10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2012

OR

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

For the transition period from __________ to _______________

Commission File No.: 000-54246

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

(Exact name of registrant as specified in its charter)

Pennsylvania	56-2637804
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification Number)
541 Lawrence Road
Broomall, Pennsylvania	19008
(Address)	(Zip Code)

(610) 353-2900

(Registrant's telephone number, including area code)

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

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

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

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

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

The number of shares outstanding of Common Stock, par value $0.01 per share, of the Registrant as of May 7, 2012, was 5,474,437.

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

Index

		PAGE
Part I – Financial Information
Item 1.	Financial Statements
	Unaudited Consolidated Statements of Financial Condition as of March 31, 2012 and December 31, 2011	3
	Unaudited Consolidated Statements of Income For the Three Months Ended March 31, 2012 and 2011	4
	Unaudited Statements of Comprehensive Income For the Three Months Ended March 31, 2012 and 2011	5
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2012 and 2011	6
	Unaudited Consolidated Statements of Cash Flows  For the Three Months Ended March 31, 2012 and 2011	7
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	41
Item 4.	Controls and Procedures	41
Part II – Other Information
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	42
	Signatures	43

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Part I – Item 1.

Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Financial Condition (Unaudited)

(Dollar amounts in thousands, except per share data)

	March 31,			December 31,
	2012			2011
Assets
Cash and cash due from depository institutions	$	980		$	1,397
Interest bearing deposits with depository institutions		113,673			94,455
Total cash and cash equivalents		114,653			95,852
Investment securities available for sale		22,047			23,070
Mortgage-backed securities available for sale		10,277			11,303
Investment securities held to maturity (fair value - 2012, $24,531; 2011, $23,200)		23,526			22,175
Loans receivable - net of allowance for loan losses - 2012, $3,793; 2011, $4,000		277,222			285,297
Accrued interest receivable		1,613			1,666
Premises and equipment – net		4,499			4,461
Other real estate owned (OREO)		6,897			2,587
Federal Home Loan Bank (FHLB) stock-at cost		1,792			1,887
Bank owned life insurance		11,922			11,842
Deferred tax asset – net		5,401			5,843
Prepaid FDIC premium assessment		1,044			1,134
Other prepaid expenses and other assets		3,041			2,370
Total Assets	$	483,934		$	469,487
Liabilities and Stockholders’ Equity
Liabilities
Non-interest bearing deposits	$	17,802		$	11,859
Interest bearing deposits		373,815			364,189
Total deposits		391,617			376,048
Other borrowings		3,076			3,878
Accrued expenses and other liabilities		6,347			6,566
Total Liabilities		401,040			386,492
Stockholders’ Equity
Common stock, $.01 par value; shares authorized – 50,000,000; shares issued and outstanding- 5,474,437		55			55
Additional paid-in capital		56,546			56,396
Retained earnings		31,050			30,819
Common stock acquired by benefit plans		(3,384	)		(2,927	)
Accumulated other comprehensive loss		(1,373	)		(1,348	)
Total Stockholders’ Equity		82,894			82,995
Total Liabilities and Stockholders’ Equity	$	483,934		$	469,487

See notes to unaudited consolidated financial statements.

3

Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Income (Unaudited)

(Dollar amounts in thousands, except per share data)

	For the Three Months
	Ended March 31,
	2012		2011
Interest and Fee Income
Loans, including fees	$	4,003	$	4,140
Mortgage-backed securities		107		162
Investment securities:
Taxable		76		161
Tax - exempt		225		263
Balances due from depository institutions		60		46
Total interest and fee income		4,471		4,772
Interest Expense
Deposits		871		1,141
FHLB advances and other borrowings		3		5
Total interest expense		874		1,146
Net Interest Income		3,597		3,626
Provision for Loan Losses		225		225
Net Interest Income After Provision for Loan Losses		3,372		3,401
Other Income
Service charges on deposit accounts		59		63
Other fee income		54		44
Loss on the sale of securities		—		(42	)
Gain on sale of OREO, net		—		3
Increase in cash surrender value of bank owned life insurance		80		81
Total other income		193		149
Other Expenses
Salaries and employee benefits		1,740		1,498
Occupancy and equipment		456		467
FDIC deposit insurance premiums		96		150
Advertising and marketing		54		55
Professional fees		153		128
Loan and OREO expense		112		40
Directors’ fees		57		66
Other		279		292
Total other expenses		2,947		2,696
Income Before Income Tax Expense		618		854
Income Tax Expense		113		179
Net Income	$	505	$	675
Basic Earnings per Share	$	0.10	$	0.12
Dilutive Earnings per Share	$	0.09	$	0.12

See notes to unaudited consolidated financial statements.

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Alliance Bancorp, Inc. of Pennsylvania and subsidiaries

Consolidated Statements of Comprehensive Income (Unaudited)

(Dollar amounts in thousands)

	Three Months Ended March 31,
	2012			2011
Net Income	$	505		$	675
Other Comprehensive Loss
Unrealized loss on available for sale securities net of tax benefit 2012, $13; 2011, $38		(25	)		(73	)
Plus reclassification adjustment for realized loss on sale of securities included in net income net of tax benefit of 2012, $-0-; 2011, $14		—			(28	)
Total Other Comprehensive Loss		(25	)		(101	)
Comprehensive Income	$	480		$	574

See notes to unaudited consolidated financial statements.

5

Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(Dollar amounts in thousands, except per share data)

	Common Stock			Additional Paid-in Capital			Treasury Stock			Retained Earnings			Common Stock Acquired by Benefit Plans			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity
Balance, January 1, 2011	$	72		$	23,999		$	(4,742	)	$	30,601		$	(482	)	$	(457	)	$	48,991
ESOP shares committed to be released														38						38
Common stock acquired by ESOP														(521	)					(521	)
Net income											675									675
Dividends declared ($0.03 per share)											(164	)								(164	)
Dissolution of mutual holding company					6,848															6,848
Proceeds from issuance of common stock, net of offering costs of $2,603		55			29,927															29,982
Cancellation of common stock and treasury  stock		(72	)		(4,670	)		4,742												—
Other comprehensive loss																	(101	)		(101	)
Balance, March 31, 2011	$	55		$	56,104		$	—		$	31,112		$	(965	)	$	(558	)	$	85,748
Balance, January 1, 2012	$	55		$	56,396		$	—		$	30,819		$	(2,927	)	$	(1,348	)	$	82,995
ESOP shares committed to be released														39						39
Net income											505									505
Dividends declared ($0.05 per share)											(274	)								(274	)
Stock-based compensation (stock options)					40															40
Stock-based compensation (restricted stock)					110															110
Common stock acquired by 2011 trust														(496	)					(496	)
Other comprehensive loss																	(25	)		(25	)
Balance, March 31, 2012	$	55		$	56,546		$	—		$	31,050		$	(3,384	)	$	(1,373	)	$	82,894

See notes to unaudited consolidated financial statements.

6

Alliance Bancorp, Inc. of Pennsylvania and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollar amounts in thousands)

	For the Three Months
	Ended March 31,
	2012			2011
Cash Flow From Operating Activities
Net income	$	505		$	675
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Provision for:
Loan losses		225			225
Depreciation and amortization		133			133
Loss on sale of securities		—			42
Stock based compensation expense		189			38
Deferred tax expense (benefit)		454			(339	)
Gain on the sale of OREO		—			(3	)
Increase in cash surrender value of bank owned life insurance		(80	)		(81	)
Changes in assets and liabilities which provided (used) cash:
Accrued expenses and other liabilities		(219	)		(8,658	)
Prepaid expenses and other assets		(580	)		660
Accrued interest receivable		53			55
Net cash provided by (used in) operating activities		680			(7,253	)
Cash Flow From Investing Activities
Purchase of investment securities-available for sale		(8,000	)		(10,000	)
Purchase of investment securities-held to maturity		(2,840	)		(1,015	)
Loans originated and acquired		(14,123	)		(11,265	)
Proceeds from maturities and calls of investment securities		10,489			11,083
Proceeds from the sale of securities available for sale		—			268
Redemption of FHLB stock		95			116
Principal repayments of:
Loans		17,772			9,303
Mortgage-backed securities		1,011			1,444
Purchase of premises and equipment		(171	)		(186	)
Investment in OREO		(109	)		—
Proceeds from the sale of OREO		—			190
Net cash provided by (used in) investing activities		4,124			(62	)
Cash Flow From Financing Activities
Dividends paid		(274	)		(164	)
Increase (decrease) in deposits		15,569			(6,536	)
Cash from mutual holding company reorganization		—			3,805
Proceeds from stock issuance, net		—			29,982
Acquisition of stock by benefit plans		(496	)		(522	)
Decrease in other borrowings		(802	)		(3,725	)
Net cash provided by financing activities		13,997			22,840
Increase in Cash and Cash Equivalents		18,801			15,525
Cash and Cash Equivalents, Beginning of Year		95,852			61,891
Cash and Cash Equivalents, End of Year	$	114,653		$	77,416
Supplemental Disclosures of Cash Flow Information-
Cash paid during the period for:
Interest	$	875		$	1,146
Income taxes	$	—		$	470
Supplemental Schedule of Noncash Financing and Investing Activities:
Other real estate acquired in settlement of loans	$	4,201		$	546
Premises and equipment acquired from mutual holding company reorganization	$	—		$	2,057
Investments acquired from mutual holding company reorganization	$	—		$	310
Prepaid expenses and other assets acquired from mutual holding company Reorganization	$	—		$	676

See notes to unaudited consolidated financial statements.

7

ALLIANCE BANCORP, INC OF PENNSYLVANIA AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

(1) Organization and Basis of Presentation

On January 18, 2011, Alliance Mutual Holding Company and Alliance Bancorp, Inc. of Pennsylvania, the federally chartered mid-tier holding company for Alliance Bank (the “Bank”) completed a reorganization and conversion (the “second step conversion”), pursuant to which Alliance Bancorp, Inc. of Pennsylvania, a new Pennsylvania corporation (“Alliance Bancorp” or the “Company”), acquired all the issued and outstanding shares of the Bank’s common stock. In connection with the second step conversion, 3,258,475 shares of common stock, par value $0.01 per share, of Alliance Bancorp were sold in subscription, community and syndicated community offerings to certain depositors of the Bank and other investors for $10 per share, or $32.6 million in the aggregate (the “Offering”), and 2,215,962 shares of common stock were issued in exchange for the outstanding shares of common stock of the mid-tier holding company, which also was known as Alliance Bancorp, Inc. of Pennsylvania, held by the “public” shareholders of the mid-tier holding company. Each share of common stock of the mid-tier holding company was converted into the right to receive 0.8200 shares of common stock of Alliance Bancorp in the second step conversion. As a result of the second step conversion, the former mutual holding company and the mid-tier company were merged into Alliance Bancorp and 548,524 (pre-conversion) treasury shares were canceled. Additionally, the Banks’s Employee Stock Ownership Plan (“ESOP”) was issued a line of credit for up to $1.9 million to purchase 50,991 shares of common stock in the Offering and up to 100,000 additional shares of common stock in the open market from time-to-time following the Offering.

The Bank is a community oriented savings bank headquartered in Broomall, Pennsylvania. The Bank operates a total of nine banking offices located in Delaware and Chester Counties, which are suburbs of Philadelphia. The Bank is primarily engaged in attracting deposits from the general public through its branch offices and using such deposits primarily to (i) originate and purchase loans secured by first liens on single-family (one-to-four units) residential and commercial real estate properties and (ii) invest in securities issued by the U.S. Government and agencies thereof, municipal and corporate debt securities and certain mutual funds. The Bank derives its income principally from interest earned on loans, mortgage-backed securities and investments and, to a lesser extent, from fees received in connection with the origination of loans and for other services. The Bank's primary expenses are interest expense on deposits and borrowings and general operating expenses.

The Bank is subject to regulation by the Pennsylvania Department of Banking (the "Department"), as its chartering authority and primary regulator, and by the Federal Deposit Insurance Corporation (the "FDIC"), which insures the Bank's deposits up to applicable limits. The Company is supervised by the Federal Reserve Board (“FRB”).

8

Basis of Presentation. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (US GAAP). The consolidated statement of financial condition at December 31, 2011, has been derived from audited consolidated financial statements but does not include all information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring adjustments or accruals, which are necessary for a fair presentation of the consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results which may be expected for the year ending December 31, 2012 or any other period. All significant intercompany accounts and transactions have been eliminated. For comparative purposes, prior periods’ consolidated financial statements have been reclassified when necessary to conform to report classifications of the current year. The reclassifications had no effect on net income. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Subsequent Events. The Company has evaluated events and transactions occurring subsequent to March 31, 2012, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

(2) Recent Accounting Pronouncements

In 2011, the FASB issued Accounting Standards Update No. 2011-04 "Fair Value Measurement Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements" ("ASU 2011-04"). The ASU amends Topic 820 to add both additional clarifications to existing fair value measurement and disclosure requirements and changes to existing principles and disclosure guidance. Clarifications were made to the relevancy of the highest and best use valuation concept, measurement of an instrument classified in an entity's shareholder's equity and disclosure of quantitative information about the unobservable inputs for level 3 fair value measurements. Changes to existing principles and disclosures included measurement of financial instruments managed within a portfolio, the application of premiums and discounts in fair value measurement, and additional disclosures related to fair value measurements. The updated guidance and requirements are effective for financial statements issued for the first interim or annual period beginning after December 15, 2011, and should be applied prospectively. The Company does not believe the guidance will have a material impact on the consolidated financial statements but has included the disclosure requirements in this 10-Q.

(3) Commitments and Contingencies

Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party. The amount of credit risk involved in issuing letters of credit in the event of nonperformance by the other party is the contract amount. The maximum exposure related to these commitments at March 31, 2012 was $567,000 which was secured by real estate.

(4) Segment Information

The Company has no reportable segments. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk.

9

(5) Earnings Per Share

Earnings per share (“EPS”) consists of two separate components, basic EPS and dilutive EPS. Basic EPS is computed based on the weighted average number of shares of common stock outstanding for each period presented. Dilutive EPS is calculated based on the weighted average number of shares of common stock outstanding plus dilutive common stock equivalents (“CSEs”). CSEs consist of shares that are assumed to have been purchased with the proceeds from the exercise of stock options, as well as unvested common stock awards. Common stock equivalents which are considered antidilutive are not included for the purposes of this calculation. At March 31, 2012, there were 277,750 antidilutive CSEs. At March 31, 2011, the Company had no CSEs.

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computations.

	For the Three Months Ended March 31,
	2012			2011
Net Income	$	505,000		$	675,000
Weighted average shares outstanding		5,474,437			5,474,489
Adjusted average unearned ESOP shares		(174,628	)		(87,249	)
Weighted average shares outstanding – basic		5,299,809			5,387,240
Effect of dilutive common stock equivalents		94,736			—
Adjusted weighted average shares outstanding-dilutive		5,394,545			5,287,240
Basic earnings per share	$	0.10		$	0.12
Dilutive earnings per share	$	0.09		$	0.12

(6) Employee Stock Ownership Plan

The Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements as defined in the ESOP. The ESOP purchased 74,073 shares of common stock in the Offering completed on January 30, 2007 using proceeds of a loan from the former mid-tier holding company. The Bank makes quarterly payments of principal and interest over a term of 8 years at a rate of 8.25% to the Company. The ESOP has a second loan from the Company to fund the purchase of 150,991 additional shares in connection with the second step conversion completed on January 18, 2011 under which the Bank makes quarterly payments of principal and interest over a term of 20 years at a rate of 3.25% to the Company. The loans are secured by the shares of the stock purchased.

