LOUISIANA BANCORP INC - FORM 10-K/A

Attached files

file	filename
EX-31.2 - EXHIBIT 31.2 - LOUISIANA BANCORP INC	exh_312.htm
EX-32.0 - EXHIBIT 32.0 - LOUISIANA BANCORP INC	exh_320.htm
EX-31.1 - EXHIBIT 31.1 - LOUISIANA BANCORP INC	exh_311.htm
EX-23.1 - EXHIBIT 23.1 - LOUISIANA BANCORP INC	exh_231.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No. 1)

(Mark One)

[x]	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended: December 31, 2011

[ ]	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		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

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

Registrant’s telephone number, including area code: (504) 834-1190

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
Common Stock, $.01 par value per share		The Nasdaq Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: none

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES [ ] NO [x]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES [ ] NO [x]

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 and (2) has been subject to such filing requirements for the past 90 days. YES [x] NO [ ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files). YES [x] NO [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [x]

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	[ ]	Accelerated filer	[ ]
Non-accelerated filer	[ ]	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 Act). YES [ ] NO [x]

The aggregate market value of the 2,482,219 shares of the Registrant’s common stock held by non-affiliates, based upon the closing price of $15.77 for the common stock on June 30, 2011, as reported by the Nasdaq Stock Market, was approximately $39.1 million. Shares of common stock held by executive officers, directors, the Company’s Employee Stock Ownership Plan and the 2007 Recognition and Retention Plan have been excluded since such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

Number of shares of common stock outstanding as of March 27, 2012: 3,235,622

DOCUMENTS INCORPORATED BY REFERENCE

Set forth below are the documents incorporated by reference and the part of the Form 10-K into which the document is incorporated:

Portions of the definitive Proxy Statement for the 2012 Annual Meeting of Stockholders are incorporated by reference into Part III, Items 10-14 of this Form 10-K.

EXPLANATORY NOTE

On March 28, 2012, Louisiana Bancorp, Inc. (the “Company”) filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

This amendment on Form 10-K/A is being filed solely for the purpose of correcting the inadvertent omission of our auditor’s signature on its Report of Independent Registered Public Accounting Firm previously included in Item 8 of the originally filed Annual Report on Form 10-K. At the time of filing of the original Annual Report on Form 10-K, we had received a manually signed and dated Report of Independent Registered Public Accounting Firm. There are no other changes to the Company’s 2011 Annual Report on Form 10-K.

Item 8. Financial Statements and Supplementary Data

Contents


Report of Independent Registered Public Accounting Firm	61


Basic Financial Statements

Consolidated Balance Sheets	62

Consolidated Statements of Income	63

Consolidated Statements of Comprehensive Income	64

Consolidated Statements of Changes in Shareholders’ Equity	65

Consolidated Statements of Cash Flows	66 - 67

Notes to Consolidated Financial Statements	68 - 107

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Louisiana Bancorp, Inc.

Metairie, Louisiana

We have audited the accompanying consolidated balance sheets of Louisiana Bancorp, Inc. (the Company) and its wholly owned subsidiary, Bank of New Orleans (the Bank), as of December 31, 2011 and 2010, and the related consolidated statements of income, comprehensive income, changes in shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Louisiana Bancorp, Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

A Professional Accounting Corporation

Metairie, Louisiana

March 9, 2012

LOUISIANA BANCORP, INC.

Consolidated Balance Sheets

December 31, 2011 and 2010


	2011			2010
	(In Thousands)
Assets
Cash and Cash Equivalents
Cash and Due from Banks	$	2,064		$	2,956
Short-Term Interest-Bearing Deposits		25,525			3,654
Total Cash and Cash Equivalents		27,589			6,610

Certificates of Deposit		742			635
Securities Available-for-Sale, at Fair Value (Amortized Cost of $21,780 in 2011 and $61,429 in 2010)		22,750			62,489
Securities Held-to-Maturity, at Amortized Cost (Estimated Fair Value of $63,067 in 2011 and $67,355 in 2010)		59,581			63,539
Loans, Net of Allowance for Loan Losses of $1,805 in 2011 and $1,759 in 2010		195,632			179,110
Accrued Interest Receivable		1,081			1,196
Other Real Estate Owned		532			1,696
Stock in Federal Home Loan Bank		1,543			2,002
Premises and Equipment, Net		1,636			1,688
Other Assets		2,042			1,910
Total Assets	$	313,128		$	320,875

