10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended  December 31, 2015
	OR
¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                     to
	Commission file number: 000-55084

Prudential Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	46-2935427
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1834 West Oregon Avenue Philadelphia, Pennsylvania	19145 Zip Code
(Address of Principal Executive Offices)

(215) 755-1500

(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 Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes ¨ No

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

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

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

¨ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practical date: as of January 29, 2016, 9,544,809 shares were issued and 8,240,625 outstanding.

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION:
Item 1.	Consolidated Financial Statements
	Unaudited Consolidated Statements of Financial Condition December 31, 2015 and September 30, 2015	2
	Unaudited Consolidated Statements of Operations for the Three  Months Ended December 31, 2015 and 2014	3
	Unaudited Consolidated Statements of Comprehensive Income(Loss) for for the Three Months Ended December 31, 2015 and 2014	4
	Unaudited Consolidated Statements of Changes in   Stockholders’ Equity for the Three Months Ended December 31, 2015 and 2014	5
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2015 and 2014	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51
Item 4.	Controls and Procedures	51
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	53
SIGNATURES		54

1

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

	December 31,			September 30,
	2015			2015
	(Dollars in Thousands,
ASSETS	Except Share Data)
Cash and amounts due from depository institutions	$	1,949		$	2,150
Interest-bearing deposits		3,802			9,122
Total cash and cash equivalents		5,751			11,272
Investment and mortgage-backed securities available for sale (amortized cost—December 31, 2015, $119,433; September 30, 2015, $77,456)		118,275			77,483
Investment and mortgage-backed securities held to maturity (fair value—December 31, 2015, $55,732; September 30, 2015, $66,877)		55,789			66,384
Loans receivable—net of allowance for loan losses (December 31, 2015, $2,919; September 30, 2015, $2,930)		321,865			312,633
Accrued interest receivable		1,863			1,665
Real estate owned		-			869
Federal Home Loan Bank stock—at cost		1,644			369
Office properties and equipment—net		1,554			1,492
Bank owned life insurance		12,806			12,722
Prepaid expenses and other assets		1,923			1,325
Deferred tax assets-net		1,307			975
TOTAL ASSETS	$	522,777		$	487,189
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Noninterest-bearing	$	2,837		$	2,293
Interest-bearing		367,769			362,781
Total deposits		370,606			365,074
Advances from Federal Home Loan Bank		31,889			-
Accrued interest payable		57			1,291
Advances from borrowers for taxes and insurance		2,554			1,670
Accounts payable and accrued expenses		1,741			2,153
Total liabilities		406,847			370,188
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued		-			-
Common stock, $.01 par value, 40,000,000 shares authorized; 9,544,809 issued and 8,397,625 outstanding at December 31, 2015 and 9,544,809 issued and 8,449,625 outstanding at September 30, 2015		95			95
Additional paid-in capital		95,586			95,286
Unearned Employee Stock Ownership Plan shares		(4,832	)		(4,926	)
Treasury stock, at cost: 1,147,184 shares at December 31, 2015 and 1,095,184 at September 30, 2015		(15,556	)		(14,691	)
Retained earnings		41,401			41,219
Accumulated other comprehensive (loss) income		(764	)		18
Total stockholders' equity		115,930			117,001
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	522,777		$	487,189

See notes to unaudited consolidated financial statements.

2

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended December 31,
	2015			2014
	(Dollars in Thousands, Except Per Share Data)
INTEREST INCOME:
Interest on loans	$	3,060		$	3,257
Interest on mortgage-backed securities		512			416
Interest and dividends on investments		479			548
Interest on interest-bearing assets		5			19
Total interest income		4,056			4,240
INTEREST EXPENSE:
Interest on deposits		752			901
Interest on borrowings		48			-
Total interest expense		800			901
NET INTEREST INCOME		3,256			3,339
PROVISION FOR LOAN LOSSES		-			75
NET INTEREST  INCOME AFTER PROVISION FOR LOAN LOSSES		3,256			3,264
NON-INTEREST INCOME:
Fees and other service charges		119			101
Gain on sale of loans, net		1			138
Gain on the sale of OREO		58			-
Income from bank owned life insurance		84			89
Other		12			22
Total non-interest income		274			350
NON-INTEREST EXPENSE:
Salaries and employee benefits		1,638			1,665
Data processing		116			106
Professional services		279			276
Office occupancy		171			147
Depreciation		77			76
Payroll taxes		79			84
Director compensation		126			86
Deposit insurance		82			68
Advertising		17			30
Other		311			388
Total non-interest expense		2,896			2,926
INCOME BEFORE INCOME TAXES		634			688
INCOME TAXES:
Current expense		286			269
Deferred (benefit) expense		(65	)		(52)
Total income tax expense		221			217
NET INCOME	$	413		$	471
BASIC EARNINGS PER SHARE	$	0.05		$	0.05
DILUTED EARNINGS PER SHARE	$	0.05		$	0.05
DIVIDENDS PER SHARE	$	0.03		$	0.03

See notes to unaudited consolidated financial statements.

3

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)  

	Three months ended December 31,
	2015			2014
	(Dollars in Thousands)
Net income	$	413		$	471
Unrealized holding (losses) gains on available-for-sale securities		(1,185	)		735
Tax effect		403			(250	)
Total other comprehensive income (loss)		(782	)		485
Comprehensive Income (Loss)	$	(369	)	$	956

See notes to unaudited consolidated financial statements.

4

PRUDENTIAL bancorp, inc. and subsidiarIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

														Accumulated
			Additional		Unearned									Other			Total
	Common		Paid-In		ESOP			Treasury			Retained			Comprehensive			Stockholders'
	Stock		Capital		Shares			Stock			Earnings			Income (Loss)			Equity
	(Dollars in Thousands, Except Per Share Data)
BALANCE, OCTOBER 1, 2015	$	95	$	95,286	$	(4,926	)	$	(14,691	)	$	41,219		$	18		$	117,001
Net income												413						413
Other comprehensive loss															(782	)		(782	)
Dividends paid ($0.03 per share)												(231	)					(231	)
Excess tax benefit from stock compensation plans				59														59
Purchase of treasury stock (52,000 shares)									(865	)								(865	)
Stock option expense				121														121
Recognition and Retention Plan expense				84														84
ESOP shares committed to be released (8,879 shares)				36		94												130
BALANCE, DECEMBER 31, 2015	$	95	$	95,586	$	(4,832	)	$	(15,556	)	$	41,401		$	(764	)	$	115,930

														Accumulated
			Additional		Unearned									Other			Total
	Common		Paid-In		ESOP			Treasury			Retained			Comprehensive			Stockholders'
	Stock		Capital		Shares			Stock			Earnings			Loss			Equity
	(Dollars in Thousands, Except Per Share Data)
BALANCE, OCTOBER 1, 2014	$	95	$	94,397	$	(5,302	)	$	-		$	41,188		$	(953	)	$	129,425
Net income												471						471
Other comprehensive income															485			485
Dividends paid ($0.03 per share)												(240	)					(240	)
Excess tax benefit from stock compensation plans				10														10
Purchase of treasury stock (117,900 shares)									(2,163	)								(2,163	)
Stock option expense				21														21
Recognition and Retention Plan expense				14														14
ESOP shares committed to be released (8,909 shares)				14		94												108
BALANCE, DECEMBER 31, 2014	$	95	$	94,456	$	(5,208	)	$	(2,163	)	$	41,419		$	(468	)	$	128,131

See notes to unaudited consolidated financial statements.

5

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended  December 31,
	2015			2014
OPERATING ACTIVITIES:	(Dollars in Thousands)
Net income	$	413		$	471
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		77			76
Net accretion of premiums/discounts		22			(50	)
Provision for loan losses		-			75
Net amortization of deferred loan fees and costs		70			72
Share-based compensation expense for stock options and awards		205			35
Income from bank owned life insurance		(84	)		(89	)
Gain from sale of loans		(1	)		(138	)
Gain on sale of OREO		(58	)		-
Originations of loans held for sale		(300	)		(2,400	)
Proceeds from sale of loans held for sale		301			2,538
Compensation expense of ESOP		130			108
Deferred income tax expense		65			(52	)
Changes in assets and liabilities which used cash:
Accrued interest receivable		(198	)		(103	)
Prepaid expenses and other assets		(592	)		(404	)
Accrued interest payable		(1,234	)		(1,470	)
Accounts payable and accrued expenses		(412	)		2,879
Net cash (used in) provided  by  operating activities		(1,596	)		1,548
INVESTING ACTIVITIES:
Purchase of investment and mortgage-backed securities available for sale		(36,929	)		(4,079	)
Purchase of corporate bonds available for sale		(10,135	)		-
Loans originated or acquired		(19,085	)		(33,552	)
Principal collected on loans		9,783			22,235
Principal payments received on investment and mortgage-backed securities:
Held-to-maturity		10,604			644
Available-for-sale		5,056			1,211
Proceeds from redemption of FHLB stock		-			862
Purchase of FHLB stock		(1,275	)		-
Proceeds from sale of real estate owned		927			16
Purchases of equipment		(139	)		(160	)
Net cash used in investing activities		(41,193	)		(12,823	)
FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts, and savings accounts		2,249			2,412
Net increase (decrease) in certificates of deposit		3,283			(1,995	)
FHLB increase advances		31,889			-
Increase in advances from borrowers for taxes and insurance		884			1,066
Cash dividends paid		(231	)		(240	)
Purchase of treasury stock		(865	)		(2,163	)
Excess tax benefit related to stock compensation plans		59			10
Net cash provided by (used in) financing activities		37,268			(910	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(5,521	)		(12,185	)
CASH AND CASH EQUIVALENTS—Beginning of period		11,272			45,382
CASH AND CASH EQUIVALENTS—End of period	$	5,751		$	33,197
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid on deposits and advances from Federal
Home Loan Bank	$	2,034		$	2,371
Income taxes paid	$	-		$	200

See notes to unaudited consolidated financial statements.

6

PRUDENTIAL BANCORP, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

Organization –On October 9, 2013, Prudential Mutual Holding Company (“MHC”) and Prudential Bancorp of Pennsylvania, Inc. (“Old Prudential”), the Pennsylvania-chartered mid-tier holding company for Prudential Savings Bank (the “Bank”), completed a reorganization and conversion (the “second-step conversion”), pursuant to which Prudential Bancorp, Inc., a new Pennsylvania corporation (“Prudential” or the “Company”), became the holding company for the Bank and MHC and Old Prudential ceased to exist. In connection with the second-step conversion, 7,141,602 shares of common stock, par value $0.01 per share, of Prudential were sold in a subscription offering to certain depositors of the Bank for $10 per share or $71.4 million in the aggregate (the “Offering”), and 2,403,207 shares of common stock were issued in exchange for the outstanding shares of common stock of Old Prudential, which were held by the “public” shareholders of Old Prudential. Each share of common stock of Old Prudential was converted into right to receive 0.9442 shares of common stock of the Company in the second-step conversion. As a result of the second-step conversion, the former MHC and Old Prudential were merged in the Company and 2,540,255 (pre-conversion) treasury shares were cancelled.

The Bank is a community-oriented Pennsylvania-chartered savings bank headquartered in South Philadelphia. The banking office network currently consists of the headquarters and main office and seven full-service branch offices. Five of the banking offices are located in Philadelphia (Philadelphia County), and one is in Drexel Hill, Delaware County, Pennsylvania and the remaining branch is located in Chalfont, Bucks County, Pennsylvania. The Bank maintains ATMs at six of the banking offices. The Bank also provides on-line and mobile banking services. The Bank has filed notice with the regulatory agencies of its intent to close the Chalfont branch in late February 2016.

The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities (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. As a bank holding company, Prudential is subject to the regulation of the Board of Governors of the Federal Reserve System.

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three ended December 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2016, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of Prudential . and the accompanying notes thereto included in the Company’s Annual Report on Form 10-Kfor the fiscal year ended September 30, 2015.

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

7

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements.

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not be entitled to receive any dividends declared on the common stock subject to the award until earned.

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the three month period ended December 31, 2015, the Company repurchased 52,000 shares at an approximate total cost of $865,000.

FHLB Stock – FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at December 31, 2015.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “Update”) 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU did not have a significant impact on the Company’s financial statements.

8

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This ASU did not have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40). The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. This ASU did not to have a significant impact on the Company’s financial statements.

9

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements -Going Concern (Subtopic 205-40). The amendments in this Update provide guidance in accounting principles generally accepted in the United States of America about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The amendments in this Update are first effective for the annual period ending after December 15, 2016, and for annual periods and interim periods within such annual periods thereafter. Early application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies how current U.S. GAAP should be interpreted in subjectively evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Public business entities are required to implement the new requirements in fiscal years and interim periods within those fiscal years beginning after December 15, 2015. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-17, Business Combinations (Topic 805): Pushdown Accounting. The amendments in this Update apply to the separate financial statements of an acquired entity and its subsidiaries that are a business or nonprofit activity (either public or nonpublic) upon the occurrence of an event in which an acquirer (an individual or an entity) obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period to the acquired entity's most recent change-in-control event. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. This ASU did not have a significant impact on the Company’s financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement –Extraordinary and Unusual Items, as part of its initiative to reduce complexity in accounting standards. This Update eliminates from GAAP the concept of extraordinary items. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments (1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

10

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30), as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-04, Compensation-Retirement Benefits (Topic 715), as part of its initiative to reduce complexity in accounting standards. For an entity with a fiscal year-end that does not coincide with a month-end, the amendments in this Update provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan. The amendments in this Update are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2015, the FASB issued ASU 2015-08, Business Combinations - Pushdown Accounting - Amendment to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115. This ASU was issued to amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115 which deleted certain topics related to push down accounting in order to make the SEC’s interpretive guidance consistent with current accounting and audit guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this ASU. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contract with Customers (Topic 606). The amendments in this Update defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is evaluating the effect of adopting this new accounting ASU.

11

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this Update require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this Update (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

12

2. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, during the period. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, based upon the treasury stock method using an average market price for the period.

The calculated basic and diluted earnings per share are as follows:

	Three Months Ended December 31,
	2015				2014
	Basic		Diluted		Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net income	$	413	$	413	$	471	$	471
Weighted average shares outstanding		7,625,150		7,625,150		8,850,963		8,850,963
Effect of common stock equivalents		-		158,906		-		390,683
Adjusted weighted average shares used in earnings per share computation		7,625,150		7,784,056		8,850,963		9,241,646
Earnings per share - basic and diluted	$	0.05	$	0.05	$	0.05	$	0.05

All stock options outstanding as of December 31, 2015 and 2014 had exercise prices below the then current market price and were considered dilutive for the earnings per share calculation.

13

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive loss by component, net of tax:

	Three Months Ended December 31,
	2015			2014
	(Dollars in Thousands)
	Unrealized gains (losses)			Unrealized gains (losses)
	on available for sale			on available for sale
	securities (a)			securities (a)
Beginning Balance	$	18		$	(953	)
Other comprehensive income (loss) gain before reclassification		(782	)		485
Amount reclassified from accumulated other comprehensive income (loss)		-			-
Total other comprehensive (loss) income		(782	)		485
Ending Balance	$	(764	)	$	(468	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

14

4. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses, are as follows:

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(439	)	$	18,549
Mortgage-backed securities - U.S. government agencies		90,306		268		(960	)		89,614
Corporate bonds		10,133		-		(64	)		10,069
Total debt securities available for sale		119,427		268		(1,463	)		118,232
FHLMC preferred stock		6		37		-			43
Total securities available for sale	$	119,433	$	305	$	(1,463	)	$	118,275
Securities Held to Maturity:
U.S. government and agency obligations	$	44,930	$	378	$	(1,176	)	$	44,132
Mortgage-backed securities - U.S. government agencies		10,859		772		(31	)		11,600
Total securities held to maturity	$	55,789	$	1,150	$	(1,207	)	$	55,732

15

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(276	)	$	18,712
Mortgage-backed securities - U.S. government agencies		58,462		475		(225	)		58,712
Total debt securities available for sale		77,450		475		(501	)		77,424
FHLMC preferred stock		6		53		-			59
Total securities available for sale	$	77,456	$	528	$	(501	)	$	77,483
Securities Held to Maturity:
U.S. government and agency obligations	$	54,929	$	462	$	(849	)	$	54,542
Mortgage-backed securities - U.S. government agencies		11,455		880		-			12,335
Total securities held to maturity	$	66,384	$	1,342	$	(849	)	$	66,877

16

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at December 31, 2015:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(129	)	$	4,867	$	(310	)	$	10,682	$	(439	)	$	15,549
Mortgage-backed securities - U.S. government agencies		(775	)		60,914		(185	)		8,886		(960	)		69,800
Corporate bonds		(64	)		10,069		-			-		(64	)		10,069
Total securities available for sale		(968	)		75,850		(495	)		19,568		(1,463	)		95,418
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(1,176	)		33,777		(1,176	)		33,777
Mortgage-backed securities - U.S. government agencies		(31	)		3,829		-			-		(31	)		3,829
Total securities held to maturity		(31	)		3,829		(1,176	)		33,777		(1,207	)		37,606
Total	$	(999	)	$	79,679	$	(1,671	)	$	53,345	$	(2,670	)	$	133,024

17

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at September 30, 2015:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(85	)	$	4,910	$	(191	)	$	13,802	$	(276	)	$	18,712
Mortgage-backed securities - agency		(138	)		22,173		(87	)		9,206		(225	)		31,379
Total securities available for sale		(223	)		27,083		(278	)		23,008		(501	)		50,091
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(849	)		42,603		(849	)		42,603
Total securities held to maturity		-			-		(849	)		42,603		(849	)		42,603
Total	$	(223	)	$	27,083	$	(1,127	)	$	65,611	$	(1,350	)	$	92,694

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least once each quarter, and more frequently when economic or market concerns warrant such evaluation. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities.  Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, the length of time and extent to which the fair value of the security has been less than cost, and the near-term prospects of the issuer.

The Company assesses whether a credit loss exists with respect to a security by considering whether (1) the Company has the intent to sell the security, (2) it is more likely than not that it will be required to sell the security before recovery has occurred, or (3) it does not expect to recover the entire amortized cost basis of the security. The Company bifurcates the OTTI impact on impaired securities where impairment in value was deemed to be other than temporary between the component representing credit loss and the component representing loss related to other factors. The portion of the fair value decline attributable to credit loss must be recognized through a charge to earnings. The credit component is determined by comparing the present value of the cash flows expected to be collected, discounted at the rate in effect before recognizing any OTTI, with the amortized cost basis of the debt security.  The Company uses the cash flows expected to be realized from the security, which includes assumptions about interest rates, timing and severity of defaults, estimates of potential recoveries, the cash flow distribution from the security and other factors, then applies a discount rate equal to the effective yield of the security.  The difference between the present value of the expected cash flows and the amortized book value is considered a credit loss.  The fair market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from open market and other sources as appropriate for the particular security.  The difference between the fair value and the security’s remaining amortized cost is recognized in other comprehensive income (loss).  

During the three months ended December 31, 2015 and 2014, the Company did not record any credit losses on investment securities through either earnings or in comprehensive income (loss).

18

U.S. Government Agency Obligations - The Company’s investments reflected in the tables above in U.S. Government agency notes consist of debt obligations of the FHLB and Federal Farm Credit System (“FFCS”). These securities are typically rated AAA by one of the internationally recognized credit rating services. At December 31, 2015, U.S. Government and agency obligations in a gross unrealized loss for less than 12 months consisted of four securities. There were 18 securities in a gross unrealized loss for more than 12 months at such date. The unrealized losses on these debt securities relate principally to the changes in market interest rates and a lack of liquidity currently in the financial markets and are not a result of a projected shortfall of cash flows. The Company anticipates it will recover the entire amortized cost basis of the securities. As a result, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2015.

U.S. Agency Issued Mortgage-Backed Securities - At December 31, 2015, there were six securities in a gross unrealized loss for less than 12 months while there were nine securities in a gross unrealized loss for more than 12 months at such date. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency.

Corporate Debt Securities –At December 31, 2015, there were two securities in a gross unrealized loss for less than 12 months.

The amortized cost and fair value of debt securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The maturity table below excludes mortgage-backed securities because the contractual maturities of such securities are not indicative of actual maturities due to significant prepayments.

	December 31, 2015
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due within one year	$	-	$	-	$	-	$	-
Due after one through five years		1,999		2,224		-		-
Due after five through ten years		985		1,000		10,133		10,069
Due after ten years		41,946		40,908		18,988		18,549
Total	$	44,930	$	44,132	$	29,121	$	28,618

During both three month periods ended December 31, 2015 and 2014, no securities were sold.

19

5. LOANS RECEIVABLE

Loans receivable consist of the following:

	December 31,			September 30,
	2015			2015
	(Dollars in Thousands)
One-to-four family residential	$	253,233		$	259,163
Multi-family residential		6,201			6,249
Commercial real estate		39,550			25,799
Construction and land development		37,006			38,953
Consumer		671			392
Total loans		336,661			330,556
Undisbursed portion of loans-in-process		(13,928	)		(17,097	)
Deferred loan costs		2,051			2,104
Allowance for loan losses		(2,919	)		(2,930	)
Net loans	$	321,865		$	312,633

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at December 31, 2015:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,471		58		359		757		-		8		266		2,919
Total ending allowance balance	$	1,471	$	58	$	359	$	757	$	-	$	8	$	266	$	2,919
Loans:
Individually evaluated for impairment	$	4,703	$	347	$	3,712	$	9,317	$	-	$	-			$	18,079
Collectively evaluated for impairment		248,530		5,854		35,838		27,689		-		671				318,582
Total loans	$	253,233	$	6,201	$	39,550	$	37,006	$	-	$	671			$	336,661

20

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at September 30, 2015:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,635		66		231		724		-		5		269		2,930
Total loans	$	1,635	$	66	$	231	$	724	$	-	$	5	$	269	$	2,930
Loans:
Individually evaluated for impairment	$	4,206	$	-	$	3,768	$	8,796	$	-	$	-	$	-	$	16,770
Collectively evaluated for impairment		254,957		6,249		22,031		30,157		-		392		-		313,786
Total loans	$	259,163	$	6,249	$	25,799	$	38,953	$	-	$	392	$	-	$	330,556

The loan portfolio is segmented at a level that allows management to monitor both risk and performance. Management evaluates for potential impairment all construction loans, commercial real estate and commercial business loans and all loans 90 plus days delinquent as to principal and/or interest. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect in full the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Once the determination is made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is generally measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following three methods: (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. Management primarily utilizes the fair value of collateral method as a practically expedient alternative. On collateral method evaluations, any portion of the loan deemed uncollectible is charged-off against the loan loss allowance.

The following table presents impaired loans by class as of December 31, 2015, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

21

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,703	$	4,703	$	5,080
Multi-family residential		-		-		347		347		347
Commercial real estate		-		-		3,712		3,712		3,712
Construction and land development		-		-		9,317		9,317		9,317
Total Loans	$	-	$	-	$	18,079	$	18,079	$	18,456

The following table presents impaired loans by class as of September 30, 2015, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
										Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,206	$	4,206	$	4,550
Commercial real estate		-		-		3,768		3,768		3,768
Construction and land development		-		-		8,796		8,796		8,796
Total Loans	$	-	$	-	$	16,770	$	16,770	$	17,114

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated:

22

	Three Months Ended December 31, 2015
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,455	$	31	$	23
Multi-family residential		351		6		-
Commercial real estate		3,740		24		13
Construction and land development		9,057		125		-
Total Loans	$	17,603	$	186	$	36

	Three Months Ended December 31, 2014
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	10,526	$	139	$	35
Multi-family residential		365		64		-
Commercial real estate		3,771		52		11
Construction and land development		7,479		104		-
Total Loans	$	22,141	$	359	$	46

Federal regulations and our policy require that the Company utilize an internal asset classification system as a means of reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, consistent with Federal banking regulations, as a part of its credit monitoring system. Management currently classifies problem and potential problem assets as “special mention”, “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “special mention.”

The following table presents the classes of the loan portfolio in which a formal risk weighting system is utilized summarized by the aggregate “Pass” and the criticized category of “special mention”, and the classified categories of “substandard”, “doubtful” and “loss” within the Company’s risk rating system as applied to the loan portfolio. The Company had no loans classified as “doubtful” or “loss” at either of the dates presented.

23

	December 31, 2015
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,613	$	1,717	$	1,373	$	4,703
Multi-family residential		5,854		-		347		6,201
Commercial real estate		35,816		961		2,773		39,550
Construction and land development		27,689		-		9,317		37,006
Total Loans	$	70,972	$	2,678	$	13,810	$	87,460

	September 30, 2015
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,348	$	2,107	$	751	$	4,206
Multi-family residential		5,898		351		-		6,249
Commercial real estate		22,005		965		2,829		25,799
Construction and land development		30,157		-		8,796		38,953
Total Loans	$	59,408	$	3,423	$	12,376	$	75,207

The Company evaluates the classification of one-to-four family residential and consumer loans primarily on a pooled basis. If the Company becomes aware that adverse or distressed conditions exist that may affect a particular single-family residential loan, the loan is downgraded following the above definitions of special mention, substandard, doubtful and loss.

The following table represents loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status. Non-performing loans that would be included in the table are those loans greater than 90 days past due that do not have a designated risk rating.

24

	December 31, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	248,530	$	-	$	248,530
Consumer		671		-		671
Total Loans	$	249,201	$	-	$	249,201

	September 30, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	254,957	$	-	$	254,957
Consumer		392		-		392
Total Loans	$	255,349	$	-	$	255,349

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is due or overdue, as the case may be. The following table presents the loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans:

	December 31, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	250,487	$	821	$	1,925	$	-	$	821	$	253,233	$	3,416
Multi-family residential		6,201		-		-		-		-		6,201		-
Commercial real estate		39,369		-		181		-		-		39,550		1,542
Construction and land development		37,006		-		-		-		-		37,006		9,317
Consumer		671		-		-		-		-		671		-
Total Loans	$	333,734	$	821	$	2,106	$	-	$	821	$	336,661	$	14,275

25

	September 30, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	255,669	$	1,462	$	2,032	$	-	$	1,462	$	259,163	$	3,547
Multi-family residential		6,249		-		-		-		-		6,249		-
Commercial real estate		25,114		504		181		-		504		25,799		1,589
Construction and land development		38,953		-		-		-		-		38,953		8,796
Consumer		392		-		-		-		-		392		-
Total Loans	$	326,377	$	1,966	$	2,213	$	-	$	1,966	$	330,556	$	13,932

The allowance for loan losses is established through a provision for loan losses charged to expense. The Company maintains the allowance at a level believed to cover all known and inherent losses in the portfolio that are both probable and reasonable to estimate at each reporting date. Management reviews the allowance for loan losses no less than quarterly in order to identify these inherent losses and to assess the overall collection probability for the loan portfolio in view of these inherent losses. For each primary type of loan, a loss factor is established reflecting an estimate of the known and inherent losses in such loan type contained in the portfolio using both a quantitative analysis as well as consideration of qualitative factors. The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and geographic concentration of the Company’s loans, the value of collateral securing the loans, the borrowers’ ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience.

