Louisiana Bancorp (LABC) 10-Q 2012 Q2 Quarterly report

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 June 30, 2012

OR

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

For the transition period from to

Commission file number: 001-33573

Louisiana Bancorp, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Louisiana	20-8715162
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1600 Veterans Memorial Boulevard, Metairie, Louisiana	70005
(Address of Principal Executive Offices)	(Zip Code)

(504) 834-1190

(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.  x Yes  o 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 shorter period that the registrant was required to submit and post such files). x Yes  o No

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

Large accelerated filer   o                                                                                  Accelerated filer                    o

Non-accelerated filer     o                                                                                Smaller reporting company    x

(Do not check if a smaller reporting company)

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

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 14, 2012, there were 3,022,792 shares of the Registrant’s common stock outstanding.

1

PART I - FINANCIAL INFORMATION

Interim financial information required by Rule 10-01 of Regulation S-X and Item 303 of Regulation S-K is included in this Form 10-Q as referenced below.

		Page
Item 1 -	Financial Statements	3
Item 2 -	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3 -	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4 -	Controls and Procedures	28
PART II - OTHER INFORMATION
Item 1 -	Legal Proceedings	29
Item 1A -	Risk Factors	29
Item 2 -	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3 -	Defaults Upon Senior Securities	29
Item 4 -	Mine Safety Disclosure	29
Item 5 -	Other Information	29
Item 6 -	Exhibits	29
Signatures		31

2

LOUISIANA BANCORP, INC.
Consolidated Balance Sheets
	(unaudited)
	June 30, 2012			December 31, 2011
	(In Thousands)
Assets
Cash and Due from Banks	$	2,436		$	2,064
Short-Term Interest-Bearing Deposits		1,294			25,525
Total Cash and Cash Equivalents		3,730			27,589
Certificates of Deposit		481			742
Securities Available-for-Sale, at Fair Value (Amortized Cost of $13,317 and $21,780, respectively)		14,128			22,750
Securities Held-to-Maturity, at Amortized Cost (Estimated Fair Value of $84,449 and $63,067, respectively)		80,943			59,581
Loans Held for Sale		2,869			-
Loans Held for Investment		214,009			197,437
Allowance for Loan Loss		(1,821	)		(1,805	)
Total Loans Receivable		215,057			195,632
Accrued Interest Receivable		1,078			1,081
Other Real Estate Owned		652			532
Stock in Federal Home Loan Bank		1,989			1,543
Premises and Equipment, Net		2,315			1,636
Other Assets		2,137			2,042
Total Assets		322,510			313,128
		-
Liabilities and Shareholders' Equity
Deposits
Non-Interest-Bearing	$	12,563		$	9,764
Interest-Bearing		182,854			184,562
Total Deposits		195,417			194,326
Borrowings		67,166			57,113
Advance Payments by Borrowers for Taxes and Insurance		2,366			2,395
Accrued Interest Payable		276			297
Other Liabilities		1,753			1,477
Total Liabilities		266,978			255,608
Commitments and Contigencies		-			-
Shareholders' Equity
Common Stock, $.01 Par Value, 40,000,000 Shares Authorized; 6,345,732 Shares Issued; 3,032,792 and 3,257,130 Outstanding, respectively		63			63
Additional Paid-in-Capital		63,290			63,218
Unearned ESOP Shares		(3,934	)		(3,934	)
Unearned Recognition and Retention Plan Shares		(973	)		(1,516	)
Treasury Stock, at Cost (3,312,940 shares and 3,088,602 shares, respectively)		(46,919	)		(43,286	)
Retained Earnings		43,470			42,335
Accumulated Other Comprehensive Income		535			640
Total Shareholders' Equity		55,532			57,520
Total Liabilities and Shareholders' Equity	$	322,510		$	313,128

3

LOUISIANA BANCORP, INC.
Consolidated Statements of Income (Unaudited)
	For the Three Months					For the Six Months
	Ended June 30,					Ended June 30,
	2012		2011			2012		2011
	(In Thousands, Except per Share Data
Interest and Dividend Income
Loans, Including Fees	$	2,796	$	2,732		$	5,519	$	5,462
Mortgage Backed Securities		761		824			1,541		1,721
Investment Securities		36		201			76		397
Other Interest-Bearing Deposits		4		7			13		15
Total Interest and Dividend Income		3,597		3,764			7,149		7,595
Interest Expense
Deposits		534		694			1,093		1,404
Borrowings		565		653			1,117		1,306
Total Interest Expense		1,099		1,347			2,210		2,710
Net Interest Income		2,498		2,417			4,939		4,885
Provision for (Recovery of) Loan Losses		73		(67	)		128		(30	)
Net Interest Income after Provision for Loan Losses		2,425		2,484			4,811		4,915
Non-Interest Income
Customer Service Fees		236		123			376		248
Gain on Sale of Loans		268		93			377		149
Other Income		40		27			65		46
Total Non-Interest Income		544		243			818		443
Non-Interest Expense
Salaries and Employee Benefits		1,250		1,171			2,442		2,304
Occupancy Expense		312		276			603		553
Louisiana Bank Shares Tax		57		57			115		114
FDIC Insurance Premium		38		27			75		80
Net Cost of OREO Operations		32		236			70		238
Other Expenses		337		260			585		484
Total Non-Interest Expense		2,026		2,027			3,890		3,773
Income Before Income Tax Expense		943		700			1,739		1,585
Income Tax Expense		327		243			604		549
Net Income	$	616	$	457		$	1,135	$	1,036
Earnings Per Share
Basic	$	0.23	$	0.15		$	0.42	$	0.34
Diluted	$	0.22	$	0.15		$	0.40	$	0.33

See accompanying notes to unaudited consolidated financial statements.

4

LOUISIANA BANCORP, INC.
Consolidated Statements of Comprehensive Income
(Unaudited)
	For the Six Months
	Ended June 30,
	2012			2011
	(In Thousands)
Net Income	$	1,135		$	1,036
Other Comprehensive (Loss) Income, Net of Tax
Unrealized Holding (Losses) Gains Arising During the Period		(105	)		86
Reclassification Adjustment for Gains Included in Net Income		-			-
Total Other Comprehensive (Loss) Income		(105	)		86
Comprehensive Income	$	1,030		$	1,122

See accompanying notes to unaudited consolidated financial statements.

5

LOUISIANA BANCORP, INC.
Consolidated Statements of Changes in Shareholders' Equity (unaudited)
For the Six Months Ended June 30, 2012 and 2011
(Dollars in thousands)
																	Accumulated
			Additional			Unearned			Unearned								Other			Total
	Common		Paid-in			ESOP			RRP			Treasury			Retained		Comprehensive			Shareholders'
	Stock		Capital			Stock			Stock			Stock			Earnings		Income (Loss)			Equity
Balances at December 31, 2010	$	63	$	62,880		$	(4,188	)	$	(2,074	)	$	(37,321	)	$	40,218	$	700		$	60,278
Net Income - Six Months Ended June 30, 2011		-		-			-			-			-			1,036		-			1,036
Other Comprehensive Income, Net of Applicable
Deferred Income Taxes		-		-			-			-			-			-		86			86
Stock Purchased for Treasury		-		-			-			-			(3,102	)		-		-			(3,102	)
RRP Shares Earned		-		(46	)		-			534			-			-		-			488
Stock Option Expense		-		121			-			-			-			-		-			121
Balances at June 30, 2011	$	63	$	62,955		$	(4,188	)	$	(1,540	)	$	(40,423	)	$	41,254	$	786		$	58,907
Balances at December 31, 2011	$	63	$	63,218		$	(3,934	)	$	(1,516	)	$	(43,286	)	$	42,335	$	640		$	57,520
Net Income - Six Months Ended June 30, 2012		-		-			-			-			-			1,135		-			1,135
Other Comprehensive Loss, Net of Applicable
Deferred Income Taxes		-		-			-			-			-			-		(105	)		(105	)
Stock Purchased for Treasury		-		-			-			-			(3,689	)		-		-			(3,689	)
RRP Shares Earned		-		(44	)		-			543			-			-		-			499
Stock Options Exercised		-		(2	)								56								54
Stock Option Expense		-		118			-			-			-			-		-			118
Balances at June 30, 2012	$	63	$	63,290		$	(3,934	)	$	(973	)	$	(46,919	)	$	43,470	$	535		$	55,532

See accompanying notes to unaudited consolidated financial statements.