Liabilities and Shareholders' Equity
Deposits
Non-Interest-Bearing	$	9,764		$	8,130
Interest-Bearing		184,562			180,232
Total Deposits		194,326			188,362

Borrowings		57,113			68,248
Advance Payments by Borrowers for Taxes and Insurance		2,395			1,997
Accrued Interest Payable		297			421
Other Liabilities		1,477			1,569
Total Liabilities		255,608			260,597

Commitments and Contigencies		-			-

Shareholders' Equity
Common Stock, $.01 Par Value, 40,000,000 Shares Authorized; 6,345,732 Shares Issued; 3,257,130 and 3,640,918 Shares Outstanding in 2011 and 2010, Respectively		63			63
Additional Paid-in-Capital		63,218			62,880
Unearned ESOP Shares		(3,934	)		(4,188	)
Unearned Recognition and Retention Plan Shares		(1,516	)		(2,074	)
Treasury Stock, at Cost (3,088,602 and 2,704,814 Shares in 2011 and 2010, Respectively)		(43,286	)		(37,321	)
Retained Earnings		42,335			40,218
Accumulated Other Comprehensive Income		640			700
Total Shareholders' Equity		57,520			60,278
Total Liabilities and Shareholders' Equity	$	313,128		$	320,875

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Consolidated Statements of Income

For the Years Ended December 31, 2011, 2010 and 2009


	2011		2010		2009
	(In Thousands, Except per Share Data)
Interest and Dividend Income
Loans, Including Fees	$	10,972	$	10,386	$	8,400
Mortgage-Backed Securities		3,203		4,897		7,637
Investment Securities		694		817		723
Other Interest-Bearing Deposits		33		40		72
Total Interest and Dividend Income		14,902		16,140		16,832

Interest Expense
Deposits		2,646		3,194		3,714
Borrowings		2,492		2,670		2,563
Total Interest Expense		5,138		5,864		6,277

Net Interest Income		9,764		10,276		10,555

Provision for Loan Losses		53		269		337

Net Interest Income after Provision for Loan Losses		9,711		10,007		10,218

Non-Interest Income
Customer Service Fees		496		394		324
Gain on Sale of Loans		431		249		36
Gain on Sale of Securities		72		204		406
Other Income		88		143		70
Total Non-Interest Income		1,087		990		836

Non-Interest Expense
Salaries and Employee Benefits		4,637		4,557		4,404
Occupancy Expense		1,097		1,113		1,155
Louisiana Bank Shares Tax		230		214		211
FDIC Insurance Premium		166		180		233
Net Cost of OREO Operations		313		235		-
Other Expenses		1,082		973		1,087
Total Non-Interest Expense		7,525		7,272		7,090

Income Before Income Tax Expense		3,273		3,725		3,964

Income Tax Expense		1,156		1,167		1,430

Net Income	$	2,117	$	2,558	$	2,534

Earnings Per Share
Basic	$	0.73	$	0.71	$	0.54
Diluted	$	0.70	$	0.69	$	0.54

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Consolidated Statements of Comprehensive Income

For the Years Ended December 31, 2011, 2010 and 2009


	2011			2010			2009
	(In Thousands)

Net Income	$	2,117		$	2,558		$	2,534

Other Comprehensive Loss, Net of Tax
Unrealized Holding Losses Arising During the Period		(12	)		(92	)		(149	)

Reclassification Adjustment for Gains Included in Net Income		(48	)		(128	)		(268	)

Total Other Comprehensive Loss		(60	)		(220	)		(417	)

Comprehensive Income	$	2,057		$	2,338		$	2,117

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Consolidated Statements of Changes in Shareholders’ Equity

For the Years Ended December 31, 2011, 2010 and 2009

	Common Stock		Additional Paid-in Capital			Unearned ESOP Stock			Unearned RRP Stock			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity
	(In Thousands)
Balances at December 31, 2008	$	63	$	62,305		$	(4,696	)	$	(3,200	)	$	(5,208	)	$	35,126	$	1,337		$	85,727
Net Income - Year Ended December 31, 2009		-		-			-			-			-			2,534		-			2,534
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes		-		-			-			-			-			-		(417	)		(417	)
Stock Purchased for Treasury		-		-			-			-			(15,595	)		-		-			(15,595	)
ESOP Shares Released for Allocation (25,382 Shares)		-		89			254			-			-			-		-			343
RRP Shares Earned		-		(48	)		-			564			-			-		-			516
Stock Option Expense		-		240			-			-			-			-		-			240

