Document And Entity Information	9 Months Ended
Document And Entity Information	Jun. 30, 2011	Aug. 19, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2011
Entity Registrant Name	Poage Bankshares, Inc.
Entity Central Index Key	0001511071
Current Fiscal Year End Date	--09-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		0

Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
ASSETS
Cash and due from financial institutions	$ 6,023	$ 4,058
Federal funds sold	7,625	39,175
Cash and cash equivalents	13,648	43,233
Interest-bearing deposits in other financial institutions		100
Securities available for sale	82,674	45,234
Loans held for sale	318	1,701
Loans, net of allowance of $1,523, and $1,134	182,050	182,358
Federal Home Loan Bank stock, at cost	1,906	1,883
Other real estate owned, net	318	219
Premises and equipment, net	6,360	6,449
Company owned life insurance	6,411	6,239
Accrued interest receivable	1,549	1,370
Other assets	2,961	2,361
Assets, Total	298,195	291,147
LIABILITIES AND EQUITY
Non-interest bearing	1,125	745
Interest bearing	240,479	227,067
Total deposits	241,604	227,812
Federal Home Loan Bank advances	24,974	32,205
Accrued interest payable	347	505
Other liabilities	2,165	2,879
Total liabilities	269,090	263,401
Commitments and contingent liabilities
Equity
Retained earnings	28,444	27,067
Accumulated other comprehensive income	661	679
Total equity	29,105	27,746
Liabilities and Equity, Total	$ 298,195	$ 291,147

Balance Sheets (Parenthetical) (USD $) In Thousands	Jun. 30, 2011	Sep. 30, 2010
Balance Sheets
Loans, allowance	$ 1,523	$ 1,134

Statements Of Income (USD $) In Thousands	3 Months Ended		9 Months Ended
Statements Of Income (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Interest and dividend income
Loans, including fees	$ 2,766	$ 2,766	$ 8,314	$ 8,188
Taxable securities	181	484	423	1,784
Tax exempt securities	291	201	870	617
Federal funds sold and other	22	24	66	67
Interest and Dividend Income, Operating, Total	3,260	3,475	9,673	10,656
Interest expense
Deposits	894	1,098	2,832	3,460
Federal Home Loan Bank advances and other	195	226	623	776
Interest Expense, Total	1,089	1,324	3,455	4,236
Net interest income	2,171	2,151	6,218	6,420
Provision for loan losses	160	150	460	450
Net interest income after provision for loan losses	2,011	2,001	5,758	5,970
Non-interest income
Service charges on deposits	107	144	296	355
Other service charges	6	1	14	13
Net gains on sales of loans	50		294
Net gains on sales of securities	28	2,269	28	2,269
Income from company owned life insurance	56	40	170	156
Other	3	5	12	13
Noninterest Income, Total	250	2,459	814	2,806
Noninterest expense
Salaries and employee benefits	946	726	2,659	2,182
Occupancy and equipment	203	161	561	486
Data processing	140	1,079	312	1,620
Federal deposit insurance	94	73	264	202
Foreclosed assets, net	87	8	134	31
Advertising	73	68	203	195
Other	287	221	855	786
Noninterest Expense, Total	1,830	2,336	4,988	5,502
Income before income taxes	431	2,124	1,584	3,274
Income tax expense	36	736	207	872
Net income	$ 395	$ 1,388	$ 1,377	$ 2,402

Statements Of Comprehensive Income (USD $) In Thousands	3 Months Ended		9 Months Ended
Statements Of Comprehensive Income (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Statements Of Comprehensive Income
Net income	$ 395	$ 1,388	$ 1,377	$ 2,402
Other comprehensive income (loss):
Unrealized holding gains (losses) on available for sale securities	755	(325)	(1)	17
Reclassification adjustments for (gains) losses recognized in income	(28)	(2,269)	(28)	(2,269)
Net unrealized holding gains (losses) on available for sale securities	727	(2,594)	(29)	(2,252)
Tax effect	(247)	882	11	766
Other comprehensive income (loss):	480	(1,712)	(18)	(1,486)
Comprehensive income (loss)	$ 875	$ (324)	$ 1,359	$ 916

Statements Of Equity (USD $) In Thousands	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss), Net [Member]	Total
Balances at Sep. 30, 2010	$ 27,067	$ 679	$ 27,746
Net income	1,377		1,377
Change in unrealized gain (loss) on securities available for sale, net of taxes		(18)	(18)
Balances at Jun. 30, 2011	$ 28,444	$ 661	$ 29,105