As the debt is repaid, shares are released from collateral and allocated to qualified employees. As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations. The compensation expense for the ESOP for the three months ended March 31, 2012 and March 31, 2011 was $38,000 and $38,000, respectively.

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The following table presents the components of the ESOP shares inclusive of shares purchased prior to 2007:

	March 31, 2012		March 31, 2011
Shares released for allocation		148,646		135,218
Unearned shares		172,721		87,249
Total ESOP shares		321,367		222,467

(7) Retirement Plans

The Bank has a defined benefit pension plan which covers all full-time employees meeting certain eligibility requirements. As required under FASB ASC Topic 715, Compensation – Retirement Benefits, the net pension costs included the following components:

	For the Three Months Ended March 31,
	2012			2011
Net Periodic Benefit Cost
Service Cost	$	73,153		$	68,026
Interest Cost		59,083			68,807
Expected Return on Plan Assets		(100,313	)		(93,623	)
Amortization of Prior Service Cost		3,171			3,171
Amortization of Loss		33,594			12,449
Net Periodic Benefit Cost	$	68,688		$	58,830

The Bank has a Nonqualified Retirement and Death Benefit Agreement (the “Agreement”) with certain officers of the Bank. The purpose of the Agreement is to provide the officers with supplemental retirement benefits equal to a specified percentage of final compensation and a pre-retirement death benefit if the officer does not attain the specific age requirement. A summary of the interim information required under FASB ASC Topic 715, Compensation – Retirement Benefits, for the Agreement is as follows:

	For the Three Months Ended March 31,
	2012		2011
Net Periodic Benefit Cost
Service Cost	$	12,060	$	9,865
Interest Cost		43,214		58,852
Amortization of (gain) loss		4,726		(5,717	)
Net Periodic Benefit Cost	$	60,000	$	63,000

(8) Fair Value Accounting

FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs to validation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy under FASB ASC Topic 820 are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to fair value measurement and unobservable (i.e. support with little or no market value activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following methods and assumptions were used to estimate the fair value of certain Company assets and liabilities.

Cash and Cash Equivalents (Carried at Cost). The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate those assets’ fair values.

Investment and Mortgage-Backed Securities. The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Receivable (Carried at Cost). The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans (Level 3). Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Generally Carried at Fair Value). Impaired loans are those in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Appraised values may be discounted from 10% to 35% based upon management’s historical knowledge and changes in the market conditions from the time of the appraisal. Because of the high degree of judgment required in estimating the fair value of collateral underlying impaired loans and because of the relationship between fair value and general economic conditions we consider fair values of impaired loans to be highly sensitive to market conditions. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balances, net of any valuation allowance. At March 31, 2012 and December 31, 2011, the fair value consists of loan balances of $6.3 million and $7.2 million, respectively, with valuation allowances of $531,000 and $667,000, respectively.

Other Real Estate Owned. OREO assets are originally recorded at fair value less estimated selling costs upon transfer of the loans to OREO. Subsequently, OREO assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Appraised values may be discounted from 10% to 35% based upon management’s historical knowledge and changes in the market conditions from the time of the appraisal. These assets are included as Level 3 fair values.

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FHLB Stock (Carried at Cost). The carrying amount of FHLB stock approximates fair value, and considers the limited marketability of such securities.

Accrued Interest Receivable and Payable (Carried at Cost). The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposits (Carried at Cost). The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) (Level 1). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits (Level 3).

Other Borrowings (Carried at Cost). The carrying amount of overnight sweep accounts generally approximate fair value.

Off-Balance Sheet Financial Instruments. Fair values for the Company’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.

The following table summarizes assets measured at fair value on a recurring basis as of March 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

Description	Total		(Level 1) Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Investment Security Obligations of FHLB	$	8,021	$	—	$	8,021	$	—
Investment Security Obligations of Freddie Mac		5,020		—		5,020		—
Investment Security Obligations of Fannie Mae		9,006		—		9,006		—
Mortgage Backed Obligations of GNMA		1,507		—		1,507		—
Mortgage Backed Obligations of FHLMC		3,358		—		3,358		—
Mortgage Backed Obligations of FNMA		5,412		—		5,412		—
Total	$	32,324	$	—	$	32,324	$	—

13

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

Description	Total		(Level 1) Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Investment Security Obligations of FHLB	$	8,034	$	—	$	8,034	$	—
Investment Security Obligations of Freddie Mac		7,027		—		7,027		—
Investment Security Obligations of Fannie Mae		8,009		—		8,009		—
Mortgage Backed Obligations of GNMA		1,545		—		1,545		—
Mortgage Backed Obligations of FHLMC		3,800		—		3,800		—
Mortgage Backed Obligations of FNMA		5,958		—		5,958		—
Total	$	34,373	$	—	$	34,373	$	—

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2012 are as follows:

Description	Total		(Level 1)  Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans	$	5,742	$	—	$	—	$	5,742
Other real estate		989		—		—		989
Total	$	6,731	$	—	$	—	$	6,731

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2011 are as follows:

Description	Total		(Level 1)  Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans	$	6,497	$	—	$	—	$	6,497
Other real estate owned		989		—		—		989
Total	$	7,486	$	—	$	—	$	7,486

There were no transfers between levels for the three months ended March 31, 2012. The Company’s policy is to recognize transfers between levels as of the end of the reporting period.

14

The carrying amount and estimated fair values of the Company’s assets and liabilities were as follows.

	At March 31, 2012
	Carrying		Level 1		Level 2		Level 3
	Amount		Fair Value		Fair Value		Fair Value
		(In thousands)
Assets:
Cash and due from banks	$	980	$	980	$	—	$	—
Interest bearing deposits at banks		113,673		113,673		—		—
Investment securities		45,573		—		46,578		—
Mortgage-backed securities		10,277		—		10,277		—
Loans receivable		277,222		—		—		275,068
FHLB stock		1,792		—		1,792		—
Accrued interest receivable		1,613		—		1,613		—
Liabilities:
NOW and MMDA deposits (1)	$	101,138	$	101,138	$	—	$	—
Other savings deposits		47,669		47,669		—		—
Certificate accounts		242,810		—		—		243,883
Other borrowed money		3,076		3,076		—		—
Accrued interest payable		13		—		13		—
Off balance sheet instruments		—		—		—		—

(1) Includes non-interest bearing accounts, totaling $17,802.

	At December 31, 2011
	Carrying		Level 1		Level 2		Level 3
	Amount		Fair Value		Fair Value		Fair Value
	(In thousands)
Assets:
Cash and due from banks$ 1,397	$	1,397	$	—	$	—
Interest bearing deposits at banks		95,455		94,455		—		—
Investment securities		45,245		—		46,270		—
Mortgage-backed securities		11,303		—		11,303		—
Loans receivable		285,297		—		—		283,708
FHLB stock1,887		—		1,887		—
Accrued interest receivable1,666		—		1,666		—
Liabilities:
NOW and MMDA deposits (1)	$	95,685	$	95,685	$	—	$	—
Other savings deposits		47,157		47,157		—		—
Certificate accounts		233,206		—		—		235,255
Other borrowed money		3,878		3,878		—		—
Accrued interest payable		14		—		14		—
Off balance sheet instruments		—		—		—		—

(1) Includes non-interest bearing accounts, totaling $11,859.

15

(9) Investment and Mortgage Backed Securities

The Bank classifies and accounts for debt and equity securities as follows:

· Securities Held to Maturity - Securities held to maturity are stated at cost, adjusted for unamortized purchase premiums and discounts, based on the positive intent and the ability to hold these securities to maturity considering all reasonably foreseeable conditions and events.

· Securities Available for Sale - Securities available for sale, carried at fair value, are those securities management might sell in response to changes in market interest rates, increases in loan demand, changes in liquidity needs and other conditions. Unrealized gains and losses, net of tax, are reported as a net amount in other comprehensive income (loss) until realized.

Purchase premiums and discounts are amortized to income over the life of the related security using the interest method. The adjusted cost of a specific security sold is the basis for determining the gain or loss on the sale.

The following table shows the fair value and unrealized losses on investments, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position.

	At March 31, 2012
	Less than 12 Months					12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale
U.S. Government obligations	$	1,997	$	(3	)	$	—	$	—	$	1,997	$	(3	)
Mortgage-backed securities		—		—			—		—		—		—
Total securities available for sale	$	1,997	$	(3	)	$	—	$	—	$	1,997	$	(3	)
Securities Held to Maturity
Municipal obligations	$	2,797	$	(41	)	$	—	$	—	$	2,797	$	(41	)

	At December 31, 2011
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale
U.S. Government obligations	$	2,995	$	5	$	—	$	—	$	2,995	$	5
Mortgage-backed securities		119		2		—		—		119		2
Total securities available for sale	$	3,114	$	7	$	—	$	—	$	3,114	$	7
Securities Held to Maturity
Municipal obligations	$	—	$	—	$	—	$	—	$	—	$	—

16

Other-than-temporary impairment, if any, is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

As of March 31, 2012, management believes that the estimated fair value of the securities disclosed above is primarily dependent upon the movement in market interest rates particularly given the negligible inherent credit risk associated with the issuers of these securities.

Although the fair value will fluctuate as market interest rates move, management believes that these fair values will recover as the underlying portfolios mature. As of March 31, 2012, there was 1 U.S. government obligation in an unrealized loss position for less than twelve months and none in an unrealized loss position greater than twelve months, no mortgage backed securities were in an unrealized loss position, and 4 municipal obligations were in an unrealized loss position for less than twelve months and none in an unrealized loss position for more than twelve months. The Company does not intend to sell these securities and it is not more likely than not that it will be required to sell these securities before recovery. Management does not believe any individual unrealized loss as of March 31, 2012 represents an other-than-temporary impairment.

Securities Available for Sale and Held to Maturity

The amortized cost, gross unrealized gains and losses, and the fair values of securities available for sale and held to maturity are shown below. Where applicable, the maturity distribution and the fair value of securities, by contractual maturity, are shown. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Dollars in Thousands

	March 31, 2012
	Amortized		Gross Unrealized					Fair
Available for Sale:	Cost		Gains		Losses			Value
Obligations of the Federal Home Loan Bank:
Due after 1 year through 5 years	$	3,997	$	26	$	—		$	4,023
Due after 5 years through 10 years		4,000		1		(3	)		3,998
Total	$	7,997	$	27	$	(3	)	$	8,021

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Obligations of Freddie Mac:
Due after 1 year through 5 years	$	2,000	$	1	$	—	$	2,001
Due after 10 years		3,000		19		—		3,019
Total	$	5,000	$	20	$	—	$	5,020

17

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Obligations of Fannie Mae:
Due after 1 year through 5 years	$	5,000	$	2	$	—	$	5,002
Due after 5 years through 10 years		3,997		7		—		4,004
Total	$	8,997	$	9	$	—	$	9,006

	March 31, 2012
	Amortized		Gross Unrealized					Fair
Held to Maturity	Cost		Gains		Losses			Value
Municipal Obligations:
Due after 1 years through 5 years	$	2,065	$	68	$	(16	)	$	2,117
Due after 5 years through 10 years		3,595		85		(8	)		3,672
Due after 10 years		17,866		893		(17	)		18,742
Total	$	23,526	$	1,046	$	(41	)	$	24,531

	December 31, 2011
	Amortized		Gross Unrealized				Fair
Available for Sale:	Cost		Gains		Losses		Value
Obligations of the Federal Home Loan Bank:
Due after 1 year through 5 years	$	5,997	$	36	$	—	$	6,033
Due after 5 years through 10 years		2,000		1		—		2,001
Total	$	7,997	$	37	$	—	$	8,034

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Obligations of Freddie Mac:
Due after 1 year through 5 years	$	2,000	$	—	$	(3	)	$	1,997
Due after 10 years		5,000		30		—			5,030
Total	$	7,000	$	30	$	(3	)	$	7,027

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Obligations of Fannie Mae:
Due after 1 year through 5 years	$	3,000	$	2	$	(2	)	$	3,000
Due after 5 years through 10 years		4,997		12		—			5,009
Total	$	7,997	$	14	$	(2	)	$	8,009

18

	December 31, 2011
	Amortized		Gross Unrealized				Fair
Held to Maturity	Cost		Gains		Losses		Value
Municipal Obligations:
Due after 1 year through 5 years	$	1,000	$	75	$	—	$	1,075
Due after 5 years through 10 years		1,766		61		—		1,827
Due after 10 years		19,409		889	$	—		20,298
Total	$	22,175	$	1,025	$	—	$	23,200

Included in obligations of U.S. Government agencies at March 31, 2012 and December 31, 2011, were $22.0 million and $23.1 million, respectively, of structured notes. These structured notes were comprised of step-up bonds that provide the U.S. Government agency with the right, but not the obligation, to call the bonds on certain dates. In March of 2011, the Company recorded a $42,000 loss on the sale of $268,000 of equity securities, which previously were owned by the mutual holding company. There were no sales of investment securities in 2012.

Mortgage-Backed Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and the fair values of mortgage-backed securities available for sale are as follows:

Dollars in Thousands

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
GNMA pass-through certificates	$	1,408	$	99	$	—	$	1,507
FHLMC pass-through certificates		3,106		252		—		3,358
FNMA pass-through certificates		5,075		337		—		5,412
Total	$	9,589	$	688	$	—	$	10,277

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
GNMA pass-through certificates	$	1,449	$	96		—		$	1,545
FHLMC pass-through certificates		3,528		272		—			3,800
FNMA pass-through certificates		5,623		337	$	(2	)		5,958
Total	$	10,600	$	705	$	(2	)	$	11,303

At March 31, 2012 and December 31, 2011, the Bank had $2.0 million and $2.2 million, respectively, in mortgage-backed securities pledged as collateral for the treasury, tax and loan account and certain deposits. There were no sales of mortgage-backed securities in 2012 or 2011.

19

(10) Loans Receivable - Net

Loans receivable consist of the following:

Dollars in Thousands	At March 31,		At December 31,
	2012		2011
Real estate loans:
Single-family	$	119,319	$	118,059
Multi-family		10,155		10,757
Commercial		125,042		130,191
Land and construction		11,432		14,595
Commercial business		9,181		9,481
Consumer		6,288		6,616
Total loans receivable		281,417		289,699
Less:
Deferred fees		402		402
Allowance for loan losses		3,793		4,000
Loans receivable - net	$	277,222	$	285,297

The Company originates loans to customers located primarily in Southeastern Pennsylvania. This geographic concentration of credit exposes the Bank to a higher degree of risk associated with this economic region.

Single-family real estate loans primarily consist of first mortgage liens on existing single-family residences and home equity loans. The Company and intends to continue to originate permanent loans secured by first mortgage liens and home equity loans on single-family residential properties in the future

Multi-family and commercial real estate loans are made on terms up to 30 years, some of which include call or balloon provisions ranging from five to 15 years. The Company will originate and purchase these loans either with fixed interest rates or with interest rates which adjust in accordance with a designated index.

The Company also originates residential and commercial construction loans, and to a limited degree, land acquisition and development loans. Construction loans are classified as either residential construction loans or commercial real estate construction loans at the time of origination, depending on the nature of the property securing the loan.