Balances at December 31, 2009		63		62,586			(4,442	)		(2,636	)		(20,803	)		37,660		920			73,348
Net Income - Year Ended December 31, 2010		-		-			-			-			-			2,558		-			2,558
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes		-		-			-			-			-			-		(220	)		(220	)
Stock Purchased for Treasury		-		-			-			-			(16,628	)		-		-			(16,628	)
ESOP Shares Released for Allocation (25,383 Shares)		-		117			254			-			-			-		-			371
RRP Shares Earned		-		(48	)		-			562			-			-		-			514
Stock Options Exercised		-		(17	)		-			-			110			-		-			93
Stock Option Expense		-		242			-			-			-			-		-			242

Balances at December 31, 2010		63		62,880			(4,188	)		(2,074	)		(37,321	)		40,218		700			60,278
Net Income - Year Ended December 31, 2011		-		-			-			-			-			2,117		-			2,117
Other Comprehensive Loss, Net of Applicable Deferred Income Taxes		-		-			-			-			-			-		(60	)		(60	)
Stock Purchased for Treasury		-		-			-			-			(5,965	)		-		-			(5,965	)
ESOP Shares Released for Allocation (25,383 Shares)		-		138			254			-			-			-		-			392
RRP Shares Earned		-		(44	)		-			558			-			-		-			514
Stock Option Expense		-		244			-			-			-			-		-			244

Balances at December 31, 2011	$	63	$	63,218		$	(3,934	)	$	(1,516	)	$	(43,286	)	$	42,335	$	640		$	57,520

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2011, 2010 and 2009

	2011			2010			2009
	(In Thousands)
Cash Flows from Operating Activities
Net Income	$	2,117		$	2,558		$	2,534
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation		189			218			239
Provision for Loan Losses		53			269			337
Net Increase in ESOP Shares Earned		392			371			343
Net Increase in RRP Shares Earned		514			514			516
Stock Option Plan Expense		244			242			240
Discount Accretion Net of Premium Amortization		(77	)		(220	)		(319	)
Gain on Insurance Settlement		-			-			(2	)
Deferred Income Tax Benefit		(242	)		(504	)		(133	)
Gain on Sale of Securities		(72	)		(204	)		(406	)
Gain on Sale of Loans		(431	)		(249	)		(36	)
Gain on Sale of Property and Equipment		(4	)		-			(4	)
Originations of Loans Held-for-Sale		(30,715	)		(30,793	)		(12,509	)
Proceeds from Sales of Loans Held-for-Sale		29,344			30,559			12,478
Decrease in Accrued Interest Receivable		115			130			323
Impairment of Other Real Estate Owned		287			227			-
Decrease (Increase) in Other Assets		140			19			(652	)
Decrease in Accrued Interest Payable		(124	)		(176	)		(67	)
(Decrease) Increase in Other Liabilities		(92	)		80			(446	)
Net Cash Provided by Operating Activities		1,638			3,041			2,436

Cash Flows from Investing Activities
Investment in Certificates of Deposit		(566	)		(426	)		(1,676	)
Purchase of Securities Available-for-Sale		(25,683	)		(52,994	)		(37,455	)
Purchase of Securities Held-to-Maturity		(18,279	)		-			(8,601	)
Proceeds from Maturities of Certificates of Deposit		459			1,317			1,576
Proceeds from Maturities of Securities Available-for-Sale		63,238			47,293			42,772
Proceeds from Maturities of Securities Held-to-Maturity		23,278			31,074			36,046
Proceeds from Sales of Securities Available-for-Sale		1,202			5,635			13,781
Proceeds from Sales of Securities Held-to-Maturity		-			125			-
Net Increase in Loans Receivable		(14,931	)		(21,289	)		(49,967	)
Proceeds from Sales of Loans Held for Investing		-			489			914
Insurance Proceeds - Property Damage		-			-			42
Purchase of Property and Equipment		(137	)		(109	)		(272	)
Proceeds from Sale of Property and Equipment		5			-			4
Proceeds from Sale of Foreclosed Assets		1,035			-			-
Net Decrease (Increase) in Investment in Federal Home Loan Bank Stock		459			(7	)		298
Net Cash Provided by (Used in) Investing Activities		30,080			11,108			(2,538	)

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Consolidated Statements of Cash Flows (Continued)

