	6,197			—		—			6,197
Agency residential mortgage related securities	277,419			—		277,419			—
Loans (1)	2,806			—		—			2,806
Financial assets acquired from debtors	3,714			—		—			3,714
Derivative contracts (1)	(320		)	—		(308		)	(12		)
Total	$	302,307		$	—	$	289,602		$	12,705

(1)          Such financial instruments are recorded at fair value as further described in Note 4.

The following measures were made on a non-recurring basis as of June 30, 2013 and December 31, 2012:

Loans, which were partially charged off at June 30, 2013 and December 31, 2012.  The loans’ fair values are based on Level 3 inputs, which are either an appraised value or a sales agreement, less costs to sell.  These amounts do not include fully charged-off loans, because we carry fully charged-off loans at zero on our balance sheet.

MSRs, the fair value of which was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.

Other real estate owned, for which we used Level 3 inputs, which consist of appraisals or agreements of sale.  Other real estate owned is initially recorded on our balance sheet at fair value, net of costs to sell, when we obtain control of the property.

NOTE 9 - FAIR VALUE (CONTINUED)

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description		Balance		(Level 1)		(Level 2)		(Level 3)
As of June 30, 2013	(Unaudited)			(In thousands)
Loans		$	730	$	—	$	—	$	730
Mortgage servicing rights		169		—		169		—
Other real estate owned		6,740		—		—		6,740
Total		$	7,639	$	—	$	169	$	7,470
As of December 31, 2012
Loans		$	2,951	$	—	$	—	$	2,951
Mortgage servicing rights		170		—		170		—
Other real estate owned		4,810		—		—		4,810
Total		$	7,931	$	—	$	170	$	7,761

The following tables include a roll forward of the financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3) for the periods of December 31, 2012 to June 30, 2013 and December 31, 2011 to June 30, 2012.

Six Months Ended June 30, 2013
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012	$	—		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions	—			—			—			1,994			—			1,994
Sales	—			—			—			—			—			—
Payments (received) made	—			(3,939		)	—			667			(51		)	(3,323		)
Premium amortization, net	—			(3		)	—			—			—			(3		)
Decrease/(increase) in value	—			(64		)	5			(3,167		)	12			(3,214		)
Ending balance, June 30, 2013	$	—		$	2,191		$	(7	)	$	3,208		$	2,767		$	8,159
Six Months Ended June 30, 2012
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2011	$	122		$	8,906		$	—		$	—		$	2,877		$	11,905
Purchases/additions	—			—			(13		)	1,789			—			1,776
Sales	(70		)	—			—			—			—			(70		)
Payments received	(7		)	(2,197		)	—			—			(47		)	(2,251		)
Premium amortization, net	—			(7		)	—			—			—			(7		)
Decrease/(increase) in value	(45		)	(24		)	—			—			33			(36		)
Ending balance, June 30, 2012	$	—		$	6,678		$	(13	)	$	1,789		$	2,863		$	11,317

There were no transfers made between levels during the six months ended June 30, 2013 or 2012.

XML

FAIR VALUE (Details) (USD $)	6 Months Ended
	Jun. 30, 2013 item	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Fair Value Disclosures [Abstract]
Number of external pricing service providers	1
Number of quotes per investment security obtained	1
Adjustments to the values obtained from the primary pricing service	$ 0
Financial assets:
Cash and cash equivalents	9,072,000	25,090,000	14,808,000	7,586,000
Investment securities available-for-sale	283,512,000	296,107,000
Mortgage related securities	273,037,000	283,616,000
Held to maturity securities	63,704,000	29,451,000
Federal Home Loan Bank stock	9,610,000	8,097,000
Accrued interest receivable	3,301,000	3,223,000
Mortgage servicing rights	169,000	170,000	244,000	316,000
Financial liabilities:
Savings and club accounts	98,875,000	99,046,000
Accrued interest payable	303,000	330,000
Private label commercial mortgage related securities
Financial assets:
Investment securities available-for-sale	2,191,000	6,197,000
Agency residential mortgage related securities
Financial assets:
Investment securities available-for-sale	270,846,000	277,419,000
Held to maturity securities	63,704,000	29,451,000
Carrying Amount | Level 1
Financial assets:
Cash and cash equivalents	9,072,000	25,090,000
Carrying Amount | Level 2
Financial assets:
Investment securities available-for-sale	10,475,000	12,491,000
Mortgage servicing rights	169,000	170,000
Financial liabilities:
Savings and club accounts	98,875,000	99,046,000
Demand, NOW and money market deposits	295,039,000	275,693,000
Brokered deposits	61,651,000	50,637,000
Certificates of deposit	245,049,000	262,033,000
Short-term borrowings	70,300,000	70,500,000
Federal Home Loan Bank advances	140,000,000	110,000,000
Other borrowed funds	30,000,000	30,000,000
Accrued interest payable	303,000	330,000
Carrying Amount | Level 3
Financial assets:
Loans held for sale	3,157,000	0
Loans receivable, net	701,112,000	683,865,000
Federal Home Loan Bank stock	9,610,000	8,097,000
Accrued interest receivable	3,301,000	3,223,000
Financial assets acquired from debtors	3,208,000	3,714,000
Carrying Amount | Level 2, 3
Financial liabilities:
Derivative contracts	175,000	320,000
Carrying Amount | Private label commercial mortgage related securities | Level 3
Financial assets:
Mortgage related securities	2,191,000	6,197,000
Carrying Amount | Agency residential mortgage related securities | Level 2
Financial assets:
Mortgage related securities	270,846,000	277,419,000
Held to maturity securities	64,225,000	28,369,000
Estimated Fair Value | Level 1
Financial assets:
Cash and cash equivalents	9,072,000	25,090,000
Estimated Fair Value | Level 2
Financial assets:
Investment securities available-for-sale	10,475,000	12,491,000
Mortgage servicing rights	169,000	170,000
Financial liabilities:
Savings and club accounts	98,875,000	99,046,000
Demand, NOW and money market deposits	295,039,000	275,693,000
Brokered deposits	61,280,000	50,715,000
Certificates of deposit	246,964,000	264,694,000
Short-term borrowings	70,300,000	70,500,000
Federal Home Loan Bank advances	143,891,000	115,767,000
Other borrowed funds	32,417,000	33,651,000
Accrued interest payable	303,000	330,000
Estimated Fair Value | Level 3
Financial assets:
Loans held for sale	3,157,000	0
Loans receivable, net	703,233,000	686,867,000
Federal Home Loan Bank stock	9,610,000	8,097,000
Accrued interest receivable	3,301,000	3,223,000
Financial assets acquired from debtors	3,208,000	3,714,000
Estimated Fair Value | Level 2, 3
Financial liabilities:
Derivative contracts	175,000	320,000
Estimated Fair Value | Private label commercial mortgage related securities | Level 3
Financial assets:
Mortgage related securities	2,191,000	6,197,000
Estimated Fair Value | Agency residential mortgage related securities | Level 2
Financial assets:
Mortgage related securities	270,846,000	277,419,000
Held to maturity securities	$ 63,704,000	$ 29,451,000

XML

LOANS (Details 5) (USD $)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2013 loan item	Jun. 30, 2012 loan	Jun. 30, 2013 loan item	Jun. 30, 2012 loan	Dec. 31, 2012 loan
TDR activity
Number of Loans, Restructured Current Year	1	1	1	4
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	$ 450,000	$ 107,000	$ 450,000	$ 919,000
Post-Modification Outstanding Recorded Investment, Restructured Current Year	450,000	107,000	450,000	919,000
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
TDRs additional disclosure
Number of troubled debt restructurings, nonaccrual status	6		6
Number of troubled debt restructurings, included in nonaccrual status and total impaired loans					7
Troubled debt restructurings excluded from accruing TDR	5,000,000		5,000,000		6,900,000
Total TDRs	12,300,000		12,300,000		14,300,000
Number of loans classified as TDRs	13		13		14
Interest on loans
Loans on which accrual of interest has been discontinued	9,989,000		9,989,000		17,124,000
Increase in interest income, if recognized			374,000		1,500,000
Loans past due 90 days or more and still accruing interest	0		0		0
Remaining TDRs [Member]
TDRs additional disclosure
Total TDRs	11,800,000		11,800,000
Number of loans classified as TDRs	12		12
One- to four-family
TDR activity
Number of Loans, Restructured Current Year	1	1	1	3
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	450,000	107,000	450,000	400,000
Post-Modification Outstanding Recorded Investment, Restructured Current Year	450,000	107,000	450,000	400,000
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
Interest on loans
Loans on which accrual of interest has been discontinued	2,525,000		2,525,000		3,355,000
Multi-family and commercial
TDR activity
Number of Loans, Restructured Current Year	0	0	0	1
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	519,000
Post-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	519,000
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
Interest on loans
Loans on which accrual of interest has been discontinued	2,978,000		2,978,000		5,284,000
Construction
TDR activity
Number of Loans, Restructured Current Year	0	0	0	0
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
TDRs additional disclosure
Total TDRs	4,300,000		4,300,000
Number of loans classified as TDRs	2		2		2
Interest on loans
Loans on which accrual of interest has been discontinued	4,305,000		4,305,000		6,434,000
Two construction loans
TDRs additional disclosure
Number of troubled debt restructurings, nonaccrual status	2		2
Troubled debt restructurings excluded from accruing TDR	4,300,000		4,300,000
Commitments to lend additional funds	423,000		423,000
Construction [Member]
TDRs additional disclosure
Total TDRs	6,800,000		6,800,000
Number of loans classified as TDRs	4		4		4
Consumer
TDR activity
Number of Loans, Restructured Current Year	0	0	0	0
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
TDRs additional disclosure
Total TDRs	14,000		14,000
Number of loans classified as TDRs	1		1		1
Interest on loans
Loans on which accrual of interest has been discontinued	181,000		181,000		2,051,000
Commercial and industrial
TDR activity
Number of Loans, Restructured Current Year	0	0	0	0
Pre-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured Current Year	0	0	0	0
Number of Loans Defaulted, Restructured in Prior Twelve Months	0	0	0	0
Post-Modification Outstanding Recorded Investment, Restructured in Prior Twelve Months	0	0	0	0
Interest on loans
Loans on which accrual of interest has been discontinued	0		0		0
Residential loans
TDRs additional disclosure
Total TDRs	696,000		696,000
Number of loans classified as TDRs	5		5		5
Four residential loans
TDRs additional disclosure
Number of troubled debt restructurings, nonaccrual status	4		4
Troubled debt restructurings excluded from accruing TDR	689,000		689,000
One new residential loan
TDRs additional disclosure
Total TDRs	$ 450,000		$ 450,000
Number of loans classified as TDRs	1		1

XML

FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2013

Fair Value Disclosures [Abstract]

Fair value of financial instruments

The estimated fair values of the Company’s financial instruments at June 30, 2013 and December 31, 2012 were as follows:

		June 30, 2013				December 31, 2012
	Fair Value Hierarchy Level	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
		(In thousands)
Financial assets:		(Unaudited)
Cash and cash equivalents	Level 1	$	9,072	$	9,072	$	25,090	$	25,090
Available for sale securities:
Investment securities available-for-sale	Level 2	10,475		10,475		12,491		12,491
Private label commercial mortgage related securities	Level 3	2,191		2,191		6,197		6,197
Agency residential mortgage related securities	Level 2	270,846		270,846		277,419		277,419
Held to maturity securities:
Agency mortgage related securities	Level 2	64,225		63,704		28,369		29,451
Loans held for sale	Level 2	3,157		3,157		—		—
Loans receivable, net	Level 3	701,112		703,233		683,865		686,867
FHLB stock	Level 3	9,610		9,610		8,097		8,097
Accrued interest receivable	Level 3	3,301		3,301		3,223		3,223
Mortgage servicing rights	Level 2	169		169		170		170
Financial assets acquired from debtors	Level 3	3,208		3,208		3,714		3,714
Financial liabilities:
Savings and club accounts	Level 2	98,875		98,875		99,046		99,046
Demand, NOW and money market deposits	Level 2	295,039		295,039		275,693		275,693
Brokered deposits	Level 2	61,651		61,280		50,637		50,715
Certificates of deposit	Level 2	245,049		246,964		262,033		264,694
Short-term borrowings	Level 2	70,300		70,300		70,500		70,500
FHLB advances	Level 2	140,000		143,891		110,000		115,767
Other borrowed funds	Level 2	30,000		32,417		30,000		33,651
Accrued interest payable	Level 2	303		303		330		330
Derivative contracts	Level 2, 3	175		175		320		320

Schedule of fair value measurements on a recurring basis

The following measures were made on a recurring basis as of June 30, 2013 and December 31, 2012.

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	June 30, 2013			(Level 1)		(Level 2)			(Level 3)
	(In thousands, Unaudited)
Available for Sale Securities:
Obligations of U.S. government agencies	$	311		$	—	$	311		$	—
Corporate securities	10,164			—		10,164			—
Private label commercial mortgage related securities	2,191			—		—			2,191
Agency residential mortgage related securities	270,846			—		270,846			—
Loans (1)	2,767			—		—			2,767
Financial assets acquired from debtors	3,208			—		—			3,208
Derivative contracts (1)	(175		)	—		(168		)	(7		)
Total	$	289,312		$	—	$	281,153		$	8,159
				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Other Unobservable Inputs
	As of
Description	December 31, 2012			(Level 1)		(Level 2)			(Level 3)
	(In thousands)
Available for Sale Securities:
Obligations of U.S. government agencies	$	314		$	—	$	314		$	—
Corporate securities	12,177			—		12,177			—
Private label commercial mortgage related securities	6,197			—		—			6,197
Agency residential mortgage related securities	277,419			—		277,419			—
Loans (1)	2,806			—		—			2,806
Financial assets acquired from debtors	3,714			—		—			3,714
Derivative contracts (1)	(320		)	—		(308		)	(12		)
Total	$	302,307		$	—	$	289,602		$	12,705

(1)          Such financial instruments are recorded at fair value as further described in Note 4.