The Company has a commercial loan department to provide a full range of commercial loan products to small business customers in its primary marketing area. These loans generally have shorter terms and higher interest rates as compared to mortgage loans.

The Company offers consumer loans in order to provide a full range of financial services to its customers and because such loans generally have shorter terms and higher interest rates than mortgage loans. The consumer loans presently offered by the Company include deposit account secured loans and lines of credit.

20

(11) Loan Credit Quality

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Generally, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of March 31, 2012:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 or More Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable Greater Than 90 Days Past Due and Accruing
Real estate:
Single-family	$	399	$	711	$	3,065	$	4,175	$	115,144	$	119,319	$	2,011
Multi-family		—		—		—		—		10,155		10,155		—
Commercial		656		151		2,527		3,334		121,708		125,042		—
Land and construction		—		—		3,161		3,161		8,271		11,432		—
Commercial business		—		—		—		—		9,181		9,181		—
Consumer		215		81		383		679		5,609		6,288		383
Total	$	1,270	$	943	$	9,136	$	11,349	$	270,068	$	281,417	$	2,394

21

The following table presents the classes of the loan portfolio summarized by the past due status as of December 31, 2011:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 or More Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable Greater Than 90 Days Past Due and Accruing
Real estate:
Single-family	$	1,509	$	252	$	3,073	$	4,834	$	113,225	$	118,059	$	2,018
Multi-family		—		—		—		—		10,757		10,757		—
Commercial		3,420		56		3,016		6,492		123,699		130,191		—
Land and construction		—		—		7,707		7,707		6,888		14,595		—
Commercial business		—		—		81		81		9,400		9,481		—
Consumer		207		119		561		887		5,729		6,615		561
Total	$	5,136	$	427	$	14,438	$	20,001	$	269,698	$	289,699	$	2,579

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2012 and December 31, 2011:

	March 31, 2012		December 31, 2011
(Dollars in thousands)
Real estate:
Single-family	$	1,054	$	1,055
Multi-family		—		—
Commercial		2,757		3,016
Land and construction		3,161		7,707
Commercial business		—		81
Consumer		—		—
Total non-accruing loans	$	6,972	$	11,859

Allowance for Loan Losses

The allowance for loan losses is increased by charges to income and decreased by chargeoffs (net of recoveries). Allowances are provided for specific loans when losses are probable and can be estimated. When this occurs, management considers the remaining principal balance, fair value and estimated net realizable value of the property collateralizing the loan. Current and future operating and/or sales conditions are also considered. These estimates are susceptible to changes that could result in material adjustments to results of operations. Recovery of the carrying value of such loans is dependent to a great extent on economic, operating and other conditions that may be beyond management’s control.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

22

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. An unallocated component, if any, is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The general component covers pools of loans by loan class including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:

1.	Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
2.	National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans.
3.	Nature and volume of the portfolio and terms of loans.
4.	Experience, ability, and depth of lending management and staff.
5.	Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications.
6.	Quality of the Company’s loan review system, and the degree of oversight by the Company’s Board of Directors.
7.	Existence and effect of any concentrations of credit and changes in the level of such concentrations.
8.	Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Single family real estate loans involve certain risks such as interest rate risk and risk of non repayment. Adjustable-rate single family real estate loans decreases the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy or the borrower.

Multi-family and commercial real estate lending entails significant risks. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for multi-family and commercial real estate as well as economic conditions generally.

23

Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property's value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Company than construction loans to individuals on their personal residences.

Commercial business lending is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business assets. Commercial business loans are primarily secured by inventories and other business. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Consumer loans generally have shorter terms and higher interest rates than other lending but generally involve high credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. In addition, consumer lending collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial and construction loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss.  Loans criticized special mention have potential weaknesses that deserve management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.   Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, our estimates of the allowance for loan losses have not required significant adjustments from management’s initial estimates. In addition, the Department and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses. The Department and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods.

24

The following table presents the activity in the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for the three months ended March 31, 2012:

(Dollars in thousands)	Single Family Real Estate			Multi Family Real Estate		Commercial Real Estate			Land and Construction			Consumer			Commercial Business			Total
Allowance for loan losses for the three months ended March 31, 2012:
Beginning balance	$	693		$	234	$	2,289		$	525		$	20		$	239		$	4,000
Charge-offs		—			—		—			(440	)		(2	)		—			(442	)
Recoveries		8			—		—			1			1			—			10
Provisions		(5	)		60		(4	)		176			3			(5	)		225
Ending balance	$	696		$	294	$	2,285		$	262		$	22		$	234		$	3,793
Allowance for loan losses:
Ending balance	$	696		$	294	$	2,285		$	262		$	22		$	234		$	3,793
Ending balance:
individually evaluated
for impairment	$	—		$	223	$	308		$	—		$	—		$	—		$	531
Ending balance:
collectively evaluated
for impairment	$	696		$	71	$	1,977		$	262		$	22		$	234		$	3,262
Loans receivable:
Ending balance	$	119,319		$	10,155	$	125,042		$	11,432		$	6,288		$	9,181		$	281,417
Ending balance:
individually evaluated
for impairment	$	—		$	2,834	$	7,143		$	3,161		$	—		$	—		$	13,138
Ending balance:
collectively evaluated
for impairment	$	119,319		$	7,321	$	117,899		$	8,271		$	6,288		$	9,181		$	268,279

25

The following table presents the activity in the allowance for loan losses by classes of the loans individually and collectively evaluated for impairment as of and for the three months ended March 31, 2011:

(Dollars in thousands)	Single Family Real Estate			Multi Family Real Estate		Commercial Real Estate		Land and Construction		Commercial Business			Consumer		Total
Allowance for loan losses:
Beginning balance	$	411		$	247	$	2,072	$	2,151	$	190		$	19	$	5,090
Charge-offs		(33	)		—		—		—		—	(2)				(35	)
Recoveries		—			—		—		—		—			—		—
Provisions		45			32		30		96		20			2		225
Ending balance	$	423		$	279	$	2,102	$	2,247	$	210		$	19	$	5,280
Ending balance:
individually evaluated
for impairment	$	—		$	—	$	26	$	1,907	$	13		$	—	$	1,946
Ending balance:
collectively evaluated
for impairment	$	423		$	279	$	2,076	$	340	$	197		$	19	$	3,334

The following table presents the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of December 31, 2011:

(Dollars in thousands)	Single Family Real Estate		Multi Family Real Estate		Commercial Real Estate		Land and Construction		Consumer		Commercial Business		Total
Allowance for loan losses:
Ending balance	$	693	$	234	$	2,289	$	525	$	20	$	239	$	4,000
Ending balance:
individually evaluated
for impairment	$	—	$	157	$	205	$	305	$	—	$	—	$	667
Ending balance:
collectively evaluated
for impairment	$	693	$	77	$	2,084	$	220	$	20	$	239	$	3,333
Loans receivable:
Ending balance	$	118,059	$	10,757	$	130,191	$	14,595	$	6,616	$	9,481	$	289,699
Ending balance:
individually evaluated
for impairment	$	—	$	2,834	$	4,991	$	7,707	$	—	$	81	$	15,613
Ending balance:
collectively evaluated
for impairment	$	118,059	$	7,923	$	125,200	$	6,888	$	6,616	$	9,400	$	274,086

26

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of March 31, 2012:

	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in thousands)
Real estate:
Single-family	$	115,754	$	—	$	3,565	$	—	$	119,319
Multi-family		7,321		—		2,834		—		10,115
Commercial		116,930		3,214		4,898		—		125,042
Land and construction		8,271		—		3,161		—		11,432
Commercial business		9,156		25		—		—		9,181
Consumer		6,288		—		—		—		6,288
Total	$	263,720	$	3,239	$	14,458	$	—	$	281,417

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of December 31, 2011:

	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in thousands)
Real estate:
Single-family	$	114,486	$	—	$	3,573	$	—	$	118,059
Multi-family		7,923		—		2,834		—		10,757
Commercial		121,980		3,220		4,991		—		130,191
Land and construction		6,888		—		7,707		—		14,595
Commercial business		9,375		25		81		—		9,481
Consumer		6,616		—		—		—		6,616
Total	$	267,268	$	3,245	$	19,186	$	—	$	289,699

Loan Impairment

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and industrial loans, commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

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An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. Currently, estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral.

The Company does not separately identify individual single-family loans secured by real estate unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment.

For multi-family, land and construction, and commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial business loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

The Company does not separately identify consumer and other loans unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment.

Loans whose terms are modified are classified as troubled debt restructurings if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary below market rate reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

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The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the three months ended March 31, 2012:

(Dollars in Thousands)	Recorded		Unpaid Principal		Related		Average Recorded		Interest Income Recognized
	Investment		Balance		Allowance		Investment		While Impaired
With no related allowance recorded:
Real estate:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial	$	3,704	$	3,704	$	—	$	3,704	$	—
Land and construction	$	3,161	$	6,188	$	—	$	3,161	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
With an allowance recorded:
Real estate:
Multi-family	$	2,834	$	2,834	$	223	$	2,834	$	—
Commercial	$	3,439	$	3,439	$	308	$	3,439	$	—
Land and construction	$	—	$	—	$	—	$	—	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
Total:
Real estate:
Multi-family	$	2,834	$	2,834	$	223	$	2,834	$	—
Commercial	$	7,143	$	7,143	$	308	$	7,143	$	—
Land and construction	$	3,161	$	6,188	$	—	$	3,161	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—

The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the year ended December 31, 2011:

(Dollars in Thousands)	Recorded		Unpaid Principal		Related		Average Recorded		Interest Income Recognized
	Investment		Balance		Allowance		Investment		While Impaired
With no related allowance recorded:
Real estate:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial	$	2,507	$	2,507	$	—	$	1,537	$	46
Land and construction	$	5,861	$	10,289	$	—	$	5,861	$	145
Commercial business	$	81	$	81	$	—	$	25	$	1
With an allowance recorded:
Real estate:
Multi-family	$	2,834	$	2,834	$	157	$	944	$	29
Commercial	$	2,484	$	2,484	$	205	$	679	$	34
Land and construction	$	1,846	$	1,846	$	305	$	526	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
Total:
Real estate:
Multi-family	$	2,834	$	2,834	$	157	$	944	$	29
Commercial	$	4,991	$	4,991	$	205	$	2,216	$	80
Land and construction	$	7,707	$	12,135	$	305	$	6,387	$	145
Commercial business	$	81	$	81	$	—	$	25	$	1

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The following table summarizes information in regards to troubled debt restructurings for the three months ended March 31, 2012:

(Dollars in Thousands)	Number of  Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Real estate:
Single-family	—		—		—
Multi-family	—		—		—
Commercial	7	$	3,445	$	3,445
Land and construction	—		—		—
Commercial business	—		—		—
Consumer	—		—		—

There were no troubled debt restructurings with a payment default, with the payment default occurring within 12 months of restructure, and payment default occurring during the three months ended March 31, 2012.

At March 31, 2012, the Company had two multi-family loans, ten commercial real estate loans, and one land and construction loan classified as troubled debt restructurings. The two multi-family loans are to one borrower, were classified as substandard in the Company’s allowance for loan losses, and have a $223,000 allowance against them. The ten commercial real estate loans are to three borrowers. Eight of the ten commercial real estate loans are to two borrowers and are classified as special mention in the Company’s allowance for loan losses. Two of the ten commercial real estate loans are to two borrowers and are classified as substandard in the Company’s allowance for loan losses. The land and construction loan was classified as substandard in the Company’s allowance for loan losses and had been written down by $2.6 million in charge-offs during the year ended December 31, 2011 and had no allowance against a $3.2 million carrying value at March 31, 2012. The Company expects to receive sale proceeds of $3.3 million for this land and construction loan in May of 2012. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven.

The following table summarizes information in regards to troubled debt restructurings at December 31, 2011:

(Dollars in Thousands)	Number of  Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Real estate:
Single-family	—		—		—
Multi-family	2	$	2,834	$	2,834
Commercial	3	$	1,280	$	1,280
Land and construction	2	$	9,702	$	5,561
Commercial business	—		—		—
Consumer	—		—		—

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	Number of  Contracts		Recorded Investment
That Subsequently Defaulted
Real estate:
Single-family		—		—
Multi-family		—		—
Commercial		—		—
Land and construction		2	$	5,861
Commercial business		—		—
Consumer		—		—

At December 31, 2011, the Company had two multi-family, three commercial real estate, and two land and construction loans classified as troubled debt restructurings. The two multi-family loans are to one borrower, were classified as substandard in the Company’s allowance for loan losses, and have a $158,000 allowance against them. The three commercial real estate loans are to one borrower, are classified as special mention in the Company’s allowance for loan losses, and had no reserve against them. The two land and construction loans are to two borrowers, were classified as substandard in the Company’s allowance for loan losses and had been written down by $3.7 million in charge-offs as of December 31, 2011, and had no allowance against them. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven. The two multi-family and the two land and construction loans were classified as troubled debt restructurings at December 31, 2010, while the three commercial real estate were classified as troubled debt restructurings during the year ended December 31, 2011.

(12) Stock-Based Compensation

Recognition and Retention Plan and Trust

In July of 2011, the shareholders of the Company approved the adoption of the 2011 Recognition and Retention Plan and Trust (the “2011 RRP”). Pursuant to the terms of the 2011 RRP, awards of up to 218,977 shares of restricted common stock may be granted to employees and directors. In order to fund the 2011 RRP, the 2011 RRP acquired 138,300 shares of the Company’s common stock in the open market for approximately $1.5 million at an average price of $10.72 per share. The Company made sufficient contributions to the 2011 RRP to fund the purchase of these shares. Pursuant to the terms of the 2011 RRP, an additional 80,677 shares will need to be acquired. On July 20, 2011, a total of 208,200 2011 RRP awards were granted. The 2011 RRP shares generally vest at the rate of 20% per year over five years.

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A summary of the status of the shares under the 2011 RRP as of March 31, 2012 and changes during the three months ended March 31, 2012 are presented below:

	Three Months Ended March 31, 2012
			Weighted
	Number of		average grant
	shares		date fair value
Restricted at the beginning of period		208,200	$	11.05
Granted		—		—
Vested		—		—
Forfeited		—		—
Restricted at the end of period		208,200	$	11.05

Compensation expense on 2011 RRP shares granted is recognized ratably over the five year vesting period in an amount which totals the market price of the common stock at the date of grant. During the three months ended March 31, 2012, approximately 10,410 shares were amortized to expense, based on the proportional vesting of the awarded shares, resulting in recognition of approximately $110,000 in compensation expense. As of March 31, 2012, approximately $1.9 million in additional compensation expense is scheduled to be recognized over the remaining vesting period of 4.25 years. Under the terms of the 2011 RRP, any unvested 2011 RRP awards will become fully vested upon a change in control resulting in the full recognition of any unrecognized expense.

Stock Options

In July 2011, the shareholders of the Company also approved the adoption of the 2011 Stock Option Plan (the “2011 Option Plan”). Pursuant to the 2011 Option Plan, options to acquire 325,842 shares of common stock may be granted to employees and directors. Under the 2011 Option Plan, options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. On July 20, 2011, options to purchase 277,750 shares of common stock were awarded. As of March 31, 2012, a total of 48,092 shares of common stock have been reserved for future grant pursuant to the 2011 Option Plan.