For the Years Ended December 31, 2011, 2010 and 2009


	2011			2010			2009
	(In Thousands)
Cash Flows from Financing Activities
Increase (Decrease) in Deposits		5,964			(261	)		28,033
Increase in Advances by Borrowers for Taxes and Insurance		398			83			275
(Decrease) Increase in Borrowings		(11,136	)		4,439			(12,850	)
Purchase of Treasury Stock		(5,965	)		(16,628	)		(15,595	)
Proceeds from Exercise of Options		-			93			-

Net Cash Used in Financing Activities		(10,739	)		(12,274	)		(137	)

Net Increase (Decrease) in Cash and Cash Equivalents		20,979			1,875			(239	)

Cash and Cash Equivalents, Beginning of Year		6,610			4,735			4,974

Cash and Cash Equivalents, End of Year	$	27,589		$	6,610		$	4,735


Supplemental Disclosure of Cash Flow Information
Cash Paid During the Year for:
Interest	$	5,263		$	6,040		$	6,344

Income Taxes	$	1,315		$	1,752		$	2,498

Loans Transferred to Other Real Estate Owned	$	158		$	350		$	1,573

The accompanying notes are an integral part of these consolidated financial statements.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies

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”) in anticipation of converting the Bank from a federally chartered mutual savings and loan association to a federally chartered stock savings and loan association. In July 2007, the Company completed the conversion. 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 mortgages on owner-occupied, family residences and other properties.

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

Basis of Presentation and Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Bank of New Orleans. All significant inter-company balances and transactions have been eliminated in consolidation.

Significant Group Concentrations of Credit Risk

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

Cash and Cash Equivalents

For the purposes of the statements of cash flows, cash and cash equivalents include cash and balances due from banks, federal funds sold and securities purchased under agreements to resell, all of which mature within ninety days.

For 2011, the Bank was required to maintain cash in reserve accounts with the Federal Reserve Bank of Atlanta. For the reserve maintenance period ended December 31, 2011, the reserve requirement was $547,000.

Investment Securities

Securities are being accounted for in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 320, Investments - Debt and Equity Securities. ASC 320 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 this classification 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.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

Investment Securities (Continued)

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 December 31, 2011 or 2010.

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 Bank 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 sales agreements. A substantial portion of the loan portfolio is represented by mortgage loans made to customers throughout the greater New Orleans area. The ability of the Bank’s debtors to honor their contracts is dependent upon the real estate 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.

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 for loans that are placed on non-accrual or 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 the accrual status when all of the principal and interest amounts 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 troubled debt restructurings, and performing and non-performing loans with respect to which the 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.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

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 collectability 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 consolidated balance sheets is adequate to absorb possible losses in the existing loan portfolio.

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, 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 amortized 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.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

Premises and Equipment

Premises and equipment are carried at cost, less accumulated depreciation. The Company computes depreciation and amortization generally on the straight-line method for both financial reporting and Federal income tax purposes. Estimated useful lives of premises and equipment range as follows:

	Buildings	20 - 40 Years
	Furniture, Fixtures and Equipment	3 - 10 Years
	Automobiles	5 Years

Real Estate Owned

Real estate acquired through, or in lieu of, loan foreclosure is initially recorded at fair value, less estimated cost to sell, at the date of foreclosure and any related write-down is charged to the allowance for loan losses. Management periodically performs valuations, and an allowance for losses will be established when any significant and permanent decline reduces the fair value to less than the carrying value. The ability of the Company to recover the carrying value of real estate is based upon future sales of the real estate owned. The ability to effect such sales is subject to market conditions and other factors, many of which are beyond the Company’s control. Operating income of such properties, net of related expenses, and gains and losses on their disposition are included in the accompanying statements of income.

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.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above would be reflected as a liability for unrecognized tax benefits in the consolidated balance sheets along with any associated interest or penalties that would be payable to the taxing authorities upon examination. Interest and/or penalties associated with unrecognized tax benefits, if any, would be classified as additional income taxes in the statements of income.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs were $158,000, $132,000, and $163,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Comprehensive Earnings

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 equity section of the balance sheets, such items, along with net earnings, are components of comprehensive earnings.

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.