Commercial real estate loans entail significant additional credit risks compared to one-to-four family residential mortgage loans, as they generally involve large loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related real estate project and/or business operation of the borrower who is, in some cases, also the primary occupant, and thus may be subject to a greater extent to the effects of adverse conditions in the real estate market and in the economy in general. Commercial business loans typically involve a higher risk of default than residential loans of like duration since their repayment is generally dependent on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Land acquisition, development and construction lending exposes the Company to greater credit risk than permanent mortgage financing. The repayment of land acquisition, development and construction loans depends upon the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. These events may adversely affect both the borrowers as well as the value of the collateral property. Such lending is additionally subject to the risk that if the estimate of construction cost proves to be inaccurate, potentially the Company will be compelled to advance additional funds. In addition, if the estimate of value proves to be inaccurate, the Company may be confronted with a project, when completed, having less value than the loan amount. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company would be able to recover the entire unpaid portion of the loan.

The following table summarizes the primary segments of the allowance for loan losses. Activity in the allowance is presented for the three month periods ended December 31, 2015 and 2014:

26

	Three Months Ended December 31, 2015
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated			Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724	$	-	$	5	$	269		$	2,930
Charge-offs		(11	)		-			-		-		-		-		-			(11	)
Recoveries		-			-			-		-		-		-		-			-
Provision		(153	)		(8	)		128		33		-		3		(3	)		-
ALLL balance at December 31, 2015	$	1,471		$	58		$	359	$	757	$	-	$	8	$	266		$	2,919

	Three Months Ended December  31, 2014
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business			Consumer		Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2014	$	1,663		$	67		$	122	$	323	$	15		$	4	$	231	$	2,425
Charge-offs		-			-			-		-		-			-		-		-
Recoveries		-			-			-		-		-			-		-		-
Provision		(171	)		(16	)		94		170		(10	)		-		8		75
ALLL balance at December 31, 2014	$	1,492		$	51		$	216	$	493	$	5		$	4	$	239	$	2,500

The Company determined that a provision for loan losses was not necessary for the three months ended December 31, 2015, compared to the $75,000 provision recorded during the same period in 2014.

At December 31, 2015, the Company had ten loans classified as TDRs aggregating $7.9 million, consisting of two single-family residential real estate loans which amounted to $1.5 million, one construction and land development loan totaling $3.5 million and seven commercial real estate loans which amounted to $3.0 million. Of these loans, one single-family residential real estate loan totaling $1.4 million, one commercial real estate loan totaling $733,000 and a construction and land development loan totaling $3.5 million were determined to be non-performing until management has made the decision to designate these credits as performing. Typically management will wait until a minimum of six consecutive contractual payments have been made prior to changing the designation. All TDRs, with the exception of one commercial real estate loan totaling $854,000, were classified as “substandard” as of December 31, 2015. During the three months ended December 31, 2015, no TDRs defaulted.

The Company did not restructure any debt during the three month period ended December 31, 2015 and 2014.

27

6. DEPOSITS

Deposits consist of the following major classifications:

	December 31,					September 30,
	2015					2015
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	59,855		16.1	%	$	60,736		16.6	%
Interest-bearing checking accounts		37,591		10.1			35,649		9.8
Non-interest bearing checking accounts		2,837		0.8			2,293		0.6
Passbook, club and statement savings		71,000		19.2			70,355		19.3
Certificates maturing in six months or less		48,380		13.0			49,857		13.7
Certificates maturing in more than six months		150,943		40.8			146,184		40.0
Total	$	370,606		100.0	%	$	365,074		100.0	%

Certificates of $250,000 and over totaled $30.3 million as of December 31, 2015 and $32.7 million as of September 30, 2015.

28

7. INCOME TAXES

Items that gave rise to significant portions of deferred income taxes are as follows:

	December 31,			September 30,
	2015			2015
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,178		$	1,185
Nonaccrual interest		93			86
Accrued vacation		62			119
Capital loss carryforward		506			534
Split dollar life insurance		19			19
Post-retirement benefits		106			126
Unrealized loss on available for sale securities		387			-
Employee benefit plans		643			530
Total deferred tax assets		2,994			2,599
Valuation allowance		(506	)		(534	)
Total deferred tax assets, net of valuation allowance		2,488			2,065
Deferred tax liabilities:
Property		484			365
Unrealized gains on available for sale securities		-			10
Deferred loan fees		697			715
Total deferred tax liabilities		1,181			1,090
Net deferred tax assets	$	1,307		$	975

The Company establishes a valuation allowance for deferred tax assets when management believes that the use of the deferred tax assets is not likely to be realized through a carry back to taxable income in prior years or future reversals of existing taxable temporary differences, and/or to a lesser extent, future taxable income. The tax deduction generated by the redemption of the shares of a mutual fund held by the Bank and the subsequent impairment charge on the assets acquired through the redemption in kind are considered capital losses and can only be utilized to the extent of capital gains over a five year period, resulting in the establishment of a valuation allowance for the carryforward period. The valuation allowance totaled $506,000 at December 31, 2015, and $534,000 at September 30, 2015.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Operations as a component of income tax expense. As of December 31, 2015, the Internal Revenue Service had conducted an audit of the Company’s federal tax return for the year ended September 30, 2010, and no adverse findings were reported. The Company’s federal and state income tax returns for taxable years through September 30, 2012 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.

29

8. STOCK COMPENSATION PLANS

The Company maintains an employee stock ownership plan (“ESOP”) for substantially all of its full-time employees. The ESOP purchased 427,057 shares (on a converted basis) of the Company’s common stock for an aggregate cost of approximately $4.5 million in fiscal 2005. The ESOP purchased an additional 255,564 shares during December 2013 and an additional 30,100 shares at the beginning January 2014, of the Company’s common stock for an aggregate cost of approximately $3.1 million. The shares were purchased with the proceeds of loans from the Company. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants as the loans are repaid. Shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. As of December 31, 2015, the ESOP held 697,270 shares and the Company had allocated a total of 251,118 shares from the suspense account to participants. For the three months ended December 31, 2015 and 2014, the Company recognized $130,000 and $108,000, respectively, in compensation expense related to the ESOP.

The Company maintains the 2008 Recognition and Retention Plan (“2008 RRP”) which is administered by a committee of the Board of Directors of the Company. The RRP provides for the grant of shares of common stock of the Company to officers, employees and directors of the Company. In order to fund the grant of shares under the RRP, the RRP Trust purchased 213,528 shares (on a converted basis) of the Company’s common stock in the open market for approximately $2.5 million, at an average purchase price per share of $11.49 as part of the 2008 RRP. The Company made sufficient contributions to the RRP Trust to fund these purchases. As of December 31, 2015, all the shares, with exception of 3,059 shares that had been forfeited, had been awarded as part of the 2008 RRP. Shares subject to awards under the 2008 RRP generally vest at the rate of 20% per year over five years. During February 2015, shareholders approved the 2014 Stock Incentive Plan (the “2014 SIP”). As part of the 2014 SIP, a maximum of 285,655 shares can be awarded as restricted stock awards or units, of which 235,500 shares were awarded during February 2015 of which 26,500 shares had been forfeited as of December 31, 2015.

Compensation expense related to the shares subject to restricted stock awards granted is recognized ratably over the five-year vesting period in an amount which totals the grant date fair value multiplied by the number of shares subject to the grant. During the three months ended December 31, 2015, an aggregate of $128,000 was recognized in compensation expense for the 2008 RRP and the grants pursuant to the 2014 SIP. Income tax benefits of $44,000 were recognized for the three months ended December 31, 2015. During the three months ended December 31, 2014, $21,000 was recognized in compensation expense for the 2008 RRP. An income tax benefit of $7,000 was recognized for the three months ended December 31, 2014. At December 31, 2015, approximately $2.2 million in additional compensation expense for the shares awarded which remained outstanding related to the 2008 RRP and the 2014 SIP and $2.6 million in compensation expense remained unrecognized. At December 31, 2014, approximately $225,000 in additional compensation expense for the shares awarded related to the 2008 RRP remained unrecognized.

30

A summary of the Company’s non-vested stock award activity for the three months ended December 31, 2015 and 2014 is presented in the following tables:

	Three Months Ended December 31, 2015
	Number of Shares (1)			Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Issued		-			-
Forfeited		(7,746	)		11.50
Vested		-			-
Nonvested stock awards at the December 31, 2015		233,682		$	11.75

	Three Months Ended December 31, 2014
	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2014		38,055	$	8.07
Issued		-		-
Forfeited		-		-
Vested		-		-
Nonvested stock awards at the December 31, 2014		38,055	$	8.07

The Company maintains the 2008 Stock Option Plan (the “2008 Option Plan”) which authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price at least equal to the fair market value of the common stock on the grant date. 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. A total of 533,808 shares (on a converted basis) of common stock were approved for future issuance pursuant to the 2008 Stock Option Plan. As of December 31, 2015, all of the options had been awarded under the 2008 Option Plan. As of December 31, 2015, 418,294 options (on a converted basis) were vested under the 2008 Option Plan. The 2014 SIP reserved up to 714,145 shares for issuance pursuant to options. Options to purchase 587,112 shares were awarded during February 2015, 605,000 shares pursuant to the 2014 SIP and the remainder pursuant to the 2008 Option Plan. As of December 31, 2015, the 2008 Option Plan had 7,932 shares forfeited and the 2014 SIP had 70,000 shares forfeited.

A summary of the status of the Company’s stock options under the 2008 Option Plan and the 2014 SIP as of December 31, 2015 and 2014 are presented below:

31

	Three Months Ended December 31, 2015
	Number of Shares			Weighted Average Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		-			-
Forfeited		(25,166	)		11.59
Outstanding at December 31, 2015		1,049,264		$	11.93
Exercisable at December 31, 2015		440,976		$	11.42

	Three Months Ended December 31, 2014
	Number of Shares		Weighted Average Exercise Price
Outstanding at October 1, 2014		530,084	$	10.86
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at December 31, 2014		530,084	$	10.86
Exercisable at December 31, 2014		417,767	$	11.57

The weighted average remaining contractual term was approximately 6.8 years for options outstanding as of December 31, 2015.

The estimated fair value of options granted during fiscal 2009 was $2.98 per share, $2.92 for options granted during fiscal 2010, $3.34 for options granted during fiscal 2013, $4.67 for the options granted during fiscal 2014 and $4.58 for options granted during fiscal 2015. The fair value for grants made in fiscal 2015 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $12.23, expected term of seven years, volatility rate of 38.16%, interest rate of 1.62% and a yield rate of 0.98%.

During the three months ended December 31, 2015, $136,000 was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $15,000 was recognized for the three months ended December 31, 2015. During the three months ended December 31, 2014, $25,000 was recognized in compensation expense for the 2008 Option Plan and a tax benefit of $1,000 was recognized during this period. At December 31, 2015, approximately $2.3 million in additional compensation expense for awarded options which remained outstanding at such date. The weighted average period over which this expense will be recognized is approximately 4.1 years.

9. COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2015, the Company had $7.5 million in outstanding commitments to originate fixed and variable-rate loans with market interest rates ranging from 3.75% to 6.00%. At September 30, 2015, the Company had $2.5 million in outstanding commitments to originate fixed and variable-rate loans with market interest rates ranging from 4.25% to 5.25%. The aggregate undisbursed portion of loans-in-process amounted to $13.9 million at December 31, 2015 and $17.2 million at September 30, 2015.

32

The Company also had commitments under unused lines of credit of $5.7 million as of December 31, 2015 and $6.1 million as of September 30, 2015 and letters of credit outstanding of $2.6 million as of December 31, 2015 and September 30, 2015.

Among the Company’s contingent liabilities are exposures to limited recourse arrangements with respect to the Company’s sales of whole loans and participation interests. At December 31, 2015, the exposure, which represents a portion of credit risk associated with the interests sold, amounted to $53,000. This exposure is for the life of the related loans and payables, on our proportionate share, as actual losses are incurred.

The Company is involved in various legal proceedings occurring in the ordinary course of business. Management of the Company, based on discussions with litigation counsel, believes that such proceedings will not have a material adverse effect on the financial condition, operations or cash flows of the Company. However, there can be no assurance that any of the outstanding legal proceedings to which the Company is a party will not be decided adversely to the Company's interests and not have a material adverse effect on the financial condition and operations of the Company.

10. FAIR VALUE MEASUREMENT

The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2015 and September 30, 2015, respectively. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Generally accepted accounting principles used in the United States establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

The three broad levels of hierarchy are as follows:

Level 1	Quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Those assets as of December 31, 2015 which are to be measured at fair value on a recurring basis are as follows:

33

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,549	$	-	$	18,549
Mortgage-backed securities - U.S. Government agencies		-		89,614		-		89,614
Corporate bonds		-		10,069				10,069
FHLMC preferred stock		43		-		-		43
Total	$	43	$	118,232	$	-	$	118,275

Those assets as of September 30, 2015 which are measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,712	$	-	$	18,712
Mortgage-backed securities - U.S. Government agencies		-		58,712		-		58,712
FHLMC preferred stock		59		-		-		59
Total	$	59	$	77,424	$	-	$	77,483

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and real estate owned at fair value on a non-recurring basis.

Impaired Loans

The Company considers loans to be impaired when it becomes more likely than not that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreements. Collateral dependent impaired loans are based on the fair value of the collateral which is based on appraisals and would be categorized as Level 2 measurement.  In some cases, adjustments are made to the appraised values for various factors including the age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. These loans are reviewed for impairment and written down to their net realizable value by charges against the allowance for loan losses. The collateral underlying these loans had a fair value in excess of $18.1 million, as of December 31, 2015.

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is generally repossessed and reclassified to foreclosed real estate and repossessed assets. These repossessed assets are carried at the lower of cost or fair value of the collateral, based on independent appraisals, less cost to sell and would be categorized as Level 2 measurement. In some cases, adjustments are made to the appraised values for various factors including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. Thus the evaluations are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement.

34

Summary of Non-Recurring Fair Value Measurements

	At December 31, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	18,079	$	18,079
Total	$	-	$	-	$	18,079	$	18,079

	At September 30, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,770	$	16,770
Real estate owned		-		869		-		869
Total	$	-	$	869	$	16,770	$	17,639

The following table provides information describing the valuation processes used to determine nonrecurring fair value measurements categorized within Level 3 of the fair value hierarchy:

	At December 31, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	18,079	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount

	At September 30, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,770	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount
Real estate owned	$	869	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

35

The fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

					Fair Value Measurements at
					December 31, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	5,751	$	5,751	$	5,751	$	-	$	-
Investment and mortgage-backed
securities available for sale		118,275		118,275		43		118,232		-
Investment and mortgage-backed securities held to maturity		55,789		55,732		-		55,732		-
Loans receivable, net		321,865		318,681		-		-		318,681
Accrued interest receivable		1,863		1,863		1,863		-		-
Federal Home Loan Bank stock		1,644		1,644		1,644		-		-
Bank owned life insurance		12,806		12,806		12,806		-		-
Liabilities:
Checking accounts		40,428		40,428		40,428		-		-
Money market deposit accounts		59,855		59,855		59,855		-		-
Passbook, club and statement savings accounts		71,000		71,000		71,000		-		-
Certificates of deposit		199,323		201,917		-		-		214,749
Advances from Federal Home
Loan Bank		31,889		31,636		-		-		31,636
Accrued interest payable		57		57		57		-		-
Advances from borrowers for taxes and
insurance		2,554		2,554		2,554		-		-

36

					Fair Value Measurements at
					September 30, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	11,272	$	11,272	$	11,272	$	-	$	-
Investment and mortgage-backed securities available for sale		77,483		77,483		59		77,424		-
Investment and mortgage-backed
securities held to maturity		66,384		66,877		-		66,877		-
Loans receivable, net		312,633		312,613		-		-		312,613
Accrued interest receivable		1,665		1,665		1,665		-		-
Federal Home Loan Bank stock		369		369		369		-		-
Bank owned life insurance		12,722		12,722		12,722		-		-
Liabilities:
Checking accounts		37,942		37,942		37,942		-		-
Money market deposit accounts		60,736		60,736		60,736		-		-
Passbook, club and statement savings accounts		70,355		70,355		70,355		-		-
Certificates of deposit		196,041		199,639		-		-		199,639
Accrued interest payable		1,291		1,291		1,291		-		-
Advances from borrowers for taxes and
insurance		1,670		1,670		1,670		-		-

Cash and Cash Equivalents—For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Investments and Mortgage-Backed Securities—The fair value of investment securities and mortgage-backed securities is based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.

Loans Receivable—The fair value of loans is estimated based on present value using the current market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying value that fair value is compared to is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 of the fair value hierarchy.

Accrued Interest Receivable – For accrued interest receivable, the carrying amount is a reasonable estimate of fair value.

Federal Home Loan Bank (FHLB) Stock—Although FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount.

Bank Owned Life Insurance—The fair value of bank owned life insurance is based on the cash surrender value obtained from an independent advisor that is derivable from observable market inputs.

Checking Accounts, Money Market Deposit Accounts, Passbook Accounts, Club Accounts, Statement Savings Accounts, and Certificates of Deposit—The fair value of passbook accounts, club accounts, statement savings accounts, checking accounts, and money market deposit accounts is the amount reported in the financial statements. The fair value of certificates of deposit is based on market rates currently offered for deposits of similar remaining maturity.

37

Advances from Federal Home Loan Bank—The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Accrued Interest Payable – For accrued interest payable, the carrying amount is a reasonable estimate of fair value.

Advances from borrowers for taxes and insurance – For advances from borrowers for taxes and insurance, the carrying amount is a reasonable estimate of fair value.

Commitments to Extend Credit and Letters of Credit—The majority of the Bank’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

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

The following discussion should be read in conjunction with our unaudited consolidated financial statements included elsewhere in this Form 10-Q and with our Annual Report on Form 10-K for the year ended September 30, 2015 (the “Form 10-K”).

Overview. Prudential Bancorp, Inc. (the “Company”) was formed by Prudential Bancorp, Inc. of Pennsylvania to become the successor holding company for Prudential Savings Bank (the “Bank”) as a result of the second-step conversion completed in October 2013. The Company’s results of operations are primarily dependent on the results of the Bank, which is a wholly owned subsidiary of the Company. The Company’s results of operations depend to a large extent on net interest income, which primarily is the difference between the income earned on its loan and securities portfolios and the cost of funds, which is the interest paid on deposits and borrowings. Results of operations are also affected by our provisions for loan losses, non-interest income (which includes impairment charges) and non-interest expense. Non-interest expense principally consists of salaries and employee benefits, office occupancy expense, depreciation, data processing expense, payroll taxes and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable laws, regulations or government policies may materially impact our financial condition and results of operations. The Bank is subject to regulation by the Federal Deposit Insurance Corporation (the “FDIC”) and the Pennsylvania Department of Banking and Securities (the “Department”). The Bank’s main office is in Philadelphia, Pennsylvania, with six additional full-service banking offices located in Philadelphia, Delaware and Bucks Counties in Pennsylvania. The Bank’s primary business consists of attracting deposits from the general public and using those funds together with borrowings to originate loans and to invest primarily in U.S. Government and agency securities and mortgage-backed securities. In November 2005, the Bank formed PSB Delaware, Inc., a Delaware corporation, as a subsidiary of the Bank. In March 2006, all mortgage-backed securities then owned by the Company’s predecessor were transferred to PSB Delaware, Inc. PSB Delaware, Inc.’s activities are included as part of the consolidated financial statements.

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 financial statements. These policies are described in Note 1 of the notes to our unaudited consolidated financial statements included in Item 1 hereof as well as in Note 2 to our audited consolidated financial statements included in the Form 10-K. The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and to general practices within the banking industry. Accordingly, the 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 as well as contingent assets and contingent liabilities at the date of the 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.

38

Allowance for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to expense. Losses are charged against the allowance for loan losses when management believes that the collectability in full of the principal of a loan is unlikely. Subsequent recoveries are added to the allowance. The allowance for loan losses is maintained at a level that management considers adequate to provide for estimated losses and impairments based upon an evaluation of known and inherent losses in the loan portfolio that are both probable and reasonable to estimate. Loan impairment is evaluated based on the fair value of collateral or estimated net realizable value. It is the policy of management to provide for losses on unidentified loans in its portfolio in addition to criticized and classified loans.

Management monitors its allowance for loan losses at least quarterly and makes adjustments to the allowance through the provision for loan losses as economic conditions and other pertinent factors indicate. The quarterly review and adjustment of the qualitative factors employed in the allowance methodology and the updating of historic loss experience allow for timely reaction to emerging conditions and trends.  In this context, a series of qualitative factors are used in a methodology as a measurement of how current circumstances are affecting the loan portfolio. Included in these qualitative factors are:

· Levels of past due, classified, criticized and non-accrual loans, troubled debt restructurings and loan modifications;

· Nature and volume of loans;

· Changes in lending policies and procedures, underwriting standards, collections, charge-offs and recoveries and for commercial loans, the level of loans being approved with exceptions to the Bank’s lending policy;

· Experience, ability and depth of management and staff;

· National and local economic and business conditions, including various market segments;

· Quality of the Company’s loan review system and the degree of Board oversight;

· Concentrations of credit and changes in levels of such concentrations; and

· Effect of external factors on the level of estimated credit losses in the current portfolio.

In determining the allowance for loan losses, management has established a general pooled allowance. Values assigned to the qualitative factors and those developed from historic loss experience provide a dynamic basis for the calculation of reserve factors for both pass-rated loans (the general pooled allowance) and those for criticized and classified loans. The amount of the specific allowance is determined through a loan-by-loan analysis of certain large dollar commercial real estate loans, construction and land development loans and multi-family loans. Loans not individually reviewed are evaluated as a group using reserve factor percentages based on historical loss experience and the qualitative factors described above. In determining the appropriate level of the general pooled allowance, management makes estimates based on internal risk ratings, which take into account such factors as debt service coverage, loan-to-value ratios and external factors. Estimates are periodically measured against actual loss experience.

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, construction and residential loan portfolios and 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. 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 examination. 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 affect earnings in future periods.

39

Investment and mortgage-backed securities available for sale.  Where quoted prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. If quoted market prices are not available, then fair values are estimated using quoted prices of securities with similar characteristics or discounted cash flows and are classified within Level 2 of the fair value hierarchy. In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy, although there were no securities with that classification as of December 31, 2015 or September 30, 2015. 

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company determines whether the unrealized losses are temporary or not in accordance with U.S. GAAP.  The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities. In addition, the Company also considers the likelihood that the security will be required to be sold because of regulatory concerns, our internal intent not to dispose of the security prior to maturity and whether the entire cost basis of the security is expected to be recovered. In determining whether the cost basis will be recovered, management evaluates other facts and circumstances that may be indicative of an “other-than-temporary” impairment condition. This includes, but is not limited to, an evaluation of the type of security, length of time and extent to which the fair value has been less than cost, and near-term prospects of the issuer.

In addition, certain assets are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and investment securities, both AFS and HTM, at fair value on a non-recurring basis.  

Valuation techniques and models utilized for measuring financial assets and liabilities are reviewed and validated by the Company at least quarterly.

Income Taxes. The Company accounts for income taxes in accordance with U.S. GAAP. The Company records deferred income taxes that reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Management exercises significant judgment in the evaluation of the amount and timing of the recognition of the resulting tax assets and liabilities. The judgments and estimates required for the evaluation are updated based upon changes in business factors and the tax laws. If actual results differ from the assumptions and other considerations used in estimating the amount and timing of tax recognized, there can be no assurance that additional expenses will not be required in future periods. 

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 an additional 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.

U.S. GAAP prescribes a minimum probability threshold that a tax position must meet before a financial statement benefit is recognized. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the consolidated income statement.  Assessment of uncertain tax positions requires careful consideration of the technical merits of a position based on management's analysis of tax regulations and interpretations.  Significant judgment may be involved in the assessment of the tax position.

40

Forward-looking Statements. In addition to historical information, this Quarterly Report on Form 10-Q includes certain "forward-looking statements" based on management's current expectations. The Company's actual results could differ materially, as such term is defined in the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, from management's expectations. Such forward-looking statements include statements regarding management's current intentions, beliefs or expectations as well as the assumptions on which such statements are based. These forward-looking statements are subject to significant business, economic and competitive uncertainties and contingencies, many of which are not subject to the Company's control. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Factors that could cause future results to vary from current management expectations include, but are not limited to, general economic conditions, legislative and regulatory changes, monetary and fiscal policies of the federal government, changes in tax policies, rates and regulations of federal, state and local tax authorities, changes in interest rates, deposit flows, the cost of funds, demand for loan products, demand for financial services, competition, changes in the quality or composition of the Company's loan and investment portfolios, changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and fees.

The Company undertakes no obligation to update or revise any forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results that occur subsequent to the date such forward-looking statements are made unless required by law or regulations.

Market Overview. Although the economy slowly improved during 2014 and 2015, we still view the current environment as challenging.

The Company continues to focus on the credit quality of its customers, closely monitoring the financial status of borrowers throughout the Company’s markets, gathering information, working on early detection of potential problems, taking pre-emptive steps where necessary and performing the analysis required to maintain adequate reserves for loan losses. 

Despite the current market and economic conditions, the Company continues to maintain capital well in excess of regulatory requirements.

The following discussion provides further details on the financial condition of the Company at December 31, 2015 and September 30, 2015, and the results of operations for the three months ended December 31, 2015 and 2014.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2015 AND SEPTEMBER 30, 2015

At December 31, 2015, the Company had total assets of $522.8 million, as compared to $487.2 million at September 30, 2015, an increase of 7.3%. The primary reasons for the $35.6 million increase in assets was a $40.8 million increase in available-for-sale (“AFS”) investment securities, of which $35.0 million was a part of an investment leverage strategy implemented in the first quarter of fiscal 2016, combined with a $9.2 million increase in net loans. These increases were partially offset by a reduction in cash and cash equivalents and held-to-maturity (“HTM”) investment securities of $5.5 million and $10.6 million, respectively. The reduction in cash and cash equivalents reflected the use of such funds to purchase AFS investment securities while the reduction in HTM investment securities was due to calls and principal payments.