Statements Of Cash Flows (USD $) In Thousands	9 Months Ended
Statements Of Cash Flows (USD $) In Thousands	Jun. 30, 2011	Jun. 30, 2010
OPERATING ACTIVITY
Net income	$ 1,377	$ 2,402
Adjustments to reconcile net income to net cash from operating activities:
Depreciation	277	240
Provision for loan losses	460	450
Loss (gain) on sale of securities	(28)	(2,269)
Loss (gain) on sale of other real estate owned	52	3
Net amortization (accretion) on securities	360	5
Net gain on sale of loans	(294)
Origination of loans held for sale	(7,996)
Proceeds from loans held for sale	9,673
Increase in cash value of life insurance	(172)	(156)
Decrease (increase) in:
Accrued interest receivable	(179)	188
Other assets	(591)	(1,349)
Increase (decrease) in:
Accrued interest payable	(158)	(381)
Other liabilities	(714)	498
Net cash from (used in) operating activities	2,067	(369)
INVESTING ACTIVITIES
Proceeds from sales	1,964	48,820
Proceeds from calls	15,283	896
Proceeds from maturities	445	375
Purchases	(55,554)	(18,559)
Principal payments received	61	11,977
Purchase of Federal Home Loan Bank Stock	(23)	(49)
Term deposits in other financial institutions:
Proceeds from maturities	100
Purchases
Loan originations and principal payments on loans, net	(659)	(14,112)
Proceeds from the sale of other real estate owned	358	80
Purchase of premises and equipment	(188)	(591)
Net cash from (used in) investing activities	(38,213)	28,837
FINANCING ACTIVITIES
Net change in deposits	13,792	12,282
Payments on Federal Home Loan Bank borrowings	(7,231)	(4,883)
Net cash from (used in) financing activities	6,561	7,399
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(29,585)	35,867
Cash and cash equivalents at beginning of year	43,233	18,715
CASH AND CASH EQUIVALENTS AT END OF YEAR	13,648	54,582
Additional cash flows and supplementary information:
Interest on deposits and advances	3,613	4,617
Income taxes		665
Real estate acquired in settlement of loans	$ 508	$ 30

Basis Of Presentation And Summary Of Significant Accounting Policies

9 Months Ended

Jun. 30, 2011

Basis Of Presentation And Summary Of Significant Accounting Policies

Basis Of Presentation And Summary Of Significant Accounting Policies

NOTE 1 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited financial statements of Home Federal Savings and Loan Association (the "Association") have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates used in the preparation of the financial statements are based on various factors including the current interest rate environment and the general strength of the local economy. Changes in the overall interest rate environment can significantly affect the Company's net interest income and the value of its recorded assets and liabilities. Actual results could differ from those estimates used in the preparation of the financial statements.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Association's financial position as of June 30, 2011 and September 30, 2010 and the results of operations and cash flows for the interim periods ended June 30, 2011 and 2010. All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year. These financial statements should be read in conjunction with the Association's audited financial statements and notes thereto filed as part of Poage Bankshares, Inc.'s Prospectus dated July 11, 2011, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on July 21, 2011.

In the opinion of management, all adjustments considered necessary for a fair presentation have been reflected in the accompanying unaudited financial statements. Those adjustments consist only of normal recurring adjustments. Results of interim periods are not necessarily indicative of results to be expected for the full fiscal year. The balance sheet of the Association as of June 30, 2011 has been derived from the unaudited balance sheet of the Association as of that date.

Adoption Of New Accounting Standards

9 Months Ended

Jun. 30, 2011

Adoption Of New Accounting Standards

Adoption Of New Accounting Standards

NOTE 2 – ADOPTION OF NEW ACCOUNTING STANDARDS

Effect of newly issued but not yet effective accounting standards:

In January 2011, the FASB issued ASU No. 2011-01, "Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20." The provisions of ASU No. 2010-20 required the disclosure of more granular information on the nature and extent of troubled debt restructurings and their effect on the allowance for loan and lease losses effective for the Company's reporting period ended June 30, 2011. The amendments in ASU No. 2011-01 defer the effective date related to these disclosures, enabling creditors to provide such disclosures after the FASB completes their project clarifying the guidance for determining what constitutes a troubled debt restructuring. As the provisions of this ASU only defer the effective date of disclosure requirements related to troubled debt restructurings, the adoption of this ASU will have no impact on the Association's statements of income and condition.