Schedule of fair value measurements on a non-recurring basis

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Unobservable Inputs
Description		Balance		(Level 1)		(Level 2)		(Level 3)
As of June 30, 2013	(Unaudited)			(In thousands)
Loans		$	730	$	—	$	—	$	730
Mortgage servicing rights		169		—		169		—
Other real estate owned		6,740		—		—		6,740
Total		$	7,639	$	—	$	169	$	7,470
As of December 31, 2012
Loans		$	2,951	$	—	$	—	$	2,951
Mortgage servicing rights		170		—		170		—
Other real estate owned		4,810		—		—		4,810
Total		$	7,931	$	—	$	170	$	7,761

Rollforward of Level 3 Fair Value Financial Instruments

The following tables include a roll forward of the financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3) for the periods of December 31, 2012 to June 30, 2013 and December 31, 2011 to June 30, 2012.

Six Months Ended June 30, 2013
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2012	$	—		$	6,197		$	(12	)	$	3,714		$	2,806		$	12,705
Purchases/additions	—			—			—			1,994			—			1,994
Sales	—			—			—			—			—			—
Payments (received) made	—			(3,939		)	—			667			(51		)	(3,323		)
Premium amortization, net	—			(3		)	—			—			—			(3		)
Decrease/(increase) in value	—			(64		)	5			(3,167		)	12			(3,214		)
Ending balance, June 30, 2013	$	—		$	2,191		$	(7	)	$	3,208		$	2,767		$	8,159
Six Months Ended June 30, 2012
	Private Label Residential Mortgage Related Security			Private Label Commercial Mortgage Related Securities			Derivative Contracts			Financial Assets Acquired from Debtors			Loans			Total
	(In thousands, Unaudited)
Beginning balance, December 31, 2011	$	122		$	8,906		$	—		$	—		$	2,877		$	11,905
Purchases/additions	—			—			(13		)	1,789			—			1,776
Sales	(70		)	—			—			—			—			(70		)
Payments received	(7		)	(2,197		)	—			—			(47		)	(2,251		)
Premium amortization, net	—			(7		)	—			—			—			(7		)
Decrease/(increase) in value	(45		)	(24		)	—			—			33			(36		)
Ending balance, June 30, 2012	$	—		$	6,678		$	(13	)	$	1,789		$	2,863		$	11,317

XML

STOCK BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of stock option activity and related information

The following is a summary of the Bancorp’s stock option activity and related information for the six months ended June 30, 2013.

	Number of Stock Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
	(Unaudited)
Outstanding at December 31, 2012	877,669		$	11.57	6.3 years	$	4,461,000
Granted	254,650		17.00
Exercised	(4,608	)	11.11
Forfeited/Cancelled	(100	)	12.94
Outstanding at June 30, 2013	1,127,611		$	12.80	6.7 years	$	4,741,000
Exercisable at June 30, 2013	623,273		$	11.28	4.8 years	$	3,565,000

Summary of unvested options and changes during the period

The following is a summary of the Company’s unvested options as of June 30, 2013 and the changes therein during the six months then ended.

		Number of Stock Options		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	310,661		$	3.36
Granted		254,650		4.20
Vested		(60,973	)	3.11
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	504,338		$	3.82

Schedule of assumptions to determine the fair value of the options

The fair value of the options granted in 2013 was estimated to be $4.20.  The fair value was based on the following assumptions:

Expected Dividend Yield	2.22	%
Expected Volatility	31.12	%
Risk-Free Interest Rate	1.19	%
Expected Option Life in Years	6.5

Summary of the status of the Company's restricted stock activity and balances

The following is a summary of the status of the Company’s restricted stock as of June 30, 2013 and changes therein during the six months then ended.

		Number of Restricted Shares		Weighted Average Grant Date Fair Value
		(Unaudited)
Unvested at	December 31, 2012	130,557		$	12.41
Granted		122,450		17.00
Vested		(18,250	)	11.92
Forfeited / Cancelled		—		—
Unvested at	June 30, 2013	234,757		$	14.84

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BORROWINGS (Details 2) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Other Borrowed Funds
Amount of other borrowings	$ 30,000,000	$ 30,000,000
Interest rate (as a percent)	3.30%
Short-term borrowings	70,300,000	70,500,000
Blended weighted average interest rate (as a percent)	1.55%
3.40% other borrowings, due September 2018
Other Borrowed Funds
Amount of other borrowings	10,000,000
Interest rate (as a percent)	3.40%
3.20% other borrowings, due September 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.20%
3.15% other borrowings, due October 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.15%
3.27% other borrowings, due October 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.27%
3.37% other borrowings, due November 2018
Other Borrowed Funds
Amount of other borrowings	5,000,000
Interest rate (as a percent)	3.37%
Other long-term borrowings
Other Borrowed Funds
Mortgage backed securities pledged as collateral for other borrowed funds	$ 37,300,000
Short-term borrowings
Other Borrowed Funds
Blended weighted average interest rate (as a percent)	0.32%	0.30%

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LOANS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
LOANS
Total loans	$ 711,604	$ 694,772
Deferred loan origination cost, net	6	263
Allowance for loan losses	(10,498)	(11,170)	(11,225)	(12,075)
Net loans	701,112	683,865
Real estate loans:
LOANS
Total loans	548,689	550,367
One- to four-family
LOANS
Total loans	140,439	158,828
Allowance for loan losses	(478)	(642)		(1,760)
Multi-family and commercial
LOANS
Total loans	400,969	368,948
Allowance for loan losses	(6,743)	(6,327)		(6,112)
Construction
LOANS
Total loans	7,281	22,591
Allowance for loan losses	(422)	(873)		(869)
Consumer
LOANS
Total loans	24,388	30,585
Allowance for loan losses	(210)	(232)		(455)
Commercial and industrial
LOANS
Total loans	138,527	113,820
Allowance for loan losses	$ (2,194)	$ (2,630)		$ (2,657)

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LOANS (Details 7) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Past due loans
30 - 59 Days Past Due	$ 1,618	$ 41
60 - 89 Days Past Due	323	2,026
One- to four-family
Past due loans
30 - 59 Days Past Due	1,373	18
60 - 89 Days Past Due	145	284
Multi-family and commercial
Past due loans
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	168	1,691
Construction
Past due loans
30 - 59 Days Past Due	0	0
60 - 89 Days Past Due	0	0
Consumer
Past due loans
30 - 59 Days Past Due	115	23
60 - 89 Days Past Due	10	51
Commercial and industrial
Past due loans
30 - 59 Days Past Due	130	0
60 - 89 Days Past Due	$ 0	$ 0

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FAIR VALUE (Details 2) (USD $)						6 Months Ended					6 Months Ended				12 Months Ended	6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2013 Loans item	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3)	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3)	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Dec. 31, 2012 Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3) Private label residential mortgage related security	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3) Private label residential mortgage related security	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3) Loans	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2012 Significant Other Unobservable Inputs (Level 3) Loans	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3) Financial assets acquired from debtors	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3) Financial assets acquired from debtors	Jun. 30, 2013 Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Jun. 30, 2012 Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Jun. 30, 2013 Recurring basis Balance	Dec. 31, 2012 Recurring basis Balance	Jun. 30, 2013 Recurring basis Balance Obligations of U.S. government agencies	Dec. 31, 2012 Recurring basis Balance Obligations of U.S. government agencies	Jun. 30, 2013 Recurring basis Balance Corporate securities	Dec. 31, 2012 Recurring basis Balance Corporate securities	Jun. 30, 2013 Recurring basis Balance Private label commercial mortgage related securities	Dec. 31, 2012 Recurring basis Balance Private label commercial mortgage related securities	Jun. 30, 2013 Recurring basis Balance Agency residential mortgage related securities	Dec. 31, 2012 Recurring basis Balance Agency residential mortgage related securities	Jun. 30, 2013 Recurring basis Balance Loans	Dec. 31, 2012 Recurring basis Balance Loans	Jun. 30, 2013 Recurring basis Balance Derivatives contracts	Dec. 31, 2012 Recurring basis Balance Derivatives contracts	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Obligations of U.S. government agencies	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Obligations of U.S. government agencies	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Corporate securities	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Corporate securities	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Private label commercial mortgage related securities	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Private label commercial mortgage related securities	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Agency residential mortgage related securities	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Agency residential mortgage related securities	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Jun. 30, 2013 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Derivatives contracts	Dec. 31, 2012 Recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Derivatives contracts	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2)	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2)	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Obligations of U.S. government agencies	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Obligations of U.S. government agencies	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Corporate securities	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Corporate securities	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Private label commercial mortgage related securities	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Private label commercial mortgage related securities	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Agency residential mortgage related securities	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Agency residential mortgage related securities	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Loans	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Loans	Jun. 30, 2013 Recurring basis Significant Other Observable Inputs (Level 2) Derivatives contracts	Dec. 31, 2012 Recurring basis Significant Other Observable Inputs (Level 2) Derivatives contracts	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3)	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3)	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Obligations of U.S. government agencies	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Obligations of U.S. government agencies	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Corporate securities	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Corporate securities	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Private label commercial mortgage related securities	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Agency residential mortgage related securities	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Agency residential mortgage related securities	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Jun. 30, 2013 Recurring basis Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Dec. 31, 2012 Recurring basis Significant Other Unobservable Inputs (Level 3) Derivatives contracts	Jun. 30, 2013 Non-recurring basis Balance	Dec. 31, 2012 Non-recurring basis Balance	Jun. 30, 2013 Non-recurring basis Balance Loans	Dec. 31, 2012 Non-recurring basis Balance Loans	Jun. 30, 2013 Non-recurring basis Balance Other real estate owned	Dec. 31, 2012 Non-recurring basis Balance Other real estate owned	Jun. 30, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Dec. 31, 2012 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1)	Jun. 30, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Dec. 31, 2012 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Loans	Jun. 30, 2013 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Other real estate owned	Dec. 31, 2012 Non-recurring basis Quoted Prices in Active Markets for Identical Assets (Level 1) Other real estate owned	Jun. 30, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2)	Dec. 31, 2012 Non-recurring basis Significant Other Observable Inputs (Level 2)	Jun. 30, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2) Loans	Dec. 31, 2012 Non-recurring basis Significant Other Observable Inputs (Level 2) Loans	Jun. 30, 2013 Non-recurring basis Significant Other Observable Inputs (Level 2) Other real estate owned	Dec. 31, 2012 Non-recurring basis Significant Other Observable Inputs (Level 2) Other real estate owned	Jun. 30, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3)	Dec. 31, 2012 Non-recurring basis Significant Other Unobservable Inputs (Level 3)	Jun. 30, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Dec. 31, 2012 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Loans	Jun. 30, 2013 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Other real estate owned	Dec. 31, 2012 Non-recurring basis Significant Other Unobservable Inputs (Level 3) Other real estate owned
Fair value measurement
Net unrealized gain	$ 3,058,000	$ 7,206,000						$ 14,000		$ 78,000
Number of loans					2
Unrealized gain on loans													305,000		293,000
Losses resulting from changes in fair value						(3,214,000)	(36,000)	(64,000)	(24,000)		0	(45,000)	12,000	33,000		(3,167,000)	0	5,000	0
Liabilities																																175,000	320,000													0	0													168,000	308,000													7,000	12,000
Fully charged off loans balance sheet value																																																																																																0
Investment securities available-for-sale	283,512,000	296,107,000																				311,000	314,000	10,164,000	12,177,000	2,191,000	6,197,000	270,846,000	277,419,000							0	0	0	0	0	0	0	0							311,000	314,000	10,164,000	12,177,000	0	0	270,846,000	277,419,000							0	0	0	0	2,191,000	6,197,000	0	0
Financial assets acquired from debtors																				3,208,000	3,714,000													0	0													0	0													3,208,000	3,714,000
Assets																				289,312,000	302,307,000									2,767,000	2,806,000			0	0									0	0			281,153,000	289,602,000									0	0			8,159,000	12,705,000									2,767,000	2,806,000			7,639,000	7,931,000	730,000	2,951,000	6,740,000	4,810,000	0	0	0	0	0	0	169,000	170,000	0	0	0	0	7,470,000	7,761,000	730,000	2,951,000	6,740,000	4,810,000
Mortgage servicing rights	$ 169,000	$ 170,000	$ 244,000	$ 316,000																																																																								$ 169,000	$ 170,000					$ 0	$ 0					$ 169,000	$ 170,000					$ 0	$ 0

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 2) (USD $)	3 Months Ended	6 Months Ended
	Jun. 30, 2013 security	Jun. 30, 2013 security	Dec. 31, 2012
INVESTMENT AND MORTGAGE RELATED SECURITIES
Temporarily Impaired Investments Continuous Unrealized Loss Position Aggregate Losses 1	$ 7,852,000	$ 7,852,000	$ 186,000
Net unrealized loss	6,760,000	6,760,000	186,000
Amortized Cost	287,214,000	287,214,000	289,087,000
Net unrealized gain	3,058,000	3,058,000	7,206,000
Fair Value of securities impaired greater than twelve months	2,977,000	2,977,000	2,879,000
Fair Value of securities impaired less than twelve months	225,297,000	225,297,000	29,092,000
Mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Number of securities sold	4	7
Amortized cost of securities sold	2,500,000	9,000,000
Recognized gains (losses)	171,000	532,000
Net unrealized loss	6,735,000	6,735,000	65,000
Amortized Cost	276,747,000	276,747,000	276,580,000
Net unrealized gain	3,025,000	3,025,000	7,101,000
Fair Value of securities impaired greater than twelve months	0	0	0
Fair Value of securities impaired less than twelve months	222,700,000	222,700,000	29,092,000
Corporate securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Net unrealized loss	25,000	25,000	121,000
Amortized Cost	10,167,000	10,167,000	12,207,000
Net unrealized gain	22,000	22,000	91,000
Fair Value of securities impaired greater than twelve months	2,977,000	2,977,000	2,879,000
Fair Value of securities impaired less than twelve months	2,597,000	2,597,000	0
Corporate securities | Baa2
INVESTMENT AND MORTGAGE RELATED SECURITIES
Net unrealized loss	23,000	23,000
Number of Corporate Debt Securities	1	1
Fair Value of securities impaired greater than twelve months	3,000,000	3,000,000
Corporate securities | A2
INVESTMENT AND MORTGAGE RELATED SECURITIES
Net unrealized loss	2,000	2,000
Number of Corporate Debt Securities	1	1
Fair Value of securities impaired less than twelve months	2,600,000	2,600,000
Agency residential mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Net unrealized loss	6,735,000	6,735,000	65,000
Number of Agency Residential Mortgage Related Securities	96	96
Mortgage Related Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	262,691,000	262,691,000
Mortgage Related Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Gross Unrealized Loss	7,827,000	7,827,000
Amortized Cost	274,570,000	274,570,000	270,461,000
Net unrealized gain	3,011,000	3,011,000	7,023,000
Fair Value of securities impaired greater than twelve months	0	0	0
Fair Value of securities impaired less than twelve months	222,700,000	222,700,000	29,092,000
Private label commercial mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Net unrealized loss	0	0	0
Amortized Cost	2,177,000	2,177,000	6,119,000
Number of securities held	2	2	3
Net unrealized gain	14,000	14,000	78,000
Fair Value of securities impaired greater than twelve months	0	0	0
Fair Value of securities impaired less than twelve months	$ 0	$ 0	$ 0