Total liabilities increased to $406.8 million at December 31, 2015 from $370.1 million at September 30, 2015. The $36.7 million increase in total liabilities was primarily due to the $31.9 million increase in FHLB borrowings used to fund the purchase of AFS securities pursuant to the Company’s investment leverage strategy implemented during the first quarter of fiscal 2016 along with an increase in deposits of approximately $5.5 million.

41

Total stockholders’ equity decreased by $1.1 million to $115.9 million at December 31, 2015 from $117.0 million at September 30, 2015. The decrease was primarily due to the repurchase of common stock during the quarter pursuant to the Company’s previously announced stock repurchase program at an aggregate cost of $865,000, partially offset by net income of $413,000 less cash dividends paid during the quarter in the amount of $231,000. In addition, the Company’s tax-adjusted unrealized gain and loss on AFS investment securities declined from an unrealized net gain of $18,000 at September 30, 2015 to an unrealized net loss of $764,000 as of December 31, 2015 as a result of an increase in market rates.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2015 AND 2014

Net income. The Company recognized net income of $413,000, or $0.05 per diluted share, for the quarter ended December 31, 2015 as compared to $471,000 or $0.05 per diluted share, for the comparable period in 2014. The modestly higher net income experienced for the three month period ended December 31, 2014 as compared to the same period in 2015 was primarily due to recording a $138,000 gain on the sale of a SBA loan, partially offset by a $75,000 provision during the three month period ended December 31, 2014, both of which were not applicable to the 2015 period.

Net interest income. For the three months ended December 31, 2015, net interest income decreased $83,000 to $3.3 million as compared to the same period in fiscal 2014. The decrease reflected a $184,000 or 4.3% decrease in interest income, partially offset by a $101,000 or 11.2% decrease in interest paid on deposits and borrowings. The decrease in net interest income in the first quarter of fiscal 2016 resulted primarily from a decrease of $25.9 million in the average balance of interest-earning assets from the comparable period in fiscal 2015 partially offset by an increase of three basis points in the weighted average yield on interest-earning assets during the quarter ended December 31, 2015. During the three month period ended December 31, 2015, the Company used cash and cash equivalents to fund its stock repurchase program as well as the outflow of higher costing deposits. The weighted average yield on loans decreased 11 basis points to 3.85% for the three month period ended December 31, 2015, compared to 3.96% for the same period in 2014, primarily due to a decline in the average balance with a higher yield. The yield on investment securities decreased 12 basis points to 2.58 % for the three month period ended December 31, 2015, compared to 2.70 % for the same period in 2014, primarily due to the purchase of $35.0 million of securities bearing lower current market yields purchased towards the end of the quarter in connection with the implementation of the investment leverage strategy funded with FHLB advances. The decrease in interest expense for the quarter ended December 31, 2015 resulted primarily from an $8.5 million decrease in the average balance of total interest bearing liabilities compared to the same period in fiscal 2015 as the Company allowed the run-off of higher costing certificates of deposit. Also contributing to the decrease was an eight basis point decrease in the weighted average cost of interest-bearing liabilities to 0.84% for the three months ended December 31, 2015 as compared to the same period in 2014. The decrease reflected a reduction in rates paid on our core deposits combined with our asset-liability strategy of continuing to allow higher costing certificates of deposit to runoff at maturity. During the three months ended December 31, 2015, the Company obtained advances from the FHLB of Pittsburgh to fund purchases of AFS investment securities as part of an investment leverage strategy.

For the three months ended December 31, 2015, the net interest margin was 2.70% compared to 2.62% for the same period in fiscal 2015. The increase for the three months ended December 31, 2015 was primarily due to combination of an increase of three basis points in the yield earned on the average balance of interest-earning assets resulting from the redeployment of cash and cash equivalents into higher yielding interest-earning assets combined with the eight basis point decrease in the weighted average cost of interest-bearing liabilities.

42

Average balances, net interest income, and yields earned and rates paid. The following table shows for the periods indicated the total dollar amount of interest earned from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities and the resulting costs, expressed both in dollars and rates, the interest rate spread and the net interest margin. Average yields and rates have been annualized. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.

	Three Months
	Ended December 31,
	2015								2014
	Average					Average			Average					Average
	Balance		Interest			Yield/Rate (1)			Balance		Interest			Yield/Rate (1)
	(Dollars in Thousands)
Interest-earning assets:
Investment securities	$	69,031	$	440			2.53	%	$	86,475	$	548			2.51	%
Mortgage-backed securities		83,159		551			2.63			55,159		416			2.99
Loans receivable(2)		315,045		3,060			3.85			326,175		3,257			3.96
Other interest-earning assets		11,779		5			0.17			37,082		19			0.20
Total interest-earning assets		479,014		4,056			3.36			504,891		4,240			3.33
Cash and non-interest-bearing balances		1,967								2,261
Other non-interest-earning assets		19,802								15,693
Total assets	$	500,783							$	522,845
Interest-bearing liabilities:
Savings accounts	$	72,966		25			0.14		$	73,310		57			0.31
Money market deposit and NOW accounts		97,327		50			0.20			101,156		89			0.35
Certificates of deposit		193,393		676			1.39			211,820		754			1.41
Total deposits		363,686		751			0.82			386,286		900			0.92
Advances from Federal Home Loan Bank		14,422		48			1.32			340		-			0.00
Advances from borrowers for taxes and insurance		1,786		1			0.22			1,763		1			0.23
Total interest-bearing liabilities		379,894		800			0.84			388,389		901			0.92
Non-interest-bearing liabilities:
Non-interest-bearing demand accounts		2,431								2,405
Other liabilities		963								3,788
Total liabilities		383,288								394,582
Stockholders' equity		117,495								128,263
Total liabilities and stockholders' equity	$	500,783							$	522,845
Net interest-earning assets	$	99,120							$	116,502
Net interest income; interest rate spread			$	3,256			2.52	%			$	3,339			2.41	%
Net interest margin(3)							2.70	%							2.62	%
Average interest-earning assets to average interest-bearing liabilities				126.09	%							130.00	%

________________________________

(1) Yields and rates for the three month periods are annualized.

(2) Includes non-accrual loans. Calculated net of unamortized deferred fees, undisbursed portion of loans-in-process and the allowance for loan losses.

(3) Equals net interest income divided by average interest-earning assets.

43

Provision for loan losses. The allowance is maintained at a level sufficient to cover all inherent and known losses in the loan portfolio at each reporting date.  At least quarterly, management performs an analysis to identify the inherent risk of loss in the Company’s loan portfolio. This analysis includes a qualitative evaluation of concentrations of credit, past loss experience, current economic conditions, amount and composition of the loan portfolio (including loans being specifically monitored by management), estimated fair value of underlying collateral, delinquencies, and other factors.

The Company’s methodology for assessing the adequacy of the allowance establishes both specific and general pooled allocations of the allowance.  Loans are assigned ratings, either individually for larger credits or in homogeneous pools, based on an internally developed grading system.  The resulting determinations are reviewed and approved by senior management.

At December 31, 2015, the Company’s non-performing assets totaled $14.3 million or 2.8% of total assets as compared to $14.8 million or 3.0% of total assets at September 30, 2015. The decrease was primarily due to the sale of the Company’s sole OREO property during the current quarter for a gain of $58,000. Non-performing loans at December 31, 2015 consisted of five construction loans aggregating $9.3 million, 13 one-to- four family residential mortgage loans aggregating $2.0 million, one single-family residential investment property loan totaling $1.4 million and three commercial real estate loans aggregating $1.5 million. The majority of the Company’s non-performing assets relate to the Company’s largest lending relationship, which consists of eight loans aggregating $10.8 million including five construction loans aggregating $9.3 million. The relationship was classified as non-performing due to insufficient cash flow. This relationship, which consists primarily of construction loans related to residential real estate development projects, has been in a workout status for several quarters and has been classified “substandard” since June 2014. As of December 31, 2015, the complete relationship was analyzed for impairment. As of such date, the relationship was deemed to have sufficient collateral and as a result, no impairment charge was required. At December 31, 2015, the Company had ten loans aggregating $7.9 million that were classified as troubled debt restructurings (“TDRs”). As of December 31, 2015, all of the TDRs were performing in accordance with their restructured terms. Three of such loans aggregating $5.6 million as of December 31, 2015 were classified as non-performing until such time as an adequate sustained payment history under the restructured terms has been established to justify returning the loans to performing (accrual) status. The Company currently has six loans totaling approximately $2.3 million classified as TDRs which have performed in accordance with their new terms for six consecutive months and are reported as performing loans.

The allowance for loan losses totaled $2.9 million, or 0.9% of total loans and 19.9% of total non-performing loans at December 31, 2015 as compared to $2.9 million, or 0.9% of total loans and 21.3% of total non-performing loans at September 30, 2015.

At December 31, 2015, the Company had $821,000 of loans delinquent 30-89 days as to interest and/or principal. Such amount consisted of eight one-to-four family residential mortgage loans.

As of December 31, 2015, the Company had reviewed $18.1 million of loans for possible impairment of which $13.8 million was classified as substandard compared to $16.8 million reviewed for possible impairment and $12.4 million classified substandard as of September 30, 2015. The “substandard” loans as of December 31, 2015 consisted of 20 loans. We did not have any assets classified as “doubtful” or “loss” at either December 31, 2015 or September 30, 2015..

At December 31, 2015, we also had a total of five loans totaling $2.7 million that had been designated “special mention”. These loans consist of three loans extended to a single borrower and are secured by real estate. All of the loans were designated “special mention” due to concerns with regard to the borrower’s cash flow situation. At September 30, 2015, we had a total of eight loans aggregating $3.4 million designated as “special mention”.

The following table shows the amounts of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past and real estate owned) as of December 31, 2015 and September 30, 2015. At neither date did the Company have any accruing loans 90 days or more past due that were accruing.

44

	December 31, 2015			September 30, 2015
	(Dollars in Thousands)
Non-accruing loans:
One-to-four family residential	$	3,416		$	3,547
Commercial real estate		1,542			1,589
Construction and land development		9,317			8,796
Total non-accruing loans		14,275			13,932
Real estate owned, net:  (1)		-			869
Total non-performing assets	$	14,275		$	14,801
Total non-performing loans as a percentage of loans, net		4.44	%		4.46	%
Total non-performing loans as a percentage of total assets		2.43	%		3.04	%
Total non-performing assets as a percentage of total assets		0.90	%		0.93	%

(1) Real estate owned balances are shown net of related loss allowances and consist solely of real property.

Non-interest income. With respect to the quarter ended December 31, 2015, non-interest income amounted to $274,000 as compared to $350,000 for the same quarter in fiscal 2014. The primary reason for the higher level of non-interest income in the first quarter of fiscal 2015 was the inclusion of a net gain of approximately $138,000 from the sale of a loan. The decline in non-interest income between the 2015 and 2014 periods was partially offset by a $58,000 gain recognized on the sale of an OREO property during the three months ended December 31, 2015.

Non-interest expense. For the three months ended December 31, 2015, non-interest expense decreased $30,000 to $2.9 million as compared to the same quarter in fiscal 2015. The primary reasons for the decrease in non-interest expense were decreases in salary and employee benefit expense, other real estate owned expense and other operating expense, partially offset by an increase in directors’ compensation expense, expenses related to the recognition of equity grant expense and office and occupancy expenses.

Income tax expense. We recorded income tax expense for the three months ended December 31, 2015 of $221,000, compared to income tax expense of $217,000 for the three months ended December 31, 2014. The Company recorded an effective tax rate of 34.9% for the three month period ended December 31, 2015, compared to an effective tax rate of 31.5% for the same period in 2014.

45

LIQUIDITY AND CAPITAL RESOURCES

The Company’s liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. Our primary sources of funds are deposits, scheduled principal and interest payments on loans, loan prepayments and the maturity of loans, mortgage-backed securities and other investments, and other funds provided from operations. While scheduled payments from the amortization of loans and mortgage-backed securities and maturing investment securities are relatively predictable sources of funds, deposit flows and loan and securities prepayments can be greatly influenced by market rates of interest, economic conditions and competition. We also maintain excess funds in short-term, interest-earning assets that provide additional liquidity. At December 31, 2015, our cash and cash equivalents amounted to $5.7 million. In addition, our AFS investment securities amounted to an aggregate of $99.7 million at such date.

We use our liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets, and to meet operating expenses. At December 31, 2015, the Company had $7.5 million in outstanding commitments to originate fixed and variable-rate loans, not including loans in process. The Company also had commitments under unused lines of credit of $5.7 million and letters of credit outstanding of $2.6 million at December 31, 2015. Certificates of deposit at December 31, 2015 maturing in one year or less totaled $88.3 million. Based upon historical experience, we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us.

In addition to cash flows from loan and securities payments and prepayments as well as from sales of available for sale securities, we have significant borrowing capacity available to fund liquidity needs should the need arise. Our borrowings consist solely of advances from the Federal Home Loan Bank of Pittsburgh (“FHLB”), of which we are a member. Under terms of the collateral agreement with the FHLB, we pledge residential mortgage loans as well as our stock in the FHLB as collateral for such advances. At December 31, 2015, we had $31.9 million in outstanding FHLB advances and had the ability to obtain an additional $185.9 million in FHLB advances. Additional borrowing capacity with the FHLB could be obtained with the pledging of certain investment securities. The Bank has also obtained approval to borrow from the Federal Reserve Bank discount window.

We anticipate that we will continue to have sufficient funds and alternative funding sources to meet our current commitments.

46

The following table summarizes the Company’s and Bank’s regulatory capital ratios as of December 31, 2015 and September 30, 2015 and compares them to current regulatory guidelines.

							To Be
							Well Capitalized
				Required for			Under Prompt
				Capital Adequacy			Corrective Action
	Actual Ratio			Purposes			Provisions
December 31, 2015:
Tier 1 capital (to average assets)
The Company		22.98	%		N/A			N/A
The Bank		19.18	%		4.0	%		5.0	%
Tier 1 common (to risk-weighted assets)
The Company		46.57	%		N/A			N/A
The Bank		38.78	%		4.5	%		6.5	%
Tier 1 capital (to risk-weighted assets)
The Company		46.78	%		N/A			N/A
The Bank		39.09	%		6.0	%		8.0	%
Total capital (to risk-weighted assets)
The Company		48.00	%		N/A			N/A
The Bank		40.31	%		8.0	%		10.0	%
September 30, 2015:
Tier 1 capital (to average assets)
Company		23.73	%		N/A			N/A
Bank		19.50	%		4.0	%		5.0	%
Tier 1 common (to risk-weighted assets)
The Company		50.63	%		N/A			N/A
The Bank		41.66	%		4.5	%		6.5	%
Tier 1 capital (to risk-weighted assets)
Company		50.63	%		N/A			N/A
Bank		41.65	%		4.0	%		6.0	%
Total capital (to risk-weighted assets)
Company		51.98	%		N/A			N/A
Bank		43.00	%		8.0	%		10.0	%

IMPACT OF INFLATION AND CHANGING PRICES

The financial statements, accompanying notes, and related financial data of the Company presented herein have been prepared in accordance with generally accepted accounting principles which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in the relative purchasing power of money over time due to inflation.

Unlike most industrial companies, substantially all of the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the price of goods and services, since such prices are affected by inflation to a larger extent than interest rates. In the current interest rate environment, liquidity and the maturity structure of the Company's assets and liabilities are critical to the maintenance of acceptable performance levels.

47

How We Manage Market Risk. Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from interest rate risk which is inherent in our lending, investment and deposit gathering activities. To that end, management actively monitors and manages interest rate risk exposure. In addition to market risk, our primary risk is credit risk on our loan portfolio. We attempt to manage credit risk through our loan underwriting and oversight policies.

The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements and performance objectives, and manage the risk consistent with approved guidelines. We seek to manage our exposure to risks from changes in interest rates while at the same time trying to improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. We have established an Asset/Liability Committee which is comprised of our President and Chief Executive Officer, Chief Financial Officer, Chief Lending Officer, Treasurer and Controller. The Asset/Liability Committee meets on a regular basis and is responsible for reviewing our asset/liability policies and interest rate risk position. Both the extent and direction of shifts in interest rates are uncertainties that could have a negative impact on future earnings.

In recent years, as a part of our asset/liability management strategy we primarily have reduced our investment in longer term fixed-rate callable agency bonds, increased our origination of hybrid adjustable-rate single-family residential mortgage loans and increased our portfolio of step-up callable agency bonds and agency issued collaterized mortgage-backed securities (“CMOs”) with short effective life. However, notwithstanding the foregoing steps, we remain subject to a significant level of interest rate risk in a low interest rate environment due to the high proportion of our loan portfolio that consists of fixed-rate loans as well as our decision in prior periods to invest a significant amount of our assets in long-term, fixed-rate investment and mortgage-backed securities.

Gap Analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring a Company’s interest rate sensitivity “gap.” An asset or liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to affect adversely net interest income while a positive gap would tend to result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to affect adversely net interest income.

The following table sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at December 31, 2015, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the “GAP Table”). Except as stated below, the amounts of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2015, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and as a result of contractual rate adjustments on adjustable-rate loans. Annual prepayment rates for variable-rate and fixed-rate single-family and multi-family residential and commercial mortgage loans are assumed to range from 6.3% to 31.6%. The annual prepayment rate for mortgage-backed securities is assumed to range from 0.7% to 22.3%. For savings accounts, checking accounts and money markets, the decay rates vary on an annual basis over a ten year period. 

48

				More than			More than			More than
	3 Months			3 Months			1 Year			3 Years			More than			Total
	or Less			to 1 Year			to 3 Years			to 5 Years			5 Years			Amount
	(Dollars in Thousands)
Interest-earning assets(1):
Investment and mortgage-backed securities(2)	$	3,363		$	9,940		$	26,424		$	20,604		$	113,733		$	174,064
Loans receivable(3)		28,310			40,776			85,984			58,053			108,742			321,865
Other interest-earning assets(4)		5,446			-			-			-			-			5,446
Total interest-earning assets	$	37,119		$	50,716		$	112,408		$	78,657		$	222,475		$	501,375
Interest-bearing liabilities:
Savings accounts	$	1,845		$	5,753		$	9,452		$	9,107		$	44,843		$	71,000
Money market deposit and NOW accounts		3,481			10,442			10,950			13,970			59,147			97,990
Certificates of deposit		25,259			59,573			66,333			48,158			-			199,323
Advances from FHLB		851			2,570			27,177			1,291			-			31,889
Advances from borrowers for taxes and insurance		2,554			-			-			-			-			2,554
Total interest-bearing liabilities	$	33,990		$	78,338		$	113,912		$	72,526		$	103,990		$	402,756
Interest-earning assets less interest-bearing liabilities	$	3,129		$	(27,622	)	$	(1,504	)	$	6,131		$	118,485		$	98,619
Cumulative interest-rate sensitivity gap (5)	$	3,129		$	(24,493	)	$	(25,997	)	$	(19,866	)	$	98,619
Cumulative interest-rate gap as a percentage of total assets at December 31 , 2015		0.60	%		-4.69	%		-4.97	%		-3.80	%		18.86	%
Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at December 31, 2015		109.21	%		78.20	%		88.51	%		93.35	%		124.49	%

_____________________________________

(1) Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities.

(2) For purposes of the gap analysis, investment securities are reflected at amortized cost.

(3) For purposes of the gap analysis, loans receivable includes non-performing loans and is gross of the allowance for loan losses and unamortized deferred loan fees, but net of the undisbursed portion of loans-in-process.

(4) Includes FHLB stock.

(5) Cumulative interest-rate sensitivity gap represents the difference between interest-earning assets and interest-bearing liabilities.

Certain shortcomings are inherent in the method of analysis presented in the foregoing table. For example, although certain assets and liabilities may have similar maturities or periods to repricing, they may react in different degrees to changes in market interest rates. Also, the interest rates on certain types of assets and liabilities may fluctuate in advance of changes in market interest rates, while interest rates on other types may lag behind changes in market rates. Additionally, certain assets, such as variable-rate loans, have features which restrict changes in interest rates both on a short-term basis and over the life of the asset. Further, in the event of a change in interest rates, prepayment and early withdrawal levels would likely deviate significantly from those assumed in calculating the table. Finally, the ability of many borrowers to service their variable-rate loans may be adversely affected in the event of an interest rate increase.

49

Net Portfolio Value Analysis. Our interest rate sensitivity also is monitored by management through the use of a model which generates estimates of the changes in our net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The “Sensitivity Measure” is the decline in the NPV ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline. The following table sets forth our NPV as of December 31, 2015 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.

Change in									NPV as % of Portfolio
Interest Rates	Net Portfolio Value								Value of Assets
In Basis Points
(Rate Shock)	Amount		$ Change			% Change			NPV Ratio			Change
	(Dollars in Thousands)
300	$	91,882	$	(39,606	)		(30.12	)%		20.44	%		(4.89	)%
200		104,300		(27,188	)		(20.68	)%		20.12	%		(5.21	)%
100		117,618		(13,870	)		(10.55	)%		23.77	%		(1.56	)%
Static		131,488		-			-			25.33	%		-
(100)		136,704		5,216			3.97	%		25.52	%		0.19	%
(200)		136,151		4,663			3.55	%		25.01	%		(0.32	)%
(300)		138,665		7,177			5.46	%		25.05	%		(0.28	)%

At September 30, 2015, the Company’s NPV was $131.1 million or 27.2% of the market value of assets. Following a 200 basis point increase in interest rates, the Company’s “post shock” NPV would be $107.4 million or 24.4% of the market value of assets.

As is the case with the GAP Table, certain shortcomings are inherent in the methodology used in the above interest rate risk measurements. Modeling changes in NPV requires the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the models presented assume that the composition of our interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV model provides an indication of interest rate risk exposure at a particular point in time, such model is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.

50

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At December 31, 2015, there had not been any material change to the market risk disclosure contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2015, set forth in Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operation –Exposure to Changes in Interest Rates.”

ITEM 4. CONTROLS AND PROCEDURES

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

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) or 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, our internal control over financial reporting.

51

PART II

Item 1. Legal Proceedings

The Company is involved in various legal proceedings occurring in the ordinary course of business. Management of the Company, based on discussions with litigation counsel, does not believe that such proceedings will have a material adverse effect on the financial condition or operations of the Company. There can be no assurance that any of the outstanding legal proceedings 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 financial condition and operations of the Company.

Item 1A. Risk Factors

No material changes have occurred.

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

(a) and (b) Not applicable

(c) The Company’s repurchases of equity shares for the first quarter of fiscal year 2016 were as follows:

Period	Total Number  of Shares Purchased		Average Price Paid Per Share		Total Number  of Shares Purchased as  Part of Publicly Announced Plans or Programs (1)(2)		Maximum Number of  Shares that May Yet  Purchased Under  Plans or Programs  (1)(2)
October 1 - 31, 2015		32,000	$	14.67		32,000		704,816
November 1 - 30, 2015		20,000	$	14.73		20,000		684,816
December 1 - 31, 2015		28,279	$	14.91		28,279		656,537
		80,279	$	14.77		80,279

(1) On September 17, 2014, the Company announced that the Board of Directors had approved a stock repurchase program authorizing the Company to repurchase up 950,000 shares of common stock, approximately 10% of the Company's then outstanding shares, starting on October 9, 2014.

(2) On July 15, 2015, the Company announced that the Board of Directors had approved a second stock repurchase program authorizing the Company to repurchase up 850,000 shares of common stock, approximately 10% of the Company's then outstanding shares.

52

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable

Item 6. Exhibits

Exhibit No.	Description
10.1	Retirement agreement by and among Prudential Bancorp, Inc. , Prudential Bank Savings Bank and Thomas A. Vento*
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.0	Section 1350 Certifications
101.INS	XBRL Instance Document.
101.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.

* Management contract or compensatory plan or arrangement required to be filed pursuant to this Form 10-Q pursuant to Item 6.

53

SIGNATURES

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

	PRUDENTIAL BANCORP, INC. OF PENNSYLVANIA
Date:	February 9, 2016	By: /s/ Joseph R. Corrato
		Joseph R. Corrato
		President and Chief Executive Officer
Date:	February 9, 2016	By: /s/ Jack E. Rothkopf
		Jack E. Rothkopf
		Senior Vice President, Chief Financial Officer and Treasurer

54

EX-10.1

Exhibit 10.1

PRUDENTIAL BANCORP, INC.

PRUDENTIAL SAVINGS BANK

RETIREMENT AGREEMENT

This Retirement Agreement (the “Agreement”) by and among Prudential Bancorp, Inc. (the “Company”), Prudential Savings Bank (the “Bank” and collectively with the Company, “Prudential”), and Thomas A. Vento is entered into as of December 22, 2015.

WHEREAS, Mr. Vento currently serves as a member of the Board and as Chairman of the Board of Directors of each of the Company and the Bank;

WHEREAS, Prudential and Mr. Vento previously entered into a retirement and transition agreement dated as of May 13, 2015 (the “Transition Agreement”);

WHEREAS, Mr. Vento also has previously entered into an Endorsement Split-Dollar Agreement with the Bank dated January 1, 2006 (the “Split-Dollar Agreement”), providing for certain benefits with respect to split-dollar insurance maintained by the Bank for his benefit;

WHEREAS, Mr. Vento has provided valuable services to the Bank for more than fifty years and to the Company since its formation in 2013 (and to its predecessor from its formation in 2004);

WHEREAS, Mr. Vento desires to resign his position as Chairman of the Board of Directors of each of the Company and the Bank as well as retire as a member of the Board of each of the Company and the Bank; and

WHEREAS, Mr. Vento is willing to relinquish his rights under the Transition Agreement and to have it superseded by this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants set forth herein and other good and valuable consideration, the parties hereto agree as follows:

1.           Effective Date. The “Effective Date” of the Agreement is December 22, 2015.

2.           Service on the Boards; Retirement.

(a)          As of the Effective Date, Mr. Vento shall resign from his position as Chairman of the Board of the Board of Directors of each of the Company and the Bank.

(b)          As of the Effective Date, Mr. Vento will retire from his position as a member of the Board of Directors of each of the Company and the Bank.

(c)          Mr. Vento is hereby appointed, as of the Effective Date, as a director emeritus of the Bank to serve in that capacity, which Mr. Vento accepts, through February 29, 2020 (“Service Period”). Mr. Vento will have no specified duties except as may be mutually agreed to by the Bank and Mr. Vento.