In April 2011, the FASB issued ASU No. 2011-02, "A Creditor's Determination of Whether a Restructuring is a Troubled Debt Restructuring." The provisions of ASU No. 2011-02 provide additional guidance related to determining whether a creditor has granted a concession, include factors and examples for creditors to consider in evaluating whether a restructuring results in a delay in payment that is insignificant, prohibit creditors from using the borrower's effective rate test to evaluate whether a concession has been granted to the borrower, and add factors for creditors to use in determining whether a borrower is experiencing financial difficulties. A provision in ASU No. 2011-02 also ends the FASB's deferral of the additional disclosures about troubled debt restructurings as required by ASU No. 2010-20. The provisions of ASU No. 2011-02 are effective for the Association's reporting period ending September 30, 2011. The adoption of ASU No. 2011-02 is not expected to have a material impact on the Association's statements of income and condition.

Securities Available For Sale

9 Months Ended

Jun. 30, 2011

Securities Available For Sale

Securities Available For Sale

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The amortized cost and fair value of securities available for sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) at June 30, 2011 and September 30, 2010 were as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2011 (Unaudited)
States and political subdivisions	$	28,435	$	927	$	(129	)	$	29,233
U.S. Government agencies and sponsored entities		50,786		179		—			50,965
Government sponsored entities residential mortgage-backed:
FNMA		2,452		24		—			2,476

Total securities	$	81,673	$	1,130	$	(129	)	$	82,674


September 30, 2010
States and political subdivisions	$	28,201	$	1,010	$	(1	)	$	29,210
U.S. Government agencies and sponsored entities		16,003		29		(8	)		16,024

Total securities	$	44,204	$	1,039	$	(9	)	$	45,234

The proceeds from sales of securities and the associated gross gains and losses are listed below (in thousands):


	Three months ended June 30,				Nine months ended June 30,
	(Unaudited)
	2011		2010		2011		2010
Proceeds	$	1,964	$	48,820	$	1,964	$	48,820
Gross gains		28		2,270		28		2,270
Gross losses		—		1		—		1

The provision for income taxes for the three months and nine months ended June 30, 2011 and 2010 related to net realized securities gains was $10,000 and $771,000, respectively, based on an income tax rate of 34%.

The amortized cost and fair value of the securities portfolio at June 30, 2011 and September 30, 2010 are shown by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.


	June 30, 2011				September 30, 2010
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Unaudited)
Within one year	$	520	$	534	$	445	$	454
One to five years		29,486		29,690		15,820		15,954
Five to ten years		33,998		34,506		17,182		17,654
Beyond ten years		17,669		17,944		10,757		11,172

Total	$	81,673	$	82,674	$	44,204	$	45,234

The following table summarizes the securities with unrealized losses at June 30, 2011 and September 30, 2010, aggregated by major security type and length of time in a continuous unrealized loss position:


	Less Than 12 Months					12 Months or Longer				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Dollars in thousands)

June 30, 2011
States and political subdivisions	$	6,665	$	(129	)	$	—	$	—	$	6,665	$	(129	)
U.S. Government agencies and sponsored entities		—		—			—		—		—		—

Total securities	$	6,665	$	(129	)	$	—	$	—	$	6,665	$	(129	)


September 30, 2010
States and political subdivisions	$	214	$	(1	)	$	—	$	—	$	214	$	(1	)
U.S. Government agencies and sponsored entities		1,770		(8	)		—		—		1,770		(8	)

Total securities	$	1,984	$	(9	)	$	—	$	—	$	1,984	$	(9	)

Unrealized losses on bonds have not been recognized into income because the issuers of the bonds are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bond(s) approach maturity.

Management evaluates securities for other-than-temporary impairment ("OTTI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For securities in an unrealized loss position, management considers the extent and duration of the unrealized loss, and the financial condition and near-term prospects of the issuer. Management also assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet the aforementioned criteria, the amount of impairment is split into two components as follows: 1) OTTI related to credit loss, which must be recognized in the income statement, and 2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. For equity securities, the entire amount of impairment is recognized through earnings.