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MORTGAGE SERVICING ACTIVITY (Details) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Mortgage servicing activity
Unpaid principal balances of loans serviced for others	$ 30,800,000	$ 41,800,000	$ 36,600,000
Fees, net of amortization, from the servicing of loans	(2,800)	(11,600)
Servicing Rights
Balance at the beginning of the period	325,000	455,000
Amortization	(42,000)	(74,000)
Balance at the end of the period	283,000	381,000
Valuation Allowance
Balance at the beginning of the period	(155,000)	(139,000)
Reductions	41,000	2,000
Balance at the end of the period	(114,000)	(137,000)
Net Carrying Value
Balance at the beginning of the period	170,000	316,000
Reductions	(41,000)	2,000
Amortization	(42,000)	(74,000)
Balance at the end of the period	169,000	244,000
Mortgage servicing rights
Net Carrying Value
Fair value of MSRs	$ 169,000	$ 245,000	$ 170,000

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BORROWINGS (Tables)

6 Months Ended

Jun. 30, 2013

BORROWINGS

Schedule of FHLB advances

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
(In thousands, Unaudited)
August 2014	$	10,000	0.52	%	Not Applicable	Not Applicable
September 2014	15,000		0.41	%	Not Applicable	Not Applicable
December 2014	15,000		0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49	%	Not Applicable	Not Applicable
April 2015	10,000		0.45	%	Not Applicable	Not Applicable
August 2015	10,000		0.68	%	Not Applicable	Not Applicable
March 2016	10,000		0.62	%	Not Applicable	Not Applicable
September 2016	5,000		0.75	%	Not Applicable	Not Applicable
June 2017	5,000		0.94	%	Not Applicable	Not Applicable
November 2017	15,000		3.62	%	August 2013	LIBOR + 0.10%
November 2017	15,000		3.87	%	August 2013	LIBOR + 0.10%
December 2017	20,000		2.83	%	September 2013	LIBOR + 0.11%
	$	140,000	1.55	%

Schedule of other long-term borrowings

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20	%	Not Applicable	Not Applicable
October 2018	5,000		3.15	%	July 2013	Quarterly
October 2018	5,000		3.27	%	Not Applicable	Not Applicable
November 2018	5,000		3.37	%	November 2013	Not Applicable
	$	30,000	3.30	%

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Statement of Other Comprehensive Income [Abstract]
Net income	$ 1,044	$ 539	$ 2,871	$ 1,726
Other comprehensive (loss) income:
Unrealized holding (losses) gains on securities available for sale	(7,490)	27	(10,188)	(172)
Tax Effect	2,633	6	3,585	70
Net of Tax Amount	(4,857)	33	(6,603)	(102)
Reclassification adjustments for net investment securities gains included in net income	(171)	(2,426)	(532)	(2,426)
Tax Effect	63	863	186	863
Net of Tax Amount	(108)	(1,563)	(346)	(1,563)
Reclassification adjustment for loss included in net income for other-than temporary impaired investment sold, net	0	86	0	86
Tax Effect	0	(33)	0	(33)
Net of Tax Amount	0	53	0	53
Other comprehensive loss	(4,965)	(1,477)	(6,949)	(1,612)
Comprehensive (loss) income	$ (3,921)	$ (938)	$ (4,078)	$ 114

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Consolidated Statements of Changes in Equity (Parenthetical) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Statement of Stockholders' Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.12	$ 0.08

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INVESTMENT AND MORTGAGE RELATED SECURITIES

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

INVESTMENT AND MORTGAGE RELATED SECURITIES

INVESTMENT AND MORTGAGE RELATED SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of June 30, 2013 and December 31, 2012 are summarized as follows: 

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	11	$	—		$	—	$	311
Corporate securities	10,167		22		(25		)	—		10,164
	10,467		33		(25		)	—		10,475
Private label commercial mortgage related securities	2,177		14		—			—		2,191
Agency residential mortgage related securities	274,570		3,011		(6,735		)	—		270,846
Total mortgage related securities	276,747		3,025		(6,735		)	—		273,037
Total available-for-sale securities	$	287,214	$	3,058	$	(6,760	)	$	—	$	283,512
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
Total mortgage related securities	64,225		571		(1,092		)	—		63,704
Total held-to-maturity securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	14	$	—		$	—	$	314
Corporate securities	12,207		91		(121		)	—		12,177
	12,507		105		(121		)	—		12,491
Private label commercial mortgage related securities	6,119		78		—			—		6,197
Agency residential mortgage related securities	270,461		7,023		(65		)	—		277,419
Total mortgage related securities	276,580		7,101		(65		)	—		283,616
Total available-for-sale securities	$	289,087	$	7,206	$	(186	)	$	—	$	296,107
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	28,369	$	1,082	$	—		$	—	$	29,451
Total mortgage related securities	28,369		1,082		—			—		29,451
Total held-to-maturity securities	$	28,369	$	1,082	$	—		$	—	$	29,451

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	2,597		(2		)	2,977		(23		)	5,574		(25		)
	2,597		(2		)	2,977		(23		)	5,574		(25		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total available-for-sale securities	$	225,297	$	(6,737	)	$	2,977	$	(23	)	$	228,274	$	(6,760	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total held-to-maturity securities	$	39,991	$	(1,092	)	$	—	$	—		$	39,991	$	(1,092	)
Total Temporarily Impaired Securities	$	265,288	$	(7,829	)	$	2,977	$	(23	)	$	268,265	$	(7,852	)
	At December 31, 2012
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,879		(121		)	2,879		(121		)
	—		—			2,879		(121		)	2,879		(121		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total available-for-sale securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	—		—			—		—			—		—
Total mortgage related securities	—		—			—		—			—		—
Total held-to-maturity securities	$	—	$	—		$	—	$	—		$	—	$	—
Total Temporarily Impaired Securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

During the three months ended June 30, 2013, the Company sold four mortgage related securities with an amortized cost of $2.5 million and recognized gross gains of $171,000. During the six months ended June 30, 2013, the Company sold seven mortgage related securities with an amortized cost of $9.0 million and recognized gross gains of $532,000.

The Company evaluates a variety of factors when concluding whether a security is other-than-temporarily impaired.  These factors include, but are not limited to, the type and purpose of the security, the underlying rating of the issuer, and the presence of credit enhancements.

At June 30, 2013, gross unrealized losses totaled $7.9 million .  One corporate security, with a fair value of $3.0 million and an unrealized loss position of $23,000, had an unrealized loss position for twelve months or longer as of June 30, 2013.  This security has a rating of “Baa2”.  The remaining securities in an unrealized loss position at June 30, 2013 have been in an unrealized loss position for less than twelve months.  These securities consist of: 1) one corporate security with a fair value of $2.6 million, unrealized loss of $2,000 and a rating of "A2" and 2) 96 agency residential mortgage related securities whose fair value primarily fluctuates with changes in market conditions for the underlying securities and changes in the interest rate environment.  The fair value of these agency residential mortgage related securities totaled $262.7 million and the unrealized loss totaled $7.8 million. The Company does not intend to sell the securities in an unrealized loss position and it is not more likely than not that it will be required to sell these securities before a recovery of fair value, which may be maturity.  Upon review of the attributes of the individual securities, the Company concluded these securities were not other-than-temporarily impaired.

As of June 30, 2013, the Company held two private label commercial mortgage related securities ("CMBS") with an amortized cost of $2.2 million.  These securities had a net unrealized gain of $14,000 at June 30, 2013 and both individual securities were held at an unrealized gain.  As of December 31, 2012, the Company held three private label CMBS with an amortized cost of $6.1 million.  These securities had a net unrealized gain of $78,000 at December 31, 2012 and all individual securities were held at an unrealized gain.

The Company evaluates current characteristics of each of these private label securities such as delinquency and foreclosure levels, credit enhancement, projected losses, coverage and actual and projected cash flows, on a quarterly basis.  It is possible that the underlying collateral of these securities will perform worse than current expectations, which may lead to adverse changes in cash flows on these securities and potential future other-than-temporary impairment losses.  Events that may trigger material declines in fair values for these securities in the future would include but are not limited to deterioration of credit metrics, significantly higher levels of default and severity of loss on the underlying collateral, deteriorating credit enhancement and loss coverage ratios, or further illiquidity.

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The following schedules provide a summary of the components of net investment securities gains (losses) in the Company’s consolidated statements of operations for the three and six month periods ended June 30, 2013 and 2012.

	Three Months Ended June 30, 2013												Six Months Ended June 30, 2013
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—
Corporate securities	—		—			—		—		—			—		—			—		—		—
	—		—			—		—		—			—		—			—		—		—
Private label residential mortgage related security	—		—			—		—		—			—		—			—		—		—
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total securities available-for-sale	$	171	$	—		$	—	$	—	$	171		$	532	$	—		$	—	$	—	$	532
	Three Months Ended June 30, 2012												Six Months Ended June 30, 2012
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	64	$	—		$	—	$	—	$	64		$	64	$	—		$	—	$	—	$	64
Corporate securities	—		—			—		—		—			—		—			—		—		—
	64		—			—		—		64			64		—			—		—		64
Private label residential mortgage related security	—		(87		)	—		—		(87		)	—		(87		)	—		—		(87		)
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	2,363		—			—		—		2,363			2,363		—			—		—		2,363
Total mortgage related securities	2,363		(87		)	—		—		2,276			2,363		(87		)	—		—		2,276
Total securities available-for-sale	$	2,427	$	(87	)	$	—	$	—	$	2,340		$	2,427	$	(87	)	$	—	$	—	$	2,340

NOTE 2 - INVESTMENT AND MORTGAGE RELATED SECURITIES (CONTINUED)

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at June 30, 2013 and December 31, 2012 by contractual maturity are as follows:

		Available for Sale				Held to Maturity
		Amortized Cost		Fair Value		Amortized Cost		Fair Value
		(In thousands)
June 30, 2013	(Unaudited)
Due in one year or less		$	1,975	$	1,995	$	—	$	—
Due after one year through five years		8,492		8,480		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,747		273,037		64,225		63,704
		$	287,214	$	283,512	$	64,225	$	63,704
At December 31, 2012
Due in one year or less		$	2,019	$	2,032	$	—	$	—
Due after one year through five years		10,488		10,459		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,580		283,616		28,369		29,451
		$	289,087	$	296,107	$	28,369	$	29,451

Securities with a carrying value of $8.5 million and $8.3 million at June 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

Securities with a carrying value of $37.3 million and $46.6 million at June 30, 2013 and December 31, 2012, respectively, were used to secure other borrowed funds.   See Note 7.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Cash Flows From Operating Activities
Net income	$ 2,871	$ 1,726
Adjustments to reconcile net income to net cash provided by operating activities:
Provision (credit) for loan losses	(143)	2,566
Valuation adjustment for assets acquired through foreclosure	2,991	45
Depreciation	396	430
Net amortization of securities premiums and discounts	1,451	1,424
(Benefit) provision for deferred income taxes	(637)	685
Stock compensation from benefit plans	1,054	1,011
Net gain on sale of assets acquired through foreclosure	(181)	(127)
Net gains on sales of investment securities	(532)	(2,340)
Income on bank-owned life insurance	(233)	(237)
Excess tax benefit from exercise of stock options and vesting of restricted stock	(35)	0
Decrease in mortgage servicing rights, net	1	72
Decrease (increase) in accrued interest receivable and other assets	912	(565)
(Decrease) increase in accrued interest payable, accrued expenses and other liabilities	(1,050)	125
Net Cash Provided by Operating Activities	6,865	4,815
Investment securities - available-for-sale:
Proceeds from sales	0	6,157
Proceeds from maturities, calls and principal repayments	2,000	8,516
Mortgage related securities – available-for-sale:
Purchases	(49,821)	(122,835)
Proceeds from sales	9,517	69,067
Proceeds from maturities, calls and principal repayments	39,597	35,041
Mortgage related securities - held-to-maturity:
Purchases	(41,354)	0
Proceeds from maturities, calls and principal repayments	5,321	5,714
Net (increase) decrease in loans	(5,499)	16,280
Purchases of loans and loan participations	(19,955)	(11,753)
Net (increase) decrease in Federal Home Loan Bank stock	(1,513)	787
Purchases of premises and equipment	(54)	(505)
Additions to assets acquired through foreclosure	(703)	(35)
Proceeds from sales and payments on assets acquired through foreclosure	1,459	1,126
Net Cash (Used in) Provided by Investing Activities	(61,005)	7,560
Cash Flows from Financing Activities
Net increase in deposits	13,205	52,909
Increase in advances from borrowers for taxes and insurance	132	415
Principal payments on other borrowed funds	0	(20,000)
Proceeds from Federal Home Loan Bank advances	30,000	0
Principal payments on Federal Home Loan Bank advances	0	(38,278)
Net (decrease) increase in short-term borrowings	(200)	6,500
Tax benefit from exercise of stock options and vesting of restricted stock	35	0
Common stock issued for exercise of stock options	51	203
Purchase of treasury stock	(3,703)	(5,934)
Cash dividends paid	(1,398)	(968)
Net Cash Provided by (Used in) Financing Activities	38,122	(5,153)
Net (Decrease) Increase in Cash and Cash Equivalents	(16,018)	7,222
Cash and Cash Equivalents – Beginning	25,090	7,586
Cash and Cash Equivalents – Ending	9,072	14,808
Supplemental Disclosure of Cash Flow Information
Interest paid	3,944	5,883
Income taxes paid	1,400	1,440
Transfers of loans to assets acquired through foreclosure	4,990	6,751
Transfer of loans to loans held for sale	3,157	0
Net charge-offs	$ 529	$ 3,416