1

3.           Compensation; Benefits.

(a)          Compensation. Mr. Vento shall not be entitled to any cash compensation for his service as a director emeritus during the Service Period. The Chairman’s fee, as such term is defined in the Transition Agreement, shall cease as of the Effective Date.

(b)          Split-Dollar Agreement. The Split-Dollar Agreement shall remain in full force and effect and Mr. Vento’s rights and privileges thereunder shall not be affected by or be subject to the provisions of this Agreement. The Bank agrees during the period this Agreement is in effect to not terminate the Split-Dollar Agreement. In addition, the Bank agrees to maintain during the period this Agreement is in effect the bank owned life insurance owned by the Bank that provides the life insurance benefits covered by the Split-Dollar Agreement.

(c)          Medical, Dental and Other Insurance Benefits. Effective as of the Effective Date, the Bank and/or the Company shall cease to provide medical and dental insurance for the benefit of Mr. Vento and his spouse at no cost to Mr. Vento and his spouse. Notwithstanding the forgoing, Mr. Vento may elect continued medical and dental coverage at his expense pursuant to COBRA to the extent and for the amount of time it is permissible to maintain continued COBRA coverage. In addition to the life insurance coverage provided pursuant to the Split-Dollar Agreement as set forth in Section 3(b), the Bank will promptly assign to Mr. Vento, effective as of the Effective Date, the supplemental life insurance policy issued by Lincoln National Insurance Company, Policy No. JF5434389 (the “Policy”), covering Mr. Vento; Mr. Vento will be responsible for payment of any and all premiums due and payable after the Effective Date with respect to the Policy.

(d)          Existing Stock Options and Restricted Stock Awards. The 114,456 vested stock options held by Mr. Vento as of the Effective Date of this Agreement to purchase shares of common stock of the Company shall remain outstanding and exercisable in accordance with their terms. The options covering 121,511 shares of common stock of the Company and the restricted stock awards covering 63,583 shares which remain unvested as of the Effective Date will continue to vest in accordance with the terms of their grant so long as Mr. Vento continues to serve as a director emeritus of the Bank.

(e)          Employee Benefit Plans. Mr. Vento shall be entitled to receive his vested benefits under the Bank’s Employee Stock Ownership Plan, the Bank’s 401(k) profit sharing plan and the Bank’s multiple employer defined benefit pension plan in accordance with the terms of such plans. As of October 1, 2015, Mr. Vento was no longer entitled to participate in any of the employee benefit plans or programs offered by the Company, the Bank or any of their subsidiaries (except to the extent permitted by the terms of such plans), and no additional benefits accrued or vested or shall accrue or vest on behalf of Mr. Vento under such employee benefit plans or programs subsequent to October 1, 2015, except as set forth in Sections 3(b), 3(c) and 3(d) hereof or as otherwise provided under the terms of such plans.

2

(f)           Expenses. The Company and/or the Bank shall reimburse Mr. Vento or otherwise provide for or pay for all reasonable expenses, if any, incurred by Mr. Vento at the specific request of the Company or the Bank, subject to such reasonable documentation as may be requested by the Company or the Bank. If such expenses are paid in the first instance by Mr. Vento, the Company and/or the Bank shall reimburse Mr. Vento therefor upon receipt of such reasonable documentation as may be requested by the Company. Such reimbursements or payments shall be made promptly by the Company or the Bank, as applicable, and, in any event, no later than March 15^th of the year immediately following the year in which such expenses were incurred.

(g)          Transfer of Automobile. The Bank shall transfer to the Executive the title on the company-provided automobile currently used by the Executive. Such title transfer shall occur within ten (10) business days following the Effective Date, without the payment of any consideration by the Executive; provided, however, Mr. Vento will be responsible for the expenses incurred in connection with the transfer thereof.

4.            Termination.

(a)          Cause. The Company and the Bank may terminate Mr. Vento’s service as a director emeritus during the Service Period for Cause. For purposes of this Agreement, “Cause” shall mean removal of Mr. Vento as a director emeritus because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order, willful conduct which is materially detrimental (monetarily or otherwise) to the Company and/or the Bank or material breach of any provision of this Agreement, in each case with respect to matters that occurred, arose or were discovered during the Service Period. Notwithstanding the foregoing, for purposes hereof, a determination by regulatory authorities that Mr. Vento has willfully violated any applicable law, rule or regulation or final cease-and-desist order shall constitute Cause.

For purposes of this provision, no act or failure to act, on the part of Mr. Vento, shall be considered “willful” unless it is done, or omitted to be done, by him in bad faith or without reasonable belief that his action or omission was in the best interests of the Company and/or the Bank. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors of either the Company or the Bank or based upon the advice of counsel for the Company and/or the Bank shall be conclusively presumed to be done, or omitted to be done, by Mr. Vento in good faith and in the best interests of the Company and the Bank. The removal of Mr. Vento as a director emeritus for conduct described the paragraph above shall not be deemed to be for Cause unless and until there shall have been delivered to him a copy of a resolution duly adopted by the affirmative vote of a majority of the entire membership of the Board of Directors of the Company and/or the Bank (excluding Mr. Vento) at a meeting of the Board of Directors called and held for such purpose (after not less than ten (10) days advance notice is provided to Mr. Vento and he is given an opportunity, together with counsel chosen by him, to be heard before the Board of Directors), finding that, in the good faith opinion of the Board, Mr. Vento is guilty of the conduct described above, and specifying the particulars thereof in detail.

3

As of the date hereof, neither Mr. Vento nor the Company is aware of facts that would constitute “Cause” as defined under this Agreement.

(b)          Notice of Termination. Any termination by the Company and/or the Bank for Cause shall be communicated by a written Notice of Termination to the other party hereto given in accordance with Section 12 of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for removal of Mr. Vento as a director emeritus under the provision so indicated and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Company and/or the Bank to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company and/or the Bank, hereunder or preclude the Company and/or the Bank, respectively, from asserting such fact or circumstance in enforcing his or the Company’s or the Bank’s rights hereunder.

(e)          Date of Termination. “Date of Termination” means if Mr. Vento’s service as a director emeritus is terminated by the Company and/or the Bank for Cause, the date on which the Notice of Termination is given, or any later date specified therein within thirty (30) days of delivery of such notice, as the case may be.

5.           Covenants.

(a)          Mr. Vento agrees that he shall not make, or cause to be made, any disparaging or critical remarks, comments or statements about or against the Company or its subsidiaries (including the Bank) or affiliates or any director, officer, employee or customer of any such entities at any time in the future, except for any statements by him made pursuant to lawful subpoena or legal process. The Bank will advise the members of its Board of Directors (and those of the Company’s Board of directors) and all executive officers of the Bank and the Company (collectively, the “Persons to be Advised”) that they should not make public statements that are in any way disparaging or negative towards Mr. Vento. The Bank will advise the Persons to be Advised that a non-disparagement agreement is in effect, and will use reasonable efforts to enforce compliance with this Agreement. Notwithstanding the foregoing agreement, the parties hereto recognize and acknowledge that the Bank and the Company will not be liable for statements between the Bank and/or the Company and its independent auditors, state and federal banking regulators, the Securities and Exchange Commission or statements necessary to comply with applicable law or regulation. In addition, nothing contained herein shall prevent any of the parties hereto from making any truthful statement in connection with any legal proceeding or investigation by the Company or any governmental authority.

4

(b)          Except as required by law or regulation (including without limitation in connection with any judicial or administrative process or proceeding), Mr. Vento shall keep secret and confidential and shall not disclose to any third party (other than the Bank or any of its subsidiaries or affiliates or any persons employed or engaged by such entities) in any fashion or for any purpose whatsoever any information regarding the Bank or any of its subsidiaries or affiliates which is not available to the general public to which Mr. Vento was granted access at any time prior to the Effective Date or during the Service Period, including, without limitation, any of the following information relating to the Bank or any Bank subsidiary or affiliate: business or operations; plans, strategies, prospects or objectives; products, technology, processes or specifications; research and development operations or plans; the names and addresses of customers or prospective customers, including any customer lists; work performed or services rendered for any customer; any method and/or procedures relating to projects or other work developed for the Bank or any subsidiary or affiliate; distribution, sales, service, support and marketing practices and operations; financial condition, results of operations and prospects; operational strengths and weaknesses; and personnel and compensation policies and procedures.

(c)          Mr. Vento agrees that damages at law will be an insufficient remedy to the Company and the Bank in the event that Mr. Vento violates any of the provisions of subsections (a) or (b) of this Section 5, and that the Company or the Bank may apply for and, upon the requisite showing, have injunctive relief in any court of competent jurisdiction to restrain the breach or threatened or attempted breach of or otherwise to specifically enforce any of the covenants contained in subsections (a) or (b) of this Section 5. Mr. Vento hereby consents to the right of the Company and the Bank to seek (i) any injunction (temporary or otherwise) and (ii) to any other court order which may be issued against Mr. Vento from violating, or directing Mr. Vento to comply with, any of the covenants in subsections (a) or (b) of this Section 5. Mr. Vento also agrees that such remedies that may be obtained shall be in addition to any and all remedies, including damages, available to the Company or the Bank against Mr. Vento for such breaches or threatened or attempted breaches.

(d)          In addition to the rights of the Bank set forth in subsection (c) of this Section 5, in the event that Mr. Vento shall violate the terms and conditions of subsections (a) or (b) of this Section 5, the Company and its subsidiaries and affiliates may terminate any payments or benefits of any type and regardless of source payable by the Company or its subsidiaries or affiliates, if applicable, to Mr. Vento, other than with respect to payments or benefits to Mr. Vento under plans or arrangements that are covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

6.            Designation of Beneficiary. Mr. Vento may from time to time, by providing a written notification to the Bank and/or the Company, designate any person or persons (who may be designated concurrently, contingently or successively), his estate or any trust or trusts created by him to receive benefits which are provided under the terms of this Agreement. Each beneficiary designation shall revoke all prior designations and will be effective only when filed in writing with the Compensation Committee of the Board of Directors of the Bank (the “Committee”). If Mr. Vento fails to designate a beneficiary or if a beneficiary dies before the date of Mr. Vento’s death and no contingent beneficiary has been designated, then the benefits which are payable as aforesaid shall be paid to his estate. If benefits commence to be paid to a beneficiary and such beneficiary dies before all benefits to which such beneficiary is entitled have been paid, the remaining benefits shall be paid to the successive beneficiary or beneficiaries designated by Mr. Vento, if any, and if none to the estate of such beneficiary.

5

7.           Unsecured Promise. Nothing contained in this Agreement shall create or require the Company or the Bank to create a trust of any kind to fund the benefits provided hereunder. Any insurance policy or other asset acquired or held by, or on behalf of, the Bank or funds allocated by the Bank in connection with the liabilities assumed by the Bank pursuant to this Agreement shall not be deemed to be held under any trust for the benefit of Mr. Vento or his beneficiaries or to be a security for the performance of the obligations of the Bank pursuant hereto but shall be and remain a general asset of the Bank. To the extent that Mr. Vento or any other person acquires a right to receive payments from the Bank hereunder, such right shall be no greater than the right of any unsecured general creditor of the Bank.

8.           Release of the Company and Related Parties.

(a)          In consideration of the payments and the benefits to be provided to Mr. Vento pursuant to this Agreement, the sufficiency of which is acknowledged hereby, Mr. Vento, with the intention of binding himself and his heirs, executors, administrators and assigns, does hereby release, remise, acquit and forever discharge the Company, the Bank and each of their subsidiaries and affiliates (the “Company Affiliated Group”), their present and former officers, directors, executives, agents, attorneys and employees, and the successors, predecessors and assigns of each of the foregoing (collectively, the “Company Released Parties”), of and from any and all claims, actions, causes of action, complaints, charges, demands, rights, damages, debts, sums of money, accounts, financial obligations, suits, expenses, attorneys’ fees and liabilities of whatever kind or nature in law, equity or otherwise, whether accrued, absolute, contingent, unliquidated or otherwise and whether now known or unknown, suspected or unsuspected, which Mr. Vento, individually or as a member of a class, now has, owns or holds, or has at any time heretofore had, owned or held, against any Company Released Party in any capacity, including, without limitation, any and all claims (i) arising out of or in any way connected with Mr. Vento’s service to any member of the Company Affiliated Group (or the predecessors thereof) through and including the Effective Date in any capacity, or the termination of such service in any such capacity as of the Effective Date, (ii) for severance or vacation benefits, unpaid wages, salary or incentive payments, (iii) for breach of contract, wrongful discharge, impairment of economic opportunity, defamation, intentional infliction of emotional harm or other tort, (iv) for any violation of applicable state and local labor and employment laws (including, without limitation, the Pennsylvania Human Relations Act, the Pennsylvania Minimum Wage Act, the Pennsylvania Wage Payment and Collection Law and all other laws concerning unlawful and unfair labor and employment practices), (v) for employment discrimination under any applicable federal, state or local statute, provision, order or regulation, and including, without limitation, any claim under Title VII of the Civil Rights Act of 1964 (“Title VII”), the Civil Rights Act of 1988, the Fair Labor Standards Act, the Americans with Disabilities Act (“ADA”), ERISA, the Age Discrimination in Employment Act (“ADEA”), the Older Workers Benefit Protection Act, the Family and Medical Leave Act and any similar or analogous state statute, and (vi) under the Employment Agreement, excepting only:

(A)         the rights of Mr. Vento as a shareholder of the Company, including his stock options and restricted stock awards as described in Section 3(d);

6

(B)         the right of Mr. Vento to receive COBRA continuation coverage in accordance with applicable law;

(C)         rights to indemnification Mr. Vento may have under (i) applicable corporate law, (ii) the articles of incorporation, charter or bylaws of any entities included in the Company Affiliated Group, (iii) any other agreement between Mr. Vento and a Company Released Party, or (iv) as an insured under any director’s and officer’s liability insurance policy now or previously in force;

(D)         claims for vested benefits under any health, disability, retirement, life insurance or other similar “employee benefit plan” (within the meaning of Section 3(3) of ERISA) of the Company Affiliated Group existing as of the Effective Date (the “Company Benefit Plans”); and

(E)          the rights of Mr. Vento under this Agreement.

(b)          Mr. Vento acknowledges and agrees that the release of claims set forth in this Section 7 is not to be construed in any way as an admission of any liability whatsoever by any Company Released Party, with any such liability being expressly denied.

(c)          The release of claims set forth in this Section 8 applies to any relief no matter how called, including, without limitation, wages, back pay, front pay, compensatory damages, liquidated damages, punitive damages, damages for pain or suffering, costs, and attorney’s fees and expenses.

(d)          Mr. Vento specifically acknowledges that his acceptance of the terms of the release of claims set forth in this Section 8 is, among other things, a specific waiver of his rights, claims and causes of action under Title VII, ADEA, ADA and any state or local law or regulation in respect of discrimination of any kind.

(e)          Mr. Vento covenants and agrees that neither he, nor any person or entity on his behalf, will file or cause or permit to be filed any civil action, suit, arbitration or legal proceeding seeking any type of personal relief, or share in any remedy against the Bank or any other Company Released Party, involving any matter which: (i) is the subject of this Agreement; (ii) arises from, or relates or refers in any way to, Mr. Vento’s employment with the Bank, the termination of that employment, the Employment Agreement, or the action or inaction of any of the Company Released Parties through and including the Effective Date; or (iii) occurred at any time in the past up to and including the date of Mr. Vento’s execution of this Agreement, or involves any continuing effects of any actions or practices which may have arisen or occurred on or prior to his execution of this Agreement; provided, however, that nothing in this Agreement prevents Mr. Vento from (x) filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or a state fair employment practices agency, except that he acknowledges that he shall not be able to recover any monetary benefits in connection with any such claim, charge or proceeding, or (y) initiating an action to enforce the terms of this Agreement or pursue claims pursuant to subsections (A) thorough (D) of Section 7(a).

7

(f)           Mr. Vento shall have a period of 21 days to consider whether to execute this Agreement. To the extent Mr. Vento has executed this Agreement within less than 21 days after its delivery to him, Mr. Vento hereby acknowledges that his decision to execute this Agreement prior to the expiration of such 21-day period was entirely voluntary. If Mr. Vento accepts the terms hereof and executes this Agreement, he may thereafter, for a period of seven days following (and not including) the date of execution (the “Revocation Period”), revoke this Agreement. If Consultant determines to revoke this Agreement prior to the expiration of the Revocation Period, he shall provide a written notice to the Bank in accordance with Section 12 prior to such expiration. If no such revocation occurs, this Agreement shall become irrevocable in its entirety, and binding and enforceable against Mr. Vento, on the day next following the day on which the foregoing Revocation Period has elapsed. Any revocation of this Agreement shall be deemed for all purposes a revocation of this Agreement in its entirety.

(g)          Mr. Vento acknowledges and agrees that he has not, with respect to any transaction or state of facts existing prior to the date hereof, filed any complaints, charges or lawsuits against any Company Released Party with any governmental agency, court or tribunal.

(h)          Mr. Vento acknowledges and agrees that he has been advised by the Company and the Bank to consult with independent legal counsel of his choosing in connection with his review of this Agreement prior to executing this Agreement, that he has done so or had the opportunity to do so, that he has read and had the terms of this Agreement explained to him, and that he has entered into this Agreement voluntarily and with full knowledge of its significance, meaning and binding effect. Mr. Vento acknowledges and agrees that neither the Company or the Bank nor its agents or representatives has made any promises, statements or representations, either oral or written, to Mr. Vento or anyone else concerning the terms or effects of this Agreement other than those expressly contained herein.

(h)          In addition to any other remedy available to the Company or the Bank hereunder, in the event that, as a result of a challenge brought by Mr. Vento, the release of claims set forth in Section 8 becomes null and void or is otherwise determined not to be enforceable, then the obligation of the Bank to make any additional payments or to provide any additional benefits under this Agreement shall immediately cease to be of any force and effect, and Mr. Vento shall promptly return to the Bank any payments or benefits the provision of which by the Bank was conditioned on the enforceability of this Agreement.         

9.            Full Settlement. The obligations of the Company and/or the Bank to perform its respective obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company and/or the Bank may have against Mr. Vento or others. In no event shall Mr. Vento be obligated to seek other services or take any other action by way of mitigation of the amounts payable to him under any of the provisions of this Agreement.

8

10.         Representations and Warranties. Each party hereto represents and warrants to each other that they have carefully read this Agreement and consulted with respect thereto, to the extent deemed appropriate, with their respective counsel and that each of them fully understands the content of this Agreement and its legal effect. Each party hereto also represents and warrants that this Agreement is a legal, valid and binding obligation of such party which is enforceable against it in accordance with its terms.

11.         Successors and Assigns. This Agreement will inure to the benefit of and be binding upon Mr. Vento and his assigns and upon the Company and the Bank any successor to the Company or the Bank and by merger or consolidation or any other change in form or any other person or firm or corporation to which all or substantially all of the assets and business of the Company and the Bank may be sold or otherwise transferred. Any successor to the Company or the Bank by merger, consolidation or other change in form shall expressly in writing assume all obligations of the Company or the Bank hereunder as fully as if it had been originally made a party hereto, and this Agreement shall continue in effect following any change in control of the Company and/or the Bank. This Agreement may not be assigned by any party hereto without the written consent of the other parties hereto.

12.         Notices. Any communication to a party required or permitted under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party or parties, as applicable:

If to Mr. Vento:

Thomas A. Vento

At the address last appearing on the

personnel records of the Bank

If to the Company and the Bank:

Prudential Bancorp, Inc.

Prudential Savings Bank

1834 West Oregon Avenue

Philadelphia, Pennsylvania 19145

Attention: Corporate Secretary

13.         Withholding. The Company and/or the Bank may withhold from any amounts payable under this Agreement such federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

9

14.          Entire Agreement; Severability.

(a)          This Agreement incorporates the entire understanding between the parties relating to the subject matter hereof, recites the sole consideration for the promises exchanged and supersedes any prior agreements between the Company and/or the Bank and Mr. Vento with respect to the subject matter hereof including the Transition Agreement except as otherwise specifically provided herein. In reaching this Agreement, no party has relied upon any representation or promise except those set forth herein.

(b)          Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable. In all such cases, the parties shall use their reasonable best efforts to substitute a valid, legal and enforceable provision which, insofar as practicable, implements the original purposes and intents of this Agreement.

15.         Amendment; Waiver.

(a)          This Agreement may not be amended, supplemented or modified except by an instrument in writing signed by each party hereto; provided, however, that notwithstanding anything in this Agreement to the contrary, the Company and the Bank may amend in good faith any terms of this Agreement, including retroactively, in order to comply with Section 409A of the Internal Revenue Code of 1986, as amended.

(b)          Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

16.         Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

17.         Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania applicable to agreements made and entirely to be performed within such jurisdiction.

18.         Headings. The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

10

19.         Regulatory Provisions. Notwithstanding anything to the contrary contained in this Agreement, any payments to Mr. Vento by the Company and/or the Bank, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with, to the extent applicable, Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. Section 1828(k), and the regulations promulgated thereunder in 12 C.F.R. Part 359.

[The next page is the signature page.]

11

IN WITNESS WHEREOF, Mr. Vento has hereunto set his hand, and the Company and the Bank, have caused this Agreement to be executed by their duly authorized officers, all as of the day and year first written above.

ATTEST:
By:	/s/Regina Wilson	/s/Thomas A Vento
Name:	Regina Wilson	Name: Thomas A. Vento
Title:	Corporate Secretary

PRUDENTIAL BANCORP, INC.
By:	/s/Francis V. Mulcahy
Name:	Francis V. Mulcahy
Title:	Chairman, Compensation Committee

PRUDENTIAL SAVINGS BANK
By:	/s/Francis V. Mulcahy
Name:	Francis V. Mulcahy
Title:	Chairman, Compensation Committee

12

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

I, Joseph R. Corrato, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential Bancorp, Inc. (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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting as defined by 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

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

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

Date:  February 9, 2016	/s/ Joseph R. Corrato
	Joseph R. Corrato
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

I, Jack E. Rothkopf, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Prudential Bancorp, Inc. (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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting as defined by 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(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of Registrant's board of directors (or persons performing the equivalent functions):

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

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

Date:  February 9, 2016	/s/Jack E. Rothkopf
	Jack E. Rothkopf
	Senior Vice President, Chief Financial Officer and Treasurer

EX-32

EXHIBIT 32.0

SECTION 1350 CERTIFICATIONS

Each of the undersigned Chief Executive Officer and Chief Financial Officer of Prudential Bancorp, Inc. (the "Registrant") hereby certifies that the Registrant's Form 10-Q for the quarter ended December 31, 2015 fully complies with the requirements of Section 13(a) or 15(d) 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.