32

A summary of the status of the Company’s stock options under the 2011 Option Plan as of March 31, 2012, and changes during the three months ended March 31, 2012, is presented below:

	Three Months Ended March 31, 2012
			Weighted
	Number of		average
	shares		exercise price
Options outstanding at the beginning of period		277,750	$	11.05
Granted		—		—
Exercised		—		—
Vested		—		—
Forfeited		—		—
Options outstanding at the end of period		277,750	$	11.05
Exercisable at end of the period		—		—

The fair value of each option grant is estimated using the Black-Scholes pricing model with the following weighted average assumptions for the options granted in 2011: dividend yield of 2.0%, risk-free interest rate of 1.58%, expected life of 7.0 years, and volatility of 30.34%. The calculated fair value of options granted in 2011 was $2.99. The weighted average contractual term of the option was 9.3 years at March 31, 2012. No options were exercisable at March 31, 2012.

During the three months ended March 31, 2012, approximately $40,000 was recognized in compensation expense for the 2011 Option Plan. At March 31, 2012, approximately $677,000 in additional compensation expense for awarded options remained unrecognized. The weighted average period over which this expense will be recognized is approximately 4.25 years.

(13) Contingent Obligations

The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit. The Company has issued unconditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit totaled approximately $567,000 at March 31, 2012 and $508,000 at December 31, 2011 and represent the maximum potential future payments the Company could be required to make. Typically, these instruments have terms of twelve months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit for on-balance sheet instruments. Company policies governing loan collateral apply to standby letters of credit at the time of credit extension. Loan-to-value ratios are generally consistent with loan-to-value requirements for other commercial loans secured by similar types of collateral.

33

Part I – Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements. Alliance Bancorp, Inc. of Pennsylvania (the “Company”) may from time to time make written or oral “forward-looking statements,” including statements contained in the Company’s filings with the Securities and Exchange Commission (including this Quarterly Report on Form 10-Q and the exhibits hereto and thereto), in its reports to shareholders and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions, that are subject to significant risks and uncertainties, and are subject to change based on various factors (some of which are beyond the Company’s control).  The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements.  The following factors, among others, could cause the Company’s financial performance to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System; inflation, interest rate, market and monetary fluctuations; the timely development of and acceptance of new products and services of the Company and the perceived overall value of these products and services by users, including the features, pricing and quality compared to competitors’ products and services; the willingness of users to substitute competitors’ products and services for the Company’s products and services; the success of the Company in gaining regulatory approval of its products and services, when required; the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance); technological changes; acquisitions; changes in consumer spending and saving habits; and the success of the Company at managing the risks involved in the foregoing.

The Company cautions that the foregoing list of important factors is not exclusive.  Readers are also cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date of this report.  The Company does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

General. The Company’s profitability is highly dependent on net interest income. The components that drive net interest income are the amounts of interest-earning assets and interest-bearing liabilities along with rates earned or paid on such rate sensitive instruments. The Company manages interest rate exposure by attempting to match asset maturities with liability maturities. In addition to managing interest rate exposure, the Company also considers the credit risk, prepayment risk and extension risk of certain assets. The Company maintains asset quality by utilizing comprehensive loan underwriting standards and collection efforts as well as originating or purchasing primarily secured or guaranteed assets.

The Company’s profitability is also affected by fee income, gain or loss on the sale of other real estate owned, general and administrative expenses, provisions for loan losses, other real estate owned expenses, and income taxes.

34

Critical Accounting Policies. In reviewing and understanding financial information for the Company, you are encouraged to read and understand the significant accounting policies used in preparing our consolidated financial statements included elsewhere herein. These policies are described in Note 2 of the notes to the consolidated financial statements in the December 31, 2011 annual report on Form 10-K. The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America (US GAAP) and to general practices within the banking industry. Accordingly, the consolidated financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of income and expenses during the periods presented. The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to expense. Charges against the allowance for loan losses are made when management believes that the collectability of loan principal is unlikely. Subsequent recoveries are added to the allowance. The allowance is an amount that management believes will cover known and inherent losses in the loan portfolio, based on evaluations of the collectability of loans. The evaluations take into consideration such factors as changes in the types and amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, and current economic conditions. This evaluation is inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future cash flows on impaired loans, value of collateral, estimated losses on our commercial and residential loan portfolios and general amounts for historical loss experience. All of these estimates may be susceptible to significant change.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, our estimates of the allowance for loan losses have not required significant adjustments from management’s initial estimates. In addition, the Department and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses. The Department and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods.

35

Income Taxes. Management makes estimates and judgments to calculate various tax liabilities and determine the recoverability of our deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenues and expenses. As of March 31, 2012, the Company has approximately $1.1 million, $864 thousand, and $575 thousand of capital loss carryforwards, expiring in 2013, 2014, and 2015, respectively, which result in a deferred tax asset of $859 thousand. The Company expects to fully realize the benefit of such carryforwards through tax planning and sales/leaseback of capital assets. As of March 31, 2012, the Company has $1.3 million of federal net operating loss carryforwards, expiring from 2027 through 2031, which result in a deferred tax asset of $443 thousand. The net operating losses were incurred at Alliance Mutual Holding Company (“MHC”). In connection with the second step conversion in January 2011, the MHC was dissolved, and the NOLs that existed at the MHC were transferred to the Company. The NOLs that were transferred cannot be carried back; however, the Company expects to fully realize the benefit of such carryforwards based on future periods’ forecasted earnings.

In evaluating our ability to recover deferred tax assets, we consider all available positive and negative evidence, including our past operating results, and our forecast of future taxable income. In determining future taxable income, we make assumptions for the amount of taxable income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require us to make judgments about our future taxable income and are consistent with the plans and estimates we use to manage our business. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets. An increase in the valuation allowance would result in additional income tax expense in the period and could have a significant impact on our future earnings.

Other than Temporary Impairment of Investment Securities and Mortgage Backed Securities. The Company is required to perform periodic reviews of individual securities in its investment portfolio to determine whether a decline in the fair value of a security below its amortized cost is other than temporary. A review of other than temporary impairment requires management to make certain judgments regarding the nature of the decline, its effect on the consolidated financial statements and the probability, extent and timing of a valuation recovery. Management evaluates securities for other than temporary impairment on at least a quarterly basis, and more frequently when economic or market conditions warrant such evaluations. The other-than-temporary impairment is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

Comparison of Financial Condition at March 31, 2012 and December 31, 2011

Total assets increased $14.4 million or 3.1% to $483.9 million at March 31, 2012 compared to $469.5 million at December 31, 2011. This increase was primarily due to a $18.8 million or 19.6% increase in total cash and cash equivalents, a $1.4 million or 6.1% increase in investment securities held to maturity, and a $4.3 million or 166.6% increase in other real estate owned. These increases were partially offset by a $1.0 million or 4.4% decrease in investment securities available for sale, a $1.0 million or 9.1% decrease in mortgage-backed securities available for sale, and a $8.1 million or 2.8% decrease in net loans receivable.

36

Total liabilities increased $14.5 million or 3.8% to $401.0 million at March 31, 2012 compared to $386.5 million at December 31, 2011. This increase was primarily due to a $5.9 million or 50.1% increase in non-interest bearing deposits and a $9.7 million or 2.6 % increase in interest bearing deposits. These increases were partially offset by a $802,000 or 20.7% decrease in other borrowings from December 31, 2011 to March 31, 2012.

Stockholders’ equity decreased $101,000 to $82.9 million as of March 31, 2012 compared to $83.0 million at December 31, 2011. The decrease was due to $457,000 of common stock acquired by benefit plans combined with $274,000 in dividends paid. The decrease was partially offset by net income of $505,000 for the three months ended March 31, 2012.

Nonperforming assets decreased $762,000 to $16.3 million or 3.36% of total assets at March 31, 2012 as compared to $17.0 million or 3.63% of total assets at December 31, 2011. The nonperforming assets at March 31, 2012 included $9.4 million in nonperforming loans and $6.9 million in other real estate owned. The decrease in nonperforming assets was primarily due to a $5.1 million decrease in nonperforming loans, which was partially offset by a $4.3 million increase in other real estate owned as of March 31, 2012. Overall, nonperforming loans included $3.1 million in single-family residential real estate loans, $2.8 million in commercial real estate loans, $3.2 million in a real estate construction loan and $383,000 in student loans, which are fully guaranteed by the U.S. Government. The increase in other real estate owned resulted from the transfer of $4.2 million, net of $440,000 in charge-offs, previously reported as nonperforming residential land and construction loans to other real estate owned during the three months ended March 31, 2012.

The Company continues to aggressively work towards the resolution of its nonperforming assets. As previously reported, the $3.2 million nonperforming real estate construction loan is under an agreement of sale and the Company expects to receive sales proceeds of $3.3 million in May 2012. In addition and as previously reported, the Company has a $2.7 million real estate owned property under an agreement of sale with a purchase price of $2.7 million and pending the receipt of the deed from the Sheriff of Philadelphia expects to settle in the second quarter of 2012. The allowance for loan losses amounted to $3.8 million or 40.5% of nonperforming loans at March 31, 2012 as compared to $4.0 million or 27.7% at December 31, 2011.

Although management uses the best information available to make determinations with respect to the provisions for loan losses, additional provisions for loan losses may be required to be established in the future should economic or other conditions change substantially. In addition, the Department and the FDIC, as an integral part of their examination process, periodically review the Bank’s allowance for loan losses. Such agencies may require the Bank to recognize additions to such allowance based on their judgments about information available to them at the time of their examination.

Comparison of Results of Operations for the Three Months ended March 31, 2012 and March 31, 2011

General. Net income decreased $170,000 or 25.2% to $505,000 or $0.09 per share (dilutive) for the three months ended March 31, 2012 as compared to $675,000 or $0.12 per share (dilutive) for the same period in 2011. The decrease in net income was primarily due to a $251,000 or 9.3% increase in other expenses and a $29,000 or 0.8% decrease in net interest income which was partially offset by a $44,000 or 29.5% increase in other income for the three months ended March 31, 2012 when compared to the same period in 2011.

37

Net Interest Income. Net interest income is determined by the interest rate spread (i.e., the difference between the yields earned on interest-earning assets and the rates paid on its interest-bearing liabilities) and the relative amounts of interest-earning assets and interest-bearing liabilities. Net interest income decreased $29,000 or 0.8% during the three months ended March 31, 2012 as compared to the same period in 2011. The decrease in net interest income was primarily due to a $301,000 or 6.3% decrease in interest income on interest earning assets, partially offset by a $272,000 or 23.8% decrease in interest expense on interest bearing liabilities.

As a result, the interest rate spread decreased 5 basis points from 3.10% for the three months ended March 31, 2011 to 3.05% for the three months ended March 31, 2012. Based on the current economic environment and market competition, management anticipates continued pressure on the interest rate spread for 2012 which may negatively impact net interest income.

Interest Income. Interest income decreased $301,000 or 6.3% to $4.5 million for the three months ended March 31, 2012, compared to the same period in 2011. The decrease was primarily due to a $137,000 or 3.3% decrease on interest income on loans, a $123,000 or 29.0% decrease in interest income on investment securities, and a $55,000 or 34.0% decrease in interest income on mortgage backed securities. These decreases were partially offset by a $14,000 or 30.4% increase in interest income earned on balances due from depository institutions. The decrease in interest income on loans was due to a 6 basis point or 1.1% decrease in the average yield earned and a $6.6 million or 2.3% decrease in the average balance of loans outstanding. The decrease in interest income on investment securities was primarily due to a $19.9 million or 29.5% decrease in the average balance of investment securities, partially offset by 2 basis point or 0.8% increase in the average yield earned. The decrease in interest income on mortgage backed securities was due to a $4.7 million or 30.1% decrease in the average balance of mortgage backed securities and a 23 basis point or 5.5% decrease in the average yield earned. The increase in interest income on balances due from depository institutions was due to a $38.0 million or 57.2% increase in the average balance of balances due from depository institutions, partially offset by a 5 basis point or 17.0% decrease in the average yield earned.

Interest Expense. Interest expense decreased $272,000 or 23.7% to $874,000 for the three months ended March 31, 2012, compared to the same period in 2011. This decrease was due to a $270,000 or 23.7% decrease in interest expense on deposits and a $2,000 or 40.0% decrease in interest expense on borrowings. The decrease in interest expense on deposits was due to a 31 basis point or 24.8% decrease in the rates paid on deposits, partially offset by a $3.1 million or 0.8% increase in the average balance of deposits. The decrease in interest expense on borrowings was due to a $3.5 million or 53.7% decrease in the average balance of borrowings, partially offset by a 9 basis point or 30.0% increase in the rates paid on borrowings.

38

Average Balances, Net Interest Income and Yields Earned and Rates Paid. The following average balance sheet table sets forth for the periods indicated, information on the Company regarding: (i) the total dollar amounts of interest income on interest-earning assets and the resulting average yields; (ii) the total dollar amounts of interest expense on interest-bearing liabilities and the resulting average costs; (iii) net interest income; (iv) interest rate spread; (v) net interest-earning assets (interest-bearing liabilities); (vi) the net yield earned on interest-earning assets; and (vii) the ratio of total interest-earning assets to total interest-bearing liabilities. Information is based on average daily balances during the periods presented.

	Three Months Ended March 31,
	2012							2011
	Average							Average
	Balance		Interest		Rate			Balance		Interest		Rate
(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) (3)	$	284,724	$	4,003		5.62	%	$	291,312	$	4,140		5.68	%
Mortgage-backed securities (3)		10,900		107		3.93			15,592		162		4.16
Investment securities (3)		47,582		301		2.53			67,507		424		2.51
Due from depository institutions		104,514		60		0.23			66,484		46		0.28
Total interest-earning assets		447,720		4,471		3.99			440,895		4,772		4.33
Noninterest-earning assets		28,966							28,419
Total assets	$	476,686						$	469,314
Interest-bearing liabilities:
Deposits	$	369,456		871		0.94		$	366,389		1,141		1.25
FHLB advances and other borrowings		3,040		3		0.39			6,566		5		0.30
Total interest-bearing liabilities		372,496		874		0.94			372,955		1,146		1.23
Noninterest-bearing
Liabilities		21,173							16,791
Total liabilities		393,669							389,746
Stockholders’ equity		83,017							79,568
Total liabilities and stockholders’ equity	$	476,686						$	469,314
Net interest-earning assets	$	75,224						$	67,940
Net interest income/interest rate spread			$	3,597		3.05	%			$	3,626		3.10	%
Net yield on interest- Earning assets (2)						3.21	%						3.29	%

1. Nonaccrual loans and loan fees have been included.

2. Net interest income divided by interest-earning assets.

3. The indicated yields are not reflected on a tax equivalent basis.

39

Provision for Loan Losses. The provision for loan losses amounted to $225,000 for the three months ended March 31, 2012 and for the three months ended March 31, 2011. Such provisions were primarily to maintain a reserve level deemed appropriate by management in light of factors such as the level of nonperforming loans and the current economic environment.

Other Income. Other income was $193,000 for the three months ended March 31, 2012 as compared to $149,000 for the same period in 2011. The increase was primarily the result of a $42,000 loss on the sale of certain equity securities in the three months ended March 31, 2011 compared to no corresponding security sales activity for the three months ended March 31, 2012. The increase in other income also included a $10,000 or 22.7% increase in other fee income. The increase in other income was partially offset by a $4,000 decrease in service charges on deposit accounts and a $3,000 decrease in gain on the sale of other real estate owned (“OREO”) for the three months ended March 31, 2012 compared to the three months ended March 31, 2011.