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LOANS (Details 8) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013 item	Dec. 31, 2012
Criticized and classified loans by segment
Total criticized and classified loans	$ 711,604	$ 694,772
Number of primary classification for loans	6
Number of classifications for problem loans	3
Minimum number of defined weaknesses for substandard loans	1
One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	140,439	158,828
Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	400,969	368,948
Construction
Criticized and classified loans by segment
Total criticized and classified loans	7,281	22,591
Consumer
Criticized and classified loans by segment
Total criticized and classified loans	24,388	30,585
Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	138,527	113,820
Pass and Pass watch
Criticized and classified loans by segment
Total criticized and classified loans	681,174	657,346
Pass and Pass watch | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	137,914	155,473
Pass and Pass watch | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	379,715	347,150
Pass and Pass watch | Construction
Criticized and classified loans by segment
Total criticized and classified loans	2,976	16,157
Pass and Pass watch | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	24,207	28,534
Pass and Pass watch | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	136,362	110,032
Special mention loans
Criticized and classified loans by segment
Total criticized and classified loans	16,262	10,366
Special mention loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Special mention loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	14,097	6,733
Special mention loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Special mention loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Special mention loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	2,165	3,633
Substandard loans
Criticized and classified loans by segment
Total criticized and classified loans	14,168	27,060
Substandard loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	2,525	3,355
Substandard loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	7,157	15,065
Substandard loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	4,305	6,434
Substandard loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	181	2,051
Substandard loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	0	155
Doubtful loans
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | One- to four-family
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Multi-family and commercial
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Construction
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Consumer
Criticized and classified loans by segment
Total criticized and classified loans	0	0
Doubtful loans | Commercial and industrial
Criticized and classified loans by segment
Total criticized and classified loans	$ 0	$ 0

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2013 item	Jun. 30, 2012	Jun. 30, 2013 loan item	Jun. 30, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of branches	11		11
Loans receivable
Interest income	$ 8,016,000	$ 8,362,000	$ 16,078,000	$ 17,210,000
Number of loans to the ESOP by Bancorp			2
Fox Chase Service Corporation | Loans | Commercial loans
Loans receivable
Commercial loans held	20,000,000		20,000,000
PMA
Loans receivable
Ownership (as a percent)	45.00%		45.00%
PMA | Warehouse line of credit
Loans receivable
Interest income			185,000	175,000
Loan satisfaction fees recorded in service charges and other fee income			27,000	28,000
PMA | Loans
Loans receivable
Total loans acquired			$ 0	$ 11,600,000

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Gains	$ 171	$ 2,427	$ 532	$ 2,427
Gross Realized Losses		(87)		(87)
Net Gains (Losses)	171	2,340	532	2,340
Mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Gains	171	2,363	532	2,363
Gross Realized Losses		(87)		(87)
Net Gains (Losses)	171	2,276	532	2,276
Agency residential mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Gains	171	2,363	532	2,363
Net Gains (Losses)	171	2,363	532	2,363
Private label residential mortgage related security
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Losses		(87)		(87)
Net Gains (Losses)		(87)		(87)
Debt securities excluding mortgage related securities
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Gains		64		64
Net Gains (Losses)		64		64
Obligations of U.S. government agencies
INVESTMENT AND MORTGAGE RELATED SECURITIES
Gross Realized Gains		64		64
Net Gains (Losses)		$ 64		$ 64

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LOANS (Details 4) (USD $)	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Impaired loans by loan segment
Nonaccrual Loans	$ 9,989,000		$ 17,124,000
Accruing TDRs	7,265,000		7,388,000
Other Impaired Loans	0		0
Total Impaired Loans	17,254,000		24,512,000
Impaired Loans with Allowance	16,775,000		22,269,000
Impaired Loans without Allowance	479,000		2,243,000
Average recorded investment in impaired loans	18,400,000	27,100,000
Interest income recognized on impaired loans	211,000	168,000
One- to four-family
Impaired loans by loan segment
Nonaccrual Loans	2,525,000		3,355,000
Accruing TDRs	457,000		507,000
Other Impaired Loans	0		0
Total Impaired Loans	2,982,000		3,862,000
Impaired Loans with Allowance	2,900,000		3,862,000
Impaired Loans without Allowance	82,000		0
Multi-family and commercial
Impaired loans by loan segment
Nonaccrual Loans	2,978,000		5,284,000
Accruing TDRs	6,794,000		6,867,000
Other Impaired Loans	0		0
Total Impaired Loans	9,772,000		12,151,000
Impaired Loans with Allowance	9,416,000		11,770,000
Impaired Loans without Allowance	356,000		381,000
Construction
Impaired loans by loan segment
Nonaccrual Loans	4,305,000		6,434,000
Accruing TDRs	0		0
Other Impaired Loans	0		0
Total Impaired Loans	4,305,000		6,434,000
Impaired Loans with Allowance	4,305,000		6,434,000
Impaired Loans without Allowance	0		0
Consumer
Impaired loans by loan segment
Nonaccrual Loans	181,000		2,051,000
Accruing TDRs	14,000		14,000
Other Impaired Loans	0		0
Total Impaired Loans	195,000		2,065,000
Impaired Loans with Allowance	154,000		203,000
Impaired Loans without Allowance	41,000		1,862,000
Commercial and industrial
Impaired loans by loan segment
Nonaccrual Loans	0		0
Accruing TDRs	0		0
Other Impaired Loans	0		0
Total Impaired Loans	0		0
Impaired Loans with Allowance	0		0
Impaired Loans without Allowance	$ 0		$ 0

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FAIR VALUE (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Liabilities transferred between the three levels of the fair value hierarchy	$ 0	$ 0
Assets transferred between the three levels of the fair value hierarchy	0	0
Unobservable Inputs (Level 3)
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	12,705	11,905
Purchases/ additions	(1,994)	(1,776)
Sales	0	70
Payments (received) made	3,323	2,251
Premium amortization, net	3	7
Increase/(decrease) in value	(3,214)	(36)
Ending balance	8,159	11,317
Unobservable Inputs (Level 3) | Private label residential mortgage related security
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	0	122
Purchases/ additions	0	0
Sales	0	(70)
Payments (received) made	0	(7)
Premium amortization, net	0	0
Increase/(decrease) in value	0	(45)
Ending balance	0	0
Unobservable Inputs (Level 3) | Private label commercial mortgage related securities
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	6,197	8,906
Purchases/ additions	0	0
Sales	0	0
Payments (received) made	(3,939)	(2,197)
Premium amortization, net	(3)	(7)
Increase/(decrease) in value	(64)	(24)
Ending balance	2,191	6,678
Unobservable Inputs (Level 3) | Derivatives contracts
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	(12)	0
Purchases/ additions	0	(13)
Sales	0	0
Payments (received) made	0	0
Premium amortization, net	0	0
Increase/(decrease) in value	5	0
Ending balance	(7)	(13)
Unobservable Inputs (Level 3) | Financial assets acquired from debtors
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	3,714	0
Purchases/ additions	(1,994)	1,789
Sales	0	0
Payments (received) made	667	0
Premium amortization, net	0	0
Increase/(decrease) in value	(3,167)	0
Ending balance	3,208	1,789
Unobservable Inputs (Level 3) | Loans
Roll forward of financial instruments which fair value is determined using Significant Other Unobservable Inputs (Level 3)
Beginning balance	2,806	2,877
Purchases/ additions	0	0
Sales	0	0
Payments (received) made	(51)	(47)
Premium amortization, net	0	0
Increase/(decrease) in value	12	33
Ending balance	$ 2,767	$ 2,863

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BORROWINGS (Details) (USD $)												6 Months Ended				6 Months Ended
	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2013 0.52% borrowing, due August 2014	Jun. 30, 2013 0.41% borrowing, due September 2014	Jun. 30, 2013 0.43% borrowing, due December 2014	Jun. 30, 2013 0.49% borrowing, due March 2015	Jun. 30, 2013 0.45% borrowing, due April 2015	Jun. 30, 2013 0.68% borrowing, due August 2015	Jun. 30, 2013 0.62% borrowing, due March 2016	Jun. 30, 2013 0.75% borrowing, due September 2016	Jun. 30, 2013 0.94% borrowing, due June 2017	Jun. 30, 2013 3.62% borrowing, due November 2017	Jun. 30, 2013 3.87% borrowing, due November 2017	Jun. 30, 2013 2.83% borrowing, due on December 2017	Jun. 30, 2013 FHLB of Pittsburgh	Jun. 30, 2013 FHLB of Pittsburgh Minimum	Jun. 30, 2013 FHLB of Pittsburgh Maximum	Jun. 30, 2013 Federal Reserve Bank of Philadelphia	Jun. 30, 2013 FHLB advances
Borrowings
Securities pledged as collateral																			$ 197,200,000
Federal Home Loan Bank advances	140,000,000	110,000,000	10,000,000	15,000,000	15,000,000	10,000,000	10,000,000	10,000,000	10,000,000	5,000,000	5,000,000	15,000,000	15,000,000	20,000,000
Interest rate (as a percent)	1.55%		0.52%	0.41%	0.43%	0.49%	0.45%	0.68%	0.62%	0.75%	0.94%	3.62%	3.87%	2.83%
Reference rate, description												LIBOR	LIBOR	LIBOR
Interest rate added to reference rate (as a percent)												0.10%	0.10%	0.11%
Maximum borrowing capacity															384,400,000			53,200,000
Capital stock to be held as percentage of advances																4.60%	6.00%
Capital stock to be held as percentage of eligible assets																0.35%	1.00%
Stock obligation																8,700,000	14,700,000
FHLB stock	$ 9,610,000	$ 8,097,000

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Consolidated Statements of Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Mortgage related securities held-to-maturity, fair value (in dollars)	$ 63,704	$ 29,451
Loans, allowance for loan losses (in dollars)	$ 10,498	$ 11,170
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	12,142,600	12,356,564
Common stock, shares outstanding	12,142,600	12,356,564
Treasury stock, shares	2,468,172	2,249,600

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MORTGAGE SERVICING ACTIVITY

6 Months Ended

Jun. 30, 2013

MORTGAGE SERVICING ACTIVITY

MORTGAGE SERVICING ACTIVITY

MORTGAGE SERVICING ACTIVITY

Loans serviced for others are not included in the accompanying consolidated statements of condition.  The unpaid principal balances of these loans were $30.8 million and $41.8 million at June 30, 2013 and 2012, respectively, and $36.6 million at December 31, 2012.  The Company received fees, net of amortization, from the servicing of loans of ($2,800) and ($11,600) during the six months ended June 30, 2013 and June 30, 2012, respectively.

The following table summarizes mortgage servicing rights activity for the six months ended June 30, 2013 and 2012:

		Servicing Rights			Valuation Allowance			Net Carrying Value
		(In thousands, Unaudited)
Balance at	December 31, 2012	$	325		$	(155	)	$	170
Reductions		—			41			41
Amortization		(42		)	—			(42		)
Balance at	June 30, 2013	$	283		$	(114	)	$	169
Balance at	December 31, 2011	$	455		$	(139	)	$	316
Reductions		—			2			2
Amortization		(74		)	—			(74		)
Balance at	June 30, 2012	$	381		$	(137	)	$	244

At June 30, 2013, December 31, 2012 and June 30, 2012, the fair value of the mortgage servicing rights (“MSRs”) was $169,000, $170,000 and $245,000, respectively.  The fair value at these dates was determined using a third-party valuation model that calculates the present value of estimated future servicing income.  The model incorporates assumptions that market participants use in estimating future net servicing income, including estimates of prepayment speeds and discount rates.  Mortgage loan prepayment speed is the annual rate at which borrowers are forecasted to repay their mortgage loan principal and is based on historical experience and current interest rates.  The discount rate used to determine the present value of future net servicing income is the required rate of return the market would expect for an asset with similar risk.  Both assumptions can, and generally will, change quarterly valuations as market conditions and interest rates change.

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Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Income Statement [Abstract]
Accumulated other comprehensive income reclassification for unrealized holdings gains	$ 171	$ 2,340	$ 532	$ 2,340
Income tax expense from reclassification items	$ 63	$ 863	$ 186	$ 863

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Consolidated Statements of Condition (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 213	$ 162
Interest-earning demand deposits in other banks	8,859	24,928
Total cash and cash equivalents	9,072	25,090
Investment securities available-for-sale	10,475	12,491
Mortgage related securities available-for-sale	273,037	283,616
Mortgage related securities held-to-maturity (fair value of $63,704 at June 30, 2013 and $29,451 at December 31, 2012)	64,225	28,369
Loans held for sale	3,157	0
Loans, net of allowance for loan losses of $10,498 at June 30, 2013 and $11,170 at December 31, 2012	701,112	683,865
Federal Home Loan Bank stock, at cost	9,610	8,097
Bank-owned life insurance	14,310	14,077
Premises and equipment, net	10,084	10,443
Assets acquired through foreclosure	9,948	8,524
Real estate held for investment	1,620	1,620
Accrued interest receivable	3,301	3,223
Mortgage servicing rights, net	169	170
Deferred tax asset, net	7,361	2,953
Other assets	4,873	5,803
Total Assets	1,122,354	1,088,341
LIABILITIES
Deposits	700,614	687,409
Short-term borrowings	70,300	70,500
Federal Home Loan Bank advances	140,000	110,000
Other borrowed funds	30,000	30,000
Advances from borrowers for taxes and insurance	1,831	1,699
Accrued interest payable	303	330
Accrued expenses and other liabilities	5,880	6,938
Total Liabilities	948,928	906,876
STOCKHOLDERS' EQUITY
Preferred stock ($.01 par value; 1,000,000 shares authorized, none issued and outstanding at June 30, 2013 and December 31, 2012)	0	0
Common stock ($.01 par value; 60,000,000 shares authorized, 12,142,600 shares issued and outstanding at June 30, 2013 and 12,356,564 shares issued and outstanding at December 31, 2012)	146	146
Additional paid-in capital	136,743	136,132
Treasury stock, at cost (2,468,172 shares at June 30, 2013 and 2,249,600 shares at December 31, 2012)	(33,436)	(29,733)
Common stock acquired by benefit plans	(9,694)	(10,228)
Retained earnings	82,076	80,608
Accumulated other comprehensive (loss) income, net	(2,409)	4,540
Total Stockholders’ Equity	173,426	181,465
Total Liabilities and Stockholders’ Equity	$ 1,122,354	$ 1,088,341

