10.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and estimated fair values are as follows:


	September 30, 2012
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)

FINANCIAL ASSETS
Cash and cash equivalents	$	2,562	$	2,562	$	2,562	$	-	$	-
Certificates of deposit		846		846		846		-		-
Investment securities - available for sale		81,382		81,382		-		81,382		-
Investment securities - held to maturity		77,880		79,472		-		79,472		-
Mortgage-backed securities - held to maturity
Agency		76,870		76,980		-		76,980		-
Private-label		7,829		8,578		-		1,514		7,064
Net loans receivable		38,704		43,153		-		-		43,153
Accrued interest receivable		1,876		1,876		1,876		-		-
FHLB stock		6,868		6,868		6,868		-		-

FINANCIAL LIABILITIES
Deposits
Non-interest bearing deposits	$	16,333	$	16,333	$	16,333	$	-	$	-
NOW accounts		20,653		20,653		20,653		-		-
Savings Accounts		39,190		39,190		39,190		-		-
Money market accounts		24,645		24,645		24,645		-		-
Certificates of deposit		40,640		40,843		-		-		40,843
Advance payments by borrowers for taxes and insurance		213		213		213		-		-
FHLB long-term advances		17,500		18,978		-		-		18,978
FHLB short-term advances		105,438		105,438		105,438		-		-
Accrued interest payable		258		258		258		-		-


	June 30, 2012
	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
	(Dollars in Thousands)

FINANCIAL ASSETS
Cash and cash equivalents	$	2,506	$	2,506	$	2,506	$	-	$	-
Certificates of deposit		846		846		846		-		-
Investment securities - available for sale		57,620		57,620		-		57,620		-
Investment securities - held to maturity		82,400		84,059		-		84,059		-
Mortgage-backed securities - held to maturity										-
Agency		69,146		69,221		-		69,221		-
Private-label		9,940		10,592		-		1,148		9,444
Net loans receivable		39,443		43,942		-		-		43,942
Accrued interest receivable		1,621		1,621		1,621		-		-
FHLB stock		7,595		7,595		7,595		-		-

FINANCIAL LIABILITIES
Deposits
Non-interest bearing deposits	$	15,642	$	15,642	$	15,642	$	-	$	-
NOW accounts		20,834		20,834		20,834		-		-
Savings Accounts		39,770		39,770		39,770		-		-
Money market accounts		23,837		23,837		23,837		-		-
Certificates of deposit		41,508		41,805		-		-		41,805
Advance payments by borrowers for taxes and insurance		582		582		582		-		-
FHLB long-term advances		17,500		19,187		-		-		19,187
FHLB short-term advances		79,270		79,270		79,270		-		-
Accrued interest payable		257		257		257		-		-

Financial instruments are defined as cash, evidence of an ownership interest in an entity, or a contract which creates an obligation or right to receive or deliver cash or another financial instrument from or to a second entity on potentially favorable or unfavorable terms.

Fair value is defined as the amount at which a financial instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. If a quoted market price is available for a financial instrument, the estimated fair value would be calculated based upon the market price per trading unit of the instrument.

If no readily available market exists, the fair value estimates for financial instruments should be based upon management's judgment regarding current economic conditions, interest rate risk, expected cash flows, future estimated losses, and other factors, as determined through various option pricing formulas or simulation modeling. As many of these assumptions result from judgments made by management based upon estimates, which are inherently uncertain, the resulting estimated values may not be indicative of the amount realizable in the sale of a particular financial instrument. In addition, changes in the assumptions on which the estimated values are based may have a significant impact on the resulting estimated values.

As certain assets and liabilities, such as deferred tax assets, premises and equipment, and many other operational elements of the Company, are not considered financial instruments, but have value, this estimated fair value of financial instruments would not represent the full market value of the Company.

Estimated fair values have been determined by the Company using the best available data, as generally provided in internal Savings Bank regulatory, or third party valuation reports, using an estimation methodology suitable for each category of financial instruments. The estimation methodologies used are as follows:

Cash and Cash Equivalents, Certificates of Deposit, Accrued Interest Receivable and Payable, and FHLB Short-term Advances

The fair value approximates the current carrying value.

Investment Securities, Mortgage-Backed Securities, and FHLB Stock

The fair value of investment and mortgage-backed securities is equal to the available quoted market price. If no quoted market price is available, fair value is estimated using the quoted market price for similar securities. For discussion of valuation of private-label CMOs, see Note 7 "Unrealized Losses on Securities". Since the FHLB stock is not actively traded on a secondary market and held exclusively by member financial institutions, the estimated fair market value approximates the carrying amount.

Net Loans Receivable and Deposits

Fair value for consumer mortgage loans is estimated using market quotes or discounting contractual cash flows for prepayment estimates. Discount rates were obtained from secondary market sources, adjusted to reflect differences in servicing, credit, and other characteristics.

The estimated fair values for consumer, fixed-rate commercial, and multi-family real estate loans are estimated by discounting contractual cash flows for prepayment estimates. Discount rates are based upon rates generally charged for such loans with similar credit characteristics.

The estimated fair value for nonperforming loans is the appraised value of the underlying collateral adjusted for estimated credit risk.

Demand, savings, and money market deposit accounts are reported at book value. The fair value of certificates of deposit is based upon the discounted value of the contractual cash flows. The discount rate is estimated using average market rates for deposits with similar average terms.

FHLB Long-term Advances

The fair values of fixed-rate advances are estimated using discounted cash flows, based on current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount on variable rate advances approximates their fair value.

Commitments to Extend Credit

These financial instruments are generally not subject to sale, and estimated fair values are not readily available. The carrying value, represented by the net deferred fee arising from the unrecognized commitment, and the fair value, determined by discounting the remaining contractual fee over the term of the commitment using fees currently charged to enter into similar agreements with similar credit risk, is not considered material for disclosure.