Other Expenses. Other expenses increased $251,000 or 9.3% to $2.9 million for the three months ended March 31, 2012 compared to the same period in 2011. The increase was primarily due to a $242,000 or 16.2% increase in salary and employee benefits, a $25,000 or 19.5% increase in professional fees, and a $72,000 or 180.0% increase in loan and OREO expense. The increase in salary and benefit cost is primarily attributed to costs associated with the stock based compensation plans implemented during the third quarter of 2011. These increases were partially offset by a $54,000 or 36.0% decrease in FDIC insurance premiums, $11,000 or 2.4% decrease in occupancy and equipment expense, and a $9,000 or 13.6% decrease in directors fees.

Income Tax Expense. Income tax expense amounted to $113,000 and $179,000 for the three months ended March 31, 2012 and 2011, respectively, resulting in effective tax rates of 18.3% and 21.0%, respectively. The decrease in income tax expense was primarily due to a lower amount of taxable income before income taxes.

Liquidity and Capital Resources

Liquidity, represented by cash and cash equivalents, is a product of its cash flows from operations. The primary sources of funds are deposits, borrowings, amortization, prepayments and maturities of outstanding loans and mortgage-backed securities, sales of loans, maturities and calls of investment securities and other short-term investments and income from operations. Changes in the cash flows of these instruments are greatly influenced by economic conditions and competition. Management attempts to balance supply and demand by managing the pricing of its loan and deposit products while maintaining a level of growth consistent with the conservative operating philosophy of the management and board of directors. Any excess funds are invested in overnight and other short-term interest-earning accounts. Cash flows are generated through the retail deposit market, its traditional funding source, for use in investing activities. In addition, the borrowings such as Federal Home Loan Bank advances may be utilized for liquidity or profit enhancement. At March 31, 2012, the Company had no outstanding advances and approximately $129.9 million of additional borrowing capacity from the FHLB of Pittsburgh. Further, the Company has access to the Federal Reserve Bank discount window. At March 31, 2012, no such funds were outstanding.

40

The primary use of funds is to meet ongoing loan and investment commitments, to pay maturing savings certificates and savings withdrawals and expenses related to general operations of the Company. At March 31, 2012, the total approved loan commitments outstanding amounted to $18.7 million. At the same date, commitments under unused lines of credit amounted to $23.4 million. Certificates of deposit scheduled to mature in one year or less at March 31, 2012 totaled $150.7 million. Management believes that a significant portion of maturing deposits will remain with the Company. For the quarter ended March 31, 2012, there were no material changes in contractual obligations that were outside of the ordinary course of business. Management anticipates that it will continue to have sufficient cash flows to meet its current and future commitments.

Impact of Inflation and Changing Prices

The unaudited condensed consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than does the effect of inflation.

Part I - Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Part I - Item 4.

CONTROLS AND PROCEDURES

The Company’s management evaluated, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are designed to ensure that financial information required to be disclosed by the Company in the reports that are filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.

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

41

Part II - Other Information

Item 1.    Legal Proceedings

The Company is involved in legal proceedings and litigation arising in the ordinary course of business. However, there can be no assurance that any of the outstanding legal proceedings and litigation to which the Company is a party will not be decided adversely to the Company’s interests and have a material adverse effect on the consolidated financial statements.

Item 1A. Risk Factors

 Not Applicable as the Company is a Smaller Reporting Company

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

None

Item 3.   Defaults Upon Senior Securities

Not Applicable

Item 4.   Mine Safety Disclosures

Not Applicable

Item 5.   Other Information

None

Item 6. Exhibits

(a) The following exhibits are filed herewith:

Ex. No.	Description
31.1	Section 302 Certification of Chief Executive Officer
31.2	Section 302 Certification of Chief Financial Officer
32.1	Section 906 Certification of Chief Executive Officer
32.2	Section 906 Certification of Chief Financial Officer
101.1.INS	XBRL Instance Document*
101.2.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document*

* These interactive files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

42

SIGNATURES

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

ALLIANCE BANCORP, INC. OF PENNSYLVANIA

Date:  May 10, 2012	By:	/s/ Dennis D. Cirucci
		Dennis D. Cirucci, President
		and Chief Executive Officer
Date:  May 10, 2012	By:	/s/ Peter J. Meier
		Peter J. Meier, Executive Vice
		President and Chief Financial Officer

43

EX-31.1

EXHIBIT 31.1

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Dennis D. Cirucci, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alliance Bancorp, Inc. of Pennsylvania (the “Registrant”);

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

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

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

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

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

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

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

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors:

(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:  May 10, 2012	/s/ Dennis D. Cirucci
	Dennis D. Cirucci
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

PURSUANT TO RULES 13a-14 AND 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, Peter J. Meier, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alliance Bancorp, Inc. of Pennsylvania (the “Registrant”);

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

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

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

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

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

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

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

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of Registrant’s board of directors:

(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:  May 10, 2012	/s/ Peter J. Meier
	Peter J. Meier
	Executive Vice President and
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

The undersigned executive officer of Alliance Bancorp, Inc. of Pennsylvania (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the quarterly period ended March 31, 2012 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:  May 10, 2012	/s/ Dennis D. Cirucci
	Dennis D. Cirucci
	President and Chief Executive Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act and has been provided to Alliance Bancorp, Inc. of Pennsylvania and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

The undersigned executive officer of Alliance Bancorp, Inc. of Pennsylvania (the “Registrant”) hereby certifies that the Registrant’s Form 10-Q for the quarterly period ended March 31, 2012 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:  May 10, 2012	/s/ Peter J. Meier
	Peter J. Meier
	Executive Vice President and
	Chief Financial Officer

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act and has been provided to Alliance Bancorp, Inc. of Pennsylvania and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash Flow From Operating Activities
Net income	$ 505	$ 675
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Loan losses	225	225
Depreciation and amortization	133	133
Loss on sale of securities	0	42
Stock based compensation expense	189	38
Deferred tax expense (benefit)	454	(339)
Gain on the sale of OREO	0	(3)
Increase in cash surrender value of bank owned life insurance	(80)	(81)
Changes in assets and liabilities which provided (used) cash:
Accrued expenses and other liabilities	(219)	(8,658)
Prepaid expenses and other assets	(580)	660
Accrued interest receivable	53	55
Net cash provided by (used in) operating activities	680	(7,253)
Cash Flow From Investing Activities
Purchase of investment securities-available for sale	(8,000)	(10,000)
Purchase of investment securities-held to maturity	(2,840)	(1,015)
Loans originated and acquired	(14,123)	(11,265)
Proceeds from maturities and calls of investment securities	10,489	11,083
Proceeds from the sale of securities available for sale	0	268
Redemption of FHLB stock	95	116
Principal repayments of:
Loans	17,772	9,303
Mortgage-backed securities	1,011	1,444
Purchase of premises and equipment	(171)	(186)
Investment in OREO	(109)	0
Proceeds from the sale of OREO	0	190
Net cash provided by (used in) investing activities	4,124	(62)
Cash Flow From Financing Activities
Dividends paid	(274)	(164)
Increase (decrease) in deposits	15,569	(6,536)
Cash from mutual holding company reorganization	0	3,805
Proceeds from stock issuance, net	0	29,982
Acquisition of stock by benefit plans	(496)	(522)
Decrease in other borrowings	(802)	(3,725)
Net cash provided by financing activities	13,997	22,840
Increase in Cash and Cash Equivalents	18,801	15,525
Cash and Cash Equivalents, Beginning of Year	95,852	61,891
Cash and Cash Equivalents, End of Year	114,653	77,416
Supplemental Disclosures of Cash Flow Information-
Interest	875	1,146
Income taxes	0	470
Supplemental Schedule of Noncash Financing and Investing Activities:
Other real estate acquired in settlement of loans	4,201	546
Premises and equipment acquired from mutual holding company reorganization	0	2,057
Investments acquired from mutual holding company reorganization	0	310
Prepaid expenses and other assets acquired from mutual holding company Reorganization	$ 0	$ 676

XML

Consolidated Statements of Changes in Stockholders' Equity [Parenthetical] (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Common stock dividends declared, per share (in dollars per share)	$ 0.05	$ 0.03
Offering cost on issuance of common stock		$ 2,603

XML

Consolidated Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Assets
Cash and cash due from depository institutions	$ 980	$ 1,397
Interest bearing deposits with depository institutions	113,673	94,455
Total cash and cash equivalents	114,653	95,852
Investment securities available for sale	22,047	23,070
Mortgage-backed securities available for sale	10,277	11,303
Investment securities held to maturity (fair value - 2012, $24,531; 2011, $23,200)	23,526	22,175
Loans receivable - net of allowance for loan losses - 2012, $3,793; 2011, $4,000	277,222	285,297
Accrued interest receivable	1,613	1,666
Premises and equipment - net	4,499	4,461
Other real estate owned (OREO)	6,897	2,587
Federal Home Loan Bank (FHLB) stock-at cost	1,792	1,887
Bank owned life insurance	11,922	11,842
Deferred tax asset - net	5,401	5,843
Prepaid FDIC premium assessment	1,044	1,134
Other prepaid expenses and other assets	3,041	2,370
Total Assets	483,934	469,487
Liabilities and Stockholders' Equity
Non-interest bearing deposits	17,802	11,859
Interest bearing deposits	373,815	364,189
Total deposits	391,617	376,048
Other borrowings	3,076	3,878
Accrued expenses and other liabilities	6,347	6,566
Total Liabilities	401,040	386,492
Stockholders' Equity
Common stock, $.01 par value; shares authorized - 50,000,000; shares issued and outstanding- 5,474,437	55	55
Additional paid-in capital	56,546	56,396
Retained earnings	31,050	30,819
Common stock acquired by benefit plans	(3,384)	(2,927)
Accumulated other comprehensive loss	(1,373)	(1,348)
Total Stockholders' Equity	82,894	82,995
Total Liabilities and Stockholders' Equity	$ 483,934	$ 469,487

XML

Consolidated Statements of Comprehensive Income [Parenthetical] (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Tax expense (benefit) of unrealized gain (loss) on securities	$ 13	$ 38
Tax expense (benefit) of reclassification adjustment for realized loss on sale of securities	$ 0	$ 14

XML

Contingent Obligations

3 Months Ended

Mar. 31, 2012

Guarantees [Abstract]

Guarantees [Text Block]

(13) Contingent Obligations

The Company does not issue any guarantees that would require liability-recognition or disclosure, other than its standby letters of credit. The Company has issued unconditional commitments in the form of standby letters of credit to guarantee payment on behalf of a customer and guarantee the performance of a customer to a third party. Standby letters of credit generally arise in connection with lending relationships. The credit risk involved in issuing these instruments is essentially the same as that involved in extending loans to customers. Contingent obligations under standby letters of credit totaled approximately $567,000 at March 31, 2012 and $508,000 at December 31, 2011 and represent the maximum potential future payments the Company could be required to make. Typically, these instruments have terms of twelve months or less and expire unused; therefore, the total amounts do not necessarily represent future cash requirements. Each customer is evaluated individually for creditworthiness under the same underwriting standards used for commitments to extend credit for on-balance sheet instruments. Company policies governing loan collateral apply to standby letters of credit at the time of credit extension. Loan-to-value ratios are generally consistent with loan-to-value requirements for other commercial loans secured by similar types of collateral.

XML

Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	Common Stock Acquired By Benefit Plans [Member]	Accumulated Other Comprehensive Income [Member]	Total
Balance at Dec. 31, 2010	$ 72	$ 23,999	$ (4,742)	$ 30,601	$ (482)	$ (457)	$ 48,991
ESOP shares committed to be released					38		38
Common stock acquired by ESOP					(521)		(521)
Net income				675			675
Dividends declared				(164)			(164)
Dissolution of mutual holding company		6,848					6,848
Proceeds from issuance of common stock, net of offering costs of $2,603	55	29,927					29,982
Cancellation of common stock and treasury stock	(72)	(4,670)	4,742				0
Other comprehensive loss						(101)	(101)
Balance at Mar. 31, 2011	55	56,104	0	31,112	(965)	(558)	85,748
Balance at Dec. 31, 2011	55	56,396	0	30,819	(2,927)	(1,348)	82,995
ESOP shares committed to be released					39		39
Net income				505			505
Dividends declared				(274)			(274)
Stock-based compensation (stock options)		40					40
Stock-based compensation (restricted stock)		110					110
Common stock acquired by 2011 trust					(496)		(496)
Other comprehensive loss						(25)	(25)
Balance at Mar. 31, 2012	$ 55	$ 56,546	$ 0	$ 31,050	$ (3,384)	$ (1,373)	$ 82,894

XML

Consolidated Statements of Financial Condition [Parenthetical] (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2012	Dec. 31, 2011
Fair value, investment securities held to maturity (in dollars)	$ 24,531	$ 23,200
Allowance for loan losses (in dollars)	$ 3,793	$ 4,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	5,474,437	5,474,437
Common stock, shares outstanding	5,474,437	5,474,437

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Fair Value Accounting

3 Months Ended

Mar. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

(8) Fair Value Accounting

FASB ASC Topic 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs to validation methods used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of fair value hierarchy under FASB ASC Topic 820 are as follows:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability.

Level 3: Prices or valuation techniques that require inputs that are both significant to fair value measurement and unobservable (i.e. support with little or no market value activity).

An asset or liability’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The following methods and assumptions were used to estimate the fair value of certain Company assets and liabilities.

Cash and Cash Equivalents (Carried at Cost). The carrying amounts reported in the consolidated statements of financial condition for cash and short-term instruments approximate those assets’ fair values.

Investment and Mortgage-Backed Securities. The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted prices.

Loans Receivable (Carried at Cost). The fair values of loans are estimated using discounted cash flow analyses, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the loans (Level 3). Projected future cash flows are calculated based upon contractual maturity or call dates, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Impaired Loans (Generally Carried at Fair Value). Impaired loans are those in which the Bank has measured impairment generally based on the fair value of the loan’s collateral. Fair value is generally determined based upon independent third-party appraisals of the properties, or discounted cash flows based upon the expected proceeds. Appraised values may be discounted from 10% to 35% based upon management’s historical knowledge and changes in the market conditions from the time of the appraisal. Because of the high degree of judgment required in estimating the fair value of collateral underlying impaired loans and because of the relationship between fair value and general economic conditions we consider fair values of impaired loans to be highly sensitive to market conditions. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balances, net of any valuation allowance. At March 31, 2012 and December 31, 2011, the fair value consists of loan balances of $6.3 million and $7.2 million, respectively, with valuation allowances of $531,000 and $667,000, respectively.

Other Real Estate Owned. OREO assets are originally recorded at fair value less estimated selling costs upon transfer of the loans to OREO. Subsequently, OREO assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. Appraised values may be discounted from 10% to 35% based upon management’s historical knowledge and changes in the market conditions from the time of the appraisal. These assets are included as Level 3 fair values.

FHLB Stock (Carried at Cost). The carrying amount of FHLB stock approximates fair value, and considers the limited marketability of such securities.

Accrued Interest Receivable and Payable (Carried at Cost). The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposits (Carried at Cost). The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts) (Level 1). Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits (Level 3).