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Jun. 30, 2013	Jun. 30, 2012
Earnings per share:
Net income	$ 1,044	$ 539	$ 2,871	$ 1,726
Weighted-average common shares outstanding (in shares)	12,184,658	12,671,404	12,254,601	12,775,182
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(594,696)	(659,744)	(602,781)	(667,877)
Shares purchased by trust	(327,818)	(387,540)	(333,035)	(390,947)
Weighted-average common shares used to calculate basic earnings per share (in shares)	11,262,144	11,624,120	11,318,785	11,716,358
Dilutive effect of:
Restricted stock awards	37,713	41,827	36,157	37,668
Stock option awards	189,709	84,676	188,854	72,824
Weighted-average common shares used to calculate diluted earnings per share (in shares)	11,489,566	11,750,623	11,543,796	11,826,850
Earnings per share-basic (in dollars per share)	$ 0.09	$ 0.05	$ 0.25	$ 0.15
Earnings per share-diluted (in dollars per share)	$ 0.09	$ 0.05	$ 0.25	$ 0.15
Outstanding common stock equivalents having no dilutive effect (in shares)	1,134,946	947,639	1,137,357	963,650

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MORTGAGE SERVICING ACTIVITY (Tables)

6 Months Ended

Jun. 30, 2013

MORTGAGE SERVICING ACTIVITY

Summary of activity of mortgage servicing rights for the period ended

The following table summarizes mortgage servicing rights activity for the six months ended June 30, 2013 and 2012:

		Servicing Rights			Valuation Allowance			Net Carrying Value
		(In thousands, Unaudited)
Balance at	December 31, 2012	$	325		$	(155	)	$	170
Reductions		—			41			41
Amortization		(42		)	—			(42		)
Balance at	June 30, 2013	$	283		$	(114	)	$	169
Balance at	December 31, 2011	$	455		$	(139	)	$	316
Reductions		—			2			2
Amortization		(74		)	—			(74		)
Balance at	June 30, 2012	$	381		$	(137	)	$	244

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DEPOSITS (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012
Weighted Average Interest Rate
NOW accounts	0.22%	0.22%
Money market accounts	0.20%	0.19%
Savings and club accounts	0.13%	0.14%
Brokered deposits	0.47%	0.36%
Certificates of deposit	1.47%	1.59%
Deposits	0.62%	0.70%
Deposits
Noninterest-bearing demand accounts	$ 126,702	$ 108,176
NOW accounts	79,191	70,199
Money market accounts	89,146	97,318
Savings and club accounts	98,875	99,046
Brokered deposits	61,651	50,637
Certificates of deposit	245,049	262,033
Total deposits amount	$ 700,614	$ 687,409

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LOANS (Details 6) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2013	Dec. 31, 2012	Jun. 30, 2012	Dec. 31, 2011
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	$ 1,176	$ 1,326
Accruing TDRs, Allowance for Loan Losses	714	954
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	1,890	2,280
General Allowance for Loan Losses	8,608	8,890
Total	10,498	11,170	11,225	12,075
One- to four-family
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	200	337
Accruing TDRs, Allowance for Loan Losses	1	5
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	201	342
General Allowance for Loan Losses	277	300
Total	478	642		1,760
Multi-family and commercial
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	596	530
Accruing TDRs, Allowance for Loan Losses	713	948
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	1,309	1,478
General Allowance for Loan Losses	5,434	4,849
Total	6,743	6,327		6,112
Construction
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	350	449
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	350	449
General Allowance for Loan Losses	72	424
Total	422	873		869
Consumer
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	30	10
Accruing TDRs, Allowance for Loan Losses		1
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	30	11
General Allowance for Loan Losses	180	221
Total	210	232		455
Commercial and industrial
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	0	0
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	0	0
General Allowance for Loan Losses	2,194	2,630
Total	2,194	2,630		2,657
Unallocated
Allowance for loan loss for impaired loans and general allowance by loan segment
Nonaccrual Loans, Allowance for Loan Losses	0	0
Accruing TDRs, Allowance for Loan Losses	0	0
Other Impaired Loans, Allowance for Loan Loss	0	0
Total Impaired Loans, Allowance for Loan Losses	0	0
General Allowance for Loan Losses	451	466
Total	$ 451	$ 466		$ 222

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LOANS (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Changes in allowance for loan losses
Balance, beginning	$ 11,170	$ 12,075	$ 12,075
Provision for loan losses	(143)	2,566	3,478
Loans charged off	(566)	(3,426)	(4,527)
Recoveries	37	10	144
Balance, ending	$ 10,498	$ 11,225	$ 11,170

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LOANS (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
Changes in allowance for loan losses
Balance, beginning	$ 11,170	$ 12,075	$ 12,075
Provision for loan losses	(143)	2,566	3,478
Loans charged off	(566)	(3,426)	(4,527)
Recoveries	37	10	144
Balance, ending	10,498	11,225	11,170
One- to four-family
Changes in allowance for loan losses
Balance, beginning	642	1,760	1,760
Provision for loan losses	(116)		286
Loans charged off	(58)		(1,408)
Recoveries	10		4
Balance, ending	478		642
Multi-family and commercial
Changes in allowance for loan losses
Balance, beginning	6,327	6,112	6,112
Provision for loan losses	871		1,064
Loans charged off	(463)		(887)
Recoveries	8		38
Balance, ending	6,743		6,327
Construction
Changes in allowance for loan losses
Balance, beginning	873	869	869
Provision for loan losses	(451)		252
Loans charged off	0		(340)
Recoveries	0		92
Balance, ending	422		873
Consumer
Changes in allowance for loan losses
Balance, beginning	232	455	455
Provision for loan losses	4		1,659
Loans charged off	(45)		(1,892)
Recoveries	19		10
Balance, ending	210		232
Commercial and industrial
Changes in allowance for loan losses
Balance, beginning	2,630	2,657	2,657
Provision for loan losses	(436)		(27)
Loans charged off	0		0
Recoveries	0		0
Balance, ending	2,194		2,630
Unallocated
Changes in allowance for loan losses
Balance, beginning	466	222	222
Provision for loan losses	(15)		244
Loans charged off	0		0
Recoveries	0		0
Balance, ending	$ 451		$ 466

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DERIVATIVES AND HEDGING

6 Months Ended

Jun. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING

DERIVATIVES AND HEDGING

Interest Rate Swaps

On November 3, 2006, the Company entered an interest rate swap with a current notional amount of $914,000, which is used to hedge a 15-year fixed rate loan that is earning interest at 7.43%.  The Company is receiving variable rate payments of one-month LIBOR plus 224 basis points and is paying fixed rate payments of 7.43%.  The swap matures in April 2022 and had a fair value loss position of $154,000 and $203,000 at June 30, 2013 and December 31, 2012, respectively.  The interest rate swap is carried at fair value in accordance with FASB ASC 815 “Derivatives and Hedging.”  The loan is carried at fair value under the fair value option as permitted by FASB ASC 825 “Financial Instruments.”

On October 12, 2011, the Company entered an interest rate swap with a current notional amount of $1.5 million, which is used to hedge a 10-year fixed rate loan that is earning interest at 5.83%.  The Company is receiving variable rate payments of one-month LIBOR plus 350 basis points and is paying fixed rate payments of 5.83%.  The Company designated this relationship as a fair value hedge.  The swap matures in October 2021 and had a fair value loss position of $15,000 and $105,000 at June 30, 2013 and December 31, 2012, respectively.  The difference between changes in the fair values of the interest rate swap agreement and the hedged loan represents hedge ineffectiveness and is recorded in other non-interest income in the consolidated statements of operations.  Hedge ineffectiveness resulted in income of $10,000 and a loss of $13,000 for the three months ended June 30, 2013 and June 30, 2012, respectively. Hedge ineffectiveness resulted in income of $14,000 and a loss of $7,000 for the six months ended June 30, 2013 and June 30, 2012, respectively.

Credit Derivatives

We have entered into agreements with a third-party financial institution whereby the financial institution enters into interest rate derivative contracts and foreign currency swap contracts with customers referred to them by us.  By the terms of the agreements, the financial institution has recourse to the Company for any exposure created under each swap contract in the event the customer defaults on the swap agreement and the agreement is in a paying position to the third-party financial institution.  These transactions represent credit derivatives and are a customary arrangement that allows financial institutions like us to provide access to interest rate and foreign currency swap transactions for our customers without creating the swap ourselves.  The Company records the fair value of credit derivatives in other liabilities on the consolidated statement of condition.   The Company recognizes changes in the fair value of credit derivatives, net of any fees received, as service charges and other fee income in the consolidated statements of operations.

At June 30, 2013, there were five variable-rate to fixed-rate interest rate swap transactions between the third-party financial institution and our customers with a notional amount of $19.8 million, and remaining maturities ranging from 6 to 10 years.  At December 31, 2012, there were four variable-rate to fixed-rate interest swap transactions between the third-party financial institution and our customers with a notional amount of $13.3 million, and remaining maturities ranging from 7 to 10 years.  The fair value of the swaps to the customers was an asset of  $751,000 and a liability of $213,000 as of June 30, 2013 and December 31, 2012, respectively, and all swaps were in receiving positions from the third-party financial institution at June 30, 2013.  As of June 30, 2013 and December 31, 2012, the fair value of the Company’s interest rate swap credit derivatives was a liability of $7,000 and $12,000, respectively.  During the three months ended June 30, 2013 and 2012, the Company recognized income of $5,000 and $2,000, respectively, from interest rate swap credit derivatives. During the six months ended June 30, 2013 and 2012, the Company recognized income of $6,000 and $2,000, respectively, from interest rate swap credit derivatives.

At June 30, 2013, there were two foreign currency swap transactions between the third-party financial institution and our customers with a notional amount aggregating approximately $150,000, and remaining maturity of 5 months.  The aggregate fair value of these swaps to the customers was a liability of $1,000 as of June 30, 2013.  At June 30, 2013, the fair value of the Company’s credit derivatives was $0.  At December 31, 2012, there were no foreign currency swap transactions between the third-party financial institution and our customers.  During the three months ended June 30, 2013 and 2012, the Company recognized income of $0 and $6,000, respectively, from foreign currency swap credit derivatives. During the six months ended June 30, 2013 and 2012, the Company recognized income of $2,000 and $29,000, respectively, from foreign currency swap credit derivatives.

The maximum potential payments by the Company to the financial institution under these credit derivatives are not estimable as they are contingent on future interest rates and exchange rates, and the agreement does not provide for a limitation of the maximum potential payment amount.

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2013	Dec. 31, 2012
Available-for-Sale Securities:
Amortized Cost	$ 287,214,000	$ 289,087,000
Gross Unrealized Gains	3,058,000	7,206,000
Gross Unrealized Losses	(6,760,000)	(186,000)
OTTI in AOCI
Total Fair Value	283,512,000	296,107,000
Held-to-maturity Securities:
Amortized Cost	64,225,000	28,369,000
Gross Unrealized Gains	571,000	1,082,000
Held-to-maturity Securities, Unrecognized Holding Loss	(1,092,000)	0
OTTI in AOCI
Fair Value	63,704,000	29,451,000
Available-for-sale securities:
Fair Value, Less than 12 Months	225,297,000	29,092,000
Unrealized Losses, Less than 12 Months	(6,737,000)	(65,000)
Fair Value, 12 Months or More	2,977,000	2,879,000
Unrealized Losses, 12 Months or More	(23,000)	(121,000)
Fair Value, Total	228,274,000	31,971,000
Unrealized Losses, Total	(6,760,000)	(186,000)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	39,991,000	0
Unrealized Losses, Less than 12 Months	(1,092,000)	0
Fair Value, 12 Months or More	0	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	0	0
Fair Value, Total	39,991,000	0
Unrealized Losses, Total	(1,092,000)	0
Temporarily Impaired Securities
Fair Value, Less than 12 Months	265,288,000	29,092,000
Unrealized Losses, Less than 12 Months	(7,829,000)	(65,000)
Fair Value, 12 Months or More	2,977,000	2,879,000
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	(23,000)	(121,000)
Fair Value, Total	268,265,000	31,971,000
Unrealized Losses, Total	(7,852,000)	(186,000)
Debt securities excluding mortgage related securities
Available-for-Sale Securities:
Amortized Cost	10,467,000	12,507,000
Gross Unrealized Gains	33,000	105,000
Gross Unrealized Losses	(25,000)	(121,000)
OTTI in AOCI
Total Fair Value	10,475,000	12,491,000
Available-for-sale securities:
Fair Value, Less than 12 Months	2,597,000	0
Unrealized Losses, Less than 12 Months	(2,000)	0
Fair Value, 12 Months or More	2,977,000	2,879,000
Unrealized Losses, 12 Months or More	(23,000)	(121,000)
Fair Value, Total	5,574,000	2,879,000
Unrealized Losses, Total	(25,000)	(121,000)
Obligations of U.S. government agencies
Available-for-Sale Securities:
Amortized Cost	300,000	300,000
Gross Unrealized Gains	11,000	14,000
Gross Unrealized Losses	0	0
OTTI in AOCI	0	0
Total Fair Value	311,000	314,000
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	0	0
Unrealized Losses, Total	0	0
Corporate securities
Available-for-Sale Securities:
Amortized Cost	10,167,000	12,207,000
Gross Unrealized Gains	22,000	91,000
Gross Unrealized Losses	(25,000)	(121,000)
OTTI in AOCI	0	0
Total Fair Value	10,164,000	12,177,000
Available-for-sale securities:
Fair Value, Less than 12 Months	2,597,000	0
Unrealized Losses, Less than 12 Months	(2,000)	0
Fair Value, 12 Months or More	2,977,000	2,879,000
Unrealized Losses, 12 Months or More	(23,000)	(121,000)
Fair Value, Total	5,574,000	2,879,000
Unrealized Losses, Total	(25,000)	(121,000)
Mortgage related securities
Available-for-Sale Securities:
Amortized Cost	276,747,000	276,580,000
Gross Unrealized Gains	3,025,000	7,101,000
Gross Unrealized Losses	(6,735,000)	(65,000)
OTTI in AOCI
Total Fair Value	273,037,000	283,616,000
Held-to-maturity Securities:
Amortized Cost	64,225,000	28,369,000
Gross Unrealized Gains	571,000	1,082,000
Held-to-maturity Securities, Unrecognized Holding Loss	(1,092,000)	0
OTTI in AOCI
Fair Value	63,704,000	29,451,000
Available-for-sale securities:
Fair Value, Less than 12 Months	222,700,000	29,092,000
Unrealized Losses, Less than 12 Months	(6,735,000)	(65,000)
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	222,700,000	29,092,000
Unrealized Losses, Total	(6,735,000)	(65,000)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	39,991,000	0
Unrealized Losses, Less than 12 Months	(1,092,000)	0
Fair Value, 12 Months or More	0	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	0	0
Fair Value, Total	39,991,000	0
Unrealized Losses, Total	(1,092,000)	0
Private label commercial mortgage related securities
Available-for-Sale Securities:
Amortized Cost	2,177,000	6,119,000
Gross Unrealized Gains	14,000	78,000
Gross Unrealized Losses	0	0
OTTI in AOCI	0	0
Total Fair Value	2,191,000	6,197,000
Available-for-sale securities:
Fair Value, Less than 12 Months	0	0
Unrealized Losses, Less than 12 Months	0	0
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	0	0
Unrealized Losses, Total	0	0
Agency residential mortgage related securities
Available-for-Sale Securities:
Amortized Cost	274,570,000	270,461,000
Gross Unrealized Gains	3,011,000	7,023,000
Gross Unrealized Losses	(6,735,000)	(65,000)
OTTI in AOCI	0	0
Total Fair Value	270,846,000	277,419,000
Held-to-maturity Securities:
Amortized Cost	64,225,000	28,369,000
Gross Unrealized Gains	571,000	1,082,000
Held-to-maturity Securities, Unrecognized Holding Loss	(1,092,000)	0
OTTI in AOCI
Fair Value	63,704,000	29,451,000
Available-for-sale securities:
Fair Value, Less than 12 Months	222,700,000	29,092,000
Unrealized Losses, Less than 12 Months	(6,735,000)	(65,000)
Fair Value, 12 Months or More	0	0
Unrealized Losses, 12 Months or More	0	0
Fair Value, Total	222,700,000	29,092,000
Unrealized Losses, Total	(6,735,000)	(65,000)
Held-to-maturity Securities:
Fair Value, Less than 12 Months	39,991,000	0
Unrealized Losses, Less than 12 Months	(1,092,000)	0
Fair Value, 12 Months or More	0	0
Unrealized Losses Plus OTTI in AOCI, 12 Months or More	0	0
Fair Value, Total	39,991,000	0
Unrealized Losses, Total	$ (1,092,000)	$ 0