6

LOUISIANA BANCORP, INC.
Consolidated Statements of Cash Flows (Unaudited)
	For the Six Months
	Ended June 30,
	2012			2011
	(In Thousands)
Cash Flows from Operating Activities
Net Income	$	1,135		$	1,036
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities:
Depreciation		107			94
Provision for (Recovery of) Loan Losses		128			(30	)
Net Increase in RRP Shares Earned		499			488
Stock Option Plan Expense		118			121
Discount Accretion Net of Premium Amortization		74			(55	)
Deferred Income Tax Benefit		(27	)		(27	)
Gain on Sale of Loans		(377	)		(149	)
Gain on the Sale of Property and Equipment		(5	)		(5	)
Gain on Sale of Other Real Estate Owned		(3	)		-
Originations of Loans Held-for-Sale		(20,098	)		(11,726	)
Proceeds from Sales of Loans Held-for-Sale		17,202			10,073
Net Increase in Loans Held-for-Sale		(2,869	)		-
Decrease in Accrued Interest Receivable		3			71
Impairment of Other Real Estate Owned		60			215
Increase in Other Assets		(13	)		(105	)
Decrease in Accrued Interest Payable		(21	)		(66	)
Increase in Other Liabilities		276			226
Net Cash (Used in) Provided by Operating Activities		(3,811	)		161
Cash Flows from Investing Activities
Purchase of Certificates of Deposit		-			(450	)
Purchase of Securities Available-for-Sale		-			(21,500	)
Purchase of Securities Held-to-Maturity		(31,353	)		(3,820	)
Proceeds from Maturities of Certificates of Deposit		261			448
Proceeds from Maturities of Securities Available-for-Sale		8,474			26,235
Proceeds from Maturities of Securities Held-to-Maturity		9,905			11,211
Net Increase in Loans Receivable		(13,741	)		(4,519	)
Purchase of Property and Equipment		(803	)		(66	)
Proceeds from Sale of Property and Equipment		22			5
Proceeds from Sale of Other Real Estate Owned		153			350
Net Increase in Investment in  Federal Home Loan Bank Stock		(446	)		(12	)
Net Cash (Used in) Provided by Investing Activities		(27,528	)		7,882

See accompanying notes to unaudited consolidated financial statements.

7

	For the Six Months
	Ended June 30,
	2012			2011
	(In Thousands)
Cash Flows from Financing Activities
Increase in Deposits		1,091			3,474
(Decrease) Increase in Advances by Borrowers for Taxes and Insurance		(29	)		16
Increase (Decrease) in Borrowings		10,053			(2,949	)
Purchase of Treasury stock		(3,689	)		(3,102	)
Proceeds from Exercise of Stock Options		54			-
Net Cash Provided by (Used in) Financing Activities		7,480			(2,561	)
Net (Decrease) Increase in Cash and Cash Equivalents		(23,859	)		5,482
Cash and Cash Equivalents, Beginning of Year		27,589			6,610
Cash and Cash Equivalents, End of Period	$	3,730		$	12,092
Supplemental Disclosure of Cash Flow Information
Cash Paid During the Period:
Interest	$	2,231		$	2,777
Income Taxes	$	526		$	649
Loans Transferred to Other Real Estate Owned During the Period	$	330		$	-

See accompanying notes to unaudited consolidated financial statements.

8

LOUISIANA BANCORP, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying unaudited financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the three month and six month periods ended June 30, 2012, are not necessarily indicative of the results which may be expected for the entire fiscal year.

NATURE OF OPERATIONS

Louisiana Bancorp, Inc. (the “Company”) was organized as a Louisiana corporation on March 16, 2007, for the purpose of becoming the holding company of Bank of New Orleans (the “Bank”).  The Company holds all of the issued and outstanding shares of capital stock of the Bank.  The Bank operates in the banking/savings and loan industry and, as such, attracts deposits from the general public and uses such deposits primarily to originate loans secured by first mortgage loans on owner-occupied single-family residences and other properties, as well as those for consumer needs.

The Bank is subject to competition from other financial institutions, and is also subject to the regulations of certain Federal agencies and undergoes periodic examinations by those regulatory authorities.

SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

Most of the Company’s activities are with customers located within the greater New Orleans area in Louisiana. Note 2 summarizes the types of securities in which the Company invests.  Note 3 summarizes the types of lending in which the Company engages. The Company does not have any significant concentrations in any one industry or to any one customer.

INVESTMENT SECURITIES

Securities are being accounted for in accordance with FASB Accounting Standards Codification (“ASC”) 320-10, Investments – Debt and Equity Securities.  FASB ASC 320-10 requires the classification of securities into one of three categories: trading, available-for-sale, or held-to-maturity. Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates these classifications periodically.

Available-for-sale securities are stated at market value, with unrealized gains and losses, net of income taxes, reported as a separate component of accumulated other comprehensive income until realized. The amortized cost of available-for-sale debt securities is adjusted for amortization of premiums and accretion of discounts to maturity or, in the case of mortgage-backed securities, over the estimated life of the security.

Securities designated as held-to-maturity are stated at cost adjusted for amortization of the related premiums and accretion of discounts, using the interest method. The Company has the positive intent and ability to hold these securities to maturity.

The Company held no trading securities as of June 30, 2012 or December 31, 2011.

Amortization, accretion and accrued interest are included in interest income on securities. Realized gains and losses, and declines in value judged to be other than temporary, are included in net securities gains or losses. Gains and losses on the sale of securities available-for-sale are determined using the specific-identification method.

LOANS

The Company grants one-to four-family, multi-family residential, commercial, and land mortgage loans, and consumer and construction loans, and lines of credit to customers. Certain first mortgage loans are originated and sold under loan sale agreements. A substantial portion of the loan portfolio is represented by mortgage loans secured by properties located throughout the greater New Orleans area. The ability of the Company’s debtors to honor their contracts is dependent, in part, upon real estate values and general economic conditions in this area.

Loans are reported at their outstanding unpaid principal balance adjusted for charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance.

9

When the payment of principal or interest on a loan is delinquent for more than 90 days, or earlier in some cases, the loan is placed on non-accrual status, unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan. If the decision is made to continue accruing interest on the loan, periodic reviews are made to confirm the accruing status of the loan.  All interest accrued but not collected on loans placed in non-accrual status or on loans charged-off, is reversed against income.  The interest on these loans is accounted for on the cash basis or cost-recovery method, until qualifying for return to accrual basis.  Loans are returned to accrual basis when all of the principal and interest contractually due are brought current and future payments are reasonably assured.

The Company considers a loan to be impaired when, based upon current information and events, it believes it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company’s impaired loans include performing and non-performing loans on which full payment of principal or interest is not expected. The Company calculates an allowance required for impaired loans based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of its collateral.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is a valuation allowance available for losses incurred on loans. All losses are charged to the allowance for loan losses when the loss actually occurs or when a determination is made that a loss is likely to occur. Recoveries are credited to the allowance at the time of recovery.