	/s/ Joseph R. Corrato
	Name: Joseph R. Corrato
	Title: President and Chief Executive Officer
Date:  February 9, 2016

	/s/ Jack E. Rothkopf
	Name: Jack E. Rothkopf
	Title: Senior Vice President, Chief Financial Officer and Treasurer
Date:  February 9, 2016

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

XML

Document and Entity Information - shares	3 Months Ended
	Dec. 31, 2015	Jan. 29, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	PRUDENTIAL BANCORP, INC.
Entity Central Index Key	0001578776
Trading Symbol	pbip
Current Fiscal Year End Date	--09-30
Entity Filer Category	Accelerated Filer
Entity Common Stock Shares Outstanding		8,240,625
Document Type	10-Q
Document Period End Date	Dec. 31, 2015
Amendment Flag	false
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
ASSETS
Cash and amounts due from depository institutions	$ 1,949	$ 2,150
Interest-bearing deposits	3,802	9,122
Total cash and cash equivalents	5,751	11,272
Investment and mortgage-backed securities available for sale (amortized cost - December 31, 2015, $119,433; September 30, 2015, $77,456)	118,275	77,483
Investment and mortgage-backed securities held to maturity (fair value - December 31, 2015, $55,732; September 30, 2015, $66,877)	55,789	66,384
Loans receivable - net of allowance for loan losses (December 31, 2015, $2,919; September 30, 2015, $2,930)	321,865	312,633
Accrued interest receivable	1,863	1,665
Real estate owned	0	869
Federal Home Loan Bank stock - at cost	1,644	369
Office properties and equipment - net	1,554	1,492
Bank owned life insurance	12,806	12,722
Prepaid expenses and other assets	1,923	1,325
Deferred tax assets-net	1,307	975
TOTAL ASSETS	522,777	487,189
Deposits:
Noninterest-bearing	2,837	2,293
Interest-bearing	367,769	362,781
Total deposits	370,606	365,074
Advances from Federal Home Loan Bank	31,889
Accrued interest payable	57	1,291
Advances from borrowers for taxes and insurance	2,554	1,670
Accounts payable and accrued expenses	1,741	2,153
Total liabilities	$ 406,847	$ 370,188
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued
Common stock, $.01 par value, 40,000,000 shares authorized; 9,544,809 issued and 8,397,625 outstanding at December 31, 2015 and 9,544,809 issued and 8,449,625 outstanding at September 30, 2015	$ 95	$ 95
Additional paid-in capital	95,586	95,286
Unearned Employee Stock Ownership Plan shares	(4,832)	(4,926)
Treasury stock, at cost: 1,147,184 shares at December 31, 2015 and 1,095,184 at September 30, 2015	(15,556)	(14,691)
Retained earnings	41,401	41,219
Accumulated other comprehensive (loss) income	(764)	18
Total stockholders' equity	115,930	117,001
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 522,777	$ 487,189

XML

UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Statement Of Financial Position [Abstract]
Investment and mortgage-backed securities available for sale, amortized cost (in dollars)	$ 119,433	$ 77,456
Investment and mortgage-backed securities held to maturity, fair value (in dollars)	55,732	66,877
Allowance for loan losses on loans receivable (in dollars)	$ 2,919	$ 2,930
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	9,544,809	9,544,809
Common stock, shares outstanding	8,397,625	8,449,625
Treasury stock, shares	1,147,184	1,095,184

XML

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
INTEREST INCOME:
Interest on loans	$ 3,060	$ 3,257
Interest on mortgage-backed securities	512	416
Interest and dividends on investments	479	548
Interest on interest-bearing assets	5	19
Total interest income	4,056	4,240
INTEREST EXPENSE:
Interest on deposits	752	901
Interest on borrowings	48
Total interest expense	800	901
NET INTEREST INCOME	3,256	3,339
PROVISION FOR LOAN LOSSES		75
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	3,256	3,264
NON-INTEREST INCOME:
Fees and other service charges	119	101
Gain on sale of loans, net	1	138
Gain on the sale of OREO	58
Income from bank owned life insurance	84	89
Other	12	22
Total non-interest income	274	350
NON-INTEREST EXPENSE:
Salaries and employee benefits	1,638	1,665
Data processing	116	106
Professional services	279	276
Office occupancy	171	147
Depreciation	77	76
Payroll taxes	79	84
Director compensation	126	86
Deposit insurance	82	68
Advertising	17	30
Other	311	388
Total non-interest expense	2,896	2,926
INCOME BEFORE INCOME TAXES	634	688
INCOME TAXES:
Current expense	286	269
Deferred (benefit) expense	65	(52)
Total income tax expense	221	217
NET INCOME	$ 413	$ 471
BASIC EARNINGS PER SHARE (in dollars per share)	$ 0.05	$ 0.05
DILUTED EARNINGS PER SHARE (in dollars per share)	0.05	0.05
DIVIDENDS PER SHARE (in dollars per share)	$ 0.03	$ 0.03

XML

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement Of Other Comprehensive Income [Abstract]
Net income	$ 413	$ 471
Unrealized holding (losses) gains on available-for-sale securities	(1,185)	735
Tax effect	403	(250)
Total other comprehensive income (loss)	(782)	485
Comprehensive Income (Loss)	$ (369)	$ 956

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Unearned ESOP Shares	Treasury Stock	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Total
BALANCE at Sep. 30, 2014	$ 95	$ 94,397	$ (5,302)		$ 41,188	$ (953)	$ 129,425
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					471		471
Other comprehensive income and loss						485	485
Dividends paid ($0.03 per share)					(240)		(240)
Excess tax benefit from stock compensation plans		10					10
Purchase of treasury stock (52,000 and 117,900 per share for June 30, 2015 and June 30, 2014, respectively)				$ (2,163)			(2,163)
Stock option expense		21					21
Recognition and Retention Plan expense		14					14
ESOP shares committed to be released (8,879 and 8,909 per share for June 30, 2015 and June 30, 2014, respectively)		14	94				108
BALANCE at Dec. 31, 2014	95	94,456	(5,208)	(2,163)	41,419	(468)	128,131
BALANCE at Sep. 30, 2015	95	95,286	(4,926)	(14,691)	41,219	18	117,001
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income					413		413
Other comprehensive income and loss						(782)	(782)
Dividends paid ($0.03 per share)					231		231
Excess tax benefit from stock compensation plans		59					59
Purchase of treasury stock (52,000 and 117,900 per share for June 30, 2015 and June 30, 2014, respectively)				(865)			(865)
Stock option expense		121					121
Recognition and Retention Plan expense		84
ESOP shares committed to be released (8,879 and 8,909 per share for June 30, 2015 and June 30, 2014, respectively)		36	94				130
BALANCE at Dec. 31, 2015	$ 95	$ 95,586	$ (4,832)	$ 15,556	$ 41,401	$ (764)	$ 115,930

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parentheticals) - $ / shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Statement Of Stockholders Equity [Abstract]
Dividends paid (in dollars per share)	$ 0.03	$ 0.03
Purchase of treasury stock, shares	52,000	117,900
ESOP shares committed to be released	8,879	8,909

XML

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
OPERATING ACTIVITIES:
Net income	$ 413	$ 471
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation	77	76
Net accretion of premiums/discounts	22	(50)
Provision for loan losses		75
Net amortization of deferred loan fees and costs	70	72
Share-based compensation expense for stock options and awards	205	35
Income from bank owned life insurance	(84)	(89)
Gain from sale of loans	(1)	(138)
Gain on sale of OREO	(58)
Originations of loans held for sale	(300)	(2,400)
Proceeds from sale of loans held for sale	301	2,538
Compensation expense of ESOP	130	108
Deferred income tax expense	65	(52)
Changes in assets and liabilities which used cash:
Accrued interest receivable	(198)	(103)
Prepaid expenses and other assets	(592)	(404)
Accrued interest payable	(1,234)	(1,470)
Accounts payable and accrued expenses	(412)	2,879
Net cash (used in) provided by operating activities	(1,596)	1,548
INVESTING ACTIVITIES:
Purchase of investment and mortgage-backed securities available for sale	(36,929)	(4,079)
Purchase of corporate bonds available for sale	(10,135)
Loans originated or acquired	(19,085)	(33,552)
Principal collected on loans	9,783	22,235
Principal payments received on investment and mortgage-backed securities:
Held-to-maturity	10,604	644
Available-for-sale	5,056	1,211
Proceeds from redemption of FHLB stock		862
Purchase of FHLB stock	(1,275)
Proceeds from sale of real estate owned	927	16
Purchases of equipment	(139)	(160)
Net cash used in investing activities	(41,193)	(12,823)
FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts, and savings accounts	2,249	2,412
Net increase (decrease) in certificates of deposit	3,283	(1,995)
FHLB increase advances	31,889
Increase in advances from borrowers for taxes and insurance	884	1,066
Cash dividends paid	(231)	(240)
Purchase of treasury stock	(865)	(2,163)
Excess tax benefit related to stock compensation plans	59	10
Net cash provided by (used in) financing activities	37,268	(910)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(5,521)	(12,185)
CASH AND CASH EQUIVALENTS - Beginning of period	11,272	45,382
CASH AND CASH EQUIVALENTS - End of period	5,751	33,197
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid on deposits and advances from Federal Home Loan Bank	$ 2,034	2,371
Income taxes paid		$ 200

XML

SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

SIGNIFICANT ACCOUNTING POLICIES

1. SIGNIFICANT ACCOUNTING POLICIES

Organization –On October 9, 2013, Prudential Mutual Holding Company (“MHC”) and Prudential Bancorp of Pennsylvania, Inc. (“Old Prudential”), the Pennsylvania-chartered mid-tier holding company for Prudential Savings Bank (the “Bank”), completed a reorganization and conversion (the “second-step conversion”), pursuant to which Prudential Bancorp, Inc., a new Pennsylvania corporation (“Prudential” or the “Company”), became the holding company for the Bank and MHC and Old Prudential ceased to exist. In connection with the second-step conversion, 7,141,602 shares of common stock, par value $0.01 per share, of Prudential were sold in a subscription offering to certain depositors of the Bank for $10 per share or $71.4 million in the aggregate (the “Offering”), and 2,403,207 shares of common stock were issued in exchange for the outstanding shares of common stock of Old Prudential, which were held by the “public” shareholders of Old Prudential. Each share of common stock of Old Prudential was converted into right to receive 0.9442 shares of common stock of the Company in the second-step conversion. As a result of the second-step conversion, the former MHC and Old Prudential were merged in the Company and 2,540,255 (pre-conversion) treasury shares were cancelled.

The Bank is a community-oriented Pennsylvania-chartered savings bank headquartered in South Philadelphia. The banking office network currently consists of the headquarters and main office and seven full-service branch offices. Five of the banking offices are located in Philadelphia (Philadelphia County), and one is in Drexel Hill, Delaware County, Pennsylvania and the remaining branch is located in Chalfont, Bucks County, Pennsylvania. The Bank maintains ATMs at six of the banking offices. The Bank also provides on-line and mobile banking services. The Bank has filed notice with the regulatory agencies of its intent to close the Chalfont branch in late February 2016.

The Bank is subject to regulation by the Pennsylvania Department of Banking and Securities (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. As a bank holding company, Prudential is subject to the regulation of the Board of Governors of the Federal Reserve System.

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three ended December 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2016, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of Prudential . and the accompanying notes thereto included in the Company’s Annual Report on Form 10-Kfor the fiscal year ended September 30, 2015.

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements.

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not be entitled to receive any dividends declared on the common stock subject to the award until earned.

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the three month period ended December 31, 2015, the Company repurchased 52,000 shares at an approximate total cost of $865,000.

FHLB Stock – FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at December 31, 2015.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “Update”) 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU did not have a significant impact on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This ASU did not have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40). The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. This ASU did not to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements -Going Concern (Subtopic 205-40). The amendments in this Update provide guidance in accounting principles generally accepted in the United States of America about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The amendments in this Update are first effective for the annual period ending after December 15, 2016, and for annual periods and interim periods within such annual periods thereafter. Early application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies how current U.S. GAAP should be interpreted in subjectively evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Public business entities are required to implement the new requirements in fiscal years and interim periods within those fiscal years beginning after December 15, 2015. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-17, Business Combinations (Topic 805): Pushdown Accounting. The amendments in this Update apply to the separate financial statements of an acquired entity and its subsidiaries that are a business or nonprofit activity (either public or nonpublic) upon the occurrence of an event in which an acquirer (an individual or an entity) obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period to the acquired entity's most recent change-in-control event. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. This ASU did not have a significant impact on the Company’s financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement –Extraordinary and Unusual Items, as part of its initiative to reduce complexity in accounting standards. This Update eliminates from GAAP the concept of extraordinary items. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments (1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30), as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-04, Compensation-Retirement Benefits (Topic 715), as part of its initiative to reduce complexity in accounting standards. For an entity with a fiscal year-end that does not coincide with a month-end, the amendments in this Update provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan. The amendments in this Update are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2015, the FASB issued ASU 2015-08, Business Combinations - Pushdown Accounting - Amendment to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115. This ASU was issued to amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115 which deleted certain topics related to push down accounting in order to make the SEC’s interpretive guidance consistent with current accounting and audit guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this ASU. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contract with Customers (Topic 606). The amendments in this Update defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is evaluating the effect of adopting this new accounting ASU.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this Update require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this Update (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

XML

EARNINGS PER SHARE

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

EARNINGS PER SHARE

2. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, during the period. Diluted earnings per share is calculated by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding, net of any treasury shares, after consideration of the potential dilutive effect of common stock equivalents, based upon the treasury stock method using an average market price for the period.

The calculated basic and diluted earnings per share are as follows:

	Three Months Ended December 31,
	2015				2014
	Basic		Diluted		Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net income	$	413	$	413	$	471	$	471
Weighted average shares outstanding		7,625,150		7,625,150		8,850,963		8,850,963
Effect of common stock equivalents		-		158,906		-		390,683
Adjusted weighted average shares used in earnings per share computation		7,625,150		7,784,056		8,850,963		9,241,646
Earnings per share - basic and diluted	$	0.05	$	0.05	$	0.05	$	0.05

All stock options outstanding as of December 31, 2015 and 2014 had exercise prices below the then current market price and were considered dilutive for the earnings per share calculation.

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the changes in accumulated other comprehensive loss by component, net of tax:

	Three Months Ended December 31,
	2015			2014
	(Dollars in Thousands)
	Unrealized gains (losses)			Unrealized gains (losses)
	on available for sale			on available for sale
	securities (a)			securities (a)
Beginning Balance	$	18		$	(953	)
Other comprehensive income (loss) gain before reclassification		(782	)		485
Amount reclassified from accumulated other comprehensive income (loss)		-			-
Total other comprehensive (loss) income		(782	)		485
Ending Balance	$	(764	)	$	(468	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES

3 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

INVESTMENT AND MORTGAGE-BACKED SECURITIES

4. INVESTMENT AND MORTGAGE-BACKED SECURITIES

The amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses, are as follows:

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(439	)	$	18,549
Mortgage-backed securities - U.S. government agencies		90,306		268		(960	)		89,614
Corporate bonds		10,133		-		(64	)		10,069
Total debt securities available for sale		119,427		268		(1,463	)		118,232
FHLMC preferred stock		6		37		-			43
Total securities available for sale	$	119,433	$	305	$	(1,463	)	$	118,275
Securities Held to Maturity:
U.S. government and agency obligations	$	44,930	$	378	$	(1,176	)	$	44,132
Mortgage-backed securities - U.S. government agencies		10,859		772		(31	)		11,600
Total securities held to maturity	$	55,789	$	1,150	$	(1,207	)	$	55,732

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(276	)	$	18,712
Mortgage-backed securities - U.S. government agencies		58,462		475		(225	)		58,712
Total debt securities available for sale		77,450		475		(501	)		77,424
FHLMC preferred stock		6		53		-			59
Total securities available for sale	$	77,456	$	528	$	(501	)	$	77,483
Securities Held to Maturity:
U.S. government and agency obligations	$	54,929	$	462	$	(849	)	$	54,542
Mortgage-backed securities - U.S. government agencies		11,455		880		-			12,335
Total securities held to maturity	$	66,384	$	1,342	$	(849	)	$	66,877

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at December 31, 2015:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(129	)	$	4,867	$	(310	)	$	10,682	$	(439	)	$	15,549
Mortgage-backed securities - U.S. government agencies		(775	)		60,914		(185	)		8,886		(960	)		69,800
Corporate bonds		(64	)		10,069		-			-		(64	)		10,069
Total securities available for sale		(968	)		75,850		(495	)		19,568		(1,463	)		95,418
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(1,176	)		33,777		(1,176	)		33,777
Mortgage-backed securities - U.S. government agencies		(31	)		3,829		-			-		(31	)		3,829
Total securities held to maturity		(31	)		3,829		(1,176	)		33,777		(1,207	)		37,606
Total	$	(999	)	$	79,679	$	(1,671	)	$	53,345	$	(2,670	)	$	133,024

The following table shows the gross unrealized losses and related fair values of the Company’s investment securities, aggregated by investment category and length of time that individual securities had been in a continuous loss position at September 30, 2015:

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(85	)	$	4,910	$	(191	)	$	13,802	$	(276	)	$	18,712
Mortgage-backed securities - agency		(138	)		22,173		(87	)		9,206		(225	)		31,379
Total securities available for sale		(223	)		27,083		(278	)		23,008		(501	)		50,091
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(849	)		42,603		(849	)		42,603
Total securities held to maturity		-			-		(849	)		42,603		(849	)		42,603
Total	$	(223	)	$	27,083	$	(1,127	)	$	65,611	$	(1,350	)	$	92,694

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least once each quarter, and more frequently when economic or market concerns warrant such evaluation. The evaluation is based upon factors such as the creditworthiness of the issuers/guarantors, the underlying collateral, if applicable, and the continuing performance of the securities.  Management also evaluates other facts and circumstances that may be indicative of an OTTI condition. This includes, but is not limited to, an evaluation of the type of security, the length of time and extent to which the fair value of the security has been less than cost, and the near-term prospects of the issuer.

The Company assesses whether a credit loss exists with respect to a security by considering whether (1) the Company has the intent to sell the security, (2) it is more likely than not that it will be required to sell the security before recovery has occurred, or (3) it does not expect to recover the entire amortized cost basis of the security. The Company bifurcates the OTTI impact on impaired securities where impairment in value was deemed to be other than temporary between the component representing credit loss and the component representing loss related to other factors. The portion of the fair value decline attributable to credit loss must be recognized through a charge to earnings. The credit component is determined by comparing the present value of the cash flows expected to be collected, discounted at the rate in effect before recognizing any OTTI, with the amortized cost basis of the debt security.  The Company uses the cash flows expected to be realized from the security, which includes assumptions about interest rates, timing and severity of defaults, estimates of potential recoveries, the cash flow distribution from the security and other factors, then applies a discount rate equal to the effective yield of the security.  The difference between the present value of the expected cash flows and the amortized book value is considered a credit loss.  The fair market value of the security is determined using the same expected cash flows; the discount rate is a rate the Company determines from open market and other sources as appropriate for the particular security.  The difference between the fair value and the security’s remaining amortized cost is recognized in other comprehensive income (loss).  

During the three months ended December 31, 2015 and 2014, the Company did not record any credit losses on investment securities through either earnings or in comprehensive income (loss).

U.S. Government Agency Obligations - The Company’s investments reflected in the tables above in U.S. Government agency notes consist of debt obligations of the FHLB and Federal Farm Credit System (“FFCS”). These securities are typically rated AAA by one of the internationally recognized credit rating services. At December 31, 2015, U.S. Government and agency obligations in a gross unrealized loss for less than 12 months consisted of four securities. There were 18 securities in a gross unrealized loss for more than 12 months at such date. The unrealized losses on these debt securities relate principally to the changes in market interest rates and a lack of liquidity currently in the financial markets and are not a result of a projected shortfall of cash flows. The Company anticipates it will recover the entire amortized cost basis of the securities. As a result, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2015.

U.S. Agency Issued Mortgage-Backed Securities - At December 31, 2015, there were six securities in a gross unrealized loss for less than 12 months while there were nine securities in a gross unrealized loss for more than 12 months at such date. These securities represent asset-backed issues that are issued or guaranteed by a U.S. Government sponsored agency or carry the full faith and credit of the United States through a government agency and are currently rated AAA by at least one bond credit rating agency.

Corporate Debt Securities –At December 31, 2015, there were two securities in a gross unrealized loss for less than 12 months.

The amortized cost and fair value of debt securities, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The maturity table below excludes mortgage-backed securities because the contractual maturities of such securities are not indicative of actual maturities due to significant prepayments.

	December 31, 2015
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due within one year	$	-	$	-	$	-	$	-
Due after one through five years		1,999		2,224		-		-
Due after five through ten years		985		1,000		10,133		10,069
Due after ten years		41,946		40,908		18,988		18,549
Total	$	44,930	$	44,132	$	29,121	$	28,618

During both three month periods ended December 31, 2015 and 2014, no securities were sold.

XML

LOANS RECEIVABLE

3 Months Ended

Dec. 31, 2015

Receivables [Abstract]

LOANS RECEIVABLE

5. LOANS RECEIVABLE

Loans receivable consist of the following:

	December 31,			September 30,
	2015			2015
	(Dollars in Thousands)
One-to-four family residential	$	253,233		$	259,163
Multi-family residential		6,201			6,249
Commercial real estate		39,550			25,799
Construction and land development		37,006			38,953
Consumer		671			392
Total loans		336,661			330,556
Undisbursed portion of loans-in-process		(13,928	)		(17,097	)
Deferred loan costs		2,051			2,104
Allowance for loan losses		(2,919	)		(2,930	)
Net loans	$	321,865		$	312,633

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at December 31, 2015:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,471		58		359		757		-		8		266		2,919
Total ending allowance balance	$	1,471	$	58	$	359	$	757	$	-	$	8	$	266	$	2,919
Loans:
Individually evaluated for impairment	$	4,703	$	347	$	3,712	$	9,317	$	-	$	-			$	18,079
Collectively evaluated for impairment		248,530		5,854		35,838		27,689		-		671				318,582
Total loans	$	253,233	$	6,201	$	39,550	$	37,006	$	-	$	671			$	336,661

The following table summarizes by loan segment the balance in the allowance for loan losses and the loans individually and collectively evaluated for impairment by loan segment at September 30, 2015:

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,635		66		231		724		-		5		269		2,930
Total loans	$	1,635	$	66	$	231	$	724	$	-	$	5	$	269	$	2,930
Loans:
Individually evaluated for impairment	$	4,206	$	-	$	3,768	$	8,796	$	-	$	-	$	-	$	16,770
Collectively evaluated for impairment		254,957		6,249		22,031		30,157		-		392		-		313,786
Total loans	$	259,163	$	6,249	$	25,799	$	38,953	$	-	$	392	$	-	$	330,556

The loan portfolio is segmented at a level that allows management to monitor both risk and performance. Management evaluates for potential impairment all construction loans, commercial real estate and commercial business loans and all loans 90 plus days delinquent as to principal and/or interest. Loans are considered to be impaired when, based on current information and events, it is probable that the Company will be unable to collect in full the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement.

Once the determination is made that a loan is impaired, the determination of whether a specific allocation of the allowance is necessary is generally measured by comparing the recorded investment in the loan to the fair value of the loan using one of the following three methods: (a) the present value of the expected future cash flows discounted at the loan’s effective interest rate; (b) the loan’s observable market price; or (c) the fair value of the collateral less selling costs. Management primarily utilizes the fair value of collateral method as a practically expedient alternative. On collateral method evaluations, any portion of the loan deemed uncollectible is charged-off against the loan loss allowance.

The following table presents impaired loans by class as of December 31, 2015, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,703	$	4,703	$	5,080
Multi-family residential		-		-		347		347		347
Commercial real estate		-		-		3,712		3,712		3,712
Construction and land development		-		-		9,317		9,317		9,317
Total Loans	$	-	$	-	$	18,079	$	18,079	$	18,456

The following table presents impaired loans by class as of September 30, 2015, segregated by those for which a specific allowance was required and those for which a specific allowance was not required.

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
										Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,206	$	4,206	$	4,550
Commercial real estate		-		-		3,768		3,768		3,768
Construction and land development		-		-		8,796		8,796		8,796
Total Loans	$	-	$	-	$	16,770	$	16,770	$	17,114

The following table presents the average recorded investment in impaired loans and related interest income recognized for the periods indicated:

	Three Months Ended December 31, 2015
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,455	$	31	$	23
Multi-family residential		351		6		-
Commercial real estate		3,740		24		13
Construction and land development		9,057		125		-
Total Loans	$	17,603	$	186	$	36

	Three Months Ended December 31, 2014
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	10,526	$	139	$	35
Multi-family residential		365		64		-
Commercial real estate		3,771		52		11
Construction and land development		7,479		104		-
Total Loans	$	22,141	$	359	$	46

Federal regulations and our policy require that the Company utilize an internal asset classification system as a means of reporting problem and potential problem assets. The Company has incorporated an internal asset classification system, consistent with Federal banking regulations, as a part of its credit monitoring system. Management currently classifies problem and potential problem assets as “special mention”, “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions, and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. Assets which do not currently expose the insured institution to sufficient risk to warrant classification in one of the aforementioned categories but possess weaknesses are required to be designated “special mention.”

The following table presents the classes of the loan portfolio in which a formal risk weighting system is utilized summarized by the aggregate “Pass” and the criticized category of “special mention”, and the classified categories of “substandard”, “doubtful” and “loss” within the Company’s risk rating system as applied to the loan portfolio. The Company had no loans classified as “doubtful” or “loss” at either of the dates presented.

	December 31, 2015
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,613	$	1,717	$	1,373	$	4,703
Multi-family residential		5,854		-		347		6,201
Commercial real estate		35,816		961		2,773		39,550
Construction and land development		27,689		-		9,317		37,006
Total Loans	$	70,972	$	2,678	$	13,810	$	87,460

	September 30, 2015
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,348	$	2,107	$	751	$	4,206
Multi-family residential		5,898		351		-		6,249
Commercial real estate		22,005		965		2,829		25,799
Construction and land development		30,157		-		8,796		38,953
Total Loans	$	59,408	$	3,423	$	12,376	$	75,207

The Company evaluates the classification of one-to-four family residential and consumer loans primarily on a pooled basis. If the Company becomes aware that adverse or distressed conditions exist that may affect a particular single-family residential loan, the loan is downgraded following the above definitions of special mention, substandard, doubtful and loss.

The following table represents loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status. Non-performing loans that would be included in the table are those loans greater than 90 days past due that do not have a designated risk rating.

	December 31, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	248,530	$	-	$	248,530
Consumer		671		-		671
Total Loans	$	249,201	$	-	$	249,201

	September 30, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	254,957	$	-	$	254,957
Consumer		392		-		392
Total Loans	$	255,349	$	-	$	255,349

Management further monitors the performance and credit quality of the loan portfolio by analyzing the age of the portfolio as determined by the length of time a recorded payment is due or overdue, as the case may be. The following table presents the loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans:

	December 31, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	250,487	$	821	$	1,925	$	-	$	821	$	253,233	$	3,416
Multi-family residential		6,201		-		-		-		-		6,201		-
Commercial real estate		39,369		-		181		-		-		39,550		1,542
Construction and land development		37,006		-		-		-		-		37,006		9,317
Consumer		671		-		-		-		-		671		-
Total Loans	$	333,734	$	821	$	2,106	$	-	$	821	$	336,661	$	14,275

	September 30, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	255,669	$	1,462	$	2,032	$	-	$	1,462	$	259,163	$	3,547
Multi-family residential		6,249		-		-		-		-		6,249		-
Commercial real estate		25,114		504		181		-		504		25,799		1,589
Construction and land development		38,953		-		-		-		-		38,953		8,796
Consumer		392		-		-		-		-		392		-
Total Loans	$	326,377	$	1,966	$	2,213	$	-	$	1,966	$	330,556	$	13,932

The allowance for loan losses is established through a provision for loan losses charged to expense. The Company maintains the allowance at a level believed to cover all known and inherent losses in the portfolio that are both probable and reasonable to estimate at each reporting date. Management reviews the allowance for loan losses no less than quarterly in order to identify these inherent losses and to assess the overall collection probability for the loan portfolio in view of these inherent losses. For each primary type of loan, a loss factor is established reflecting an estimate of the known and inherent losses in such loan type contained in the portfolio using both a quantitative analysis as well as consideration of qualitative factors. The evaluation process includes, among other things, an analysis of delinquency trends, non-performing loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and geographic concentration of the Company’s loans, the value of collateral securing the loans, the borrowers’ ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience.

Commercial real estate loans entail significant additional credit risks compared to one-to-four family residential mortgage loans, as they generally involve large loan balances concentrated with single borrowers or groups of related borrowers. In addition, the payment experience on loans secured by income-producing properties typically depends on the successful operation of the related real estate project and/or business operation of the borrower who is, in some cases, also the primary occupant, and thus may be subject to a greater extent to the effects of adverse conditions in the real estate market and in the economy in general. Commercial business loans typically involve a higher risk of default than residential loans of like duration since their repayment is generally dependent on the successful operation of the borrower’s business and the sufficiency of collateral, if any. Land acquisition, development and construction lending exposes the Company to greater credit risk than permanent mortgage financing. The repayment of land acquisition, development and construction loans depends upon the sale of the property to third parties or the availability of permanent financing upon completion of all improvements. These events may adversely affect both the borrowers as well as the value of the collateral property. Such lending is additionally subject to the risk that if the estimate of construction cost proves to be inaccurate, potentially the Company will be compelled to advance additional funds. In addition, if the estimate of value proves to be inaccurate, the Company may be confronted with a project, when completed, having less value than the loan amount. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company would be able to recover the entire unpaid portion of the loan.

