Harleysville Savings Financial Corporation Announces an Increase in the Regular Cash Dividend and Improved Third Quarter Earnings for Fiscal Year 2008

HARLEYSVILLE, Pa.--(BUSINESS WIRE)--Harleysville Savings Financial Corporation (NASDAQ:HARL) reported today that the Company’s board of directors declared an increase in the regular quarterly cash dividend to $.18 per share from $.17 per share which represents a 5.9% increase. This is the 84th consecutive quarter that the Company has paid a cash dividend to its stockholders. The cash dividend will be payable on August 20, 2008 to stockholders of record on August 6, 2008.

Net income for the third quarter was $1,036,000 or $.29 per diluted share compared to $814,000 or $.21 per diluted share for the same quarter last year. During the current quarter the bank recognized impairment from investments in bank equity securities of $252,000.

Net income for the nine months ended June 30, 2008 amounted to $2,871,000 or $.77 per diluted share compared to $2,475,000 or $.64 per diluted share for the same nine-month period a year ago.

Ron Geib, President and Chief Executive Officer of the Company, stated, “We are pleased with the current positive earnings momentum of the Company that has enabled us to create additional value for our stockholders by increasing the cash dividend. With this increase, fiscal 2008 will be the 21^st consecutive year the Company has increased the cash dividend.

Despite the difficult economic times our country is currently facing, Harleysville Savings operates in a geographic area where real estate values and employment have remained relatively stable. These conditions along with remaining true to our fundamental operating principles of maintaining prudent underwriting standards and investing in high credit quality assets, controlling our operating expenses, and practicing sound capital management, have allowed the Company to be well positioned to benefit from the favorable yield curve in the market.

With the current increase in the cash dividend and the $2.6 million repurchase of stock last quarter, the Company’s capital management reflects our confidence in our true community banking business model.”

The Company’s assets totaled $824.7 million compared to $778.1 million a year ago. Stockholders’ book value increased to $12.95 per share from $12.73 a year ago.

Harleysville Savings Financial Corporation is the holding company for Harleysville Savings Bank. Established in 1915, Harleysville Savings Bank is a Pennsylvania chartered and federally insured savings bank. Headquartered in Harleysville, PA. Harleysville is located in central Montgomery County, which has the third largest population base and the second highest per capita income in the state of Pennsylvania.

This presentation may contain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995). Actual results may differ materially from the results discussed in these forward-looking statements. Factors that might cause such a difference include, but are not limited to, general economic conditions, changes in interest rates, deposit flows, loan demand, real estate values and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic; competitive, governmental, regulatory, and technological factors affecting the Company's operations, pricing, products and services.

Harleysville Savings Financial Corporation
Selected Consolidated Financial Data as of June 30, 2008
(Dollars in thousands except per share data)
((1)Unaudited)		Three Months Ended:								Nine Months Ended:
Selected Consolidated Earnings Data		June 30, 2008(1)				June 30, 2007(1)				June 30, 2008(1)				June 30, 2007(1)
Total interest income			10,812				10,115				32,035				29,847
Total interest expense			7,056				7,249				22,206				21,234
Net Interest Income			3,756				2,866				9,829				8,613
Provision for loan losses			35				-				40				-
Net Interest Income after Provision for Loan Losses			3,721				2,866				9,789				8,613
Impairment of equity securities			252				-				252				-
Gain on sales of investments			-				-				4				160
Non-interest income			453				475				1,415				1,253
Total non-interest expenses			2,554				2,316				7,365				6,890
Income before Income Taxes			1,368				1,025				3,591				3,136
Income tax expense			332				211				720				661
Net Income		$	1,036			$	814			$	2,871			$	2,475
Per Common Share Data
Basic earnings		$	0.29			$	0.21			$	0.78			$	0.64
Diluted earnings		$	0.29			$	0.21			$	0.77			$	0.64
Dividends		$	0.17			$	0.17			$	0.51			$	0.51
Book value		$	12.95			$	12.73			$	12.95			$	12.73
Shares outstanding		3,553,533				3,921,177				3,553,533				3,921,177
Average shares outstanding - basic		3,555,039				3,859,397				3,669,262				3,859,267
Average shares outstanding - diluted		3,598,927				3,877,469				3,713,388				3,888,142
Harleysville Savings Financial Corporation
Selected Consolidated Financial Data as of June 30, 2008
(Dollars in thousands except per share data)
((1)Unaudited)		Three Months Ended:								Nine Months Ended:
Other Selected Consolidated Data		June 30, 2008(1)				June 30, 2007(1)				June 30, 2008(1)				June 30, 2007(1)
Return on average assets			0.51	%			0.42	%			0.48	%			0.44	%
Return on average equity			9.09	%			6.64	%			8.25	%			6.77	%
Interest rate spread			1.84	%			1.29	%			1.49	%			1.34	%
Net yield on interest earning assets			2.06	%			1.53	%			1.73	%			1.58	%
Operating expenses to average assets			1.25	%			1.21	%			1.23	%			1.21	%
Efficiency ratio			60.68	%			69.32	%			65.88	%			69.86	%
Ratio of non-performing loans to total assets at end of period			0.08	%			0.06	%			0.08	%			0.06	%
Loan loss reserve to total loans, net			0.42	%			0.47	%			0.42	%			0.47	%
Selected Consolidated Financial Data		June 30, 2008(1)				Mar 31, 2008 (1)				Dec 31, 2007 (1)				Sept 30, 2007				June 30, 2007 (1)
Total assets		$	824,655			$	811,854			$	791,888			$	773,544			$	778,136
Consumer loans receivable - net			425,139				415,019				410,220				403,738				397,018
Commercial loans			30,993				25,318				18,696				15,314				13,071
Loan loss reserve			1,960				1,925				1,924				1,933				1,943
Cash and investment securities			99,338				105,769				125,729				118,920				120,204
Mortgage-backed securities			224,917				223,579				195,735				193,660				202,379
FHLB stock			15,152				14,096				13,999				14,140				14,017
Deposits			440,921				450,516				440,500				424,035				433,074
Advances			329,154				309,285				298,711				298,609				288,017
Total stockholders' equity			46,004				45,397				47,239				47,041				49,045