The allowance is an amount that represents the amount of probable and reasonably estimable known and inherent losses in the loan portfolio, based on evaluations of the collectibility of loans. The evaluations take into consideration such factors as changes in the types and amount of loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, and current economic conditions. This evaluation is inherently subjective as it requires material estimates including, among others, exposure at default, the amount and timing of expected future cash flows on impacted loans, value of collateral, estimated losses on our commercial and residential loan portfolios and general amounts for historical loss experience. All of these estimates may be susceptible to significant change.

It should be understood that estimates of future loan losses involve an exercise of judgment. While it is possible that in particular periods, the Company may sustain losses which are substantial relative to the allowance for loan losses, it is the judgment of management that the allowance for loan losses reflected in the accompanying statements of condition was appropriate under U.S. GAAP.

LOANS HELD-FOR-SALE

Loans held-for-sale include originated mortgage loans intended for sale in the secondary market, which are carried at the lower of cost or estimated market value. Loans held-for-sale are identified at the time of origination, in accordance with the Company’s interest rate risk strategy. In addition, the Company occasionally sells loans that it originates, but cannot hold, due to regulatory limitations on loans to one borrower or concentrations of credit in a particular property type or industry.

LOAN FEES, LOAN COSTS, DISCOUNTS AND PREMIUMS

Loan origination and commitment fees and certain direct loan origination costs are deferred and amortized as an adjustment to the related loan’s yield using the interest method over the contractual life of the loan.

Discounts received in connection with mortgage loans purchased are accreted to income over the term of the loan using the interest method. Premiums on purchased loans are amortized over the term of the loan using the interest method.

INCOME TAXES

Deferred income tax assets and liabilities are reflected at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

COMPREHENSIVE INCOME

    Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the shareholders’ equity section of the balance sheets, such items, along with income, are components of comprehensive income.

10

USE OF ESTIMATES

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheets and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for losses on loans and deferred taxes.

NOTE 2 – SECURITIES

A summary of securities classified as available-for-sale at June 30, 2012 and December 31, 2011, with gross unrealized gains and losses, follows:

	June 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Securities Available-for-Sale
Mortgage-Backed Securities
GNMA	$	97	$	5	$	-	$	102
FNMA		4,625		353		-		4,978
FHLMC		2,452		184		-		2,636
		7,174		542		-		7,716
U.S. Government and Agency Obligations		5,960		210		-		6,170
Equity Securities		183		59		-		242
Total	$	13,317	$	811	$	-	$	14,128

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Securities Available-for-Sale
Mortgage-Backed Securities
GNMA	$	146	$	9	$	-	$	155
FNMA		6,347		470		-		6,817
FHLMC		3,155		229		-		3,384
		9,648		708		-		10,356
U.S. Government and Agency Obligations		11,949		262		-		12,211
Equity Securities		183		-		-		183
Total	$	21,780	$	970	$	-	$	22,750

11

A summary of securities classified as held-to-maturity at June 30, 2012 and December 31, 2011, with gross unrealized gains and losses, follows:

	June 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Securities Held-to-Maturity
Mortgage-Backed Securities
GNMA	$	5,225	$	227	$	-	$	5,452
FNMA		35,779		2,016		-		37,795
FHLMC		12,197		1,063		-		13,260
		53,201		3,306		-		56,507
Collateralized Mortgage Obligations
FNMA		13,148		61		-		13,209
FHLMC		14,594		139		-		14,733
	$	80,943	$	3,506	$	-	$	84,449

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
	(In Thousands)
Securities Held-to-Maturity
Mortgage-Backed Securities
GNMA	$	5,987	$	244	$	-	$	6,231
FNMA		38,994		2,031		-		41,025
FHLMC		14,600		1,211		-		15,811
	$	59,581	$	3,486	$	-	$	63,067

The amortized cost and fair value of available-for-sale and held-to-maturity securities by contractual maturity at June 30, 2012, follows. Actual maturities will differ from contractual maturities because borrowers have the right to put or prepay obligations with or without call or prepayment penalties.

	Available-for-Sale Securities				Held-to-Maturity Securities
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(In Thousands)
Amounts Maturing in:
Less than One Year	$	480	$	498	$	-	$	-
One to Five Years		6,903		7,166		435		461
Five to Ten Years		5,230		5,658		12,050		13,052
Over Ten Years		521		564		68,458		70,936
	$	13,134	$	13,886	$	80,943	$	84,449
Equity Securities		183		242		-		-
Total	$	13,317	$	14,128	$	80,943	$	84,449

At June 30, 2012, and December 31, 2011, the Company held no securities that had unrealized losses.

12

NOTE 3 – LOANS

The following table summarizes the composition of our total net loans receivable:

	June 30, 2012			December 31, 2011
	(In Thousands)
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	114,661		$	105,718
Home Equity Loans and Lines		21,219			18,467
Multi-family Residential		19,782			14,591
Commercial Real Estate		60,327			56,492
Land		210			1,299
Total Loans Secured by Real Estate		216,199			196,567
Consumer and Other Loans
Loans Secured by Deposits		468			568
Other		319			452
Total Consumer and Other Loans		787			1,020
Less:
Allowance for Loan Losses		(1,821	)		(1,805	)
Net Deferred Loan Origination Fess/Costs		(108	)		(150	)
Total Loans, Net	$	215,057		$	195,632

A summary of our current, past due and nonaccrual loans as of June 30, 2012 and December 31, 2011 follows:

			90 Days
			or More
	30-89 Days		Past Due		Nonaccrual		Total		Current		Total
June 30, 2012	Past Due		and Accruing		Loans		Past Due		Loans		Loans
Real Estate Secured Loans	(In Thousands)
1-4 Family Residential	$	-	$	-	$	571	$	571	$	114,090	$	114,661
Home Equity Loans and Lines		75		-		444		519		20,700		21,219
Multi-family Residential		-		-		27		27		19,755		19,782
Commercial Real Estate		-		-		48		48		60,279		60,327
Land		-		-		-		-		210		210
Consumer and Other Loans		4		-		42		46		741		787
Total	$	79	$	-	$	1,132	$	1,211	$	215,775	$	216,986

			90 Days
			or More
	30-89 Days		Past Due		Nonaccrual		Total		Current		Total
December 31, 2011	Past Due		and Accruing		Loans		Past Due		Loans		Loans
Real Estate Secured Loans	(in Thousands)
1-4 Family Residential	$	463	$	-	$	110	$	573	$	105,145	$	105,718
Home Equity Loans and
Lines		125		-		569		694		17,773		18,467
Multi-family Residential		-		-		-		-		14,591		14,591
Commercial Real Estate		-		-		330		330		56,162		56,492
Land		-		-		-		-		1,299		1,299
Consumer and Other Loans		-		-		65		65		955		1,020
Total	$	588	$	-	$	1,074	$	1,662	$	195,925	$	197,587

13

An analysis of the allowance for loan losses follows:

	Six Months Ended			Year Ended
	June 30, 2012			December 31, 2011
	(In Thousands)
Balance, Beginning of Period	$	1,805		$	1,759
Provision for Loan Losses		128			53
Loan Recoveries		11			1
Charge-Offs		(123	)		(8	)
Balance, End of Period	$	1,821		$	1,805

The following table details the activity in the allowance for loan losses by portfolio segment for the six months ended June 30, 2012 and June 30, 2011.