Loans

9 Months Ended

Jun. 30, 2011

Loans

Loans

NOTE 4 – LOANS

Loans at June 30, 2011 and September 30, 2010 were as follows:


	(Unaudited)
	June 30, 2011		September 30, 2010
	(in thousands)

Real estate:
One to four family	$	149,344	$	154,098
Multi-family		2,044		2,860
Commercial Real Estate		8,000		7,331
Construction and land		4,975		3,700

		164,363		167,989

Commercial and Industrial		2,977		1,970

Consumer
Home equity loans and lines of credit		5,378		5,005
Motor vehicle		7,099		5,544
Other		3,851		3,076

		16,328		13,625


Total		183,668		183,584
Less: Net deferred loan fees		95		92
Allowance for loan losses		1,523		1,134


	$	182,050	$	182,358

The following table summarizes the scheduled maturities of our loan portfolio at June 30, 2011. Demand loans, loans having no stated repayment schedule or maturity, and overdraft loans are reported as being due in one year or less. Loans are presented net of loans in process.


June 30, 2011	One- to Four- Family		Home Equity		Multi-Family and Commercial Real Estate		Construction and Land		Commercial Business		Consumer		Total
	(In thousands)
Amounts due in:
One year or less		122	$	—		88	$	4,516	$	1,657		340	$	6,723
More than one to two years		144		—		60		—		591		734		1,529
More than two to three years		287		—		92		—		105		1,467		1,951
More than three to five years		899		9		135		17		590		4,299		5,949
More than five to ten years		9,932		—		1,142		56		34		1,333		12,497
More than ten to fifteen years		22,764		—		2,391		386		—		11		25,552
More than fifteen years		115,196		5,369		6,136		—		—		2,766		129,467

Total	$	149,344	$	5,378	$	10,044	$	4,975	$	2,977	$	10,950	$	183,668

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment based on impairment method as of June 30, 2011. Accrued interest receivable of $898,000 and net deferred loans fees of $95,000 are not considered significant and therefore are not included in the loan balances presented in the table below (in thousands):


	Allowance for Loan Losses						Loan Balances
Loan Segment	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total		Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Total

Real estate	$	—	$	1,043	$	1,043	$	—	$	164,363	$	164,363
Commercial and industrial		—		131		131		—		2,977		2,977
Consumer		—		349		349		—		16,328		16,328


Total	$	—	$	1,523	$	1,523	$	—	$	183,668	$	183,668

The following table sets forth an analysis of our allowance for loan losses for the three and nine months ended June 30, 2011 and 2010:


	(Dollars in thousands)
	Three months ended June 30,				Nine months ended June 30,
	2011		2010		2011		2010
	(Unaudited)
Balance at beginning of period	$	1,372	$	819	$	1,134	$	555
Provision for loan losses:
Commercial		28		—		82		—
Commercial real estate		84		22		240		66
Residential real estate		—		113		—		339
Consumer		48		15		138		45

Total provision		160		150		460		450
Amounts charged off:
Commercial		—		—		—		—
Commercial real estate		—		—		—		—
Residential real estate		3		1		3		37
Consumer		7		—		69		—

Total loans charged off		10		1		72		37
Recoveries of amounts previously charged off:
Commercial		—		—		—		—
Commercial real estate		—		—		—		—
Residential real estate		—		—		—		—
Consumer		1		—		1		—

Total recoveries		1		—		1		—
Net charge-offs		—		—		—		—

Balance at end of period	$	1,523	$	968	$	1,523	$	968

There were no impaired loans as of or during the three or nine months ended June 30, 2011 or 2010, or as of or during the year ended September 30, 2010.

Nonaccrual loans and loans past due 90 days still on accrual consist of smaller balance homogeneous loans that are collectively evaluated for impairment.

The following table presents the recorded investment in nonaccrual and loans past due over 90 days still on accrual by class of loans as of June 30, 2011 and September 30, 2010 (in thousands):


	(Unaudited)
	As of June 30, 2011				As of September 30, 2010
	Nonaccrual		Loans Past Due Over 90 Days Still Accruing		Nonaccrual		Loans Past Due Over 90 Days Still Accruing
Real estate:
One to four family	$	775	$	—	$	1,322	$	890
Multi-family		494		—		—		—
Commercial real estate		—		—		—		—
Construction and land		—		—		—		—
Commercial and industrial		—		—		—		6
Consumer:
Home equity loans and lines of credit		9		—		—		—
Motor vehicle		22		—		8		—
Other		4		—		4		—


Total	$	1,304	$	—	$	1,334	$	896

The following table presents the aging of the recorded investment in past due loans as of June 30, 2011 by class of loans. Non-accrual loans of $1,304,000 as of June 30, 2011 is included in the table below and has been categorized based on payment status (in thousands).