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DERIVATIVES AND HEDGING (Details) (USD $)	0 Months Ended			0 Months Ended	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		12 Months Ended	3 Months Ended		6 Months Ended
	Nov. 03, 2006 Interest rate swap maturing in April 2022	Jun. 30, 2013 Interest rate swap maturing in April 2022	Dec. 31, 2012 Interest rate swap maturing in April 2022	Oct. 12, 2011 Interest rate swap maturing in October 2021	Jun. 30, 2013 Interest rate swap maturing in October 2021	Jun. 30, 2012 Interest rate swap maturing in October 2021	Jun. 30, 2013 Interest rate swap maturing in October 2021	Jun. 30, 2012 Interest rate swap maturing in October 2021	Dec. 31, 2012 Interest rate swap maturing in October 2021	Jun. 30, 2013 Credit Derivatives (Interest Rate Swap Underlyings) item	Jun. 30, 2012 Credit Derivatives (Interest Rate Swap Underlyings)	Jun. 30, 2013 Credit Derivatives (Interest Rate Swap Underlyings) item	Jun. 30, 2012 Credit Derivatives (Interest Rate Swap Underlyings)	Dec. 31, 2012 Credit Derivatives (Interest Rate Swap Underlyings) item	Jun. 30, 2013 Credit Derivatives (Foreign Currency Swap Underlyings) item	Jun. 30, 2012 Credit Derivatives (Foreign Currency Swap Underlyings)	Jun. 30, 2013 Credit Derivatives (Foreign Currency Swap Underlyings) item	Jun. 30, 2012 Credit Derivatives (Foreign Currency Swap Underlyings)	Dec. 31, 2012 Credit Derivatives (Foreign Currency Swap Underlyings) item
Derivative
Notional amount, interest rate swap derivative		$ 914,000			$ 1,500,000		$ 1,500,000
Fixed rate loan term	15 years			10 years
Interest rate on loans receivable	7.43%			5.83%
Fixed interest rate to be paid under hedge (as a percent)	7.43%			5.83%
Variable interest rate basis	one-month LIBOR			one-month LIBOR
Fair value loss position on interest rate swap derivative		154,000	203,000		15,000		15,000		105,000
Hedge ineffectiveness, income					10,000		14,000
Fair value loss position on interest rate swap derivative, ineffective portion						13,000		7,000
Number of derivative transactions										5		5		4	2		2		0
Notional amount of credit swap derivative (protection sold)										19,800,000		19,800,000		13,300,000	150,000		150,000
Remaining maturity period, minimum												6 years		7 years
Remaining maturity period, maximum												10 years		10 years
Fair value of swap liability										751,000		751,000		213,000	1,000		1,000
Recognized income										5,000	2,000	6,000	2,000		0	6,000	2,000	29,000
Margin added to derivative interest rate (as a percent)	2.24%			3.50%
Derivative liability										$ 7,000		$ 7,000		$ 12,000	$ 0		$ 0
Remaining maturity period																	5 months

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BORROWINGS

6 Months Ended

Jun. 30, 2013

BORROWINGS

BORROWINGS

BORROWINGS

Federal Home Loan Bank Advances

Pursuant to collateral agreements with the Federal Home Loan Bank of Pittsburgh (the “FHLB”), advances are secured by qualifying first mortgage loans, qualifying fixed-income securities, FHLB stock and an interest-bearing demand deposit account with the FHLB.  As of June 30, 2013, the Bank had $197.2 million in qualifying collateral pledged against its advances.

Maturity Date	Amount		Coupon Rate		Call Date	Rate if Called
(In thousands, Unaudited)
August 2014	$	10,000	0.52	%	Not Applicable	Not Applicable
September 2014	15,000		0.41	%	Not Applicable	Not Applicable
December 2014	15,000		0.43	%	Not Applicable	Not Applicable
March 2015	10,000		0.49	%	Not Applicable	Not Applicable
April 2015	10,000		0.45	%	Not Applicable	Not Applicable
August 2015	10,000		0.68	%	Not Applicable	Not Applicable
March 2016	10,000		0.62	%	Not Applicable	Not Applicable
September 2016	5,000		0.75	%	Not Applicable	Not Applicable
June 2017	5,000		0.94	%	Not Applicable	Not Applicable
November 2017	15,000		3.62	%	August 2013	LIBOR + 0.10%
November 2017	15,000		3.87	%	August 2013	LIBOR + 0.10%
December 2017	20,000		2.83	%	September 2013	LIBOR + 0.11%
	$	140,000	1.55	%

For the borrowings which have a “Call Date” disclosed in the above table, if the borrowing is called, the Bank has the option to either pay off the borrowing without penalty or the borrowing’s fixed rate resets to a variable LIBOR based rate, as noted in the above table.  Subsequent to the call date, the borrowings are callable by the FHLB quarterly.  Accordingly, the contractual maturities above may differ from actual maturities.

The Bank had a maximum borrowing capacity with the FHLB of Pittsburgh of approximately $384.4 million at June 30, 2013.  Additionally, as of June 30, 2013, the Bank has a maximum borrowing capacity of $53.2 million with the Federal Reserve Bank of Philadelphia through the Discount Window.

As a member of the FHLB of Pittsburgh, the Bank is required to acquire and hold shares of capital stock in the FHLB of Pittsburgh in an amount equal to at least 4.60% of its advances plus 0.35% of the Bank’s “eligible assets,” as such term is defined by the FHLB; and a maximum amount of 6.00% of its advances plus 1.0% of the Bank’s “eligible assets.”  As of June 30, 2013, the Company’s minimum stock obligation was $8.7 million and a maximum stock obligation was $14.7 million.  The Company held $9.6 million in FHLB stock at that date.

NOTE 7 - BORROWINGS (CONTINUED)

Other Borrowed Funds

Other borrowed funds obtained from large commercial banks under security repurchase agreements totaled $30 million at June 30, 2013.  These borrowings contractually mature with dates ranging from September 2018 through November 2018. As disclosed in the table below, two of the borrowings may be called by the lender based on the underlying agreements.  Accordingly, the contractual maturities below may differ from actual maturities.

					Next Call Date	Subsequent Call Frequency
Maturity Date	Amount		Coupon Rate
(In thousands, Unaudited)
September 2018	$	10,000	3.40	%	Not Applicable	Not Applicable
September 2018	5,000		3.20	%	Not Applicable	Not Applicable
October 2018	5,000		3.15	%	July 2013	Quarterly
October 2018	5,000		3.27	%	Not Applicable	Not Applicable
November 2018	5,000		3.37	%	November 2013	Not Applicable
	$	30,000	3.30	%

Mortgage backed securities with a fair value of $37.3 million at June 30, 2013 were used to secure these other borrowed funds.

Short Term Borrowings

As of June 30, 2013 and December 31, 2012, the Company had $70.3 million and $70.5 million, respectively, of short-term borrowings.  The short-term borrowings, had blended weighted average rates of 0.32% and 0.30% at June 30, 2013 and December 31, 2012, respectively.  Short-term borrowings consist of overnight and term borrowings with an original maturity less than one year.  Short-term borrowings are obtained from commercial banks, participants in the Federal Funds market and the FHLB.

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LOANS

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

LOANS

LOANS

The composition of net loans at June 30, 2013, and December 31, 2012 is provided below:

	June 30, 2013			December 31, 2012
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	140,439		$	158,828
Multi-family and commercial	400,969			368,948
Construction	7,281			22,591
	548,689			550,367
Consumer loans	24,388			30,585
Commercial and industrial loans	138,527			113,820
Total loans	711,604			694,772
Deferred loan origination cost, net	6			263
Allowance for loan losses	(10,498		)	(11,170		)
Net loans	$	701,112		$	683,865

NOTE 3 - LOANS (CONTINUED)

The following table presents changes in the allowance for loan losses:

	Six Months Ended June 30,						Year Ended December 31,
	2013			2012			2012
	(In thousands)
	(Unaudited)
Balance, beginning	$	11,170		$	12,075		$	12,075
Provision (credit) for loan losses	(143		)	2,566			3,478
Loans charged off	(566		)	(3,426		)	(4,527		)
Recoveries	37			10			144
Balance, ending	$	10,498		$	11,225		$	11,170

The following tables present changes in the allowance for loan losses by loan segment for the six months ended June 30, 2013 and the year ended December 31, 2012.

	Six Months Ended June 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
Provision (credit) for loan losses	(116		)	871			(451		)	4			(436		)	(15		)	(143		)
Loans charged off	(58		)	(463		)	—			(45		)	—			—			(566		)
Recoveries	10			8			—			19			—			—			37
Balance, ending	$	478		$	6,743		$	422		$	210		$	2,194		$	451		$	10,498
	Year Ended December 31, 2012
	One- to Four- Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	1,760		$	6,112		$	869		$	455		$	2,657		$	222		$	12,075
Provision (credit) for loan losses	286			1,064			252			1,659			(27		)	244			3,478
Loans charged off	(1,408		)	(887		)	(340		)	(1,892		)	—			—			(4,527		)
Recoveries	4			38			92			10			—			—			144
Balance, ending	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the breakdown of impaired loans by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2,525	$	457	$	—	$	2,982	$	2,900	$	82
Multi-family and commercial	2,978		6,794		—		9,772		9,416		356
Construction	4,305		—		—		4,305		4,305		—
Consumer loans	181		14		—		195		154		41
Commercial and industrial	—		—		—		—		—		—
Total	$	9,989	$	7,265	$	—	$	17,254	$	16,775	$	479
December 31, 2012
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	3,355	$	507	$	—	$	3,862	$	3,862	$	—
Multi-family and commercial	5,284		6,867		—		12,151		11,770		381
Construction	6,434		—		—		6,434		6,434		—
Consumer loans	2,051		14		—		2,065		203		1,862
Commercial and industrial	—		—		—		—		—		—
Total	$	17,124	$	7,388	$	—	$	24,512	$	22,269	$	2,243

For the six months ended June 30, 2013 and 2012, the average recorded investment in impaired loans was $18.4 million and $27.1 million, respectively.  The interest income recognized on these impaired loans was $211,000 and $168,000 for the six months ended June 30, 2013 and 2012, respectively.

Loans on which the accrual of interest has been discontinued amounted to $10.0 million at June 30, 2013 and $17.1 million at December 31, 2012.  If interest on such loans had been recorded in accordance with contractual terms, interest income would have increased by $374,000 and $1.5 million for the six months ended June 30, 2013 and the year ended December 31, 2012, respectively.  There were no loans past due 90 days or more and still accruing interest at June 30, 2013 or December 31, 2012.

At June 30, 2013, six troubled debt restructurings (“TDRs”), totaling $5.0 million, are excluded from the accruing TDR column above as they are included in the nonaccrual loans column.  Of this amount, $4.3 million relates to two construction loans.  The Bank has commitments of $423,000 to lend additional funds related to these construction loans.  Additionally, the Bank had four residential loan TDRs totaling $689,000 which are included in the nonaccrual loans and total impaired loans columns.

At December 31, 2012, seven TDRs totaling $6.9 million are excluded from the accruing TDR column as they are included in nonaccrual loans and total impaired loans columns.

NOTE 3 - LOANS (CONTINUED)

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	200	$	1	$	—	$	201	$	277	$	478
Multi-family and commercial	596		713		—		1,309		5,434		6,743
Construction	350		—		—		350		72		422
Consumer loans	30				—		30		180		210
Commercial and industrial	—		—		—		—		2,194		2,194
Unallocated	—		—		—		—		451		451
Total allowance for loan losses	$	1,176	$	714	$	—	$	1,890	$	8,608	$	10,498
December 31, 2012	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	337	$	5	$	—	$	342	$	300	$	642
Multi-family and commercial	530		948		—		1,478		4,849		6,327
Construction	449		—		—		449		424		873
Consumer loans	10		1		—		11		221		232
Commercial and industrial	—		—		—		—		2,630		2,630
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	1,326	$	954	$	—	$	2,280	$	8,890	$	11,170

The Company may, under certain circumstances, restructure loans as a concession to borrowers who have experienced financial difficulty, which result in a TDR.  TDRs are impaired loans.  TDRs typically result from the Company’s loss mitigation activities, which, among other activities, could include extension of maturity, rate reductions, payment extension, and/or principal forgiveness.