	Real Estate Secured Mortgage Loans
	1-4 Family		Home Equity			Multi-Family						Consumer
Six Months Ended June 30, 2012	Residential		Loans/Lines			Residential		Commercial		Land		and Other			Total
	(In Thousands)
Balance, Beginning of Year	$	889	$	207		$	148	$	485	$	2	$	74		$	1,805
Provision for (Recovery of)  Loan Losses		14		26			25		59		-		4			128
Charge-Offs		-		(48	)		-		-		-		(75	)		(123	)
Recoveries of prior charge-offs		5		2			-		-		-		4			11
Balance, End of Period	$	908	$	187		$	173	$	544	$	2	$	7		$	1,821
Ending Balance Allocated to:
Loans individually evaluated for impairment	$	-	$	-		$	-	$	-	$	-	$	-		$	-
Loans collectively evaluated for impairment		908		187			173		544		2		7			1,821
	$	908	$	187		$	173	$	544	$	2	$	7		$	1,821
Ending Loan Balance Disaggregated by Evaluation Method
Loans individually evaluated for impairment	$	-	$	-		$	-	$	-	$	-	$	-		$	-
Loans collectively evaluated for impairment		114,661		21,219			19,782		60,327		210		787			216,986
	$	114,661	$	21,219		$	19,782	$	60,327	$	210	$	787		$	216,986

	Real Estate Secured Mortgage Loans
	1-4 Family		Home Equity			Multi-Family							Consumer
Six Months Ended June 30, 2011	Residential		Loans/Lines			Residential		Commercial		Land			and Other			Total
	(In Thousands)
Balance, Beginning of Year	$	858	$	270		$	100	$	442	$	9		$	80		$	1,759
Provision for (Recovery of)  Loan Losses		3		(83	)		30		29		(5	)		(4	)		(30	)
Loans Charged-Off		-		(2	)		-		-		-			-			(2	)
Recoveries of prior charge-offs		-		-			-		-		-			-			-
Balance, End of Period	$	861	$	185		$	130	$	471	$	4		$	76		$	1,727
Ending Balance Allocated to:
Loans individually evaluated for impairment	$	-	$	68		$	-	$	-	$	-		$	66		$	134
Loans collectively evaluated for impairment		861		117			130		471		4			10			1,593
	$	861	$	185		$	130	$	471	$	4		$	76		$	1,727
Ending Loan Balance Disaggregated by Evaluation Method
Loans individually evaluated for impairment	$	-	$	172		$	-	$	-	$	-		$	66		$	238
Loans collectively evaluated for impairment		98,644		15,225			15,661		55,311		1,132			1,126			187,099
	$	98,644	$	15,397		$	15,661	$	55,311	$	1,132		$	1,192		$	187,337

14

A summary of the loans evaluated for possible impairment follows:

	June 30, 2012		December 31, 2011
	(In Thousands)
Impaired Loans Requiring a Loss Allowance	$	-	$	232
Imparied Loans not Requiring a Loss Allowance		1,132		842
Total Impaired Loans	$	1,132	$	1,074
Loss Allowance on Impaired Loans	$	-	$	128

At June 30, 2012 and December 31, 2011, all impaired loans were on nonaccrual status.  The Bank did not hold any renegotiated loans on these dates.  The amount of foregone interest on nonaccrual loans at June 30, 2012 and December 31, 2011, was approximately $87,000 and $65,000, respectively.

The following table provides additional information with respect to impaired loans by portfolio segment and the impairment methodology used to analyze the credit.

							Average
			Unpaid				Recorded		Interest
	Recorded		Principal		Related		Investment		Income
As of June 30, 2012	Investment		Balance		Allowance		YTD		Recognized
Impaired loans with no related allowance:	(In Thousands)
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	571	$	571	$	-	$	381	$	4
Home Equity Loans and Lines		444		444		-		333		9
Multi-family Residential		27		27		-		18		-
Commercial Real Estate		48		48		-		142		-
Land		-		-		-		-		-
Consumer and Other Loans		42		42		-		14		3
Total	$	1,132	$	1,132	$	-	$	888	$	16
Impaired loans with a related allowance:
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	-	$	-	$	-	$	36	$	-
Home Equity Loans and Lines		-		-		-		153		-
Multi-family Residential		-		-		-		-		-
Commercial Real Estate		-		-		-		-		-
Land		-		-		-		-		-
Consumer and Other Loans		-		-		-		22		-
Total	$	-	$	-	$	-	$	211	$	-
Total Impaired Loans
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	571	$	571	$	-	$	417	$	4
Home Equity Loans and Lines		444		444		-		486		9
Multi-family Residential		27		27		-		18		-
Commercial Real Estate		48		48		-		142		-
Land		-		-		-		-		-
Consumer and Other Loans		42		42		-		36		3
Total	$	1,132	$	1,132	$	-	$	1,099	$	16

15

							Average
			Unpaid				Recorded		Interest
	Recorded		Principal		Related		Investment		Income
As of December 31, 2011	Investment		Balance		Allowance		YTD		Recognized
Impaired loans with no related allowance:	(In Thousands)
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	110	$	110	$	-	$	95	$	4
Home Equity Loans and Lines		402		402		-		346		10
Multi-family Residential		-		-		-		-		-
Commercial Real Estate		330		330		-		66		16
Land		-		-		-		14		-
Consumer and Other Loans		-		-		-		8		-
Total	$	842	$	842	$	-	$	529	$	30
Impaired loans with a related allowance:
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	-	$	-	$	2	$	-	$	-
Home Equity Loans and Lines		167		167		61		233		17
Multi-family Residential		-		-		-		-		-
Commercial Real Estate		-		-		-		-		-
Land		-		-		-		-		-
Consumer and Other Loans		65		65		65		67		5
Total	$	232	$	232	$	128	$	300	$	22
Total Impaired Loans
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	110	$	110		2	$	95	$	4
Home Equity Loans and Lines		569		569		61		579		27
Multi-family Residential		-		-		-		-		-
Commercial Real Estate		330		330		-		66		16
Land		-		-		-		14		-
Consumer and Other Loans		65		65		65		75		5
Total	$	1,074	$	1,074	$	128	$	829	$	52

16

The following table summarizes the credit grades assigned by the Company to our loan portfolio as of June 30, 2012 and December 31, 2011.  Additional information related to the criteria used to assess these risk ratings can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as amended.  These balances are presented gross of any allowance for loan loss.

	Real Estate Secured Mortgage Loans
	1-4 Family		Home Equity		Multi-Family						Consumer
June 30, 2012	Residential		Loans/Lines		Residential		Commercial		Land		and Other		Total
Credit Classification:	(In Thousands)
Pass	$	114,090	$	20,775	$	19,755	$	60,279	$	210	$	745	$	215,854
Special Mention		-		68		-		-		-		-		68
Substandard		571		376		27		48		-		42		1,064
Loss		-		-		-		-		-		-		-
Total	$	114,661	$	21,219	$	19,782	$	60,327	$	210	$	787	$	216,986

	Real Estate Secured Mortgage Loans
	1-4 Family		Home Equity		Multi-Family						Consumer
December 31, 2011	Residential		Loans/Lines		Residential		Commercial		Land		and Other		Total
Credit Classification:	(In Thousands)
Pass	$	105,608	$	17,984	$	14,591	$	56,162	$	1,299	$	955	$	196,599
Special Mention		-		-		-		-		-		-		-
Substandard		110		316		-		330		-		-		756
Loss		-		167		-		-		-		65		232
Total	$	105,718	$	18,467	$	14,591	$	56,492	$	1,299	$	1,020	$	197,587