The following table summarizes the primary segments of the allowance for loan losses. Activity in the allowance is presented for the three month periods ended December 31, 2015 and 2014:

	Three Months Ended December 31, 2015
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated			Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724	$	-	$	5	$	269		$	2,930
Charge-offs		(11	)		-			-		-		-		-		-			(11	)
Recoveries		-			-			-		-		-		-		-			-
Provision		(153	)		(8	)		128		33		-		3		(3	)		-
ALLL balance at December 31, 2015	$	1,471		$	58		$	359	$	757	$	-	$	8	$	266		$	2,919

	Three Months Ended December  31, 2014
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business			Consumer		Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2014	$	1,663		$	67		$	122	$	323	$	15		$	4	$	231	$	2,425
Charge-offs		-			-			-		-		-			-		-		-
Recoveries		-			-			-		-		-			-		-		-
Provision		(171	)		(16	)		94		170		(10	)		-		8		75
ALLL balance at December 31, 2014	$	1,492		$	51		$	216	$	493	$	5		$	4	$	239	$	2,500

The Company determined that a provision for loan losses was not necessary for the three months ended December 31, 2015, compared to the $75,000 provision recorded during the same period in 2014.

At December 31, 2015, the Company had ten loans classified as TDRs aggregating $7.9 million, consisting of two single-family residential real estate loans which amounted to $1.5 million, one construction and land development loan totaling $3.5 million and seven commercial real estate loans which amounted to $3.0 million. Of these loans, one single-family residential real estate loan totaling $1.4 million, one commercial real estate loan totaling $733,000 and a construction and land development loan totaling $3.5 million were determined to be non-performing until management has made the decision to designate these credits as performing. Typically management will wait until a minimum of six consecutive contractual payments have been made prior to changing the designation. All TDRs, with the exception of one commercial real estate loan totaling $854,000, were classified as “substandard” as of December 31, 2015. During the three months ended December 31, 2015, no TDRs defaulted.

The Company did not restructure any debt during the three month period ended December 31, 2015 and 2014.

XML

DEPOSITS

3 Months Ended

Dec. 31, 2015

Deposits [Abstract]

DEPOSITS

6. DEPOSITS

Deposits consist of the following major classifications:

	December 31,					September 30,
	2015					2015
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	59,855		16.1	%	$	60,736		16.6	%
Interest-bearing checking accounts		37,591		10.1			35,649		9.8
Non-interest bearing checking accounts		2,837		0.8			2,293		0.6
Passbook, club and statement savings		71,000		19.2			70,355		19.3
Certificates maturing in six months or less		48,380		13.0			49,857		13.7
Certificates maturing in more than six months		150,943		40.8			146,184		40.0
Total	$	370,606		100.0	%	$	365,074		100.0	%

Certificates of $250,000 and over totaled $30.3 million as of December 31, 2015 and $32.7 million as of September 30, 2015.

XML

INCOME TAXES

3 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

INCOME TAXES

7. INCOME TAXES

Items that gave rise to significant portions of deferred income taxes are as follows:

	December 31,			September 30,
	2015			2015
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,178		$	1,185
Nonaccrual interest		93			86
Accrued vacation		62			119
Capital loss carryforward		506			534
Split dollar life insurance		19			19
Post-retirement benefits		106			126
Unrealized loss on available for sale securities		387			-
Employee benefit plans		643			530
Total deferred tax assets		2,994			2,599
Valuation allowance		(506	)		(534	)
Total deferred tax assets, net of valuation allowance		2,488			2,065
Deferred tax liabilities:
Property		484			365
Unrealized gains on available for sale securities		-			10
Deferred loan fees		697			715
Total deferred tax liabilities		1,181			1,090
Net deferred tax assets	$	1,307		$	975

The Company establishes a valuation allowance for deferred tax assets when management believes that the use of the deferred tax assets is not likely to be realized through a carry back to taxable income in prior years or future reversals of existing taxable temporary differences, and/or to a lesser extent, future taxable income. The tax deduction generated by the redemption of the shares of a mutual fund held by the Bank and the subsequent impairment charge on the assets acquired through the redemption in kind are considered capital losses and can only be utilized to the extent of capital gains over a five year period, resulting in the establishment of a valuation allowance for the carryforward period. The valuation allowance totaled $506,000 at December 31, 2015, and $534,000 at September 30, 2015.

There is currently no liability for uncertain tax positions and no known unrecognized tax benefits. The Company recognizes, when applicable, interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Consolidated Statements of Operations as a component of income tax expense. As of December 31, 2015, the Internal Revenue Service had conducted an audit of the Company’s federal tax return for the year ended September 30, 2010, and no adverse findings were reported. The Company’s federal and state income tax returns for taxable years through September 30, 2012 have been closed for purposes of examination by the Internal Revenue Service and the Pennsylvania Department of Revenue.

XML

STOCK COMPENSATION PLANS

3 Months Ended

Dec. 31, 2015

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

STOCK COMPENSATION PLANS

8. STOCK COMPENSATION PLANS

The Company maintains an employee stock ownership plan (“ESOP”) for substantially all of its full-time employees. The ESOP purchased 427,057 shares (on a converted basis) of the Company’s common stock for an aggregate cost of approximately $4.5 million in fiscal 2005. The ESOP purchased an additional 255,564 shares during December 2013 and an additional 30,100 shares at the beginning January 2014, of the Company’s common stock for an aggregate cost of approximately $3.1 million. The shares were purchased with the proceeds of loans from the Company. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants as the loans are repaid. Shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. As of December 31, 2015, the ESOP held 697,270 shares and the Company had allocated a total of 251,118 shares from the suspense account to participants. For the three months ended December 31, 2015 and 2014, the Company recognized $130,000 and $108,000, respectively, in compensation expense related to the ESOP.

The Company maintains the 2008 Recognition and Retention Plan (“2008 RRP”) which is administered by a committee of the Board of Directors of the Company. The RRP provides for the grant of shares of common stock of the Company to officers, employees and directors of the Company. In order to fund the grant of shares under the RRP, the RRP Trust purchased 213,528 shares (on a converted basis) of the Company’s common stock in the open market for approximately $2.5 million, at an average purchase price per share of $11.49 as part of the 2008 RRP. The Company made sufficient contributions to the RRP Trust to fund these purchases. As of December 31, 2015, all the shares, with exception of 3,059 shares that had been forfeited, had been awarded as part of the 2008 RRP. Shares subject to awards under the 2008 RRP generally vest at the rate of 20% per year over five years. During February 2015, shareholders approved the 2014 Stock Incentive Plan (the “2014 SIP”). As part of the 2014 SIP, a maximum of 285,655 shares can be awarded as restricted stock awards or units, of which 235,500 shares were awarded during February 2015 of which 26,500 shares had been forfeited as of December 31, 2015.

Compensation expense related to the shares subject to restricted stock awards granted is recognized ratably over the five-year vesting period in an amount which totals the grant date fair value multiplied by the number of shares subject to the grant. During the three months ended December 31, 2015, an aggregate of $128,000 was recognized in compensation expense for the 2008 RRP and the grants pursuant to the 2014 SIP. Income tax benefits of $44,000 were recognized for the three months ended December 31, 2015. During the three months ended December 31, 2014, $21,000 was recognized in compensation expense for the 2008 RRP. An income tax benefit of $7,000 was recognized for the three months ended December 31, 2014. At December 31, 2015, approximately $2.2 million in additional compensation expense for the shares awarded which remained outstanding related to the 2008 RRP and the 2014 SIP and $2.6 million in compensation expense remained unrecognized. At December 31, 2014, approximately $225,000 in additional compensation expense for the shares awarded related to the 2008 RRP remained unrecognized. 

A summary of the Company’s non-vested stock award activity for the three months ended December 31, 2015 and 2014 is presented in the following tables:

	Three Months Ended December 31, 2015
	Number of Shares (1)			Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Issued		-			-
Forfeited		(7,746	)		11.50
Vested		-			-
Nonvested stock awards at the December 31, 2015		233,682		$	11.75

	Three Months Ended December 31, 2014
	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1, 2014		38,055	$	8.07
Issued		-		-
Forfeited		-		-
Vested		-		-
Nonvested stock awards at the December 31, 2014		38,055	$	8.07

The Company maintains the 2008 Stock Option Plan (the “2008 Option Plan”) which authorizes the grant of stock options to officers, employees and directors of the Company to acquire shares of common stock with an exercise price at least equal to the fair market value of the common stock on the grant date. 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. A total of 533,808 shares (on a converted basis) of common stock were approved for future issuance pursuant to the 2008 Stock Option Plan. As of December 31, 2015, all of the options had been awarded under the 2008 Option Plan. As of December 31, 2015, 418,294 options (on a converted basis) were vested under the 2008 Option Plan. The 2014 SIP reserved up to 714,145 shares for issuance pursuant to options. Options to purchase 587,112 shares were awarded during February 2015, 605,000 shares pursuant to the 2014 SIP and the remainder pursuant to the 2008 Option Plan. As of December 31, 2015, the 2008 Option Plan had 7,932 shares forfeited and the 2014 SIP had 70,000 shares forfeited.

A summary of the status of the Company’s stock options under the 2008 Option Plan and the 2014 SIP as of December 31, 2015 and 2014 are presented below:

	Three Months Ended December 31, 2015
	Number of Shares			Weighted Average Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		-			-
Forfeited		(25,166	)		11.59
Outstanding at December 31, 2015		1,049,264		$	11.93
Exercisable at December 31, 2015		440,976		$	11.42

	Three Months Ended December 31, 2014
	Number of Shares		Weighted Average Exercise Price
Outstanding at October 1, 2014		530,084	$	10.86
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at December 31, 2014		530,084	$	10.86
Exercisable at December 31, 2014		417,767	$	11.57

The weighted average remaining contractual term was approximately 6.8 years for options outstanding as of December 31, 2015.

The estimated fair value of options granted during fiscal 2009 was $2.98 per share, $2.92 for options granted during fiscal 2010, $3.34 for options granted during fiscal 2013, $4.67 for the options granted during fiscal 2014 and $4.58 for options granted during fiscal 2015. The fair value for grants made in fiscal 2015 was estimated on the date of grant using the Black-Scholes pricing model with the following assumptions: an exercise and fair value of $12.23, expected term of seven years, volatility rate of 38.16%, interest rate of 1.62% and a yield rate of 0.98%.

During the three months ended December 31, 2015, $136,000 was recognized in compensation expense for options granted pursuant to the 2008 Option Plan and the 2014 SIP. A tax benefit of $15,000 was recognized for the three months ended December 31, 2015. During the three months ended December 31, 2014, $25,000 was recognized in compensation expense for the 2008 Option Plan and a tax benefit of $1,000 was recognized during this period. At December 31, 2015, approximately $2.3 million in additional compensation expense for awarded options which remained outstanding at such date. The weighted average period over which this expense will be recognized is approximately 4.1 years.

XML

COMMITMENTS AND CONTINGENT LIABILITIES

3 Months Ended

Dec. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

9. COMMITMENTS AND CONTINGENT LIABILITIES

At December 31, 2015, the Company had $7.5 million in outstanding commitments to originate fixed and variable-rate loans with market interest rates ranging from 3.75% to 6.00%. At September 30, 2015, the Company had $2.5 million in outstanding commitments to originate fixed and variable-rate loans with market interest rates ranging from 4.25% to 5.25%. The aggregate undisbursed portion of loans-in-process amounted to $13.9 million at December 31, 2015 and $17.2 million at September 30, 2015.

The Company also had commitments under unused lines of credit of $5.7 million as of December 31, 2015 and $6.1 million as of September 30, 2015 and letters of credit outstanding of $2.6 million as of December 31, 2015 and September 30, 2015.

Among the Company’s contingent liabilities are exposures to limited recourse arrangements with respect to the Company’s sales of whole loans and participation interests. At December 31, 2015, the exposure, which represents a portion of credit risk associated with the interests sold, amounted to $53,000. This exposure is for the life of the related loans and payables, on our proportionate share, as actual losses are incurred.

The Company is involved in various legal proceedings occurring in the ordinary course of business. Management of the Company, based on discussions with litigation counsel, believes that such proceedings will not have a material adverse effect on the financial condition, operations or cash flows of the Company. However, there can be no assurance that any of the outstanding legal proceedings to which the Company is a party will not be decided adversely to the Company's interests and not have a material adverse effect on the financial condition and operations of the Company.

XML

FAIR VALUE MEASUREMENT

3 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENT

10. FAIR VALUE MEASUREMENT

The fair value estimates presented herein are based on pertinent information available to management as of December 31, 2015 and September 30, 2015, respectively. Although management is not aware of any factors that would significantly affect the fair value amounts, such amounts have not been comprehensively revalued for purposes of these financial statements since that date and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Generally accepted accounting principles used in the United States establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value.

The three broad levels of hierarchy are as follows:

Level 1	Quoted prices in active markets for identical assets or liabilities.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Those assets as of December 31, 2015 which are to be measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,549	$	-	$	18,549
Mortgage-backed securities - U.S. Government agencies		-		89,614		-		89,614
Corporate bonds		-		10,069				10,069
FHLMC preferred stock		43		-		-		43
Total	$	43	$	118,232	$	-	$	118,275

Those assets as of September 30, 2015 which are measured at fair value on a recurring basis are as follows:

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,712	$	-	$	18,712
Mortgage-backed securities - U.S. Government agencies		-		58,712		-		58,712
FHLMC preferred stock		59		-		-		59
Total	$	59	$	77,424	$	-	$	77,483

Certain assets are measured at fair value on a nonrecurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The Company measures impaired loans and real estate owned at fair value on a non-recurring basis.

Impaired Loans

The Company considers loans to be impaired when it becomes more likely than not that the Company will be unable to collect all amounts due in accordance with the contractual terms of the loan agreements. Collateral dependent impaired loans are based on the fair value of the collateral which is based on appraisals and would be categorized as Level 2 measurement.  In some cases, adjustments are made to the appraised values for various factors including the age of the appraisal, age of the comparable included in the appraisal, and known changes in the market and in the collateral. These adjustments are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement. These loans are reviewed for impairment and written down to their net realizable value by charges against the allowance for loan losses. The collateral underlying these loans had a fair value in excess of $18.1 million, as of December 31, 2015.

Real Estate Owned

Once an asset is determined to be uncollectible, the underlying collateral is generally repossessed and reclassified to foreclosed real estate and repossessed assets. These repossessed assets are carried at the lower of cost or fair value of the collateral, based on independent appraisals, less cost to sell and would be categorized as Level 2 measurement. In some cases, adjustments are made to the appraised values for various factors including age of the appraisal, age of the comparables included in the appraisal, and known changes in the market and in the collateral. Thus the evaluations are based upon unobservable inputs, and therefore, the fair value measurement has been categorized as a Level 3 measurement.

Summary of Non-Recurring Fair Value Measurements

	At December 31, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	18,079	$	18,079
Total	$	-	$	-	$	18,079	$	18,079

	At September 30, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,770	$	16,770
Real estate owned		-		869		-		869
Total	$	-	$	869	$	16,770	$	17,639

The following table provides information describing the valuation processes used to determine nonrecurring fair value measurements categorized within Level 3 of the fair value hierarchy:

	At December 31, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	18,079	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount

	At September 30, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,770	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount
Real estate owned	$	869	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

The fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies. However, considerable judgment is necessarily required to interpret market data to develop the estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

					Fair Value Measurements at
					December 31, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	5,751	$	5,751	$	5,751	$	-	$	-
Investment and mortgage-backed
securities available for sale		118,275		118,275		43		118,232		-
Investment and mortgage-backed securities held to maturity		55,789		55,732		-		55,732		-
Loans receivable, net		321,865		318,681		-		-		318,681
Accrued interest receivable		1,863		1,863		1,863		-		-
Federal Home Loan Bank stock		1,644		1,644		1,644		-		-
Bank owned life insurance		12,806		12,806		12,806		-		-
Liabilities:
Checking accounts		40,428		40,428		40,428		-		-
Money market deposit accounts		59,855		59,855		59,855		-		-
Passbook, club and statement savings accounts		71,000		71,000		71,000		-		-
Certificates of deposit		199,323		201,917		-		-		214,749
Advances from Federal Home
Loan Bank		31,889		31,636		-		-		31,636
Accrued interest payable		57		57		57		-		-
Advances from borrowers for taxes and
insurance		2,554		2,554		2,554		-		-

					Fair Value Measurements at
					September 30, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	11,272	$	11,272	$	11,272	$	-	$	-
Investment and mortgage-backed securities available for sale		77,483		77,483		59		77,424		-
Investment and mortgage-backed
securities held to maturity		66,384		66,877		-		66,877		-
Loans receivable, net		312,633		312,613		-		-		312,613
Accrued interest receivable		1,665		1,665		1,665		-		-
Federal Home Loan Bank stock		369		369		369		-		-
Bank owned life insurance		12,722		12,722		12,722		-		-
Liabilities:
Checking accounts		37,942		37,942		37,942		-		-
Money market deposit accounts		60,736		60,736		60,736		-		-
Passbook, club and statement savings accounts		70,355		70,355		70,355		-		-
Certificates of deposit		196,041		199,639		-		-		199,639
Accrued interest payable		1,291		1,291		1,291		-		-
Advances from borrowers for taxes and
insurance		1,670		1,670		1,670		-		-

Cash and Cash Equivalents—For cash and cash equivalents, the carrying amount is a reasonable estimate of fair value.

Investments and Mortgage-Backed Securities—The fair value of investment securities and mortgage-backed securities is based on quoted market prices, dealer quotes, and prices obtained from independent pricing services.

Loans Receivable—The fair value of loans is estimated based on present value using the current market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. The carrying value that fair value is compared to is net of the allowance for loan losses and other associated premiums and discounts. Due to the significant judgment involved in evaluating credit quality, loans are classified within Level 3 of the fair value hierarchy.

Accrued Interest Receivable – For accrued interest receivable, the carrying amount is a reasonable estimate of fair value.

Federal Home Loan Bank (FHLB) Stock—Although FHLB stock is an equity interest in an FHLB, it is carried at cost because it does not have a readily determinable fair value as its ownership is restricted and it lacks a market. The estimated fair value approximates the carrying amount.

Bank Owned Life Insurance—The fair value of bank owned life insurance is based on the cash surrender value obtained from an independent advisor that is derivable from observable market inputs.

Checking Accounts, Money Market Deposit Accounts, Passbook Accounts, Club Accounts, Statement Savings Accounts, and Certificates of Deposit—The fair value of passbook accounts, club accounts, statement savings accounts, checking accounts, and money market deposit accounts is the amount reported in the financial statements. The fair value of certificates of deposit is based on market rates currently offered for deposits of similar remaining maturity.

Advances from Federal Home Loan Bank—The fair value of advances from FHLB is the amount payable on demand at the reporting date.

Accrued Interest Payable – For accrued interest payable, the carrying amount is a reasonable estimate of fair value.

Advances from borrowers for taxes and insurance – For advances from borrowers for taxes and insurance, the carrying amount is a reasonable estimate of fair value.

Commitments to Extend Credit and Letters of Credit—The majority of the Bank’s commitments to extend credit and letters of credit carry current market interest rates if converted to loans. Because commitments to extend credit and letters of credit are generally unassignable by either the Bank or the borrower, they only have value to the Bank and the borrower. The estimated fair value approximates the recorded deferred fee amounts, which are not significant.

XML

SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Dec. 31, 2015

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation – The accompanying unaudited consolidated financial statements were prepared pursuant to the rules and regulations of the U. S. Securities and Exchange Commission (“SEC”) for interim information and therefore do not include all the information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in equity and cash flows in conformity with accounting principles generally accepted in the United States of America (“GAAP”). However, all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation of the financial statements have been included. The results for the three ended December 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2016, or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements of Prudential . and the accompanying notes thereto included in the Company’s Annual Report on Form 10-Kfor the fiscal year ended September 30, 2015.

Use of Estimates in the Preparation of Financial Statements

Use of Estimates in the Preparation of Financial Statements—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. The most significant estimates and assumptions in the Company’s consolidated financial statements are recorded in the allowance for loan losses, deferred income taxes, other-than-temporary impairment, and the fair value measurement for financial instruments. Actual results could differ from those estimates.

Share-Based Compensation

Share-Based Compensation – The Company accounts for stock-based compensation issued to employees, and where appropriate, non-employees, at fair value. Under fair value provisions, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the appropriate vesting period using the straight-line method. The amount of stock-based compensation recognized at any date must at least equal the portion of the grant date fair value of the award that is vested at that date and as a result it may be necessary to recognize the expense using a ratable method. Determining the fair value of stock-based awards at the date of grant requires judgment, including estimating the expected term of the stock options and the expected volatility of the Company’s stock. In addition, judgment is required in estimating the amount of stock-based awards that are expected to be forfeited. If actual results differ significantly from these estimates or different key assumptions were used, it could have a material effect on the Company’s consolidated financial statements.

Dividends with respect to non-vested share awards granted pursuant to the Company’s 2008 Recognition and Retention Plan (“Plan”) and held in the Trust (the “Trust”) are held for the benefit of the recipients and are paid out proportionately by the Trust to the recipients of stock awards granted pursuant to the Plan as soon as practicable after the stock awards are earned. A recipient of a share award granted under the 2014 Stock Incentive Plan will not be entitled to receive any dividends declared on the common stock subject to the award until earned.

Treasury Stock

Treasury Stock – Stock held in treasury by the Company is accounted for using the cost method, which treats stock held in treasury as a reduction to total stockholders’ equity. During the three month period ended December 31, 2015, the Company repurchased 52,000 shares at an approximate total cost of $865,000.

FHLB Stock

FHLB Stock – FHLB stock is classified as a restricted equity security because ownership is restricted and there is not an established market for its resale.  FHLB stock is carried at cost and is evaluated for impairment when certain conditions warrant further consideration. Management concluded that the FHLB stock was not impaired at December 31, 2015.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU” or “Update”) 2014-01, Investments – Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects. The amendments in this Update permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this Update should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this Update are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. This ASU did not have a significant impact on the Company’s financial statements.

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in-substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method. This ASU did not have a significant impact on the Company’s financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (a new revenue recognition standard). The Update’s core principle is that a company will recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, this update specifies the accounting for certain costs to obtain or fulfill a contract with a customer and expands disclosure requirements for revenue recognition. This Update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-11, Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. For repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The amendments also require enhanced disclosures. The accounting changes in this Update are effective for the first interim or annual period beginning after December 15, 2014. An entity is required to present changes in accounting for transactions outstanding on the effective date as a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Earlier application is prohibited. The disclosure for certain transactions accounted for as a sale is required to be presented for interim and annual periods beginning after December 15, 2014, and the disclosure for repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after March 15, 2015. The disclosures are not required to be presented for comparative periods before the effective date. This ASU did not have a significant impact on the Company’s financial statements.

In June 2014, the FASB issued ASU 2014-12, Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could Be Achieved After the Requisite Service Period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. Entities may apply the amendments in this Update either (a) prospectively to all awards granted or modified after the effective date or (b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. If retrospective transition is adopted, the cumulative effect of applying this Update as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. Additionally, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40). The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. This ASU did not to have a significant impact on the Company’s financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements -Going Concern (Subtopic 205-40). The amendments in this Update provide guidance in accounting principles generally accepted in the United States of America about management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern and to provide related footnote disclosures. The amendments in this Update are first effective for the annual period ending after December 15, 2016, and for annual periods and interim periods within such annual periods thereafter. Early application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force). This ASU clarifies how current U.S. GAAP should be interpreted in subjectively evaluating the economic characteristics and risks of a host contract in a hybrid financial instrument that is issued in the form of a share. Public business entities are required to implement the new requirements in fiscal years and interim periods within those fiscal years beginning after December 15, 2015. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2014, the FASB issued ASU 2014-17, Business Combinations (Topic 805): Pushdown Accounting. The amendments in this Update apply to the separate financial statements of an acquired entity and its subsidiaries that are a business or nonprofit activity (either public or nonpublic) upon the occurrence of an event in which an acquirer (an individual or an entity) obtains control of the acquired entity. An acquired entity may elect the option to apply pushdown accounting in the reporting period in which the change-in-control event occurs. If pushdown accounting is not applied in the reporting period in which the change-in-control event occurs, an acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period to the acquired entity's most recent change-in-control event. The amendments in this Update are effective on November 18, 2014. After the effective date, an acquired entity can make an election to apply the guidance to future change-in-control events or to its most recent change-in-control event. This ASU did not have a significant impact on the Company’s financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement –Extraordinary and Unusual Items, as part of its initiative to reduce complexity in accounting standards. This Update eliminates from GAAP the concept of extraordinary items. The amendments in this Update are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. This ASU is not expected to have a significant impact on the Company’s financial statements.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810). The amendments in this Update affect reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments (1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities; (2) eliminate the presumption that a general partner should consolidate a limited partnership; (3) affect the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships; and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this Update are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and for interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30), as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public business entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. An entity should apply the new guidance on a retrospective basis, wherein the balance sheet of each individual period presented should be adjusted to reflect the period-specific effects of applying the new guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In April 2015, the FASB issued ASU 2015-04, Compensation-Retirement Benefits (Topic 715), as part of its initiative to reduce complexity in accounting standards. For an entity with a fiscal year-end that does not coincide with a month-end, the amendments in this Update provide a practical expedient that permits the entity to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. The practical expedient should be applied consistently to all plans if an entity has more than one plan. The amendments in this Update are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. Earlier application is permitted. This ASU is not expected to have a significant impact on the Company’s financial statements.

In May 2015, the FASB issued ASU 2015-08, Business Combinations - Pushdown Accounting - Amendment to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115. This ASU was issued to amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115 which deleted certain topics related to push down accounting in order to make the SEC’s interpretive guidance consistent with current accounting and audit guidance. This ASU is not expected to have a significant impact on the Company’s financial statements.

In June 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements. The amendments in this Update represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. Transition guidance varies based on the amendments in this Update. The amendments in this Update that require transition guidance are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. All other amendments will be effective upon the issuance of this ASU. This ASU is not expected to have a significant impact on the Company’s financial statements.

In August 2015, the FASB issued ASU 2015-14, Revenue from Contract with Customers (Topic 606). The amendments in this Update defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. All other entities should apply the guidance in ASU 2014-09 to annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. The Company is evaluating the effect of adopting this new accounting ASU.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805). The amendments in this Update require that an acquirer recognizes adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Update require that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Update require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. This ASU is not expected to have a significant impact on the Company’s financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. The amendments in this Update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. For public business entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, the amendments in this Update are effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The amendments in this Update may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. This ASU is not expected to have a significant impact on the Company’s financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. This Update applies to all entities that hold financial assets or owe financial liabilities and is intended to provide more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. Among other things, this Update (a) requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (b) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; (c) eliminates the requirement to disclose the fair value of financial instruments measured at amortized cost for entities that are not public business entities; (d) eliminates the requirement for public business entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; (e) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; (f) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (g) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; and (h) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. For all other entities including not-for-profit entities and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. All entities that are not public business entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact the adoption of the standard will have on the Company’s financial position or results of operations.