At December 31, 2012, the Bank had fourteen TDRs, totaling $14.3 million. At June 30, 2013, twelve of these TDRs, totaling $11.8 million, remained. These TDRs consisted of:

•two construction loans totaling $4.3 million.

•four multi-family and commercial real estate loans totaling $6.8 million.

•five residential loans totaling $696,000.

•one consumer loan totaling $14,000.

In addition, there was one new residential loan TDR during the six months ended June 30, 2013, which totaled $450,000 at June 30, 2013. The Bank agreed to modified terms with the borrower, which included delayed repayment of principal and interest. The Bank had thirteen TDRs totaling $12.3 million at June 30, 2013.

NOTE 3 - LOANS (CONTINUED)

The following tables set forth a summary of the TDR activity for the six month periods ended June 30, 2013 and 2012. 

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
Multi-family and commercial	—	—		—		—	—		—	—		—		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
	Three Months Ended June 30, 2012								Six Months Ended June 30, 2012
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	107	$	107	—	$	—	3	$	400	$	400	—	$	—
Multi-family and commercial	—	—		—		—	—		1	519		519		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	107	$	107	—	$	—	4	$	919	$	919	—	$	—

NOTE 3 - LOANS (CONTINUED)

The following table sets forth past due loans by segment as of June 30, 2013 and December 31, 2012.

	At June 30, 2013				At December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	1,373	$	145	$	18	$	284
Multi-family and commercial real estate	—		168		—		1,691
Construction	—		—		—		—
Consumer	115		10		23		51
Commercial and industrial	130		—		—		—
Total	$	1,618	$	323	$	41	$	2,026

We use six primary classifications for loans: pass, pass watch, special mention, substandard, doubtful and loss, of which three classifications are for problem loans: substandard, doubtful and loss. “Substandard loans” must have one or more well defined weaknesses and are characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. “Doubtful loans” have the weaknesses of substandard loans with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a high possibility of loss.  A loan classified “loss” is considered uncollectible and of such little value that continuance as a loan of the institution is not warranted.  We also maintain a “special mention” category, described as loans which do not currently expose us to a sufficient degree of risk to warrant classification but do possess credit deficiencies or potential weaknesses deserving our close attention.  If we classify an asset as loss, it is recorded as a loan charged off in the current period.

The following tables set forth criticized and classified loans by segment as of June 30, 2013 and December 31, 2012. 

	At June 30, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	137,914	$	379,715	$	2,976	$	24,207	$	136,362	$	681,174
Special mention	—		14,097		—		—		2,165		16,262
Substandard	2,525		7,157		4,305		181		—		14,168
Doubtful	—		—		—		—		—		—
Total loans	$	140,439	$	400,969	$	7,281	$	24,388	$	138,527	$	711,604
	At December 31, 2012
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	155,473	$	347,150	$	16,157	$	28,534	$	110,032	$	657,346
Special mention	—		6,733		—		—		3,633		10,366
Substandard	3,355		15,065		6,434		2,051		155		27,060
Doubtful	—		—		—		—		—		—
Total loans	$	158,828	$	368,948	$	22,591	$	30,585	$	113,820	$	694,772

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Consolidated Statements of Changes in Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock	Additional Paid in Capital	Treasury Stock	Common Stock Acquired by Benefit Plans	Retained Earnings	Accumulated Other Comprehensive Income, net
BALANCE at Dec. 31, 2011	$ 188,192	$ 146	$ 134,871	$ (19,822)	$ (11,541)	$ 77,971	$ 6,567
Increase (Decrease) in Stockholders' Equity
Purchase of treasury stock, net	(5,934)	0	0	(5,934)	0	0	0
Stock based compensation expense	590	0	590	0	0	0	0
Unallocated ESOP shares committed to employees	421	0	109	0	312	0	0
Issuance of stock for vested equity awards	0	0	(134)	0	146	(12)	0
Common stock issued for exercise of vested stock options	203	0	203	0	0	0	0
Tax benefit from exercise of stock options and vesting of restricted stock	29	0	29	0	0	0	0
Dividends paid	(968)	0	0	0	0	(968)	0
Net income	1,726	0	0	0	0	1,726	0
Other comprehensive loss	(1,612)	0	0	0	0	0	(1,612)
BALANCE at Jun. 30, 2012	182,647	146	135,668	(25,756)	(11,083)	78,717	4,955
BALANCE at Dec. 31, 2012	181,465	146	136,132	(29,733)	(10,228)	80,608	4,540
Increase (Decrease) in Stockholders' Equity
Purchase of treasury stock, net	(3,703)	0	0	(3,703)	0	0	0
Stock based compensation expense	507	0	507	0	0	0	0
Unallocated ESOP shares committed to employees	547	0	235	0	312	0	0
Issuance of stock for vested equity awards	0	0	(217)	0	222	(5)	0
Common stock issued for exercise of vested stock options	51	0	51	0	0	0	0
Tax benefit from exercise of stock options and vesting of restricted stock	35	0	35	0	0	0	0
Dividends paid	(1,398)	0	0	0	0	(1,398)	0
Net income	2,871	0	0	0	0	2,871	0
Other comprehensive loss	(6,949)	0	0	0	0	0	(6,949)
BALANCE at Jun. 30, 2013	$ 173,426	$ 146	$ 136,743	$ (33,436)	$ (9,694)	$ 82,076	$ (2,409)

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STOCK BASED COMPENSATION (Details) (USD $)	6 Months Ended		12 Months Ended
	Jun. 30, 2013	Jun. 30, 2012	Dec. 31, 2012
STOCK BASED COMPENSATION
Stock based compensation expense	$ 507,000	$ 590,000
Number of Stock Options
Outstanding at the beginning of the period (in shares)	877,669
Granted (in shares)	254,650
Exercised (in shares)	(4,608)
Forfeited / Cancelled (in shares)	(100)
Outstanding at the end of the period (in shares)	1,127,611		877,669
Exercisable at the end of the period (in shares)	623,273
Weighted Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 11.57
Granted (in dollars per share)	$ 17.00
Exercised (in dollars per share)	$ 11.11
Forfeited / Cancelled (in dollars per share)	$ 12.94
Outstanding at the end of the period (in dollars per share)	$ 12.80		$ 11.57
Exercisable at the end of the period (in dollars per share)	$ 11.28
Weighted Average Remaining Contractual Life
Outstanding at the beginning of the period	6 years 8 months		6 years 3 months 18 days
Outstanding at the end of the period	6 years 8 months		6 years 3 months 18 days
Exercisable at the end of the period	4 years 9 months
Aggregate Intrinsic Value
Outstanding at the beginning of the period	4,461,000
Outstanding at the end of the period	4,741,000		4,461,000
Exercisable at the end of the period	3,565,000
Number of Stock Options, Unvested
Unvested at the beginning of the period (in shares)	310,661
Granted (in shares)	254,650
Vested (in shares)	(60,973)
Forfeited / Cancelled (in shares)	0
Unvested at the end of the period (in shares)	504,338		310,661
Weighted Average Grant Date Fair Value, Unvested
Unvested at the beginning of the period (in dollars per share)	$ 3.36
Granted (in dollars per share)	$ 4.20
Vested (in dollars per share)	$ 3.11
Forfeited / Cancelled (in dollars per share)	$ 0
Unvested at the end of the period (in dollars per share)	$ 3.82		$ 3.36
Number of Restricted Shares
Unvested at the beginning of the period (in shares)	130,557
Granted (in shares)	122,450
Vested (in shares)	(18,250)
Forfeited / Cancelled (in shares)	0
Unvested at the end of the period (in shares)	234,757		130,557
Weighted Average Grant Date Fair Value
Unvested at the beginning of the period (in dollars per share)	$ 12.41
Granted (in dollars per share)	$ 17.00
Vested (in dollars per share)	$ 11.92
Forfeited / Cancelled (in dollars per share)	$ 0
Unvested at the end of the period (in dollars per share)	$ 14.84		$ 12.41
Stock options
STOCK BASED COMPENSATION
Stock based compensation expense	198,000	233,000
Number of Stock Options, Unvested
Unvested at the end of the period (in shares)	504,338
Weighted Average Grant Date Fair Value, Unvested
Granted (in dollars per share)	$ 4.20
Compensation cost not yet recognized, nonvested awards
Expected future compensation expense, non-vested options	1,700,000
Weighted average period	4 years 1 month
Assumptions used to determine fair value of options granted
Expected dividend yield (as a percent)	2.22%
Expected volatility (as a percent)	31.12%
Risk-free interest rate (as a percent)	1.19%
Expected option life	6 years 6 months
Restricted stock
STOCK BASED COMPENSATION
Stock based compensation expense	309,000	357,000
Compensation cost not yet recognized, nonvested awards
Weighted average period	4 years 2 months
Number of Restricted Shares
Unvested at the end of the period (in shares)	234,757
Weighted Average Grant Date Fair Value
Expected future compensation expense, restricted shares	$ 3,100,000
Performance based restricted stock
Number of Restricted Shares
Granted (in shares)	39,250

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Details 4) (USD $)	Jun. 30, 2013	Dec. 31, 2012
Available for Sale, Amortized Cost
Due in one year or less	$ 1,975,000	$ 2,019,000
Due after one year through five years	8,492,000	10,488,000
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	276,747,000	276,580,000
Total Amortized Cost	287,214,000	289,087,000
Available for Sale, Fair Value
Due in one year or less	1,995,000	2,032,000
Due after one year through five years	8,480,000	10,459,000
Due after five years through ten years	0	0
Due after ten years	0	0
Total mortgage related securities	273,037,000	283,616,000
Total Fair Value	283,512,000	296,107,000
Held to Maturity, Amortized Cost
Total mortgage related securities	64,225,000	28,369,000
Total Amortized Cost	64,225,000	28,369,000
Held to Maturity, Fair Value
Total mortgage related securities	63,704,000	29,451,000
Total Fair Value	63,704,000	29,451,000
Carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law	8,500,000	8,300,000
Securities pledged as collateral for other borrowed funds	$ 37,300,000	$ 46,600,000

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ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

ACCOUNTING PRONOUNCEMENTS

ACCOUNTING PRONOUNCEMENTS

Accounting Standards Update (ASU) No. 2013-01-Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. This update clarifies that the scope of ASU No. 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The Company has adopted this update and has determined it does not have an impact on the Company's consolidated financial statements or disclosures as the Company does not have any enforceable master netting arrangements or instruments that are offset in accordance with Section 210-20-45 or Section 815-10-45.

ASU No. 2013-02-Comprehensive Income (Topic 220)-Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. This update requires an entity to report the effect of significant reclassifications out of accumulated other comprehensive income on the respective line items in net income if the amount being reclassified is required under U.S. GAAP to be reclassified in its entirety to net income. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income in the same reporting period, an entity is required to cross reference other disclosures required under U.S. GAAP that provide additional detail about those amounts. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is reclassified to a balance sheet account instead of directly to income or expense in the same reporting period. For the Company, the update is effective prospectively for reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. This guidance did not have a material impact on the Company's financial statements, but did result in revised presentation on the consolidated statements of operations of the items reclassified out of accumulated other comprehensive income.

ASU No. 2013-10-Derivatives and Hedging (Topic 815)-Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes. This ASU permits the Fed funds effective swap rate (OIS) to be used as a U.S. benchmark interest rate, in addition to the U.S. Treasury rate and LIBOR, for hedge accounting purposes. The ASU also permits using different benchmark rates for similar hedges. This ASU is effective immediately and may only be applied on a prospective basis for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. The impact of adopting this ASU is not material to the Company.

ASU No. 2013-11-Income Taxes (Topic 740)-Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). As a result of applying this ASU, an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss (NOL) or other tax credit carryforward when settlement in this manner is available under the tax law. The assessment of whether settlement is available under the tax law would be based on facts and circumstances as of the balance sheet reporting date and would not consider future events (e.g., upcoming expiration of related NOL carryforwards). This classification should not affect an entity's analysis of the realization of its deferred tax assets. Gross presentation in the rollforward of unrecognized tax positions in the notes to the financial statements would still be required. For the Company, the update is effective prospectively for reporting periods beginning on or after January 1, 2014, and interim periods within those annual periods. Retrospective application is permitted. The impact of adopting this ASU will not be material to the Company.

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DEPOSITS

6 Months Ended

Jun. 30, 2013

Banking and Thrift [Abstract]

DEPOSITS

DEPOSITS

Deposits and their respective weighted average interest rate at June 30, 2013 and December 31, 2012 consist of the following:

	June 30, 2013				December 31, 2012
	Weighted Average Interest Rate		Amount		Weighted Average Interest Rate		Amount
	(Dollars in thousands)
	(Unaudited)
Noninterest-bearing demand accounts	—	%	$	126,702	—	%	$	108,176
NOW accounts	0.22		79,191		0.22		70,199
Money market accounts	0.20		89,146		0.19		97,318
Savings and club accounts	0.13		98,875		0.14		99,046
Brokered deposits	0.47		61,651		0.36		50,637
Certificates of deposit	1.47		245,049		1.59		262,033
	0.62	%	$	700,614	0.70	%	$	687,409

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LOANS (Tables)

6 Months Ended

Jun. 30, 2013

Receivables [Abstract]

Schedule of composition of net loans

The composition of net loans at June 30, 2013, and December 31, 2012 is provided below:

	June 30, 2013			December 31, 2012
	(In thousands)
	(Unaudited)
Real estate loans:
One- to four-family	$	140,439		$	158,828
Multi-family and commercial	400,969			368,948
Construction	7,281			22,591
	548,689			550,367
Consumer loans	24,388			30,585
Commercial and industrial loans	138,527			113,820
Total loans	711,604			694,772
Deferred loan origination cost, net	6			263
Allowance for loan losses	(10,498		)	(11,170		)
Net loans	$	701,112		$	683,865

Schedule of changes in allowance for loan losses

The following table presents changes in the allowance for loan losses:

	Six Months Ended June 30,						Year Ended December 31,
	2013			2012			2012
	(In thousands)
	(Unaudited)
Balance, beginning	$	11,170		$	12,075		$	12,075
Provision (credit) for loan losses	(143		)	2,566			3,478
Loans charged off	(566		)	(3,426		)	(4,527		)
Recoveries	37			10			144
Balance, ending	$	10,498		$	11,225		$	11,170

Schedule of changes in allowance for loan losses by loan segment

The following tables present changes in the allowance for loan losses by loan segment for the six months ended June 30, 2013 and the year ended December 31, 2012.