Other Borrowings (Carried at Cost). The carrying amount of overnight sweep accounts generally approximate fair value.

Off-Balance Sheet Financial Instruments. Fair values for the Company’s off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties’ credit standing.

The following table summarizes assets measured at fair value on a recurring basis as of March 31, 2012, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

Description	Total		(Level 1) Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Investment Security Obligations of FHLB	$	8,021	$	—	$	8,021	$	—
Investment Security Obligations of Freddie Mac		5,020		—		5,020		—
Investment Security Obligations of Fannie Mae		9,006		—		9,006		—
Mortgage Backed Obligations of GNMA		1,507		—		1,507		—
Mortgage Backed Obligations of FHLMC		3,358		—		3,358		—
Mortgage Backed Obligations of FNMA		5,412		—		5,412		—
Total	$	32,324	$	—	$	32,324	$	—

The following table summarizes assets measured at fair value on a recurring basis as of December 31, 2011, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value (in thousands):

Description	Total		(Level 1) Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Investment Security Obligations of FHLB	$	8,034	$	—	$	8,034	$	—
Investment Security Obligations of Freddie Mac		7,027		—		7,027		—
Investment Security Obligations of Fannie Mae		8,009		—		8,009		—
Mortgage Backed Obligations of GNMA		1,545		—		1,545		—
Mortgage Backed Obligations of FHLMC		3,800		—		3,800		—
Mortgage Backed Obligations of FNMA		5,958		—		5,958		—
Total	$	34,373	$	—	$	34,373	$	—

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at March 31, 2012 are as follows:

Description	Total		(Level 1)  Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans	$	5,742	$	—	$	—	$	5,742
Other real estate		989		—		—		989
Total	$	6,731	$	—	$	—	$	6,731

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used at December 31, 2011 are as follows:

Description	Total		(Level 1)  Quoted Prices in Active Markets for Identical Assets		(Level 2) Significant Other Observable Inputs		(Level 3) Significant Unobservable Inputs
Impaired loans	$	6,497	$	—	$	—	$	6,497
Other real estate owned		989		—		—		989
Total	$	7,486	$	—	$	—	$	7,486

There were no transfers between levels for the three months ended March 31, 2012. The Company’s policy is to recognize transfers between levels as of the end of the reporting period.

The carrying amount and estimated fair values of the Company’s assets and liabilities were as follows.

	At March 31, 2012
	Carrying		Level 1		Level 2		Level 3
	Amount		Fair Value		Fair Value		Fair Value
		(In thousands)
Assets:
Cash and due from banks	$	980	$	980	$	—	$	—
Interest bearing deposits at banks		113,673		113,673		—		—
Investment securities		45,573		—		46,578		—
Mortgage-backed securities		10,277		—		10,277		—
Loans receivable		277,222		—		—		275,068
FHLB stock		1,792		—		1,792		—
Accrued interest receivable		1,613		—		1,613		—
Liabilities:
NOW and MMDA deposits (1)	$	101,138	$	101,138	$	—	$	—
Other savings deposits		47,669		47,669		—		—
Certificate accounts		242,810		—		—		243,883
Other borrowed money		3,076		3,076		—		—
Accrued interest payable		13		—		13		—
Off balance sheet instruments		—		—		—		—

(1) Includes non-interest bearing accounts, totaling $17,802.

	At December 31, 2011
	Carrying		Level 1		Level 2		Level 3
	Amount		Fair Value		Fair Value		Fair Value
	(In thousands)
Assets:
Cash and due from banks$ 1,397	$	1,397	$	—	$	—
Interest bearing deposits at banks		95,455		94,455		—		—
Investment securities		45,245		—		46,270		—
Mortgage-backed securities		11,303		—		11,303		—
Loans receivable		285,297		—		—		283,708
FHLB stock1,887		—		1,887		—
Accrued interest receivable1,666		—		1,666		—
Liabilities:
NOW and MMDA deposits (1)	$	95,685	$	95,685	$	—	$	—
Other savings deposits		47,157		47,157		—		—
Certificate accounts		233,206		—		—		235,255
Other borrowed money		3,878		3,878		—		—
Accrued interest payable		14		—		14		—
Off balance sheet instruments		—		—		—		—

(1) Includes non-interest bearing accounts, totaling $11,859.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2012	May 07, 2012
Entity Registrant Name	Alliance Bancorp, Inc. of Pennsylvania
Entity Central Index Key	0001500711
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	allb
Entity Common Stock, Shares Outstanding		5,474,437
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2012
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2012

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Investment and Mortgage Backed Securities

3 Months Ended

Mar. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

(9) Investment and Mortgage Backed Securities

The Bank classifies and accounts for debt and equity securities as follows:

· Securities Held to Maturity - Securities held to maturity are stated at cost, adjusted for unamortized purchase premiums and discounts, based on the positive intent and the ability to hold these securities to maturity considering all reasonably foreseeable conditions and events.

· Securities Available for Sale - Securities available for sale, carried at fair value, are those securities management might sell in response to changes in market interest rates, increases in loan demand, changes in liquidity needs and other conditions. Unrealized gains and losses, net of tax, are reported as a net amount in other comprehensive income (loss) until realized.

Purchase premiums and discounts are amortized to income over the life of the related security using the interest method. The adjusted cost of a specific security sold is the basis for determining the gain or loss on the sale.

The following table shows the fair value and unrealized losses on investments, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position.

	At March 31, 2012
	Less than 12 Months					12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale
U.S. Government obligations	$	1,997	$	(3	)	$	—	$	—	$	1,997	$	(3	)
Mortgage-backed securities		—		—			—		—		—		—
Total securities available for sale	$	1,997	$	(3	)	$	—	$	—	$	1,997	$	(3	)
Securities Held to Maturity
Municipal obligations	$	2,797	$	(41	)	$	—	$	—	$	2,797	$	(41	)

	At December 31, 2011
	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in Thousands)
Securities Available for Sale
U.S. Government obligations	$	2,995	$	5	$	—	$	—	$	2,995	$	5
Mortgage-backed securities		119		2		—		—		119		2
Total securities available for sale	$	3,114	$	7	$	—	$	—	$	3,114	$	7
Securities Held to Maturity
Municipal obligations	$	—	$	—	$	—	$	—	$	—	$	—

Other-than-temporary impairment, if any, is separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is recognized in earnings. The amount of the total other-than-temporary impairment related to all other factors is recognized in other comprehensive income.

As of March 31, 2012, management believes that the estimated fair value of the securities disclosed above is primarily dependent upon the movement in market interest rates particularly given the negligible inherent credit risk associated with the issuers of these securities.

Although the fair value will fluctuate as market interest rates move, management believes that these fair values will recover as the underlying portfolios mature. As of March 31, 2012, there was 1 U.S. government obligation in an unrealized loss position for less than twelve months and none in an unrealized loss position greater than twelve months, no mortgage backed securities were in an unrealized loss position, and 4 municipal obligations were in an unrealized loss position for less than twelve months and none in an unrealized loss position for more than twelve months. The Company does not intend to sell these securities and it is not more likely than not that it will be required to sell these securities before recovery. Management does not believe any individual unrealized loss as of March 31, 2012 represents an other-than-temporary impairment.

Securities Available for Sale and Held to Maturity

The amortized cost, gross unrealized gains and losses, and the fair values of securities available for sale and held to maturity are shown below. Where applicable, the maturity distribution and the fair value of securities, by contractual maturity, are shown. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Dollars in Thousands

	March 31, 2012
	Amortized		Gross Unrealized					Fair
Available for Sale:	Cost		Gains		Losses			Value
Obligations of the Federal Home Loan Bank:
Due after 1 year through 5 years	$	3,997	$	26	$	—		$	4,023
Due after 5 years through 10 years		4,000		1		(3	)		3,998
Total	$	7,997	$	27	$	(3	)	$	8,021

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Obligations of Freddie Mac:
Due after 1 year through 5 years	$	2,000	$	1	$	—	$	2,001
Due after 10 years		3,000		19		—		3,019
Total	$	5,000	$	20	$	—	$	5,020

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Obligations of Fannie Mae:
Due after 1 year through 5 years	$	5,000	$	2	$	—	$	5,002
Due after 5 years through 10 years		3,997		7		—		4,004
Total	$	8,997	$	9	$	—	$	9,006

	March 31, 2012
	Amortized		Gross Unrealized					Fair
Held to Maturity	Cost		Gains		Losses			Value
Municipal Obligations:
Due after 1 years through 5 years	$	2,065	$	68	$	(16	)	$	2,117
Due after 5 years through 10 years		3,595		85		(8	)		3,672
Due after 10 years		17,866		893		(17	)		18,742
Total	$	23,526	$	1,046	$	(41	)	$	24,531

	December 31, 2011
	Amortized		Gross Unrealized				Fair
Available for Sale:	Cost		Gains		Losses		Value
Obligations of the Federal Home Loan Bank:
Due after 1 year through 5 years	$	5,997	$	36	$	—	$	6,033
Due after 5 years through 10 years		2,000		1		—		2,001
Total	$	7,997	$	37	$	—	$	8,034

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Obligations of Freddie Mac:
Due after 1 year through 5 years	$	2,000	$	—	$	(3	)	$	1,997
Due after 10 years		5,000		30		—			5,030
Total	$	7,000	$	30	$	(3	)	$	7,027

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Obligations of Fannie Mae:
Due after 1 year through 5 years	$	3,000	$	2	$	(2	)	$	3,000
Due after 5 years through 10 years		4,997		12		—			5,009
Total	$	7,997	$	14	$	(2	)	$	8,009

	December 31, 2011
	Amortized		Gross Unrealized				Fair
Held to Maturity	Cost		Gains		Losses		Value
Municipal Obligations:
Due after 1 year through 5 years	$	1,000	$	75	$	—	$	1,075
Due after 5 years through 10 years		1,766		61		—		1,827
Due after 10 years		19,409		889	$	—		20,298
Total	$	22,175	$	1,025	$	—	$	23,200

Included in obligations of U.S. Government agencies at March 31, 2012 and December 31, 2011, were $22.0 million and $23.1 million, respectively, of structured notes. These structured notes were comprised of step-up bonds that provide the U.S. Government agency with the right, but not the obligation, to call the bonds on certain dates. In March of 2011, the Company recorded a $42,000 loss on the sale of $268,000 of equity securities, which previously were owned by the mutual holding company. There were no sales of investment securities in 2012.

Mortgage-Backed Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and the fair values of mortgage-backed securities available for sale are as follows:

Dollars in Thousands

	March 31, 2012
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
GNMA pass-through certificates	$	1,408	$	99	$	—	$	1,507
FHLMC pass-through certificates		3,106		252		—		3,358
FNMA pass-through certificates		5,075		337		—		5,412
Total	$	9,589	$	688	$	—	$	10,277

	December 31, 2011
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
GNMA pass-through certificates	$	1,449	$	96		—		$	1,545
FHLMC pass-through certificates		3,528		272		—			3,800
FNMA pass-through certificates		5,623		337	$	(2	)		5,958
Total	$	10,600	$	705	$	(2	)	$	11,303

At March 31, 2012 and December 31, 2011, the Bank had $2.0 million and $2.2 million, respectively, in mortgage-backed securities pledged as collateral for the treasury, tax and loan account and certain deposits. There were no sales of mortgage-backed securities in 2012 or 2011.

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Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Interest and Fee Income
Loans, including fees	$ 4,003	$ 4,140
Mortgage-backed securities	107	162
Investment securities:
Taxable	76	161
Tax - exempt	225	263
Balances due from depository institutions	60	46
Total interest and fee income	4,471	4,772
Interest Expense
Deposits	871	1,141
FHLB advances and other borrowings	3	5
Total interest expense	874	1,146
Net Interest Income	3,597	3,626
Provision for Loan Losses	225	225
Net Interest Income After Provision for Loan Losses	3,372	3,401
Other Income
Service charges on deposit accounts	59	63
Other fee income	54	44
Loss on the sale of securities	0	(42)
Gain on sale of OREO, net	0	3
Increase in cash surrender value of bank owned life insurance	80	81
Total other income	193	149
Other Expenses
Salaries and employee benefits	1,740	1,498
Occupancy and equipment	456	467
FDIC deposit insurance premiums	96	150
Advertising and marketing	54	55
Professional fees	153	128
Loan and OREO expense	112	40
Directors' fees	57	66
Other	279	292
Total other expenses	2,947	2,696
Income Before Income Tax Expense	618	854
Income Tax Expense	113	179
Net Income	$ 505	$ 675
Basic Earnings per Share (in dollars per share)	$ 0.10	$ 0.12
Dilutive Earnings per Share (in dollars per share)	$ 0.09	$ 0.12

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

(3) Commitments and Contingencies

Standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party. The amount of credit risk involved in issuing letters of credit in the event of nonperformance by the other party is the contract amount. The maximum exposure related to these commitments at March 31, 2012 was $567,000 which was secured by real estate.

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2012

New Accounting Pronouncements and Changes In Accounting Principles [Abstract]

Description Of New Accounting Pronouncements [Text Block]

(2) Recent Accounting Pronouncements

In 2011, the FASB issued Accounting Standards Update No. 2011-04 "Fair Value Measurement Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements" ("ASU 2011-04"). The ASU amends Topic 820 to add both additional clarifications to existing fair value measurement and disclosure requirements and changes to existing principles and disclosure guidance. Clarifications were made to the relevancy of the highest and best use valuation concept, measurement of an instrument classified in an entity's shareholder's equity and disclosure of quantitative information about the unobservable inputs for level 3 fair value measurements. Changes to existing principles and disclosures included measurement of financial instruments managed within a portfolio, the application of premiums and discounts in fair value measurement, and additional disclosures related to fair value measurements. The updated guidance and requirements are effective for financial statements issued for the first interim or annual period beginning after December 15, 2011, and should be applied prospectively. The Company does not believe the guidance will have a material impact on the consolidated financial statements but has included the disclosure requirements in this 10-Q.

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Loans Receivable - Net

3 Months Ended

Mar. 31, 2012

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

(10) Loans Receivable - Net

Loans receivable consist of the following:

Dollars in Thousands	At March 31,		At December 31,
	2012		2011
Real estate loans:
Single-family	$	119,319	$	118,059
Multi-family		10,155		10,757
Commercial		125,042		130,191
Land and construction		11,432		14,595
Commercial business		9,181		9,481
Consumer		6,288		6,616
Total loans receivable		281,417		289,699
Less:
Deferred fees		402		402
Allowance for loan losses		3,793		4,000
Loans receivable - net	$	277,222	$	285,297

The Company originates loans to customers located primarily in Southeastern Pennsylvania. This geographic concentration of credit exposes the Bank to a higher degree of risk associated with this economic region.

Single-family real estate loans primarily consist of first mortgage liens on existing single-family residences and home equity loans. The Company and intends to continue to originate permanent loans secured by first mortgage liens and home equity loans on single-family residential properties in the future

Multi-family and commercial real estate loans are made on terms up to 30 years, some of which include call or balloon provisions ranging from five to 15 years. The Company will originate and purchase these loans either with fixed interest rates or with interest rates which adjust in accordance with a designated index.

The Company also originates residential and commercial construction loans, and to a limited degree, land acquisition and development loans. Construction loans are classified as either residential construction loans or commercial real estate construction loans at the time of origination, depending on the nature of the property securing the loan.

The Company has a commercial loan department to provide a full range of commercial loan products to small business customers in its primary marketing area. These loans generally have shorter terms and higher interest rates as compared to mortgage loans.