NOTE 4 – EARNINGS PER COMMON SHARE

Earnings per common share (“EPS”) are computed using the weighted average number of shares outstanding as prescribed in FASB ASC 260-10, Earnings per Share.  Net income is divided by the weighted average number of shares outstanding during the period to calculate basic net earnings per common share.  Diluted earnings per common share are calculated to give effect to dilutive stock options.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Net Income	$	616,000		$	457,000		$	1,135,000		$	1,036,000
Weighted Average Shares Issued		6,345,732			6,345,732			6,345,732			6,345,732
Weighted Average Unearned ESOP Shares		(393,389	)		(418,772	)		(393,389	)		(418,793	)
Weighted Average Unearned RRP Shares		(77,596	)		(122,220	)		(88,039	)		(132,499	)
Weighted Average Treasury Shares		(3,181,276	)		(2,799,001	)		(3,139,144	)		(2,757,316	)
Weighted Average Shares Outstanding for Basic EPS		2,693,471			3,005,739			2,725,160			3,037,124
Earnings per Share, Basic	$	0.23		$	0.15		$	0.42		$	0.34
Weighted Average Shares Outstanding for Basic EPS		2,693,471			3,005,739			2,725,160			3,037,124
Effect of Dilutive Securities		137,231			122,989			136,825			115,280
Weighted Average Shares Outstanding for Diluted EPS		2,830,702			3,128,728			2,861,985			3,152,404
Earnings per Shares, Diluted	$	0.22		$	0.15		$	0.40		$	0.33

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NOTE 5 – REGULATORY CAPITAL

The actual and required regulatory capital amounts and ratios applicable to the Bank at June 30, 2012 and December 31, 2011, are presented in the following table:

											Minimum to be Well
											Capitalized Under
						Minumum for Adequacy					Prompt Corrective
	Actual					Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(Dollars In Thousands)
June 30, 2012
Tangible Capital	$	47,811		14.90	%	$	4,812		1.50	%		N/A		N/A
Core/Leverage Capital		47,811		14.90	%		9,624		3.00	%	$	16,041		5.00	%
Tier 1 Risk-Based Capital		47,811		27.83	%		6,872		4.00	%		10,308		6.00	%
Total Risk-Based Capital		49,632		28.89	%		13,744		8.00	%		17,180		10.00	%
December 31, 2011
Tangible Capital	$	46,684		15.00	%	$	4,668		1.50	%		N/A		N/A
Core/Leverage Capital		46,684		15.00	%		9,336		3.00	%	$	15,560		5.00	%
Tier 1 Risk-Based Capital		46,623		29.32	%		6,360		4.00	%		9,540		6.00	%
Total Risk-Based Capital		48,300		30.38	%		12,720		8.00	%		15,900		10.00	%

The Bank’s capital under accounting principles generally accepted in the United States (“GAAP”) is reconciled to its regulatory capital as follows:

	June 30, 2012			December 31, 2011
	(In Thousands)
Capital Under GAAP	$	48,266		$	47,277
Unrealized Gains on Available-for-Sale Securities		(455	)		(593	)
Tier 1 Capital		47,811			46,684
Allowance for Loan Losses		1,821			1,677
Recourse Obligations		-			(61	)
Total Risk-Based Capital	$	49,632		$	48,300

NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted FASB ASC 820, Fair Value Measurements, on January 1, 2008 for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized at fair value in the financial statements.  FASB ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

FASB ASC 820 defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity.  In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

In addition to defining fair value, FASB ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs.  The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.  The level in the fair value hierarchy within which a fair value measurement falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety.  These levels are:

18

·   Level 1 - Quoted prices for identical assets or liabilities in active markets.

·   Level 2 - Observable inputs other than quoted prices included within Level I, such as quoted prices for similar instrumentsin active markets, quoted prices for identical or similar instruments in markets that are not active, or other inputs that areobservable in the market or can be corroborated by observable market data.

·   Level 3 - Inputs are generally unobservable and typically reflect management’s estimates of assumptions that marketparticipants would use in pricing the asset or liability.  The fair values are therefore determined using model-basedtechniques that include option pricing models, discounted cash flow models, and similar techniques.

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2012 and December 31, 2011.  All of the mortgage-backed securities reported at fair value on June 30, 2012, and December 31, 2011, were secured by first mortgage loans on residential real estate.

	Fair Value Measurements
June 30, 2012	(Level 1)		(Level 2)		(Level 3)		Total
Assets:	(In Thousands)
Available-for-Sale Securities
Mortgage-Backed Securities	$	-	$	7,716	$	-	$	7,716
US Government and
Agency Obligations		-		6,170		-		6,170
Equity Securities		242		-		-		242
Loans Held-for-Sale		-		2,943		-		2,943
Total	$	242	$	16,829	$	-	$	17,071

	Fair Value Measurements
December 31, 2011	(Level 1)		(Level 2)		(Level 3)		Total
Assets:	(In Thousands)
Available-for-Sale Securities
Mortgage-Backed Securities	$	-	$	10,356	$	-	$	10,356
US Government and
Agency Obligations				12,211		-		12,211
Equity Securities		183		-		-		183
Total	$	183	$	22,567	$	-	$	22,750

The Company did not record any liabilities at fair market value for which measurement of the fair value was made on a recurring basis at June 30, 2012 or December 31, 2011.

19

The following table presents the Company’s assets and liabilities measured at fair value on a non-recurring basis at June 30, 2012 and December 31, 2011.

	Fair Value Measurements
June 30, 2012	(Level 1)		(Level 2)		(Level 3)		Total
Assets:	(In Thousands)
Impaired Loans	$	-	$	-	$	1,132	$	1,132
Other Real Estate Owned		-		652		-		652
Total	$	-	$	652	$	1,132	$	1,784

	Fair Value Measurements
December 31, 2011	(Level 1)		(Level 2)		(Level 3)		Total
Assets:	(In Thousands)
Impaired Loans	$	-	$	-	$	947	$	947
Other Real Estate Owned		-		532		-		532
Total	$	-	$	532	$	947	$	1,479

The Company did not record any liabilities at fair market value for which measurement of the fair value was made on a non-recurring basis at June 30, 2012 or December 31, 2011.

FASB ASC 825, Financial Instruments, requires disclosure of the fair value of financial instruments for which it is practical to estimate.  Included in this disclosure are the methods and significant assumptions used to estimate the fair value of financial instruments.  A detailed description of the valuation methodologies used in estimating the fair value of the financial instruments can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

	June 30, 2012						December 31, 2011
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In Thousands)
Financial Assets
Cash and Cash Equivalents	$	3,730		$	3,730		$	27,589		$	27,589
Certificates of Deposit		481			484			742			745
Securities		95,071			98,577			82,331			85,817
Loans		216,878			226,802			197,437			206,594
Less Allowance for Loan Losses		(1,821	)		(1,821	)		(1,805	)		(1,805	)
Loans, Net of Allowance		215,057			224,981			195,632			204,789
Federal Home Loan Bank Stock		1,989			1,989			1,543			1,543
Financial Liabilities
Deposits	$	195,417		$	199,346		$	194,326		$	200,413
Borrowings		67,166			70,343			57,113			60,489
Unrecognized Financial Instruments
Commitments to Extend Credit	$	24,324		$	24,327		$	18,518		$	18,523

NOTE 7 – SUBSEQUENT EVENTS

In accordance with FASB ASC 855, Subsequent Events, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements.  The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of June 30, 2012.  In preparing these financial statements, the Company evaluated the events and transactions that occurred through the date these financial statements were issued.

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Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements and information relating to the Company and the Bank that are based on the beliefs of management as well as assumptions made by and information currently available to management. In addition, in portions of this document the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “should” and similar expressions or the negative thereof, as they relate to the Company or the Bank or their management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company and/or the Bank with respect to forward-looking events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward-looking statements.

General

During the second quarter of 2012, the Bank opened a full-service branch office in Covington, Louisiana.  This office facility was purchased by the Bank during the first quarter of 2012 from a regional commercial bank which consolidated its operations in the market.  The purchase did not include deposits or loans of the former owner.