	Six Months Ended June 30, 2013
	One- to Four-Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands, Unaudited)
Balance, beginning	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170
Provision (credit) for loan losses	(116		)	871			(451		)	4			(436		)	(15		)	(143		)
Loans charged off	(58		)	(463		)	—			(45		)	—			—			(566		)
Recoveries	10			8			—			19			—			—			37
Balance, ending	$	478		$	6,743		$	422		$	210		$	2,194		$	451		$	10,498
	Year Ended December 31, 2012
	One- to Four- Family			Multi-family and Commercial			Construction			Consumer			Commercial and Industrial			Unallocated			Total
	(In thousands)
Balance, beginning	$	1,760		$	6,112		$	869		$	455		$	2,657		$	222		$	12,075
Provision (credit) for loan losses	286			1,064			252			1,659			(27		)	244			3,478
Loans charged off	(1,408		)	(887		)	(340		)	(1,892		)	—			—			(4,527		)
Recoveries	4			38			92			10			—			—			144
Balance, ending	$	642		$	6,327		$	873		$	232		$	2,630		$	466		$	11,170

Schedule of breakdown of impaired loans by loan segment

The following tables set forth the breakdown of impaired loans by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	2,525	$	457	$	—	$	2,982	$	2,900	$	82
Multi-family and commercial	2,978		6,794		—		9,772		9,416		356
Construction	4,305		—		—		4,305		4,305		—
Consumer loans	181		14		—		195		154		41
Commercial and industrial	—		—		—		—		—		—
Total	$	9,989	$	7,265	$	—	$	17,254	$	16,775	$	479
December 31, 2012
	Nonaccrual Loans		Accruing TDRs		Other Impaired Loans		Total Impaired Loans		Impaired Loans with Allowance		Impaired Loans without Allowance
	(In thousands)
Real estate loans:
One- to four-family	$	3,355	$	507	$	—	$	3,862	$	3,862	$	—
Multi-family and commercial	5,284		6,867		—		12,151		11,770		381
Construction	6,434		—		—		6,434		6,434		—
Consumer loans	2,051		14		—		2,065		203		1,862
Commercial and industrial	—		—		—		—		—		—
Total	$	17,124	$	7,388	$	—	$	24,512	$	22,269	$	2,243

Schedule of allowance for loan loss for impaired loans and general allowance by loan segment

The following tables set forth the allowance for loan loss for impaired loans and general allowance by loan segment as of June 30, 2013 and December 31, 2012.

June 30, 2013	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands, Unaudited)
Real estate loans:
One- to four-family	$	200	$	1	$	—	$	201	$	277	$	478
Multi-family and commercial	596		713		—		1,309		5,434		6,743
Construction	350		—		—		350		72		422
Consumer loans	30				—		30		180		210
Commercial and industrial	—		—		—		—		2,194		2,194
Unallocated	—		—		—		—		451		451
Total allowance for loan losses	$	1,176	$	714	$	—	$	1,890	$	8,608	$	10,498
December 31, 2012	Allowance for Loan Losses
	Impaired Loans
	Nonaccrual Loans		Accruing TDR's		Other Impaired Loans		Total Impaired Loans
									General		Total
	(In thousands)
Real estate loans:
One- to four-family	$	337	$	5	$	—	$	342	$	300	$	642
Multi-family and commercial	530		948		—		1,478		4,849		6,327
Construction	449		—		—		449		424		873
Consumer loans	10		1		—		11		221		232
Commercial and industrial	—		—		—		—		2,630		2,630
Unallocated	—		—		—		—		466		466
Total allowance for loan losses	$	1,326	$	954	$	—	$	2,280	$	8,890	$	11,170

Summary of TDR activity for the periods

The following tables set forth a summary of the TDR activity for the six month periods ended June 30, 2013 and 2012. 

	Three Months Ended June 30, 2013								Six Months Ended June 30, 2013
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
Multi-family and commercial	—	—		—		—	—		—	—		—		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	450	$	450	—	$	—	1	$	450	$	450	—	$	—
	Three Months Ended June 30, 2012								Six Months Ended June 30, 2012
						TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months								TDRs that Defaulted in Current Period that were Restructured in the Prior Twelve Months
	Restructured Current Period								Restructured Current Period
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Post-Modification Outstanding Recorded Investment
	(Dollars in thousands, Unaudited)								(Dollars in thousands, Unaudited)
Real estate loans:
One- to four-family	1	$	107	$	107	—	$	—	3	$	400	$	400	—	$	—
Multi-family and commercial	—	—		—		—	—		1	519		519		—	—
Construction	—	—		—		—	—		—	—		—		—	—
Consumer loans	—	—		—		—	—		—	—		—		—	—
Commercial and industrial	—	—		—		—	—		—	—		—		—	—
Total	1	$	107	$	107	—	$	—	4	$	919	$	919	—	$	—

Schedule of past due loans by segment

The following table sets forth past due loans by segment as of June 30, 2013 and December 31, 2012.

	At June 30, 2013				At December 31, 2012
	30-59 Days Past Due		60-89 Days Past Due		30-59 Days Past Due		60-89 Days Past Due
	(In thousands)
	(Unaudited)
One- to four-family real estate	$	1,373	$	145	$	18	$	284
Multi-family and commercial real estate	—		168		—		1,691
Construction	—		—		—		—
Consumer	115		10		23		51
Commercial and industrial	130		—		—		—
Total	$	1,618	$	323	$	41	$	2,026

Schedule of criticized and classified loans by segment

The following tables set forth criticized and classified loans by segment as of June 30, 2013 and December 31, 2012. 

	At June 30, 2013
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands, Unaudited)
Pass and Pass watch	$	137,914	$	379,715	$	2,976	$	24,207	$	136,362	$	681,174
Special mention	—		14,097		—		—		2,165		16,262
Substandard	2,525		7,157		4,305		181		—		14,168
Doubtful	—		—		—		—		—		—
Total loans	$	140,439	$	400,969	$	7,281	$	24,388	$	138,527	$	711,604
	At December 31, 2012
	One- to Four-Family		Multi-family and Commercial		Construction		Consumer		Commercial and Industrial		Total
	(In thousands)
Pass and Pass watch	$	155,473	$	347,150	$	16,157	$	28,534	$	110,032	$	657,346
Special mention	—		6,733		—		—		3,633		10,366
Substandard	3,355		15,065		6,434		2,051		155		27,060
Doubtful	—		—		—		—		—		—
Total loans	$	158,828	$	368,948	$	22,591	$	30,585	$	113,820	$	694,772

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PRINCIPLES OF CONSOLIDATION AND PRESENTATION (Tables)

6 Months Ended

Jun. 30, 2013

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations

The following table presents the reconciliation of the numerators and denominators of the basic and diluted earnings per share computations.

	Three Months Ended June 30,						Six Months Ended   June 30,
	2013			2012			2013			2012
	(Unaudited)
Net income	$	1,044,000		$	539,000		$	2,871,000		$	1,726,000
Weighted-average common shares outstanding (1)	12,184,658			12,671,404			12,254,601			12,775,182
Average common stock acquired by stock benefit plans:
ESOP shares unallocated	(594,696		)	(659,744		)	(602,781		)	(667,877		)
Shares purchased by trust	(327,818		)	(387,540		)	(333,035		)	(390,947		)
Weighted-average common shares used to calculate basic earnings per share	11,262,144			11,624,120			11,318,785			11,716,358
Dilutive effect of:
Restricted stock awards	37,713			41,827			36,157			37,668
Stock option awards	189,709			84,676			188,854			72,824
Weighted-average common shares used to calculate diluted earnings per share	11,489,566			11,750,623			11,543,796			11,826,850
Earnings per share-basic	$	0.09		$	0.05		$	0.25		$	0.15
Earnings per share-diluted	$	0.09		$	0.05		$	0.25		$	0.15
Outstanding common stock equivalents having no dilutive effect	1,134,946			947,639			1,137,357			963,650
(1) Excludes treasury stock.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2013	Aug. 01, 2013
Document and Entity Information
Entity Registrant Name	Fox Chase Bancorp Inc
Entity Central Index Key	0001485176
Document Type	10-Q
Document Period End Date	Jun. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Entity Common Stock, Shares Outstanding		12,142,600

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INVESTMENT AND MORTGAGE RELATED SECURITIES (Tables)

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities available-for-sale and held-to-maturity

The amortized cost and fair value of securities available-for-sale and held-to-maturity as of June 30, 2013 and December 31, 2012 are summarized as follows: 

	June 30, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	11	$	—		$	—	$	311
Corporate securities	10,167		22		(25		)	—		10,164
	10,467		33		(25		)	—		10,475
Private label commercial mortgage related securities	2,177		14		—			—		2,191
Agency residential mortgage related securities	274,570		3,011		(6,735		)	—		270,846
Total mortgage related securities	276,747		3,025		(6,735		)	—		273,037
Total available-for-sale securities	$	287,214	$	3,058	$	(6,760	)	$	—	$	283,512
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
Total mortgage related securities	64,225		571		(1,092		)	—		63,704
Total held-to-maturity securities	$	64,225	$	571	$	(1,092	)	$	—	$	63,704
	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			OTTI in AOCI		Fair Value
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	300	$	14	$	—		$	—	$	314
Corporate securities	12,207		91		(121		)	—		12,177
	12,507		105		(121		)	—		12,491
Private label commercial mortgage related securities	6,119		78		—			—		6,197
Agency residential mortgage related securities	270,461		7,023		(65		)	—		277,419
Total mortgage related securities	276,580		7,101		(65		)	—		283,616
Total available-for-sale securities	$	289,087	$	7,206	$	(186	)	$	—	$	296,107
Held-to-Maturity Securities:
Agency residential mortgage related securities	$	28,369	$	1,082	$	—		$	—	$	29,451
Total mortgage related securities	28,369		1,082		—			—		29,451
Total held-to-maturity securities	$	28,369	$	1,082	$	—		$	—	$	29,451

Schedule of gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position

The following tables show gross unrealized losses and fair value of securities, aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012.

	June 30, 2013
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands, Unaudited)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	2,597		(2		)	2,977		(23		)	5,574		(25		)
	2,597		(2		)	2,977		(23		)	5,574		(25		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total mortgage related securities	222,700		(6,735		)	—		—			222,700		(6,735		)
Total available-for-sale securities	$	225,297	$	(6,737	)	$	2,977	$	(23	)	$	228,274	$	(6,760	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total mortgage related securities	39,991		(1,092		)	—		—			39,991		(1,092		)
Total held-to-maturity securities	$	39,991	$	(1,092	)	$	—	$	—		$	39,991	$	(1,092	)
Total Temporarily Impaired Securities	$	265,288	$	(7,829	)	$	2,977	$	(23	)	$	268,265	$	(7,852	)
	At December 31, 2012
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(In thousands)
Available-for-Sale Securities:
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—		$	—	$	—
Corporate securities	—		—			2,879		(121		)	2,879		(121		)
	—		—			2,879		(121		)	2,879		(121		)
Private label commercial mortgage related securities	—		—			—		—			—		—
Agency residential mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total mortgage related securities	29,092		(65		)	—		—			29,092		(65		)
Total available-for-sale securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)
Held-to-Maturity Securities:
Agency residential mortgage related securities	—		—			—		—			—		—
Total mortgage related securities	—		—			—		—			—		—
Total held-to-maturity securities	$	—	$	—		$	—	$	—		$	—	$	—
Total Temporarily Impaired Securities	$	29,092	$	(65	)	$	2,879	$	(121	)	$	31,971	$	(186	)

Schedules of components of net gains on sale of investment securities

The following schedules provide a summary of the components of net investment securities gains (losses) in the Company’s consolidated statements of operations for the three and six month periods ended June 30, 2013 and 2012.

	Three Months Ended June 30, 2013												Six Months Ended June 30, 2013
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	—	$	—		$	—	$	—	$	—		$	—	$	—		$	—	$	—	$	—
Corporate securities	—		—			—		—		—			—		—			—		—		—
	—		—			—		—		—			—		—			—		—		—
Private label residential mortgage related security	—		—			—		—		—			—		—			—		—		—
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total mortgage related securities	171		—			—		—		171			532		—			—		—		532
Total securities available-for-sale	$	171	$	—		$	—	$	—	$	171		$	532	$	—		$	—	$	—	$	532
	Three Months Ended June 30, 2012												Six Months Ended June 30, 2012
	Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)			Gross Realized Gains		Gross Realized Losses			Other-than- Temporary Impairment Losses		Portion of OTTI in OCI		Net Gains (Losses)
	(In thousands, Unaudited)												(In thousands, Unaudited)
Obligations of U.S. government agencies	$	64	$	—		$	—	$	—	$	64		$	64	$	—		$	—	$	—	$	64
Corporate securities	—		—			—		—		—			—		—			—		—		—
	64		—			—		—		64			64		—			—		—		64
Private label residential mortgage related security	—		(87		)	—		—		(87		)	—		(87		)	—		—		(87		)
Private label commercial mortgage related securities	—		—			—		—		—			—		—			—		—		—
Agency residential mortgage related securities	2,363		—			—		—		2,363			2,363		—			—		—		2,363
Total mortgage related securities	2,363		(87		)	—		—		2,276			2,363		(87		)	—		—		2,276
Total securities available-for-sale	$	2,427	$	(87	)	$	—	$	—	$	2,340		$	2,427	$	(87	)	$	—	$	—	$	2,340

Schedule of amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity by contractual maturity

The amortized cost and estimated fair value of investment securities available-for-sale and held-to-maturity at June 30, 2013 and December 31, 2012 by contractual maturity are as follows:

		Available for Sale				Held to Maturity
		Amortized Cost		Fair Value		Amortized Cost		Fair Value
		(In thousands)
June 30, 2013	(Unaudited)
Due in one year or less		$	1,975	$	1,995	$	—	$	—
Due after one year through five years		8,492		8,480		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,747		273,037		64,225		63,704
		$	287,214	$	283,512	$	64,225	$	63,704
At December 31, 2012
Due in one year or less		$	2,019	$	2,032	$	—	$	—
Due after one year through five years		10,488		10,459		—		—
Due after five years through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total mortgage related securities		276,580		283,616		28,369		29,451
		$	289,087	$	296,107	$	28,369	$	29,451