The Company offers consumer loans in order to provide a full range of financial services to its customers and because such loans generally have shorter terms and higher interest rates than mortgage loans. The consumer loans presently offered by the Company include deposit account secured loans and lines of credit.

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Employee Stock Ownership Plan

3 Months Ended

Mar. 31, 2012

Employee Stock Ownership Plan [Abstract]

Employee Stock Ownership Plan [Text Block]

(6) Employee Stock Ownership Plan

The Bank has an Employee Stock Ownership Plan (“ESOP”) for the benefit of employees who meet the eligibility requirements as defined in the ESOP. The ESOP purchased 74,073 shares of common stock in the Offering completed on January 30, 2007 using proceeds of a loan from the former mid-tier holding company. The Bank makes quarterly payments of principal and interest over a term of 8 years at a rate of 8.25% to the Company. The ESOP has a second loan from the Company to fund the purchase of 150,991 additional shares in connection with the second step conversion completed on January 18, 2011 under which the Bank makes quarterly payments of principal and interest over a term of 20 years at a rate of 3.25% to the Company. The loans are secured by the shares of the stock purchased.

As the debt is repaid, shares are released from collateral and allocated to qualified employees. As shares are released from collateral, the Company reports compensation expense equal to the current market price of the shares, and the shares become outstanding for earnings per share computations. The compensation expense for the ESOP for the three months ended March 31, 2012 and March 31, 2011 was $38,000 and $38,000, respectively.

The following table presents the components of the ESOP shares inclusive of shares purchased prior to 2007:

	March 31, 2012		March 31, 2011
Shares released for allocation		148,646		135,218
Unearned shares		172,721		87,249
Total ESOP shares		321,367		222,467

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Segment Information

3 Months Ended

Mar. 31, 2012

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

(4) Segment Information

The Company has no reportable segments. All of the Company’s activities are interrelated, and each activity is dependent and assessed based on how each of the activities of the Company supports the others. For example, lending is dependent upon the ability of the Company to fund itself with deposits and other borrowings and manage interest rate and credit risk.

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Earnings Per Share

3 Months Ended

Mar. 31, 2012

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

(5) Earnings Per Share

Earnings per share (“EPS”) consists of two separate components, basic EPS and dilutive EPS. Basic EPS is computed based on the weighted average number of shares of common stock outstanding for each period presented. Dilutive EPS is calculated based on the weighted average number of shares of common stock outstanding plus dilutive common stock equivalents (“CSEs”). CSEs consist of shares that are assumed to have been purchased with the proceeds from the exercise of stock options, as well as unvested common stock awards. Common stock equivalents which are considered antidilutive are not included for the purposes of this calculation. At March 31, 2012, there were 277,750 antidilutive CSEs. At March 31, 2011, the Company had no CSEs.

The following table sets forth the composition of the weighted average shares (denominator) used in the basic and dilutive earnings per share computations.

	For the Three Months Ended March 31,
	2012			2011
Net Income	$	505,000		$	675,000
Weighted average shares outstanding		5,474,437			5,474,489
Adjusted average unearned ESOP shares		(174,628	)		(87,249	)
Weighted average shares outstanding – basic		5,299,809			5,387,240
Effect of dilutive common stock equivalents		94,736			—
Adjusted weighted average shares outstanding-dilutive		5,394,545			5,287,240
Basic earnings per share	$	0.10		$	0.12
Dilutive earnings per share	$	0.09		$	0.12

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Retirement Plans

3 Months Ended

Mar. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

(7) Retirement Plans

The Bank has a defined benefit pension plan which covers all full-time employees meeting certain eligibility requirements. As required under FASB ASC Topic 715, Compensation – Retirement Benefits, the net pension costs included the following components:

	For the Three Months Ended March 31,
	2012			2011
Net Periodic Benefit Cost
Service Cost	$	73,153		$	68,026
Interest Cost		59,083			68,807
Expected Return on Plan Assets		(100,313	)		(93,623	)
Amortization of Prior Service Cost		3,171			3,171
Amortization of Loss		33,594			12,449
Net Periodic Benefit Cost	$	68,688		$	58,830

The Bank has a Nonqualified Retirement and Death Benefit Agreement (the “Agreement”) with certain officers of the Bank. The purpose of the Agreement is to provide the officers with supplemental retirement benefits equal to a specified percentage of final compensation and a pre-retirement death benefit if the officer does not attain the specific age requirement. A summary of the interim information required under FASB ASC Topic 715, Compensation – Retirement Benefits, for the Agreement is as follows:

	For the Three Months Ended March 31,
	2012		2011
Net Periodic Benefit Cost
Service Cost	$	12,060	$	9,865
Interest Cost		43,214		58,852
Amortization of (gain) loss		4,726		(5,717	)
Net Periodic Benefit Cost	$	60,000	$	63,000

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

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

(12) Stock-Based Compensation

Recognition and Retention Plan and Trust

In July of 2011, the shareholders of the Company approved the adoption of the 2011 Recognition and Retention Plan and Trust (the “2011 RRP”). Pursuant to the terms of the 2011 RRP, awards of up to 218,977 shares of restricted common stock may be granted to employees and directors. In order to fund the 2011 RRP, the 2011 RRP acquired 138,300 shares of the Company’s common stock in the open market for approximately $1.5 million at an average price of $10.72 per share. The Company made sufficient contributions to the 2011 RRP to fund the purchase of these shares. Pursuant to the terms of the 2011 RRP, an additional 80,677 shares will need to be acquired. On July 20, 2011, a total of 208,200 2011 RRP awards were granted. The 2011 RRP shares generally vest at the rate of 20% per year over five years.

A summary of the status of the shares under the 2011 RRP as of March 31, 2012 and changes during the three months ended March 31, 2012 are presented below:

	Three Months Ended March 31, 2012
			Weighted
	Number of		average grant
	shares		date fair value
Restricted at the beginning of period		208,200	$	11.05
Granted		—		—
Vested		—		—
Forfeited		—		—
Restricted at the end of period		208,200	$	11.05

Compensation expense on 2011 RRP shares granted is recognized ratably over the five year vesting period in an amount which totals the market price of the common stock at the date of grant. During the three months ended March 31, 2012, approximately 10,410 shares were amortized to expense, based on the proportional vesting of the awarded shares, resulting in recognition of approximately $110,000 in compensation expense. As of March 31, 2012, approximately $1.9 million in additional compensation expense is scheduled to be recognized over the remaining vesting period of 4.25 years. Under the terms of the 2011 RRP, any unvested 2011 RRP awards will become fully vested upon a change in control resulting in the full recognition of any unrecognized expense.

Stock Options

In July 2011, the shareholders of the Company also approved the adoption of the 2011 Stock Option Plan (the “2011 Option Plan”). Pursuant to the 2011 Option Plan, options to acquire 325,842 shares of common stock may be granted to employees and directors. Under the 2011 Option Plan, options generally become vested and exercisable at the rate of 20% per year over five years and are generally exercisable for a period of ten years after the grant date. On July 20, 2011, options to purchase 277,750 shares of common stock were awarded. As of March 31, 2012, a total of 48,092 shares of common stock have been reserved for future grant pursuant to the 2011 Option Plan.

A summary of the status of the Company’s stock options under the 2011 Option Plan as of March 31, 2012, and changes during the three months ended March 31, 2012, is presented below:

	Three Months Ended March 31, 2012
			Weighted
	Number of		average
	shares		exercise price
Options outstanding at the beginning of period		277,750	$	11.05
Granted		—		—
Exercised		—		—
Vested		—		—
Forfeited		—		—
Options outstanding at the end of period		277,750	$	11.05
Exercisable at end of the period		—		—

The fair value of each option grant is estimated using the Black-Scholes pricing model with the following weighted average assumptions for the options granted in 2011: dividend yield of 2.0%, risk-free interest rate of 1.58%, expected life of 7.0 years, and volatility of 30.34%. The calculated fair value of options granted in 2011 was $2.99. The weighted average contractual term of the option was 9.3 years at March 31, 2012. No options were exercisable at March 31, 2012.

During the three months ended March 31, 2012, approximately $40,000 was recognized in compensation expense for the 2011 Option Plan. At March 31, 2012, approximately $677,000 in additional compensation expense for awarded options remained unrecognized. The weighted average period over which this expense will be recognized is approximately 4.25 years.

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Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Net Income	$ 505	$ 675
Other Comprehensive Loss
Unrealized loss on available for sale securities net of tax benefit 2012, $13; 2011, $38	(25)	(73)
Plus reclassification adjustment for realized loss on sale of securities included in net income net of tax benefit of 2012, $-0-; 2011, $14	0	(28)
Total Other Comprehensive Loss	(25)	(101)
Comprehensive Income	$ 480	$ 574

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Organization and Basis of Presentation

3 Months Ended

Mar. 31, 2012

Organizational Structure and Nature Of Operations Disclosure [Abstract]

Organizational Structure And Nature Of Operations Disclosure [Text Block]

1) Organization and Basis of Presentation

On January 18, 2011, Alliance Mutual Holding Company and Alliance Bancorp, Inc. of Pennsylvania, the federally chartered mid-tier holding company for Alliance Bank (the “Bank”) completed a reorganization and conversion (the “second step conversion”), pursuant to which Alliance Bancorp, Inc. of Pennsylvania, a new Pennsylvania corporation (“Alliance Bancorp” or the “Company”), acquired all the issued and outstanding shares of the Bank’s common stock. In connection with the second step conversion, 3,258,475 shares of common stock, par value $0.01 per share, of Alliance Bancorp were sold in subscription, community and syndicated community offerings to certain depositors of the Bank and other investors for $10 per share, or $32.6 million in the aggregate (the “Offering”), and 2,215,962 shares of common stock were issued in exchange for the outstanding shares of common stock of the mid-tier holding company, which also was known as Alliance Bancorp, Inc. of Pennsylvania, held by the “public” shareholders of the mid-tier holding company. Each share of common stock of the mid-tier holding company was converted into the right to receive 0.8200 shares of common stock of Alliance Bancorp in the second step conversion. As a result of the second step conversion, the former mutual holding company and the mid-tier company were merged into Alliance Bancorp and 548,524 (pre-conversion) treasury shares were canceled. Additionally, the Banks’s Employee Stock Ownership Plan (“ESOP”) was issued a line of credit for up to $1.9 million to purchase 50,991 shares of common stock in the Offering and up to 100,000 additional shares of common stock in the open market from time-to-time following the Offering.

The Bank is a community oriented savings bank headquartered in Broomall, Pennsylvania. The Bank operates a total of nine banking offices located in Delaware and Chester Counties, which are suburbs of Philadelphia. The Bank is primarily engaged in attracting deposits from the general public through its branch offices and using such deposits primarily to (i) originate and purchase loans secured by first liens on single-family (one-to-four units) residential and commercial real estate properties and (ii) invest in securities issued by the U.S. Government and agencies thereof, municipal and corporate debt securities and certain mutual funds. The Bank derives its income principally from interest earned on loans, mortgage-backed securities and investments and, to a lesser extent, from fees received in connection with the origination of loans and for other services. The Bank's primary expenses are interest expense on deposits and borrowings and general operating expenses.

The Bank is subject to regulation by the Pennsylvania Department of Banking (the "Department"), as its chartering authority and primary regulator, and by the Federal Deposit Insurance Corporation (the "FDIC"), which insures the Bank's deposits up to applicable limits. The Company is supervised by the Federal Reserve Board (“FRB”).

Basis of Presentation. The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information or footnotes necessary for a complete presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America (US GAAP). The consolidated statement of financial condition at December 31, 2011, has been derived from audited consolidated financial statements but does not include all information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring adjustments or accruals, which are necessary for a fair presentation of the consolidated financial statements, have been included. The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results which may be expected for the year ending December 31, 2012 or any other period. All significant intercompany accounts and transactions have been eliminated. For comparative purposes, prior periods’ consolidated financial statements have been reclassified when necessary to conform to report classifications of the current year. The reclassifications had no effect on net income. The unaudited consolidated financial statements presented herein should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Subsequent Events. The Company has evaluated events and transactions occurring subsequent to March 31, 2012, for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued.

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Loan Credit Quality

3 Months Ended

Mar. 31, 2012

Loan Credit Quality [Abstract]

Loan Credit Quality [Text Block]

(11) Loan Credit Quality

For all classes of loans receivable, the accrual of interest is discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectability of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. Generally, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the allowance for loan losses. Interest received on nonaccrual loans, including impaired loans, generally is either applied against principal or reported as interest income, according to management’s judgment as to the collectability of principal. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time (generally six months) and the ultimate collectability of the total contractual principal and interest is no longer in doubt. The past due status of all classes of loans receivable is determined based on contractual due dates for loan payments.

The performance and credit quality of the loan portfolio is also monitored by analyzing the age of the loans receivable as determined by the length of time a recorded payment is past due. The following table presents the classes of the loan portfolio summarized by the past due status as of March 31, 2012:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 or More Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable Greater Than 90 Days Past Due and Accruing
Real estate:
Single-family	$	399	$	711	$	3,065	$	4,175	$	115,144	$	119,319	$	2,011
Multi-family		—		—		—		—		10,155		10,155		—
Commercial		656		151		2,527		3,334		121,708		125,042		—
Land and construction		—		—		3,161		3,161		8,271		11,432		—
Commercial business		—		—		—		—		9,181		9,181		—
Consumer		215		81		383		679		5,609		6,288		383
Total	$	1,270	$	943	$	9,136	$	11,349	$	270,068	$	281,417	$	2,394

The following table presents the classes of the loan portfolio summarized by the past due status as of December 31, 2011:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 or More Days		Total Past Due		Current		Total Loans Receivable		Loans Receivable Greater Than 90 Days Past Due and Accruing
Real estate:
Single-family	$	1,509	$	252	$	3,073	$	4,834	$	113,225	$	118,059	$	2,018
Multi-family		—		—		—		—		10,757		10,757		—
Commercial		3,420		56		3,016		6,492		123,699		130,191		—
Land and construction		—		—		7,707		7,707		6,888		14,595		—
Commercial business		—		—		81		81		9,400		9,481		—
Consumer		207		119		561		887		5,729		6,615		561
Total	$	5,136	$	427	$	14,438	$	20,001	$	269,698	$	289,699	$	2,579

The following table presents nonaccrual loans by classes of the loan portfolio as of March 31, 2012 and December 31, 2011:

	March 31, 2012		December 31, 2011
(Dollars in thousands)
Real estate:
Single-family	$	1,054	$	1,055
Multi-family		—		—
Commercial		2,757		3,016
Land and construction		3,161		7,707
Commercial business		—		81
Consumer		—		—
Total non-accruing loans	$	6,972	$	11,859

Allowance for Loan Losses

The allowance for loan losses is increased by charges to income and decreased by chargeoffs (net of recoveries). Allowances are provided for specific loans when losses are probable and can be estimated. When this occurs, management considers the remaining principal balance, fair value and estimated net realizable value of the property collateralizing the loan. Current and future operating and/or sales conditions are also considered. These estimates are susceptible to changes that could result in material adjustments to results of operations. Recovery of the carrying value of such loans is dependent to a great extent on economic, operating and other conditions that may be beyond management’s control.

The allowance for loan losses is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management performs a quarterly evaluation of the adequacy of the allowance. The allowance is based on the Company’s past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant revision as more information becomes available.