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 Bank’s results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on its loan and investment portfolios and the cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by provisions for, or recoveries from, the allowance for loan losses, fee income and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation and employee benefits, office occupancy and equipment expense, data processing, advertising and business promotion 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 law, regulations or government policies may materially impact our financial conditions and results of operations.

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 financial statements. The accounting and financial reporting policies of the Company conform to accounting principles generally accepted in the United States of America 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 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.

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

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

21

Income Taxes. We make estimates and judgments to calculate some of our tax liabilities and determine the recoverability of some of our deferred tax assets, which arise from temporary differences between the tax and financial statement recognition of revenues and expenses. We also estimate a reserve for deferred tax assets if, based on the available evidence, it is more likely than not that some portion or all of the recorded deferred tax assets will not be realized in future periods. These estimates and judgments are inherently subjective. Historically, our estimates and judgments to calculate our deferred tax accounts have not required significant revision to our initial estimates.

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

Comparison of Financial Condition at June 30, 2012 and December 31, 2011

Total assets were $322.5 million at June 30, 2012, an increase of $9.4 million compared to December 31, 2011.  During the first six months of 2012, cash and cash equivalents decreased by $23.9 million to $3.7 million.  The reduction in cash and cash equivalents primarily reflects the redeployment of such assets throughout the six month period into our securities and loan portfolios.  Total securities available-for-sale were $14.1 million at June 30, 2012, a decrease of $8.6 million compared to December 31, 2011.  This decrease was primarily due to maturities of U.S. Agency issued securities during the first six months of 2012.  Total securities held-to-maturity increased by $21.4 million, to $80.9 million, during the first six months of 2012.  This increase in securities held-to-maturity was primarily due to purchases of $27.4 million in US Agency issued CMOs and $4.0 million in US Agency issued mortgage-backed securities.  These purchases were partially offset by $9.9 million in repayments of principal on mortgage-backed securities and CMOs.  Net loans receivable were $215.1 million at June 30, 2012 including $2.9 million in loans held for sale, an increase of $19.4 million, or 9.9%, compared to December 31, 2011.  During the six months ended June 30, 2012, our first mortgage loans secured by single family residential loans increased by $8.9 million, our funded home equity loans and lines increased by $2.8 million, our loans secured by multifamily residential collateral increased by $5.2 million, and our first mortgage loans secured by non-residential commercial real estate increased by $3.8 million.

Total impaired loans were $1.1 million at both June 30, 2012 and December 31, 2011.  At these dates, our impaired loans were comprised solely of nonaccrual loans.  Other real estate owned increased by $120,000 to $652,000 during the first six months of 2012.  At June 30, 2012, our other real estate owned was comprised of a restaurant located in Baton Rouge, Louisiana with a fair value of $270,000, and the Bank’s participation interest in a $170 million construction loan secured by a multi-use development in Baton Rouge, Louisiana, which had a fair value of $382,000 at June 30, 2012.  Total nonperforming assets were $1.8 million at June 30, 2012, and $1.6 million at December 31, 2011.  Expressed as a percentage of total assets, nonperforming assets were 0.55% at June 30, 2012, and 0.51% at December 31, 2011.

Total deposits were $195.4 million at June 30, 2012 and $194.3 million at December 31, 2011.  Non-interest bearing deposits increased during the six month period by $2.8 million, to $12.6 million, and interest-bearing deposits decreased by $1.7 million, to $182.9 million.  Total Federal Home Loan Bank advances and other borrowings were $67.2 million at June 30, 2012, an increase of $10.1 million from December 31, 2011.  This increase in borrowings was primarily used to fund the growth in our loans receivable during the first six months of 2012.

Total shareholders’ equity was $55.5 million at June 30, 2012, a decrease of $2.0 million from December 31, 2011.  During the first six months of 2012, the Company acquired 228,338 shares of its common stock at a total cost of $3.7 million pursuant to its repurchase plans.  The cost of our stock repurchases during the first six months of 2012 was partially offset by net income of $1.1 million, and the release of 43,084 shares held by the Recognition and Retention Plan Trust, with a cost basis of $543,000, which became vested and were released to plan participants during the period.  The Bank’s tier 1 leverage ratio was 14.90% at June 30, 2012 compared to 15.00% at December 31, 2011.  Tier 1 risk-based capital and total risk-based capital at the bank level were 27.83% and 28.89%, respectively, at June 30, 2012, and 29.32% and 30.38%, respectively, at December 31, 2011.

22

Comparison of Our Operating Results for the Three Months and Six Months Ended June 30, 2012 and 2011

General.  Net income for the quarter ended June 30, 2012 was $616,000, an increase of $159,000 from the second quarter of 2011.  Diluted earnings per share were $0.22 and $0.15, respectively for the quarters ended June 30, 2012 and 2011.  Net interest income was $2.5 million during the second quarter of 2012, an increase of $81,000 compared to the second quarter of 2011.  Non-interest income increased by $301,000 quarter over quarter due primarily to an increase in commissions earned on brokered loans and an increase in gains on the sale of residential mortgage loans.  Non-interest expense was $2.0 million for each of the respective quarterly periods ended June 30, 2012 and 2011.

For the six month period June 30, 2012, net income was $1.1 million, or $0.40 per diluted share, compared to net income of $1.0 million, or $0.33 per diluted share for the six month period ended June 30, 2011.  Net interest income was $4.9 million for each six month period ended June 30, 2012 and 2011.  Our provision for loan losses during the first six months of 2012 was $128,000 compared to net recoveries of our allowance for loan losses of $30,000 during the first six months of 2011.  Non-interest income increased by $375,000, to $818,000, during the six months ended June 30, 2012 compared to the six month period ended June 30, 2011.  This increase in non-interest income is primarily due to the increase in commissions earned on brokered loan and an increase in the gain on the sale of loans, referenced previously.  Non-interest expense was $3.9 million and $3.8 million, respectively, for the six month periods ended June 30, 2012 and 2011.

23

Average Balances, Net Interest Income, and Yields Earned and Rates Paid. The following tables show for the periods indicated the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. 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 June 30,
	2012							2011
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
	(Dollars in Thousands)
Interest-Earning Assets:
Loans Receivable (1)	$	210,157	$	2,796		5.32	%	$	184,007	$	2,732		5.94	%
Mortgage-backed Securities		91,912		761		3.31	%		68,346		824		4.82	%
Investment Securities		6,409		36		2.25	%		51,714		201		1.55	%
Other Interest-Earning Assets		4,879		4		0.33	%		10,769		7		0.26	%
Total Interest-Earning Assets		313,357		3,597		4.59	%		314,836		3,764		4.78	%
Non-Interest Earning Assets		8,145							7,962
Total Assets	$	321,502						$	322,798
Interest-Bearing Liabilities:
Passbook, Checking and Money Market Accounts	$	50,394		29		0.23	%	$	45,950		42		0.37	%
Certificates of Deposit		133,026		505		1.52	%		136,331		652		1.91	%
Total Interest-Bearing Deposits		183,420		534		1.16	%		182,281		694		1.52	%
Borrowings		65,792		565		3.44	%		66,913		653		3.90	%
Total Interest-Bearing Liabilities		249,212		1,099		1.76	%		249,194		1,347		2.16	%
Non-Interest Bearing Liabilities		15,115							13,383
Total Liabilities		264,327							262,577
Stockholders' Equity		57,175							60,221
Total Liabilities and Stockholders' Equity	$	321,502						$	322,798
Net Interest-Earning Assets	$	64,145						$	65,642
Net Interest Income; Average Interest Rate Spread			$	2,498		2.83	%			$	2,417		2.62	%
Net Interest Margin (2)						3.19	%						3.07	%
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						125.74	%						126.34	%

_______________________________________ 

(1) Includes nonaccrual loans during the respective periods. Calculated net of deferred fees/costs and allowance for loan losses.