XML

EARNINGS PER SHARE (Tables)

3 Months Ended

Dec. 31, 2015

Earnings Per Share [Abstract]

Schedule of basic and diluted earnings per share

	Three Months Ended December 31,
	2015				2014
	Basic		Diluted		Basic		Diluted
	(Dollars in Thousands Except Per Share Data)
Net income	$	413	$	413	$	471	$	471
Weighted average shares outstanding		7,625,150		7,625,150		8,850,963		8,850,963
Effect of common stock equivalents		-		158,906		-		390,683
Adjusted weighted average shares used in earnings per share computation		7,625,150		7,784,056		8,850,963		9,241,646
Earnings per share - basic and diluted	$	0.05	$	0.05	$	0.05	$	0.05

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

3 Months Ended

Dec. 31, 2015

Accumulated Other Comprehensive Income [Abstract]

Schedule of changes in accumulated other comprehensive income

	Three Months Ended December 31,
	2015			2014
	(Dollars in Thousands)
	Unrealized gains (losses)			Unrealized gains (losses)
	on available for sale			on available for sale
	securities (a)			securities (a)
Beginning Balance	$	18		$	(953	)
Other comprehensive income (loss) gain before reclassification		(782	)		485
Amount reclassified from accumulated other comprehensive income (loss)		-			-
Total other comprehensive (loss) income		(782	)		485
Ending Balance	$	(764	)	$	(468	)

(a) All amounts are net of tax. Amounts in parentheses indicate debits.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES (Tables)

3 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Schedule of amortized cost and fair value of securities, with gross unrealized gains and losses

	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(439	)	$	18,549
Mortgage-backed securities - U.S. government agencies		90,306		268		(960	)		89,614
Corporate bonds		10,133		-		(64	)		10,069
Total debt securities available for sale		119,427		268		(1,463	)		118,232
FHLMC preferred stock		6		37		-			43
Total securities available for sale	$	119,433	$	305	$	(1,463	)	$	118,275
Securities Held to Maturity:
U.S. government and agency obligations	$	44,930	$	378	$	(1,176	)	$	44,132
Mortgage-backed securities - U.S. government agencies		10,859		772		(31	)		11,600
Total securities held to maturity	$	55,789	$	1,150	$	(1,207	)	$	55,732

	September 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	18,988	$	-	$	(276	)	$	18,712
Mortgage-backed securities - U.S. government agencies		58,462		475		(225	)		58,712
Total debt securities available for sale		77,450		475		(501	)		77,424
FHLMC preferred stock		6		53		-			59
Total securities available for sale	$	77,456	$	528	$	(501	)	$	77,483
Securities Held to Maturity:
U.S. government and agency obligations	$	54,929	$	462	$	(849	)	$	54,542
Mortgage-backed securities - U.S. government agencies		11,455		880		-			12,335
Total securities held to maturity	$	66,384	$	1,342	$	(849	)	$	66,877

Schedule of gross unrealized losses and related fair values of investment securities

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(129	)	$	4,867	$	(310	)	$	10,682	$	(439	)	$	15,549
Mortgage-backed securities - U.S. government agencies		(775	)		60,914		(185	)		8,886		(960	)		69,800
Corporate bonds		(64	)		10,069		-			-		(64	)		10,069
Total securities available for sale		(968	)		75,850		(495	)		19,568		(1,463	)		95,418
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(1,176	)		33,777		(1,176	)		33,777
Mortgage-backed securities - U.S. government agencies		(31	)		3,829		-			-		(31	)		3,829
Total securities held to maturity		(31	)		3,829		(1,176	)		33,777		(1,207	)		37,606
Total	$	(999	)	$	79,679	$	(1,671	)	$	53,345	$	(2,670	)	$	133,024

	Less than 12 months					More than 12 months					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
	(Dollars in Thousands)
Securities Available for Sale:
U.S. government and agency obligations	$	(85	)	$	4,910	$	(191	)	$	13,802	$	(276	)	$	18,712
Mortgage-backed securities - agency		(138	)		22,173		(87	)		9,206		(225	)		31,379
Total securities available for sale		(223	)		27,083		(278	)		23,008		(501	)		50,091
Securities Held to Maturity:
U.S. government and agency obligations		-			-		(849	)		42,603		(849	)		42,603
Total securities held to maturity		-			-		(849	)		42,603		(849	)		42,603
Total	$	(223	)	$	27,083	$	(1,127	)	$	65,611	$	(1,350	)	$	92,694

Schedule of amortized cost and fair value of debt securities by contractual maturity

	December 31, 2015
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(Dollars in Thousands)
Due within one year	$	-	$	-	$	-	$	-
Due after one through five years		1,999		2,224		-		-
Due after five through ten years		985		1,000		10,133		10,069
Due after ten years		41,946		40,908		18,988		18,549
Total	$	44,930	$	44,132	$	29,121	$	28,618

XML

LOANS RECEIVABLE (Tables)

3 Months Ended

Dec. 31, 2015

Receivables [Abstract]

Schedule of summary of loans receivable

	December 31,			September 30,
	2015			2015
	(Dollars in Thousands)
One-to-four family residential	$	253,233		$	259,163
Multi-family residential		6,201			6,249
Commercial real estate		39,550			25,799
Construction and land development		37,006			38,953
Consumer		671			392
Total loans		336,661			330,556
Undisbursed portion of loans-in-process		(13,928	)		(17,097	)
Deferred loan costs		2,051			2,104
Allowance for loan losses		(2,919	)		(2,930	)
Net loans	$	321,865		$	312,633

Schedule of loans individually and collectively evaluated for impairment by loan segment

	One- to-four family residential			Multi-family residential			Commercial real estate			Construction and land development			Commercial business			Consumer			Unallocated			Total
		(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment		$	-		$	-		$	-		$	-		$	-		$	-		$	-		$	-
Collectively evaluated for impairment			1,471			58			359			757			-			8			266			2,919
Total ending allowance balance		$	1,471		$	58		$	359		$	757		$	-		$	8		$	266		$	2,919
Loans:
Individually evaluated for impairment		$	4,703		$	347		$	3,712		$	9,317		$	-		$	-					$	18,079
Collectively evaluated for impairment			248,530			5,854			35,838			27,689			-			671						318,582
Total loans		$	253,233		$	6,201		$	39,550		$	37,006		$	-		$	671					$	336,661

	One- to-four family residential		Multi-family residential		Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated		Total
	(Dollars in Thousands)
Allowance for Loan Losses:
Individually evaluated for impairment	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-
Collectively evaluated for impairment		1,635		66		231		724		-		5		269		2,930
Total loans	$	1,635	$	66	$	231	$	724	$	-	$	5	$	269	$	2,930
Loans:
Individually evaluated for impairment	$	4,206	$	-	$	3,768	$	8,796	$	-	$	-	$	-	$	16,770
Collectively evaluated for impairment		254,957		6,249		22,031		30,157		-		392		-		313,786
Total loans	$	259,163	$	6,249	$	25,799	$	38,953	$	-	$	392	$	-	$	330,556

Schedule of impaired loans by class, segregated by those for which a specific allowance was required and those for which a specific allowance was not required

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
									Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,703	$	4,703	$	5,080
Multi-family residential		-		-		347		347		347
Commercial real estate		-		-		3,712		3,712		3,712
Construction and land development		-		-		9,317		9,317		9,317
Total Loans	$	-	$	-	$	18,079	$	18,079	$	18,456

					Impaired
					Loans with
	Impaired Loans with				No Specific
	Specific Allowance				Allowance		Total Impaired Loans
	(Dollars in Thousands)
										Unpaid
		Recorded		Related		Recorded		Recorded		Principal
		Investment		Allowance		Investment		Investment		Balance
One-to-four family residential	$	-	$	-	$	4,206	$	4,206	$	4,550
Commercial real estate		-		-		3,768		3,768		3,768
Construction and land development		-		-		8,796		8,796		8,796
Total Loans	$	-	$	-	$	16,770	$	16,770	$	17,114

Schedule of average investment in impaired loans and related interest income recognized

	Three Months Ended December 31, 2015
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	4,455	$	31	$	23
Multi-family residential		351		6		-
Commercial real estate		3,740		24		13
Construction and land development		9,057		125		-
Total Loans	$	17,603	$	186	$	36

	Three Months Ended December 31, 2014
	Average Recorded Investment		Income Recognized on Accrual Basis		Income Recognized on Cash Basis
	(Dollars in Thousands)
One-to-four family residential	$	10,526	$	139	$	35
Multi-family residential		365		64		-
Commercial real estate		3,771		52		11
Construction and land development		7,479		104		-
Total Loans	$	22,141	$	359	$	46

Schedule of classes of the loan portfolio in which a formal risk weighting system is utilized

	December 31, 2015
			Special				Total
\	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,613	$	1,717	$	1,373	$	4,703
Multi-family residential		5,854		-		347		6,201
Commercial real estate		35,816		961		2,773		39,550
Construction and land development		27,689		-		9,317		37,006
Total Loans	$	70,972	$	2,678	$	13,810	$	87,460

	September 30, 2015
			Special				Total
	Pass		Mention		Substandard		Loans
	(Dollars in Thousands)
One-to-four family residential	$	1,348	$	2,107	$	751	$	4,206
Multi-family residential		5,898		351		-		6,249
Commercial real estate		22,005		965		2,829		25,799
Construction and land development		30,157		-		8,796		38,953
Total Loans	$	59,408	$	3,423	$	12,376	$	75,207

Schedule of loans in which a formal risk rating system is not utilized, but loans are segregated between performing and non-performing

	December 31, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	248,530	$	-	$	248,530
Consumer		671		-		671
Total Loans	$	249,201	$	-	$	249,201

	September 30, 2015
			Non-		Total
	Performing		Performing		Loans
	(Dollars in Thousands)
One-to-four family residential	$	254,957	$	-	$	254,957
Consumer		392		-		392
Total Loans	$	255,349	$	-	$	255,349

Schedule of loan categories of the loan portfolio summarized by the aging categories of performing and delinquent loans and nonaccrual loans

	December 31, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	250,487	$	821	$	1,925	$	-	$	821	$	253,233	$	3,416
Multi-family residential		6,201		-		-		-		-		6,201		-
Commercial real estate		39,369		-		181		-		-		39,550		1,542
Construction and land development		37,006		-		-		-		-		37,006		9,317
Consumer		671		-		-		-		-		671		-
Total Loans	$	333,734	$	821	$	2,106	$	-	$	821	$	336,661	$	14,275

	September 30, 2015
							90 Days+		Total
			30-89 Days		90 Days +		Past Due		Past Due		Total		Non-
	Current		Past Due		Past Due		and Accruing		and Accruing		Loans		Accrual
	(Dollars in Thousands)
One-to-four family residential	$	255,669	$	1,462	$	2,032	$	-	$	1,462	$	259,163	$	3,547
Multi-family residential		6,249		-		-		-		-		6,249		-
Commercial real estate		25,114		504		181		-		504		25,799		1,589
Construction and land development		38,953		-		-		-		-		38,953		8,796
Consumer		392		-		-		-		-		392		-
Total Loans	$	326,377	$	1,966	$	2,213	$	-	$	1,966	$	330,556	$	13,932

Schedule of primary segments of the allowance for loan losses, segmented into the amount required for loans individually evaluated for impairment and the amount required for loans collectively evaluated for impairment.

	Three Months Ended December 31, 2015
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business		Consumer		Unallocated			Total
	(Dollars in Thousands)
ALLL balance at September 30, 2015	$	1,635		$	66		$	231	$	724	$	-	$	5	$	269		$	2,930
Charge-offs		(11	)		-			-		-		-		-		-			(11	)
Recoveries		-			-			-		-		-		-		-			-
Provision		(153	)		(8	)		128		33		-		3		(3	)		-
ALLL balance at December 31, 2015	$	1,471		$	58		$	359	$	757	$	-	$	8	$	266		$	2,919

	Three Months Ended December  31, 2014
	One- to four-family residential			Multi- family residential			Commercial real estate		Construction and land development		Commercial business			Consumer		Unallocated		Total
	(Dollars in Thousands)
ALLL balance at September 30, 2014	$	1,663		$	67		$	122	$	323	$	15		$	4	$	231	$	2,425
Charge-offs		-			-			-		-		-			-		-		-
Recoveries		-			-			-		-		-			-		-		-
Provision		(171	)		(16	)		94		170		(10	)		-		8		75
ALLL balance at December 31, 2014	$	1,492		$	51		$	216	$	493	$	5		$	4	$	239	$	2,500

XML

DEPOSITS (Tables)

3 Months Ended

Dec. 31, 2015

Deposits [Abstract]

Schedule of major classifications of deposits

	December 31,					September 30,
	2015					2015
	Amount		Percent			Amount		Percent
	(Dollars in Thousands)
Money market deposit accounts	$	59,855		16.1	%	$	60,736		16.6	%
Interest-bearing checking accounts		37,591		10.1			35,649		9.8
Non-interest bearing checking accounts		2,837		0.8			2,293		0.6
Passbook, club and statement savings		71,000		19.2			70,355		19.3
Certificates maturing in six months or less		48,380		13.0			49,857		13.7
Certificates maturing in more than six months		150,943		40.8			146,184		40.0
Total	$	370,606		100.0	%	$	365,074		100.0	%

XML

INCOME TAXES (Tables)

3 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Schedule of deferred income taxes

	December 31,			September 30,
	2015			2015
Deferred tax assets:	(Dollars in Thousands)
Allowance for loan losses	$	1,178		$	1,185
Nonaccrual interest		93			86
Accrued vacation		62			119
Capital loss carryforward		506			534
Split dollar life insurance		19			19
Post-retirement benefits		106			126
Unrealized loss on available for sale securities		387			-
Employee benefit plans		643			530
Total deferred tax assets		2,994			2,599
Valuation allowance		(506	)		(534	)
Total deferred tax assets, net of valuation allowance		2,488			2,065
Deferred tax liabilities:
Property		484			365
Unrealized gains on available for sale securities		-			10
Deferred loan fees		697			715
Total deferred tax liabilities		1,181			1,090
Net deferred tax assets	$	1,307		$	975

XML

STOCK COMPENSATION PLANS (Tables)

3 Months Ended

Dec. 31, 2015

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

Schedule of summary of the non-vested stock award activity

	Three Months Ended  December 31, 2015
	Number of  Shares (1)			Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2015		241,428		$	11.74
Issued		-			-
Forfeited		(7,746	)		11.50
Vested		-			-
Nonvested stock awards at the December 31, 2015		233,682		$	11.75

	Three Months Ended  December 31, 2014
	Number of  Shares		Weighted Average  Grant Date Fair  Value
Nonvested stock awards at October 1, 2014		38,055	$	8.07
Issued		-		-
Forfeited		-		-
Vested		-		-
Nonvested stock awards at the December 31, 2014		38,055	$	8.07

Schedule of summary of the status of the company' stock options under the stock option plan

	Three Months Ended  December 31, 2015
	Number of Shares			Weighted Average  Exercise Price
Outstanding at October 1, 2015		1,074,430		$	11.92
Granted		-			-
Exercised		-			-
Forfeited		(25,166	)		11.59
Outstanding at December 31, 2015		1,049,264		$	11.93
Exercisable at December 31, 2015		440,976		$	11.42

	Three Months Ended  December 31, 2014
	Number of  Shares		Weighted Average  Exercise Price
Outstanding at October 1, 2014		530,084	$	10.86
Granted		-		-
Exercised		-		-
Forfeited		-		-
Outstanding at December 31, 2014		530,084	$	10.86
Exercisable at December 31, 2014		417,767	$	11.57

XML

FAIR VALUE MEASUREMENT (Tables)

3 Months Ended

Dec. 31, 2015

Fair Value Disclosures [Abstract]

Schedule of assets measured at fair value on recurring basis

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,549	$	-	$	18,549
Mortgage-backed securities - U.S. Government agencies		-		89,614		-		89,614
Corporate bonds		-		10,069				10,069
FHLMC preferred stock		43		-		-		43
Total	$	43	$	118,232	$	-	$	118,275

	Category Used for Fair Value Measurement
	Level 1		Level 2		Level 3		Total
	(Dollars in Thousands)
Assets:
Securities available for sale:
U.S. Government and agency obligations	$	-	$	18,712	$	-	$	18,712
Mortgage-backed securities - U.S. Government agencies		-		58,712		-		58,712
FHLMC preferred stock		59		-		-		59
Total	$	59	$	77,424	$	-	$	77,483

Schedule of summary of non-recurring fair value measurements

	At December 31, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	18,079	$	18,079
Total	$	-	$	-	$	18,079	$	18,079

	At September 30, 2015
	(Dollars in Thousands)
	Level 1		Level 2		Level 3		Total
Impaired loans	$	-	$	-	$	16,770	$	16,770
Real estate owned		-		869		-		869
Total	$	-	$	869	$	16,770	$	17,639

Schedule of nonrecurring fair value measurements categorized within level 3 of the fair value hierarchy

	At December 31, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	18,079	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount

	At September 30, 2015
	(Dollars in Thousands)
			Valuation		Range/
	Fair Value		Technique	Unobservable Input	Weighted Ave.
Impaired loans	$	16,770	Property appraisals (1) (3)	Management discount for selling costs, property type and market volatility (2)	10% discount
Real estate owned	$	869	Property appraisals (1)(3)	Management discount for selling costs, property type and market volatility (2)	10% discount

(1) Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

(2) Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

(3) Includes qualitative adjustments by management and estimated liquidation expenses.

Schedule of the estimated fair value amounts

					Fair Value Measurements at
					December 31, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	5,751	$	5,751	$	5,751	$	-	$	-
Investment and mortgage-backed
securities available for sale		118,275		118,275		43		118,232		-
Investment and mortgage-backed securities held to maturity		55,789		55,732		-		55,732		-
Loans receivable, net		321,865		318,681		-		-		318,681
Accrued interest receivable		1,863		1,863		1,863		-		-
Federal Home Loan Bank stock		1,644		1,644		1,644		-		-
Bank owned life insurance		12,806		12,806		12,806		-		-
Liabilities:
Checking accounts		40,428		40,428		40,428		-		-
Money market deposit accounts		59,855		59,855		59,855		-		-
Passbook, club and statement savings accounts		71,000		71,000		71,000		-		-
Certificates of deposit		199,323		201,917		-		-		214,749
Advances from Federal Home
Loan Bank		31,889		31,636		-		-		31,636
Accrued interest payable		57		57		57		-		-
Advances from borrowers for taxes and
insurance		2,554		2,554		2,554		-		-

					Fair Value Measurements at
					September 30, 2015
	Carrying		Fair
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
	(Dollars in Thousands)
Assets:
Cash and cash equivalents	$	11,272	$	11,272	$	11,272	$	-	$	-
Investment and mortgage-backed securities available for sale		77,483		77,483		59		77,424		-
Investment and mortgage-backed
securities held to maturity		66,384		66,877		-		66,877		-
Loans receivable, net		312,633		312,613		-		-		312,613
Accrued interest receivable		1,665		1,665		1,665		-		-
Federal Home Loan Bank stock		369		369		369		-		-
Bank owned life insurance		12,722		12,722		12,722		-		-
Liabilities:
Checking accounts		37,942		37,942		37,942		-		-
Money market deposit accounts		60,736		60,736		60,736		-		-
Passbook, club and statement savings accounts		70,355		70,355		70,355		-		-
Certificates of deposit		196,041		199,639		-		-		199,639
Accrued interest payable		1,291		1,291		1,291		-		-
Advances from borrowers for taxes and
insurance		1,670		1,670		1,670		-		-

XML

SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) $ / shares in Units, $ in Thousands		3 Months Ended
	Oct. 09, 2013 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) Branch ATMs $ / shares shares	Dec. 31, 2014 USD ($) shares	Sep. 30, 2015 $ / shares
Significant Accounting Policies [Line Items]
Common stock, par value | $ / shares		$ 0.01		$ 0.01
Number of full service branch offices | Branch		7
Number of ATMs in banking offices | ATMs		6
Purchase of treasury stock, shares		52,000	117,900
Purchase of treasury stock | $		$ 865	$ 2,163
Philadelphia (Philadelphia County)
Significant Accounting Policies [Line Items]
Number of full service branch offices | Branch		5
Drexel Hill, Delaware County, Pennsylvania
Significant Accounting Policies [Line Items]
Number of full service branch offices | Branch		1
Chalfont, Bucks County, Pennsylvania
Significant Accounting Policies [Line Items]
Number of full service branch offices | Branch		1
Second Step Conversion
Significant Accounting Policies [Line Items]
Number of new shares sold	7,141,602
Common stock, par value | $ / shares	$ 0.01
Per share of new shares sold | $ / shares	$ 10
Value of new shares sold | $	$ 71,400
Additional outstanding shares of common stock	2,403,207
Number of shares for which the common stock exchanged	0.9442
Treasury stock cancelled	2,540,255

XML

EARNINGS PER SHARE - Calculated basic and diluted earnings per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Earnings per share - basic
Net income	$ 413	$ 471
Weighted average shares outstanding - basic	7,625,150	8,850,963
Effect of common stock equivalents - basic
Adjusted weighted average shares used in earnings per share computation - basic	7,625,150	8,850,963
Earnings per share - basic (in dollars per share)	$ 0.05	$ 0.05
Earnings per share - diluted
Net income	$ 413	$ 471
Weighted average shares outstanding - diluted	7,625,150	8,850,963
Effect of common stock equivalents - diluted	158,906	390,683
Adjusted weighted average shares used in earnings per share computation - diluted	7,784,056	9,241,646
Earnings per share - diluted (in dollars per share)	$ 0.05	$ 0.05

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) - Changes in accumulated other comprehensive income (loss) by component net of tax (Details) - USD ($) $ in Thousands		3 Months Ended
		Dec. 31, 2015	Dec. 31, 2014
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance		$ 18
Total other comprehensive income		(782)	$ 485
Ending Balance		(764)
Unrealized gains (losses) on available for sale securities
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning Balance	[1]	18	(953)
Other comprehensive income (loss) gain before reclassification	[1]	$ (782)	$ 485
Amount reclassified from accumulated other comprehensive income (loss)	[1]
Total other comprehensive income	[1]	$ (782)	$ 485
Ending Balance	[1]	$ (764)	$ (468)

[1] All amounts are net of tax. Amounts in parentheses indicate debits.

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Amortized cost and fair value of investment and mortgage-backed securities, with gross unrealized gains and losses (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Securities Available for Sale:
Amortized Cost	$ 119,433	$ 77,456
Gross Unrealized Gains	305	528
Gross Unrealized Losses	(1,463)	(501)
Fair Value	118,275	77,483
Securities Held to Maturity:
Amortized Cost	55,789	66,384
Gross Unrealized Gains	1,150	1,342
Gross unrealized losses	(1,207)	(849)
Fair value	55,732	66,877
Debt securities available for sale
Securities Available for Sale:
Amortized Cost	119,427	77,450
Gross Unrealized Gains	268	475
Gross Unrealized Losses	(1,463)	(501)
Fair Value	118,232	77,424
U.S. government and agency obligations
Securities Available for Sale:
Amortized Cost	$ 18,988	$ 18,988
Gross Unrealized Gains
Gross Unrealized Losses	$ (439)	$ (276)
Fair Value	18,549	18,712
Securities Held to Maturity:
Amortized Cost	44,930	54,929
Gross Unrealized Gains	378	462
Gross unrealized losses	(1,176)	(849)
Fair value	44,132	54,542
Mortgage-backed securities - US government agencies
Securities Available for Sale:
Amortized Cost	90,306	58,462
Gross Unrealized Gains	268	475
Gross Unrealized Losses	(960)	(225)
Fair Value	89,614	58,712
Securities Held to Maturity:
Amortized Cost	10,859	11,455
Gross Unrealized Gains	772	$ 880
Gross unrealized losses	(31)
Fair value	11,600	$ 12,335
Corporate bonds
Securities Available for Sale:
Amortized Cost	$ 10,133
Gross Unrealized Gains
Gross Unrealized Losses	$ (64)
Fair Value	10,069
FHLMC preferred stock
Securities Available for Sale:
Amortized Cost	6	6
Gross Unrealized Gains	$ 37	$ 53
Gross Unrealized Losses
Fair Value	$ 43	$ 59

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Gross unrealized losses and related fair values of investment securities, aggregated by investment category and length of time (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	$ (968)	$ (223)
Less than 12 months - Fair value	75,850	27,083
More than 12 months - Gross Unrealized Losses	(495)	(278)
More than 12 months - Fair value	19,568	23,008
Gross Unrealized Losses - Total	(1,463)	(501)
Fair Value - Total	95,418	$ 50,091
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(31)
Less than 12 months - Fair value	3,829
More than 12 months - Gross Unrealized Losses	(1,176)	$ (849)
More than 12 months - Fair value	33,777	42,603
Gross Unrealized Losses -Total	(1,207)	(849)
Fair Value - Total	37,606	42,603
Less than 12 months - Gross Unrealized Losses	(999)	(223)
Less than 12 months - Fair Value	79,679	27,083
More than 12 months Gross Unrealized Losses	(1,671)	(1,127)
More than 12 months - Fair Value	53,345	65,611
Gross Unrealized Losses, Total	(2,670)	(1,350)
Fair Value - Total	133,024	92,694
U.S. government and agency obligations
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(129)	(85)
Less than 12 months - Fair value	4,867	4,910
More than 12 months - Gross Unrealized Losses	(310)	(191)
More than 12 months - Fair value	10,682	13,802
Gross Unrealized Losses - Total	(439)	(276)
Fair Value - Total	$ 15,549	$ 18,712
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses
Less than 12 months - Fair value
More than 12 months - Gross Unrealized Losses	$ (1,176)	$ (849)
More than 12 months - Fair value	33,777	42,603
Gross Unrealized Losses -Total	(1,176)	(849)
Fair Value - Total	33,777	42,603
Mortgage-backed securities - US government agencies
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(775)	(138)
Less than 12 months - Fair value	60,914	22,173
More than 12 months - Gross Unrealized Losses	(185)	(87)
More than 12 months - Fair value	8,886	9,206
Gross Unrealized Losses - Total	(960)	(225)
Fair Value - Total	69,800	$ 31,379
Securities Held to Maturity:
Less than 12 months - Gross Unrealized Losses	(31)
Less than 12 months - Fair value	$ 3,829
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses -Total	$ (31)
Fair Value - Total	3,829
Corporate bonds
Securities Available for Sale:
Less than 12 months - Gross Unrealized Losses	(64)
Less than 12 months - Fair value	$ 10,069
More than 12 months - Gross Unrealized Losses
More than 12 months - Fair value
Gross Unrealized Losses - Total	$ (64)
Fair Value - Total	$ 10,069