The allowance consists of specific, general and unallocated components. The specific component relates to loans that are classified as impaired. For loans that are classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. An unallocated component, if any, is maintained to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio.

The general component covers pools of loans by loan class including commercial loans not considered impaired, as well as smaller balance homogeneous loans, such as residential real estate, home equity and other consumer loans. These pools of loans are evaluated for loss exposure based upon historical loss rates for each of these categories of loans, adjusted for qualitative factors. These qualitative risk factors include:

1.	Lending policies and procedures, including underwriting standards and collection, charge-off, and recovery practices.
2.	National, regional, and local economic and business conditions as well as the condition of various market segments, including the value of underlying collateral for collateral dependent loans.
3.	Nature and volume of the portfolio and terms of loans.
4.	Experience, ability, and depth of lending management and staff.
5.	Volume and severity of past due, classified and nonaccrual loans as well as and other loan modifications.
6.	Quality of the Company’s loan review system, and the degree of oversight by the Company’s Board of Directors.
7.	Existence and effect of any concentrations of credit and changes in the level of such concentrations.
8.	Effect of external factors, such as competition and legal and regulatory requirements.

Each factor is assigned a value to reflect improving, stable or declining conditions based on management’s best judgment using relevant information available at the time of the evaluation. Adjustments to the factors are supported through documentation of changes in conditions in a narrative accompanying the allowance for loan loss calculation.

Single family real estate loans involve certain risks such as interest rate risk and risk of non repayment. Adjustable-rate single family real estate loans decreases the interest rate risk to the Company that is associated with changes in interest rates but involve other risks, primarily because as interest rates rise, the payment by the borrower rises to the extent permitted by the terms of the loan, thereby increasing the potential for default. At the same time, the marketability of the underlying property may be adversely affected by higher interest rates. Repayment risk can be affected by job loss, divorce, illness and personal bankruptcy or the borrower.

Multi-family and commercial real estate lending entails significant risks. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for multi-family and commercial real estate as well as economic conditions generally.

Construction lending is generally considered to involve a high risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property's value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not necessarily pre-sold and thus pose a greater potential risk to the Company than construction loans to individuals on their personal residences.

Commercial business lending is generally considered higher risk due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on the business assets. Commercial business loans are primarily secured by inventories and other business. In most cases, any repossessed collateral for a defaulted commercial business loans will not provide an adequate source of repayment of the outstanding loan balance.

Consumer loans generally have shorter terms and higher interest rates than other lending but generally involve high credit risk because of the type and nature of the collateral and, in certain cases, the absence of collateral. In addition, consumer lending collections are dependent on the borrower's continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan.

The allowance calculation methodology includes further segregation of loan classes into risk rating categories. The borrower’s overall financial condition, repayment sources, guarantors and value of collateral, if appropriate, are evaluated annually for commercial and construction loans or when credit deficiencies arise, such as delinquent loan payments, for commercial and consumer loans. Credit quality risk ratings include regulatory classifications of special mention, substandard, doubtful and loss.  Loans criticized special mention have potential weaknesses that deserve management’s close attention.  If uncorrected, the potential weaknesses may result in deterioration of the repayment prospects.  Loans classified substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They include loans that are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any.  Loans classified doubtful have all the weaknesses inherent in loans classified substandard with the added characteristic that collection or liquidation in full, on the basis of current conditions and facts, is highly improbable.   Loans classified as a loss are considered uncollectible and are charged to the allowance for loan losses. Loans not classified are rated pass.

While management uses the best information available to make loan loss allowance evaluations, adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in accounting guidance. Historically, our estimates of the allowance for loan losses have not required significant adjustments from management’s initial estimates. In addition, the Department and the FDIC, as an integral part of their examination processes, periodically review our allowance for loan losses. The Department and the FDIC may require the recognition of adjustments to the allowance for loan losses based on their judgment of information available to them at the time of their examinations. To the extent that actual outcomes differ from management’s estimates, additional provisions to the allowance for loan losses may be required that would adversely impact earnings in future periods.

The following table presents the activity in the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of and for the three months ended March 31, 2012:

(Dollars in thousands)	Single Family Real Estate			Multi Family Real Estate		Commercial Real Estate			Land and Construction			Consumer			Commercial Business			Total
Allowance for loan losses for the three months ended March 31, 2012:
Beginning balance	$	693		$	234	$	2,289		$	525		$	20		$	239		$	4,000
Charge-offs		—			—		—			(440	)		(2	)		—			(442	)
Recoveries		8			—		—			1			1			—			10
Provisions		(5	)		60		(4	)		176			3			(5	)		225
Ending balance	$	696		$	294	$	2,285		$	262		$	22		$	234		$	3,793
Allowance for loan losses:
Ending balance	$	696		$	294	$	2,285		$	262		$	22		$	234		$	3,793
Ending balance:
individually evaluated
for impairment	$	—		$	223	$	308		$	—		$	—		$	—		$	531
Ending balance:
collectively evaluated
for impairment	$	696		$	71	$	1,977		$	262		$	22		$	234		$	3,262
Loans receivable:
Ending balance	$	119,319		$	10,155	$	125,042		$	11,432		$	6,288		$	9,181		$	281,417
Ending balance:
individually evaluated
for impairment	$	—		$	2,834	$	7,143		$	3,161		$	—		$	—		$	13,138
Ending balance:
collectively evaluated
for impairment	$	119,319		$	7,321	$	117,899		$	8,271		$	6,288		$	9,181		$	268,279

The following table presents the activity in the allowance for loan losses by classes of the loans individually and collectively evaluated for impairment as of and for the three months ended March 31, 2011:

(Dollars in thousands)	Single Family Real Estate			Multi Family Real Estate		Commercial Real Estate		Land and Construction		Commercial Business			Consumer		Total
Allowance for loan losses:
Beginning balance	$	411		$	247	$	2,072	$	2,151	$	190		$	19	$	5,090
Charge-offs		(33	)		—		—		—		—	(2)				(35	)
Recoveries		—			—		—		—		—			—		—
Provisions		45			32		30		96		20			2		225
Ending balance	$	423		$	279	$	2,102	$	2,247	$	210		$	19	$	5,280
Ending balance:
individually evaluated
for impairment	$	—		$	—	$	26	$	1,907	$	13		$	—	$	1,946
Ending balance:
collectively evaluated
for impairment	$	423		$	279	$	2,076	$	340	$	197		$	19	$	3,334

The following table presents the allowance for loan losses and related recorded investment in loans receivable by classes of the loans individually and collectively evaluated for impairment as of December 31, 2011:

(Dollars in thousands)	Single Family Real Estate		Multi Family Real Estate		Commercial Real Estate		Land and Construction		Consumer		Commercial Business		Total
Allowance for loan losses:
Ending balance	$	693	$	234	$	2,289	$	525	$	20	$	239	$	4,000
Ending balance:
individually evaluated
for impairment	$	—	$	157	$	205	$	305	$	—	$	—	$	667
Ending balance:
collectively evaluated
for impairment	$	693	$	77	$	2,084	$	220	$	20	$	239	$	3,333
Loans receivable:
Ending balance	$	118,059	$	10,757	$	130,191	$	14,595	$	6,616	$	9,481	$	289,699
Ending balance:
individually evaluated
for impairment	$	—	$	2,834	$	4,991	$	7,707	$	—	$	81	$	15,613
Ending balance:
collectively evaluated
for impairment	$	118,059	$	7,923	$	125,200	$	6,888	$	6,616	$	9,400	$	274,086

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of March 31, 2012:

	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in thousands)
Real estate:
Single-family	$	115,754	$	—	$	3,565	$	—	$	119,319
Multi-family		7,321		—		2,834		—		10,115
Commercial		116,930		3,214		4,898		—		125,042
Land and construction		8,271		—		3,161		—		11,432
Commercial business		9,156		25		—		—		9,181
Consumer		6,288		—		—		—		6,288
Total	$	263,720	$	3,239	$	14,458	$	—	$	281,417

The following table presents the classes of the loan portfolio summarized by the aggregate pass rating and the classified ratings of special mention, substandard and doubtful within the Company's internal risk rating system as of December 31, 2011:

	Pass		Special Mention		Substandard		Doubtful		Total
(Dollars in thousands)
Real estate:
Single-family	$	114,486	$	—	$	3,573	$	—	$	118,059
Multi-family		7,923		—		2,834		—		10,757
Commercial		121,980		3,220		4,991		—		130,191
Land and construction		6,888		—		7,707		—		14,595
Commercial business		9,375		25		81		—		9,481
Consumer		6,616		—		—		—		6,616
Total	$	267,268	$	3,245	$	19,186	$	—	$	289,699

Loan Impairment

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and industrial loans, commercial real estate loans and commercial construction loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent.

 
An allowance for loan losses is established for an impaired loan if its carrying value exceeds its estimated fair value. Currently, estimated fair values of substantially all of the Company’s impaired loans are measured based on the estimated fair value of the loan’s collateral.

The Company does not separately identify individual single-family loans secured by real estate unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment.

For multi-family, land and construction, and commercial loans secured by real estate, estimated fair values are determined primarily through third-party appraisals. When a real estate secured loan becomes impaired, a decision is made regarding whether an updated certified appraisal of the real estate is necessary. This decision is based on various considerations, including the age of the most recent appraisal, the loan-to-value ratio based on the original appraisal and the condition of the property. Appraised values are discounted to arrive at the estimated selling price of the collateral, which is considered to be the estimated fair value. The discounts also include estimated costs to sell the property.

For commercial business loans secured by non-real estate collateral, such as accounts receivable, inventory and equipment, estimated fair values are determined based on the borrower’s financial statements, inventory reports, accounts receivable agings or equipment appraisals or invoices. Indications of value from these sources are generally discounted based on the age of the financial information or the quality of the assets.

The Company does not separately identify consumer and other loans unless such loans are the subject of a troubled debt restructuring agreement. Large groups of these smaller balance homogeneous loans are collectively evaluated for impairment.

Loans whose terms are modified are classified as troubled debt restructurings if the Company grants such borrowers concessions and it is deemed that those borrowers are experiencing financial difficulty. Concessions granted under a troubled debt restructuring generally involve a temporary below market rate reduction in interest rate or an extension of a loan’s stated maturity date. Non-accrual troubled debt restructurings are restored to accrual status if principal and interest payments, under the modified terms, are current for six consecutive months after modification. Loans classified as troubled debt restructurings are designated as impaired.

The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the three months ended March 31, 2012:

(Dollars in Thousands)	Recorded		Unpaid Principal		Related		Average Recorded		Interest Income Recognized
	Investment		Balance		Allowance		Investment		While Impaired
With no related allowance recorded:
Real estate:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial	$	3,704	$	3,704	$	—	$	3,704	$	—
Land and construction	$	3,161	$	6,188	$	—	$	3,161	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
With an allowance recorded:
Real estate:
Multi-family	$	2,834	$	2,834	$	223	$	2,834	$	—
Commercial	$	3,439	$	3,439	$	308	$	3,439	$	—
Land and construction	$	—	$	—	$	—	$	—	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
Total:
Real estate:
Multi-family	$	2,834	$	2,834	$	223	$	2,834	$	—
Commercial	$	7,143	$	7,143	$	308	$	7,143	$	—
Land and construction	$	3,161	$	6,188	$	—	$	3,161	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—

The following table summarizes information in regards to impaired loans by loan portfolio class as of and for the year ended December 31, 2011:

(Dollars in Thousands)	Recorded		Unpaid Principal		Related		Average Recorded		Interest Income Recognized
	Investment		Balance		Allowance		Investment		While Impaired
With no related allowance recorded:
Real estate:
Multi-family	$	—	$	—	$	—	$	—	$	—
Commercial	$	2,507	$	2,507	$	—	$	1,537	$	46
Land and construction	$	5,861	$	10,289	$	—	$	5,861	$	145
Commercial business	$	81	$	81	$	—	$	25	$	1
With an allowance recorded:
Real estate:
Multi-family	$	2,834	$	2,834	$	157	$	944	$	29
Commercial	$	2,484	$	2,484	$	205	$	679	$	34
Land and construction	$	1,846	$	1,846	$	305	$	526	$	—
Commercial business	$	—	$	—	$	—	$	—	$	—
Total:
Real estate:
Multi-family	$	2,834	$	2,834	$	157	$	944	$	29
Commercial	$	4,991	$	4,991	$	205	$	2,216	$	80
Land and construction	$	7,707	$	12,135	$	305	$	6,387	$	145
Commercial business	$	81	$	81	$	—	$	25	$	1

The following table summarizes information in regards to troubled debt restructurings for the three months ended March 31, 2012:

(Dollars in Thousands)	Number of  Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Real estate:
Single-family	—		—		—
Multi-family	—		—		—
Commercial	7	$	3,445	$	3,445
Land and construction	—		—		—
Commercial business	—		—		—
Consumer	—		—		—

There were no troubled debt restructurings with a payment default, with the payment default occurring within 12 months of restructure, and payment default occurring during the three months ended March 31, 2012.

At March 31, 2012, the Company had two multi-family loans, ten commercial real estate loans, and one land and construction loan classified as troubled debt restructurings. The two multi-family loans are to one borrower, were classified as substandard in the Company’s allowance for loan losses, and have a $223,000 allowance against them. The ten commercial real estate loans are to three borrowers. Eight of the ten commercial real estate loans are to two borrowers and are classified as special mention in the Company’s allowance for loan losses. Two of the ten commercial real estate loans are to two borrowers and are classified as substandard in the Company’s allowance for loan losses. The land and construction loan was classified as substandard in the Company’s allowance for loan losses and had been written down by $2.6 million in charge-offs during the year ended December 31, 2011 and had no allowance against a $3.2 million carrying value at March 31, 2012. The Company expects to receive sale proceeds of $3.3 million for this land and construction loan in May of 2012. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven.

The following table summarizes information in regards to troubled debt restructurings at December 31, 2011:

(Dollars in Thousands)	Number of  Contracts		Pre-Modification Outstanding Recorded Investments		Post-Modification Outstanding Recorded Investments
Real estate:
Single-family	—		—		—
Multi-family	2	$	2,834	$	2,834
Commercial	3	$	1,280	$	1,280
Land and construction	2	$	9,702	$	5,561
Commercial business	—		—		—
Consumer	—		—		—

	Number of  Contracts		Recorded Investment
That Subsequently Defaulted
Real estate:
Single-family		—		—
Multi-family		—		—
Commercial		—		—
Land and construction		2	$	5,861
Commercial business		—		—
Consumer		—		—

At December 31, 2011, the Company had two multi-family, three commercial real estate, and two land and construction loans classified as troubled debt restructurings. The two multi-family loans are to one borrower, were classified as substandard in the Company’s allowance for loan losses, and have a $158,000 allowance against them. The three commercial real estate loans are to one borrower, are classified as special mention in the Company’s allowance for loan losses, and had no reserve against them. The two land and construction loans are to two borrowers, were classified as substandard in the Company’s allowance for loan losses and had been written down by $3.7 million in charge-offs as of December 31, 2011, and had no allowance against them. All of the troubled debt restructurings consisted of changes in interest rates and no principal was forgiven. The two multi-family and the two land and construction loans were classified as troubled debt restructurings at December 31, 2010, while the three commercial real estate were classified as troubled debt restructurings during the year ended December 31, 2011.