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

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	Six Months Ended June 30,
	2012							2011
					Average							Average
	Average				Yield/			Average				Yield/
	Balance		Interest		Rate			Balance		Interest		Rate
	(Dollars in Thousands)
Interest-Earning Assets:
Loans Receivable (1)	$	205,305	$	5,519		5.38	%	$	183,433	$	5,462		5.96	%
Mortgage-backed Securities		88,510		1,541		3.48	%		71,015		1,721		4.85	%
Investment Securities		7,238		76		2.10	%		51,056		397		1.56	%
Other Interest-Earning Assets		9,007		13		0.29	%		8,770		15		0.34	%
Total Interest-Earning Assets		310,060		7,149		4.61	%		314,274		7,595		4.83	%
Non-Interest Earning Assets		7,644							8,035
Total Assets	$	317,704						$	322,309
Interest-Bearing Liabilities:
Passbook, Checking and Money Market Accounts	$	50,062		57		0.23	%	$	45,624		84		0.37	%
Certificates of Deposit		133,366		1,036		1.55	%		135,775		1,320		1.94	%
Total Interest-Bearing Deposits		183,428		1,093		1.19	%		181,399		1,404		1.55	%
Borrowings		62,395		1,117		3.58	%		67,540		1,306		3.87	%
Total Interest-Bearing Liabilities		245,823		2,210		1.80	%		248,939		2,710		2.18	%
Non-Interest Bearing Liabilities		14,446							13,032
Total Liabilities		260,269							261,971
Stockholders' Equity		57,435							60,338
Total Liabilities and Stockholders' Equity	$	317,704						$	322,309
Net Interest-Earning Assets	$	64,237						$	65,335
Net Interest Income; Average Interest Rate Spread			$	4,939		2.81	%			$	4,885		2.65	%
Net Interest Margin (2)						3.19	%						3.11	%
Average Interest-Earning Assets to Average Interest-Bearing Liabilities						126.13	%						126.25	%

_______________________________________ 

(1) Includes nonaccrual loans during the respective periods. Calculated net of deferred fees/costs and allowance for loan losses.

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

Interest Income.  Net interest income was $2.5 million during the second quarter of 2012, an increase of $81,000 compared to the second quarter of 2011.  During the second quarter of 2012, interest income was $3.6 million, a decrease of $167,000 compared to the second quarter of 2011.  This decrease in interest income between the respective quarterly periods was due to a 19 basis point decrease in the average yield on our interest-earning assets and a $1.5 million decrease in the average balance of our interest-earning assets.  The average yield on our interest-earning assets was 4.59% and 4.78%, respectively, for the quarterly periods ended June 30, 2012 and 2011.  Interest income on loans receivable was $2.8 million during the second quarter of 2012, an increase of $64,000 compared to the second quarter of 2011.  The increase in interest income on loans receivable was due primarily to a $26.2 million increase in the average balance of our loans receivable, the effect of which was partially reduced by a 62 basis point decrease in the average yield of our loan portfolio.  The average balance of our mortgage-backed securities and CMOs increased by $23.6 million while the average yield on these securities decreased by 151 basis points during the second quarter of 2012 compared to the second quarter of 2011, resulting in a decrease of $63,000 in interest income earned on mortgage-backed securities and CMOs.  Interest income on investment securities during the second quarter of 2012 was $36,000, at an average yield of 2.25%, compared to $201,000, at an average yield of 1.55%, during the second quarter of 2011.

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During the six months ended June 30, 2012, net interest income was $4.9 million, an increase of $54,000 compared to the six months ended June 30, 2011.  Interest income was $7.1 million and $7.6 million, respectively, for the six month periods ended June 30, 2012 and June 30, 2011.  This decrease in interest income was due to a $4.2 million decrease in the average balance of our interest-earnings assets, and a 22 basis point decrease in the average yield on interest-earning assets.  Interest income on our loans receivable was approximately $5.5 million for both the six month periods ended June 30, 2012 and 2011.  The average balance of our loans receivable increased by $21.9 million during the six months ended June 30, 2012 compared to the six months ended June 30, 2011.  The benefit derived by this increase in the average balance of our loans was partially offset by a 58 basis point decrease in the average yield earned on our loans receivable.  During the first six months of 2012, the average balance of our mortgage-backed securities and CMOs increased by $17.5 million compared to the first six months of 2011, while the average yield of our mortgage-backed securities and CMOs decreased by 137 basis points, resulting in a decrease in interest income of $180,000.  The Company earned $76,000 on an average investment securities portfolio of $7.2 million during the first six months of 2012 compared to $397,000 on an average investment securities portfolio of $51.1 million during the first six months of 2011.

Interest Expense.  Total interest expense was $1.1 million, with our interest-bearing liabilities having an average cost of 1.76% during the second quarter of 2012, compared to $1.3 million and an average cost of 2.16% for the second quarter of 2011.  The average rate paid on interest-bearing deposits was 1.16% during the quarter ended June 30, 2012, a decrease of 36 basis points from the quarter ended June 30, 2011.  Interest expense on borrowings was $565,000 at an average cost of 3.44% during the second quarter of 2012, and $653,000 at an average cost of 3.90% during the second quarter of 2011.  The net interest rate spread between our interest-earning assets and our interest-bearing liabilities was 2.83% for the second quarter of 2012, compared to 2.62% for the second quarter of 2011.  Our net interest margin, which expresses net interest income as a percentage of average interest-earning assets, was 3.19% for the three month period ended June 30, 2012, an increase of 12 basis points from the three month period ended June 30, 2011.

Total interest expense for the first six months of 2012 was $2.2 million, a decrease of $500,000 compared to the first six months of 2011.  Average interest-bearing liabilities were $245.8 million during the six month period ended June 30, 2012, compared to $248.9 million during the six month period ended June 30, 2011.  The average cost of our interest-bearing liabilities was 1.80% for the six months ended June 30, 2012, compared to 2.18% for the six months ended June 30, 2011.  The net interest rate spread between our interest-earning assets and interest-bearing liabilities was 2.81% for the first six months of 2012, an increase of 16 basis points compared to the first six months of 2011.

Provision for Loan Losses. We have identified the evaluation of the allowance for loan losses as a critical accounting policy where amounts are sensitive to material variation. This policy is significantly affected by our judgment and uncertainties and there is a likelihood that materially different amounts would be reported under different, but reasonably plausible, conditions or assumptions. Our activity in the provision for loan losses, which are charges or recoveries to operating results, is undertaken in order to maintain a level of total allowance for losses that management believes covers all known and inherent losses that are both probable and reasonably estimable at each reporting date. Our evaluation process typically 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 our loans, the value of collateral securing the loan, the borrower’s ability to repay and repayment performance, the number of loans requiring heightened management oversight, local economic conditions and industry experience. Various regulatory agencies, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to make additional provisions for estimated loan losses based upon judgments different from those of management.

The Company recorded provisions for loan losses of $73,000 for the quarter ended June 30, 2012 compared to net recoveries of our allowance for loan losses of $67,000 during the quarter ended June 30, 2011.  Our allowance for loan losses was $1.8 million at June 30, 2012, or 160.87% of our non-performing loans at such date.

For the six month period ended June 30, 2012, our provision for loan losses was $128,000 compared to net recoveries of our allowance for loan losses of $30,000 during the six month period ended June 30, 2011.  Total non-performing loans were approximately $1.1 million at both June 30, 2012 and December 31, 2011.  Total non-performing assets were $1.8 million at June 30, 2012, compared to $1.6 million at December 31, 2011.  Stated as a percentage of total loans receivable, our allowance for loan losses was 0.84% and 0.91% at June 30, 2012 and December 31, 2011, respectively.