	30 - 59 Days Past Due		60 - 89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Loans Not Past Due		Total

June 30, 2011 (Unaudited)
Real estate:
One to four family	$	811	$	160	$	775	$	1,746	$	147,598	$	149,344
Multi-family		—		—		494		494		1,550		2,044
Commercial real estate		264		20		—		284		7,716		8,000
Construction and land		—		—		—		—		4,975		4,975
Commercial and industrial		23		4		—		27		2,950		2,977
Consumer:
Home equity loans and lines of credit		—		—		9		9		5,369		5,378
Motor vehicle		27		40		22		89		7,010		7,099
Other		13		4		4		21		3,830		3,851


Total	$	1,138	$	228	$	1,304	$	2,670	$	180,998	$	183,668

The Association had no troubled debt restructurings at June 30, 2011 or September 30, 2010. The Association has no classes of loans that are considered to be subprime. The Association, as a matter of policy, does not originate subprime loans.

The Association considers the performance of the loan portfolio and its impact on the allowance for loan losses. For all loan classes, the Association also evaluates credit quality based on the aging status of the loan, which was previously presented, and by payment activity. The following table presents the recorded investment in loans based on payment activity as of June 30, 2011:


	Performing		Nonperforming
	(In thousands)
Real estate:
One to four family	$	148,569	$	775
Multi-family		1,550		494
Commercial real estate		8,000		—
Construction and land		4,975		—
Commercial and industrial		2,977		—
Consumer:
Home equity loans and lines of credit		5,369		9
Motor vehicle		7,077		22
Other		3,847		4

	$	182,364	$	1,304

Federal Home Loan Bank Advances

9 Months Ended

Jun. 30, 2011

Federal Home Loan Bank Advances

Federal Home Loan Bank Advances

NOTE 5: FEDERAL HOME LOAN BANK ADVANCES

Advances from the FHLB at June 30, 2011 and September 30, 2010 were as follows:


	June 30, 2011		September 30, 2010

Maturities October 2010 through June 2024, fixed rate at rates from 1.94% to 6.75%, weighted average rate of 2.97% at June 30, 2011 and 2.94% at September 30, 2010	$	24,974	$	32,205

Payments contractually required over the next five years are as follows (in thousands):


	June 30,
2012		6,899
2013		4,482
2014		3,668
2015		2,996
2016		2,433
Thereafter		4,496

Total	$	24,974

Fair Value

9 Months Ended

Jun. 30, 2011

Fair Value

Fair Value

NOTE 6: FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2 – Significant other 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.

Level 3 – Significant unobservable inputs that reflect a company's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Association used the following methods and significant assumptions to estimate fair value:

Securities: The fair values for securities are determined by quoted market prices, if available (Level 1). If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments (Level 2). This includes the use of "matrix pricing" used to value debt securities absent the exclusive use of quoted prices. For securities where quoted prices or market prices of similar securities are not available, which include municipal securities, fair values are calculated using discounted cash flows (Level 3).

Other Real Estate Owned: Nonrecurring adjustments to certain commercial and residential real estate properties classified as other real estate owned (OREO) are measured at fair value, less costs to sell. Fair values are based on recent real estate appraisals. These appraisals may use a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically result in a Level 3 classification of the inputs for determining fair value.

Other real estate owned measured at fair value less costs to sell, had a net carrying amount of $318,000, which is made up of the outstanding balance of $346,000, net of a valuation allowance of $28,000 at June 30, 2011, resulting in a write-down of $28,000 for the nine months ended June 30, 2011. This is compared to $20,000 in write downs for the nine months ended June 30, 2010. At September 30, 2010, other real estate owned had a net carrying amount of $219,000, made up of the outstanding balance of $306,000, net of a valuation allowance of $87,000.