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES - Amortized cost and fair value of debt securities, by contractual maturity (Details 3) $ in Thousands	Dec. 31, 2015 USD ($)
Held to Maturity, Amortized Cost
Due within one year
Due after one through five years	$ 1,999
Due after five through ten years	985
Due after ten years	41,946
Total	$ 44,930
Held to Maturity, Fair Value
Due within one year
Due after one through five years	$ 2,224
Due after five through ten years	1,000
Due after ten years	40,908
Total	$ 44,132
Available for Sale, Amortized Cost
Due within one year
Due after one through five years
Due after five through ten years	$ 10,133
Due after ten years	18,988
Total	$ 29,121
Available for Sale, Fair Value
Due within one year
Due after one through five years
Due after five through ten years	$ 10,069
Due after ten years	18,549
Total	$ 28,618

XML

INVESTMENT AND MORTGAGE-BACKED SECURITIES (Detail Textuals)	Dec. 31, 2015 Security
U.S. government and agency obligations
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	4
Number of investment securities in debt obligations in the category of loss position more than 12 months held by company	18
U.S. Agency Issued Mortgage-Backed Securities
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	6
Number of investment securities in debt obligations in the category of loss position more than 12 months held by company	9
Corporate bonds
Marketable Securities [Line Items]
Number of investment securities in debt obligations in the category of loss position less than 12 months held by company	2

XML

LOANS RECEIVABLE - Summary of Loans receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Allowance for loan losses	$ (2,919)	$ (2,930)
Net loans	321,865	312,633
Loans Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
One-to-four family residential	253,233	259,163
Multi-family residential	6,201	6,249
Commercial real estate	39,550	25,799
Construction and land development	37,006	38,953
Consumer	671	392
Total loans	336,661	330,556
Undisbursed portion of loans-in-process	(13,928)	(17,097)
Deferred loan costs	2,051	2,104
Allowance for loan losses	(2,919)	(2,930)	$ (2,500)	$ (2,425)
Net loans	$ 321,865	$ 312,633

XML

LOANS RECEIVABLE - Summary of loans individually evaluated for impairment by loan segment (Details 1) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Allowance for loan losses
Total ending allowance balance	$ 2,919	$ 2,930
Loans Receivable
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 2,919	$ 2,930
Total ending allowance balance	2,919	2,930	$ 2,500	$ 2,425
Loans
Individually evaluated for impairment	18,079	16,770
Collectively evaluated for impairment	318,582	313,786
Total loans	$ 336,661	$ 330,556
Loans Receivable | One-to-four family residential
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 1,471	$ 1,635
Total ending allowance balance	1,471	1,635	1,492	1,663
Loans
Individually evaluated for impairment	4,703	4,206
Collectively evaluated for impairment	248,530	254,957
Total loans	$ 253,233	$ 259,163
Loans Receivable | Multi-family residential
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 58	$ 66
Total ending allowance balance	58	$ 66	51	67
Loans
Individually evaluated for impairment	347
Collectively evaluated for impairment	5,854	$ 6,249
Total loans	$ 6,201	$ 6,249
Loans Receivable | Commercial real estate
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 359	$ 231
Total ending allowance balance	359	231	216	122
Loans
Individually evaluated for impairment	3,712	3,768
Collectively evaluated for impairment	35,838	22,031
Total loans	$ 39,550	$ 25,799
Loans Receivable | Construction and land development
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 757	$ 724
Total ending allowance balance	757	724	493	323
Loans
Individually evaluated for impairment	9,317	8,796
Collectively evaluated for impairment	27,689	30,157
Total loans	$ 37,006	$ 38,953
Loans Receivable | Commercial business
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment
Total ending allowance balance			5	15
Loans
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans
Loans Receivable | Consumer
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 8	$ 5
Total ending allowance balance	$ 8	$ 5	4	4
Loans
Individually evaluated for impairment
Collectively evaluated for impairment	$ 671	$ 392
Total loans	$ 671	$ 392
Loans Receivable | Unallocated
Allowance for loan losses
Individually evaluated for impairment
Collectively evaluated for impairment	$ 266	$ 269
Total ending allowance balance	$ 266	$ 269	$ 239	$ 231
Loans
Individually evaluated for impairment
Collectively evaluated for impairment
Total loans

XML

LOANS RECEIVABLE - Impaired loans by class, segregated by those for which specific allowance was required and those for which specific allowance was not necessary (Details 2) - Loans Receivable - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	$ 18,079	$ 16,770
Total Impaired Loans - Recorded Investment	18,079	16,770
Total impaired loans - Unpaid Principal Balance	$ 18,456	$ 17,114
One-to-four family residential
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	$ 4,703	$ 4,206
Total Impaired Loans - Recorded Investment	4,703	4,206
Total impaired loans - Unpaid Principal Balance	$ 5,080	$ 4,550
Multi-family residential
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	$ 347
Total Impaired Loans - Recorded Investment	347
Total impaired loans - Unpaid Principal Balance	$ 347
Commercial real estate
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	$ 3,712	$ 3,768
Total Impaired Loans - Recorded Investment	3,712	3,768
Total impaired loans - Unpaid Principal Balance	$ 3,712	$ 3,768
Construction and land development
Financing Receivable, Impaired [Line Items]
Impaired Loans with Specific Allowance - Recorded Investment
Impaired Loans with Specific Allowance - Related Allowance
Impaired Loans with No Specific Allowance - Recorded Investment	$ 9,317	$ 8,796
Total Impaired Loans - Recorded Investment	9,317	8,796
Total impaired loans - Unpaid Principal Balance	$ 9,317	$ 8,796

XML

LOANS RECEIVABLE - Average recorded investment in impaired loans and related interest income recognized (Details 3) - Loans Receivable - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 17,603	$ 22,141
Income Recognized on Accrual Basis	186	359
Income Recognized on Cash Basis	36	46
One-to-four family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	4,455	10,526
Income Recognized on Accrual Basis	31	139
Income Recognized on Cash Basis	23	35
Multi-family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	351	365
Income Recognized on Accrual Basis	$ 6	$ 64
Income Recognized on Cash Basis
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	$ 3,740	$ 3,771
Income Recognized on Accrual Basis	24	52
Income Recognized on Cash Basis	13	11
Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Average Recorded Investment	9,057	7,479
Income Recognized on Accrual Basis	$ 125	$ 104
Income Recognized on Cash Basis

XML

LOANS RECEIVABLE - Summary of classes of loan portfolio in which formal risk weighting system is used (Details 4) - Loans Receivable - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 336,661	$ 330,556
One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	253,233	259,163
Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,201	6,249
Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total loans	39,550	25,799
Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 37,006	$ 38,953
Commercial business
Financing Receivable, Recorded Investment [Line Items]
Total loans
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 671	$ 392
Risk Rating System
Financing Receivable, Recorded Investment [Line Items]
Total loans	87,460	75,207
Risk Rating System | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	4,703	4,206
Risk Rating System | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	6,201	6,249
Risk Rating System | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total loans	39,550	25,799
Risk Rating System | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total loans	37,006	38,953
Risk Rating System | Pass
Financing Receivable, Recorded Investment [Line Items]
Total loans	70,972	59,408
Risk Rating System | Pass | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,613	1,348
Risk Rating System | Pass | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	5,854	5,898
Risk Rating System | Pass | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total loans	35,816	22,005
Risk Rating System | Pass | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total loans	27,689	30,157
Risk Rating System | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,678	3,423
Risk Rating System | Special Mention | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 1,717	2,107
Risk Rating System | Special Mention | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans		351
Risk Rating System | Special Mention | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 961	$ 965
Risk Rating System | Special Mention | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total loans
Risk Rating System | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 13,810	$ 12,376
Risk Rating System | Substandard | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	1,373	$ 751
Risk Rating System | Substandard | Multi-family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	347
Risk Rating System | Substandard | Commercial real estate
Financing Receivable, Recorded Investment [Line Items]
Total loans	2,773	$ 2,829
Risk Rating System | Substandard | Construction and land development
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 9,317	$ 8,796

XML

LOANS RECEIVABLE - Loans in which formal risk rating system is not utilized, but loans are segregated between performing and non-performing based primarily on delinquency status (Details 5) - Loans Receivable - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 336,661	$ 330,556
One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	253,233	259,163
Consumer
Financing Receivable, Recorded Investment [Line Items]
Total loans	671	392
Non Risk Rating System
Financing Receivable, Recorded Investment [Line Items]
Total loans	249,201	255,349
Non Risk Rating System | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	248,530	254,957
Non Risk Rating System | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total loans	671	392
Non Risk Rating System | Performing
Financing Receivable, Recorded Investment [Line Items]
Total loans	249,201	255,349
Non Risk Rating System | Performing | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans	248,530	254,957
Non Risk Rating System | Performing | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total loans	$ 671	$ 392
Non Risk Rating System | Nonperforming
Financing Receivable, Recorded Investment [Line Items]
Total loans
Non Risk Rating System | Nonperforming | One-to-four family residential
Financing Receivable, Recorded Investment [Line Items]
Total loans
Non Risk Rating System | Nonperforming | Consumer
Financing Receivable, Recorded Investment [Line Items]
Total loans

XML

LOANS RECEIVABLE - Loan categories of loan portfolio summarized by aging categories of performing loans and nonaccrual loans (Details 6) - Loans Receivable - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 333,734	$ 326,377
90 Days+ Past Due and Accruing
Total Past Due and Accruing	$ 821	$ 1,966
Total Loans	336,661	330,556
Non- Accrual	14,275	13,932
30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	821	1,966
90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	2,106	2,213
One-to-four family residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 250,487	$ 255,669
90 Days+ Past Due and Accruing
Total Past Due and Accruing	$ 821	$ 1,462
Total Loans	253,233	259,163
Non- Accrual	3,416	3,547
One-to-four family residential | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	821	1,462
One-to-four family residential | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	1,925	2,032
Multi-family residential
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 6,201	$ 6,249
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans	$ 6,201	$ 6,249
Non- Accrual
Multi-family residential | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans
Multi-family residential | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans
Commercial real estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 39,369	$ 25,114
90 Days+ Past Due and Accruing
Total Past Due and Accruing		$ 504
Total Loans	$ 39,550	25,799
Non- Accrual	$ 1,542	1,589
Commercial real estate | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans		504
Commercial real estate | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	$ 181	181
Construction and land development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 37,006	$ 38,953
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans	$ 37,006	$ 38,953
Non- Accrual	$ 9,317	$ 8,796
Construction and land development | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans
Construction and land development | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans
Consumer
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 671	$ 392
90 Days+ Past Due and Accruing
Total Past Due and Accruing
Total Loans	$ 671	$ 392
Non- Accrual
Consumer | 30-89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans
Consumer | 90 Days + Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans

XML

LOANS RECEIVABLE - Activity in allowance (Details 7) - USD ($) $ in Thousands	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 2,930
Provision		$ 75
ALLL balance	2,919
Loans Receivable
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	2,930	$ 2,425
Charge-offs	$ (11)
Recoveries
Provision		$ 75
ALLL balance	$ 2,919	2,500
Loans Receivable | One- to four-family residential
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	1,635	$ 1,663
Charge-offs	$ (11)
Recoveries
Provision	$ (153)	$ (171)
ALLL balance	1,471	1,492
Loans Receivable | Multi-family residential
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 66	$ 67
Charge-offs
Recoveries
Provision	$ (8)	$ (16)
ALLL balance	58	51
Loans Receivable | Commercial real estate
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 231	$ 122
Charge-offs
Recoveries
Provision	$ 128	$ 94
ALLL balance	359	216
Loans Receivable | Construction and land development
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 724	$ 323
Charge-offs
Recoveries
Provision	$ 33	$ 170
ALLL balance	$ 757	493
Loans Receivable | Commercial business
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance		$ 15
Charge-offs
Recoveries
Provision		$ (10)
ALLL balance		5
Loans Receivable | Consumer
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 5	$ 4
Charge-offs
Recoveries
Provision	$ 3
ALLL balance	8	$ 4
Loans Receivable | Unallocated
Allowance for Loan and Lease Losses [Roll Forward]
ALLL balance	$ 269	$ 231
Charge-offs
Recoveries
Provision	$ (3)	$ 8
ALLL balance	$ 266	$ 239

XML

LOANS RECEIVABLE (Detail Textuals)	3 Months Ended
	Dec. 31, 2015 USD ($) Security	Dec. 31, 2014 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision		$ 75,000
Loans Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	10
Pre-Modification Outstanding Recorded Investment	$ 7,900,000
Provision		75,000
Loans Receivable | One- to four-family residential
Accounts, Notes, Loans and Financing Receivable [Line Items]
Provision	$ (153,000)	(171,000)
Loans Receivable | Single family real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	2
Pre-Modification Outstanding Recorded Investment	$ 1,500,000
Loans Receivable | Single family real estate | Nonperforming
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	1
Pre-Modification Outstanding Recorded Investment	$ 1,400,000
Loans Receivable | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	7
Pre-Modification Outstanding Recorded Investment	$ 3,000,000
Provision	$ 128,000	94,000
Number of loans exception to TDRs | Security	1
Exception to TDRs	$ 854,000
Loans Receivable | Commercial real estate | Nonperforming
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	1
Pre-Modification Outstanding Recorded Investment	$ 733,000
Loans Receivable | Construction and land development
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	1
Pre-Modification Outstanding Recorded Investment	$ 3,500,000
Provision	$ 33,000	$ 170,000
Loans Receivable | Construction and land development | Nonperforming
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Loans | Security	1
Pre-Modification Outstanding Recorded Investment	$ 3,500,000

XML

DEPOSITS - Major classifications of deposits (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Amount
Money market deposit accounts	$ 59,855	$ 60,736
Interest-bearing checking accounts	37,591	35,649
Non-interest bearing checking accounts	2,837	2,293
Passbook, club and statement savings	71,000	70,355
Certificates maturing in six months or less	48,380	49,857
Certificates maturing in more than six months	150,943	146,184
Total deposits	$ 370,606	$ 365,074
Percent
Money market deposit accounts	16.10%	16.60%
Interest-bearing checking accounts	10.10%	9.80%
Non-interest bearing checking accounts	0.80%	0.60%
Passbook, club and statement savings	19.20%	19.30%
Certificates maturing in six months or less	13.00%	13.70%
Certificates maturing in more than six months	40.80%	40.00%
Total	100.00%	100.00%

XML

DEPOSITS (Detail Textuals) - USD ($) $ in Millions	Dec. 31, 2015	Sep. 30, 2015
Deposits [Abstract]
Certificates of $250,000 and over	$ 30.3	$ 32.7

XML

INCOME TAXES - Items that gave rise to significant portions of deferred income taxes (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Deferred tax assets:
Allowance for loan losses	$ 1,178	$ 1,185
Nonaccrual interest	93	86
Accrued vacation	62	119
Capital loss carryforward	506	534
Split dollar life insurance	19	19
Post-retirement benefits	106	126
Unrealized loss on available for sale securities	387
Employee benefit plans	643	530
Total deferred tax assets	2,994	2,599
Valuation allowance	(506)	(534)
Total deferred tax assets, net of valuation allowance	2,488	2,065
Deferred tax liabilities:
Property	484	365
Unrealized gains on available for sale securities		10
Deferred loan fees	697	715
Total deferred tax liabilities	1,181	1,090
Net deferred tax assets	$ 1,307	$ 975

XML

INCOME TAXES (Detail Textuals) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Valuation allowance	$ 506	$ 534

XML

STOCK COMPENSATION PLANS - Summary of non-vested stock award activity (Details) - 2008 Recognition and Retention Plan ("2008 RRP") - Nonvested Stock Awards - $ / shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Nonvested stock awards at October 1	241,428	38,055
Issued
Forfeited	(7,746)
Vested
Nonvested stock awards at the December 31	233,682	38,055
Weighted Average Grant Date Fair Value
Nonvested stock awards at October 1	$ 11.74	$ 8.07
Issued
Forfeited	$ 11.50
Vested
Nonvested stock awards at the December 31	$ 11.75	$ 8.07

XML

STOCK COMPENSATION PLANS - Summary of status of stock options under Stock Option Plan (Details 1) - Stock Options Plan - Stock Options - $ / shares	3 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Number of Shares
Outstanding at October 1	1,074,430	530,084
Granted
Exercised
Forfeited	(25,166)
Outstanding at December 31	1,049,264	530,084
Exercisable at December 31	440,976	417,767
Weighted Average Exercise Price
Outstanding at October 1	$ 11.92	$ 10.86
Granted
Exercised
Forfeited	$ 11.59
Outstanding at December 31	11.93	$ 10.86
Exercisable at December 31	$ 11.42	$ 11.57

XML

STOCK COMPENSATION PLANS (Detail Textuals) - USD ($)	1 Months Ended	3 Months Ended			12 Months Ended
	Jan. 31, 2014	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Sep. 30, 2005
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
ESOP shares committed to be released, shares		8,879	8,909
Compensation expense of ESOP		$ 130,000	$ 108,000
Employee Stock Ownership Plan ESOP Plan
Employee Stock Ownership Plan (ESOP) Disclosures [Line Items]
Number of common shares purchased under employee stock ownership plan (ESOP)	30,100	427,057		255,564
Aggregate cost of common stock purchased under employee stock ownership plan (ESOP)	$ 3,100,000				$ 4,500,000
Number of shares allocated from suspense account to participants		697,270
ESOP shares committed to be released, shares		251,118
Compensation expense of ESOP		$ 130,000	$ 108,000

XML

STOCK COMPENSATION PLANS (Detail Textuals 1) - USD ($)	1 Months Ended	3 Months Ended
	Feb. 28, 2015	Dec. 31, 2015	Dec. 31, 2014
2008 Recognition and Retention Plan ("2008 RRP")
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares purchased by RRP trust		213,528
Value of shares purchased in open market by RRP trust		$ 2,500,000
Average price per share of common stock purchased in the open market		$ 11.49
Number of forfeit shares exceptional for award		3,059
Percentage of vesting per year		20.00%
Vesting period of awards granted		5 years
Recognized compensation expense			$ 21,000
Tax benefit (expense) from stock-based compensation			7,000
2014 Stock Incentive Plan | Restricted stock awards or units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of forfeit shares exceptional for award	26,500
Maximum number of shares awarded under the plan	285,655
Number of shares granted	235,500
2008 RRP and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized compensation expense		$ 128,000
Tax benefit (expense) from stock-based compensation		44,000
Additional compensation expense for shares awarded		2,200,000	225,000
Unrecognized compensation expense for shares awarded		$ 2,600,000	$ 225,000

XML

STOCK COMPENSATION PLANS (Detail Textuals 2) - USD ($)	1 Months Ended	3 Months Ended		12 Months Ended
	Feb. 28, 2015	Dec. 31, 2015	Dec. 31, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2010	Sep. 30, 2009
2008 Stock Option Plan (the "2008 Option Plan") | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of vesting and exercisable per year		20.00%
Vesting period of options		5 years
Exercisable period of options after grant date		10 years
Number of common stock available for issuance		533,808
Number of vested options		418,294
Number of shares purchased for award	587,112
Number of shares forfeited		7,932
Weighted average remaining contractual term for options outstanding		6 years 9 months 18 days
Estimated fair value of options granted per share				$ 4.58	$ 4.67	$ 3.34	$ 2.92	$ 2.98
Fair value, valuation method		Black-Scholes pricing model
Exercise price and fair value		$ 12.23
Expected term		7 years
Volatility rate		38.16%
Expected interest rate		1.62%
Expected yield		0.98%
Recognized compensation expense			$ 25,000
Tax benefit from stock-based compensation			$ 1,000
Unrecognized compensation expense for options		$ 2,300,000
Weighted average period for expense recognize		4 years 1 month 6 days
2014 Stock Incentive Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares for issuance pursuant to options		714,145
Number of shares purchased for award		605,000
Number of shares forfeited		70,000
2008 RRP and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized compensation expense		$ 128,000
2008 Option Plan and 2014 SIP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Recognized compensation expense		136,000
Tax benefit from stock-based compensation		$ 15,000

XML

COMMITMENTS AND CONTINGENT LIABILITIES (Detail Textuals) - USD ($)	3 Months Ended	12 Months Ended
	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Outstanding commitments	$ 53,000
Loans Receivable
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Aggregate undisbursed portion of loans-in-process	13,928,000	$ 17,097,000
Loan Origination Commitments
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Outstanding commitments	7,500,000	2,500,000
Aggregate undisbursed portion of loans-in-process	$ 13,900,000	$ 17,200,000
Loan Origination Commitments | Minimum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Market interest rate on fixed and variable rate loans	3.75%	4.25%
Loan Origination Commitments | Maximum
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Market interest rate on fixed and variable rate loans	6.00%	5.25%
Unused lines of Credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Outstanding commitments	$ 5,700,000	$ 6,100,000
Letters of Credit
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items]
Outstanding commitments	$ 2,600,000	$ 2,600,000

XML

FAIR VALUE MEASUREMENT - Assets measured at fair value on recurring basis (Details) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 118,275	$ 77,483
U.S. Government and agency obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	18,549	18,712
Mortgage-backed securities - U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	89,614	58,712
Corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	10,069
FHLMC preferred stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	43	59
Fair Value, Measurements, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	43	59
Fair Value, Measurements, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 118,232	$ 77,424
Fair Value, Measurements, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 18,549	$ 18,712
Fair Value, Measurements, Recurring | U.S. Government and agency obligations | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 89,614	$ 58,712
Fair Value, Measurements, Recurring | Mortgage-backed securities - U.S. Government agencies | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | Corporate bonds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | Corporate bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 10,069
Fair Value, Measurements, Recurring | Corporate bonds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale	$ 43	$ 59
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale
Fair Value, Measurements, Recurring | FHLMC preferred stock | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Investment and mortgage-backed securities available for sale

XML

FAIR VALUE MEASUREMENT - Changes in level 3 assets measured at fair value (Details 1) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 18,079	$ 16,770
Real estate owned		869
Total	$ 18,079	$ 17,639
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Real estate owned
Total
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans
Real estate owned		$ 869
Total		869
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans	$ 18,079	16,770
Total		$ 16,770

XML

FAIR VALUE MEASUREMENT - Valuation processes used to determine nonrecurring fair value measurements categorized within level 3 (Details 2) - Fair Value, Measurements, Nonrecurring - USD ($) $ in Thousands		3 Months Ended	12 Months Ended
		Dec. 31, 2015	Sep. 30, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 18,079	$ 17,639
Level 3
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value			16,770
Level 3 | Impaired loan | Property Appraisals Valuation Technique
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value		$ 18,079	$ 16,770
Valuation Technique	[1],[2]	Property appraisals	Property appraisals
Unobservable Input	[3]	Management discount for selling costs, property type and market volatility	Management discount for selling costs, property type and market volatility
Management discount rate		10.00%	10.00%
Level 3 | Real estate owned | Property Appraisals Valuation Technique
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Fair Value			$ 869
Valuation Technique	[1],[2]		Property appraisals
Unobservable Input	[3]		Management discount for selling costs, property type and market volatility
Management discount rate			10.00%

[1] Fair value is generally determined through independent appraisals of the underlying collateral, which generally includes various Level 3 inputs, which are not identifiable.

[2] Includes qualitative adjustments by management and estimated liquidation expenses.

[3] Appraisals may be adjusted by management for qualitative factors such as economic conditions and estimated liquidation expenses. The range and weighted average of liquidation expenses and other appraisal adjustments are presented as a percent of the appraisal.

XML

FAIR VALUE MEASUREMENT - Assets measured at fair value on a non-recurring basis and the adjustments to the carrying value (Details 3) - USD ($) $ in Thousands	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Assets:
Cash and cash equivalents	$ 5,751	$ 11,272	$ 33,197	$ 45,382
Investment and mortgage-backed securities available for sale	118,275	77,483
Investment and mortgage-backed securities held to maturity	55,789	66,384
Loans receivable, net	321,865	312,633
Accrued interest receivable	1,863	1,665
Federal Home Loan Bank stock	1,644	369
Bank owned life insurance	12,806	12,722
Liabilities:
Checking accounts	40,428	37,942
Money market deposit accounts	59,855	60,736
Passbook, club and statement savings accounts	71,000	70,355
Certificates of deposit	199,323	196,041
Advances from Federal Home Loan Bank	31,889
Accrued interest payable	57	1,291
Advances from borrowers for taxes and insurance	2,554	1,670
Fair Value
Assets:
Cash and cash equivalents	5,751	11,272
Investment and mortgage-backed securities available for sale	118,275	77,483
Investment and mortgage-backed securities held to maturity	55,732	66,877
Loans receivable, net	318,681	312,613
Accrued interest receivable	1,863	1,665
Federal Home Loan Bank stock	1,644	369
Bank owned life insurance	12,806	12,722
Liabilities:
Checking accounts	40,428	37,942
Money market deposit accounts	59,855	60,736
Passbook, club and statement savings accounts	71,000	70,355
Certificates of deposit	201,917	199,369
Advances from Federal Home Loan Bank	31,636
Accrued interest payable	57	1,291
Advances from borrowers for taxes and insurance	2,554	1,670
Level 1
Assets:
Cash and cash equivalents	5,751	11,272
Investment and mortgage-backed securities available for sale	43	59
Accrued interest receivable	1,863	1,665
Federal Home Loan Bank stock	1,644	369
Bank owned life insurance	12,806	12,722
Liabilities:
Checking accounts	40,428	37,942
Money market deposit accounts	59,855	60,736
Passbook, club and statement savings accounts	71,000	70,355
Accrued interest payable	57	1,291
Advances from borrowers for taxes and insurance	2,554	1,670
Level 2
Assets:
Investment and mortgage-backed securities available for sale	118,232	77,424
Investment and mortgage-backed securities held to maturity	55,732	66,877
Level 3
Assets:
Loans receivable, net	318,681	312,613
Liabilities:
Certificates of deposit	214,749	$ 199,639
Advances from Federal Home Loan Bank	$ 31,636

XML

FAIR VALUE MEASUREMENT (Detail Textuals) $ in Millions	Dec. 31, 2015 USD ($)
Level 2
Financing Receivable, Impaired [Line Items]
Collateral dependent impaired loans, fair value	$ 1.8