Non-interest Income.  Non-interest income for the second quarter of 2012 was $544,000, an increase of $301,000 from the second quarter of 2011.  Customer service fees, which are primarily comprised of fees earned on transaction accounts, loan servicing fees, and broker fees earned on certain loan sales, were $236,000 during the second quarter of 2012, an increase of $113,000 from the comparable 2011 period.  Gains on the sale of mortgage loans were $268,000 during the second quarter of 2012, compared to $93,000 during the second quarter of 2011.  Other non-interest income was $40,000 and $27,000, respectively, for the three month periods ended June 30, 2012 and 2011.

26

For the six month periods ended June 30, 2012 and 2011, total non-interest income was $818,000 and $443,000, respectively.  During the 2012 period compared to the first six months of 2011, the Company recorded a $128,000 increase in its customer service fees, and a $228,000 increase in the gain on the sale of loans.  Other non-interest income was $65,000 during the first six months of 2012 and $46,000 during the first six months of 2011.

Non-interest Expense. Non-interest expense was $2.0 million for each of the three month periods ended June 30, 2012 and 2011.  Salaries and employee benefits expense was $1.3 million during the second quarter of 2012, an increase of $79,000 compared to the second quarter of 2011.  Occupancy expenses were $312,000 and $276,000 for the respective quarters ended June 30, 2012 and 2011.  The increases in our salaries and employee benefits expense and our occupancy expenses were primarily due to the staffing and operating expenses associated with our new full service branch, which opened in May 2012.  The net cost associated with our OREO operations was $32,000 during the second quarter of 2012, a decrease of $204,000 compared to the second quarter of 2011.  Other non-interest expenses for the quarters ended June 30, 2012 and 2011 were $337,000 and $260,000, respectively.

Total non-interest expense for the six months ended June 30, 2012 and 2011 was $3.9 million and $3.8 million, respectively.  Salaries and employee benefits expense was $2.4 million for the six month period ended June 30, 2012 and $2.3 million for the six month period ended June 30, 2011.  Occupancy expenses were $603,000 and $553,000 for the respective six month periods ended June 30, 2012 and 2011.  The net cost of OREO operations during the first six months of 2012 was $70,000, a decrease of $168,000 compared to the first six months of 2011.  Other non-interest expenses were $585,000 for the six month period ended June 30, 2012, an increase of $101,000 compared to the six months ended June 30, 2011.  This increase in other year-to-date non-interest expense was due to increased costs associated with advertising, legal fees, and supplies for our new branch.

Income Tax Expense. Income tax expense was $327,000 based on pre-tax income of $943,000 during the second quarter of 2012 compared to income tax expense of $243,000 on pre-tax income of $700,000 during the second quarter of 2011.

For the six month period ended June 30, 2012, the Company recorded income tax expense of $604,000, an increase of $55,000 from the six month period ended June 30, 2011.  This increase in income tax expense was primarily due to an increase in pre-tax income of $154,000 between the respective six month periods.

Liquidity and Capital Resources

Our primary sources of funds are from deposits, amortization of 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 prepayments can be greatly influenced by general interest rates, economic conditions and competition. We also maintain excess funds in short-term, interest-bearing assets that provide additional liquidity. At June 30, 2012, our cash and cash equivalents amounted to $3.7 million. In addition, at such date our available-for-sale investment and mortgage-backed securities amounted to an aggregate of $14.1 million.

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 June 30, 2012, we had certificates of deposit maturing within the next 12 months amounting to $84.5 million. Based upon historical experience, we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us.  At June 30, 2012, we had $67.2 million in total borrowings, including $41.2 million in FHLB advances and $26.0 million in reverse repurchase agreements with commercial banks.

In addition to cash flow 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. In recent years we have utilized borrowings as a cost efficient addition to deposits as a source of funds. As a member of the Federal Home Loan Bank of Dallas, we pledge residential mortgage loans and mortgage-backed securities as collateral for advances.  At June 30, 2012, the Company had $116.9 million in additional borrowing capacity available through the Federal Home Loan Bank.

The following table summarizes our contractual cash obligations at June 30, 2012.

27

	Payments Due by Period
					More Than		More Than
					1 Year		3 Years		More Than
	Total		To 1 Year		to 3 Years		to 5 Years		5 Years
	(Dollars In Thousands)
Certificates of Deposit	$	133,060	$	84,462	$	33,535	$	15,063	$	-
FHLB Advances and Other Borrowings		67,166		37,987		8,413		17,998		2,768
Total Long-Term Debt		200,226		122,449		41,948		33,061		2,768
Operating Lease Obligations	$	128	$	34	$	68	$	26	$	-
Total Contractual Obligations	$	200,354	$	122,483	$	42,016	$	33,087	$	2,768

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

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 the changes in purchasing power of money over time due to inflation. The impact of inflation is reflected in the increased cost of operations. Most of our assets and liabilities are monetary in nature; therefore, the impact of interest rates has a greater impact on our performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

Item 3 – Quantitative and Qualitative Disclosures About Market Risk.

For a discussion of the Company’s asset and liability management policies as well as the methods used to manage its exposure to the risk of loss from adverse changes in market prices and rates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – How We Manage Market Risk” at Part II, Item 7 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.

Item 4 – Controls and Procedures.

Our management evaluated, with the participation of our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer of our disclosure controls and procedures (as defined in Rules 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 President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer concluded that 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 Rules 13a-15 or 15d-15 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.

28

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings.

There are no matters required to be reported under this item.

Item 1A - Risk Factors.

See “Risk Factors” at pages 31-34 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 (SEC File No. 1-33573), which is incorporated herein by reference thereto.

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

(a) Not applicable.

(b) Not applicable.

(c) The Company’s purchases of its common stock made during the quarter consisted of purchases of shares pursuant to repurchase plans approved by the Company’s Board of Directors, as set forth in the following table.

					Total Number		Maximum
					of Shares		Number of
	Total				Purchased as		Shares that May
	Number of		Average		Part of Publicly		Yet be Purchased
	Shares		Price Paid		Announced		Under the Plan
Period	Purchased		per Share		Plan or Program		or Program (1)(2)
April 1 - April 30, 2012		-		-		-		134,989
May 1 - May 31, 2012		134,989	$	16.20		134,989		155,205
June 1 - June 30, 2012		71,313		16.01		71,313		83,892
Total		206,302	$	16.13		206,302

              _______________

(1)   On October 28, 2011, the Company announced a stock repurchase program to acquire up to 5%, or 163,163 shares of its outstanding common stock over a six-month period.  On April 27, 2012, the Company extended the duration of this program to October 26, 2012.  The repurchase program was completed on May 21, 2012.

(2)   On May 29, 2012, the Company announced a stock repurchase programs to acquire up to 5%, or 155,205 shares of its outstanding common stock over a six-month period.

Item 3 - Defaults Upon Senior Securities.

There are no matters required to be reported under this item.

Item 4 – Mine Safety Disclosure

Not applicable.

Item 5 - Other Information.

There are no matters required to be reported under this item.

Item 6 - Exhibits.

(a) List of exhibits: (filed herewith unless otherwise noted)

31.1	Rule 13a-14(a)/15d-14(a) /Section 302 Certification of the Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a)/Section 302 Certification of the Chief Financial Officer
32.1	Section 1350 Certification

29

The following Exhibits are being furnished* as part of this report:

No.	Description
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.*

______________________

* These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

30

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.

		LOUISIANA BANCORP, INC.
Date: August 14, 2012	By:	/s/ Lawrence J. LeBon, III
		Lawrence J. LeBon, III
		President and Chief Executive Officer
Date: August 14, 2012	By:	/s/ John LeBlanc
		John LeBlanc
		Senior Vice President and Chief Financial Officer

31