Assets and liabilities measured at fair value on a recurring basis, including financial assets and liabilities for which the Association has elected the fair value option, are summarized below:


			Fair Value Measurements at June 30, 2011 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Financial Assets
Securities:
States and political subdivisions	$	29,233	$	—	$	29,233	$	—
U.S. Government agencies and sponsored entitites		50,965		—		50,965		—
Mortgage backed securities		2,476		—		2,476		—


Total securities	$	82,674	$	—	$	82,674	$	—


			Fair Value Measurements at September 30, 2010 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)
Financial Assets
Securities:
States and political subdivisions	$	29,210	$	—	$	29,210	$	—
U.S. Government agencies and sponsored entitites		16,024		—		16,024		—


Total securities	$	45,234	$	—	$	45,234	$	—

Assets measured at fair value on a non-recurring basis are summarized below:


			Fair Value Measurements at June 30, 2011 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)

Other real estate owned, net	$	318	$	—	$	—	$	318

			Fair Value Measurements at September 30, 2010 Using:
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
(Dollars in thousands)

Other real estate owned, net	$	219		—		—	$	219

The carrying amounts and estimated fair values of financial instruments, at June 30, 2011 and September 30, 2010 are as follows:


June 30, 2011 (Dollars in thousands)	Carrying Amount			Fair Value

Financial assets
Cash and cash equivalents	$	13,648		$	13,648
Securities		82,674			82,674
Federal Home Loan Bank stock		1,906			N/A
Loans held for sale		318			326
Loans, net		182,050			194,577
Accrued interest receivable		1,549			1,549

Financial liabilities
Deposits	$	(241,604	)		(243,033	)
Federal Home Loan Bank advances		(24,974	)		(26,368	)
Accrued interest payable		(347	)		(347	)

September 30, 2010 (Dollars in thousands)	Carrying Amount			Fair Value

Financial assets
Cash and cash equivalents	$	43,233		$	43,233
Interest bearing deposits with other financial institutions		100			100
Securities		45,234			45,234
Federal Home Loan Bank stock		1,883			N/A
Loans held for sale		1,701			1,701
Loans, net		182,358			194,906
Accrued interest receivable		1,370			1,370

Financial liabilities
Deposits	$	(227,812	)	$	(229,160	)
Federal Home Loan Bank advances		(32,205	)		(34,003	)
Accrued interest payable		(505	)		(505	)

The methods and assumptions, not previously presented, used to estimate fair value are described as follows:

Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing deposits, accrued interest receivable and payable, demand deposits, short-term debt, advance payments by borrowers for taxes and insurance, and variable rate loans or deposits that reprice frequently and fully. The methods for determining the fair values for securities were described previously. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair value of off-balance sheet items and commitments to make loans held for sale is not considered material.

Adoption Of Plan Of Conversion

9 Months Ended

Jun. 30, 2011

Adoption Of Plan Of Conversion

Adoption Of Plan Of Conversion

NOTE 7: ADOPTION OF PLAN OF CONVERSION

The Board of Directors of the Association, subject to regulatory approval and approval by the members of the Association, adopted a Plan of Conversion on December 21, 2010 (the "Plan") from a federally chartered mutual savings association to a federally chartered stock savings association (the "Conversion"). The Conversion is expected to be accomplished through the amendment of the Association's charter and the sale of common stock in an amount equal to the market value of the Association. A subscription offering of the shares of the Association's common stock will be first offered to the Association's depositors and second, to the Association's tax-qualified employee benefit plans. Any shares not sold in the subscription offering may be offered for sale to the general public. The conversion was approved July 11, 2011, and the offering commenced July 21, 2011.

At the time of consummation of the Conversion, the Association shall establish a liquidation account in an amount equal to the retained earnings of the Association as of the latest statement of financial condition contained in the final offering circular utilized in connection with the Conversion. The liquidation account will be maintained for the benefit of eligible depositors who continue to maintain their accounts at the Association after the conversion. The liquidation account will be reduced annually to the extent that eligible depositors have reduced their qualifying deposits. Subsequent increases will not restore an eligible account holder's interest in the liquidation account. In the event of a complete liquidation, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held. The Association may not pay dividends, or repurchase any of the capital stock of the Association, if such dividend or repurchase would reduce stockholders' equity below the required liquidation account balance.

Under Office of Thrift Supervision ("OTS") regulations, which have been adopted by the Office of the Comptroller of the Currency ("OCC"), limitations have been imposed on all "capital distributions" by savings institutions, including cash dividends. The regulation establishes a three-tiered system of restrictions, with the greatest flexibility afforded to thrifts which are both well-capitalized and given favorable qualitative examination ratings.

Costs associated with the Conversion will be deferred and deducted from the proceeds of the stock offering. If, for any reason, the offering is not successful, the deferred costs will be charged to operations. As of June 30, 2011 and September 30, 2010, there were $845,000 and $10,000 costs associated with the conversion, respectively, which are included in other assets on the balance sheet.