Recent Accounting Pronouncements

In April 2011, the FASB updated the accounting guidance on the evaluation of whether a restructuring constitutes a troubled debt restructuring. The guidance clarifies the creditor’s evaluation of whether it has granted a concession, as well as, the evaluation of whether a debtor is experiencing financial difficulties. The guidance also clarifies that a creditor is precluded from using the effective interest rate test in the debtor’s guidance on restructuring of payables when evaluating whether a restructuring constitutes a troubled debt restructuring. The new guidance will be effective for the fiscal year ending December 31, 2012.

In April 2011, the FASB amended the accounting guidance related to repurchase agreements and other agreements that both entitle and obligate a transferor to repurchase or redeem financial assets before their maturity. The amendments remove from the assessment of effective internal control the criterion relating to the transferor’s ability to repurchase or redeem financial assets on substantially the agreed terms, even in the event of default by the transferee. The amendments also eliminate the requirement to demonstrate that the transferor possesses adequate collateral to fund substantially all of the cost of purchasing replacement financial assets. The guidance is effective January 1, 2012 and is not expected to have a significant impact on the Company’s financial statements.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements (Continued)

In May 2011, the FASB amended the accounting guidance related to fair value measurement and disclosure, to improve comparability between U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The FASB does not intend for the amendment to result in a change in the application of the requirements in the existing topic. Some of the amendments clarify the FASB’s intent about the application of existing fair value measurement requirements. Other amendments change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. The amendments are effective January 1, 2012 with no significant impact expected on the Company’s financial statements.

In June 2011, the FASB amended the accounting guidance for presentation of other comprehensive income. The new guidance requires that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new guidance will be effective for the fiscal year ending December 31, 2012 and is not expected to have an impact on the Company’s financial statements. In addition, this guidance requires the entity to present on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net income in the statement(s) where the components of net income and the components of other comprehensive income are presented. In December 2011, the FASB issued a deferral of the changes related to the presentation of reclassification adjustments, to allow more time to reassess and evaluate alternative presentation formats. Thus, the amendment pertaining to the presentation of reclassifications out of accumulated other comprehensive income that were in place before the amendment, were reinstated until the reassessment is complete.

In September 2011, the FASB amended guidance pertaining to goodwill impairment testing. The amendment permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. An entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The guidance is effective January 1, 2012 with no impact expected on the Company’s financial statements.

In December 2011, the FASB issued guidance which relates to deconsolidation events. Under this guidance, when a parent (reporting entity) ceases to have a controlling financial interest in a subsidiary that is in-substance real estate, as a result of the default on the subsidiary’s nonrecourse debt, the reporting entity should apply the guidance in Subtopic 360-20, Property, Plant and Equipment - Real Estate Sales, to determine whether it should derecognize the in-substance real estate. This guidance is effective for fiscal years ending December 31, 2013 and is not expected to have a significant impact on the Company’s financial statements.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 1.

Summary of Significant Accounting Policies (Continued)

Recent Accounting Pronouncements (Continued)

In December 2011, The FASB issued authoritative guidance to provide enhanced disclosures in the financial statements about offsetting and netting arrangements. The new guidance requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position, and instruments and transactions subject to an agreement similar to a master netting agreement. This guidance was issued to facilitate comparison between U.S. GAAP and IFRS financial statement presentations. The new guidance will be effective January 1, 2013 and is not expected to have a significant impact on the Company’s financial statements.

Note 2.

Securities

A summary of securities classified as available-for-sale at December 31, 2011 and 2010, with gross unrealized gains and losses, is as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated 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

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 2.

Securities (Continued)

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In Thousands)
Securities Available-for-Sale
Mortgage-Backed Securities
FNMA	$	9,770	$	584	$	-		$	10,354
FHLMC		4,735		294		-			5,029
		14,505		878		-			15,383

U.S. Government and Agency Obligations		46,924		307		(125	)		47,106

Total	$	61,429	$	1,185	$	(125	)	$	62,489

A summary of securities classified as held-to-maturity at December 31, 2011 and 2010, with gross unrealized gains and losses, is as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated 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
Total	$	59,581	$	3,486	$	-	$	63,067

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 2.

Securities (Continued)

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
Securities Held-to-Maturity
Mortgage-Backed Securities
GNMA	$	8,949	$	352	$	-	$	9,301
FNMA		33,249		2,080		-		35,329
FHLMC		19,987		1,368		-		21,355
		62,185		3,800		-		65,985

Municipal Bonds
Revenue Bonds		285		6		-		291
General Obligation Bonds		1,069		10		-		1,079
		1,354		16		-		1,370

Total	$	63,539	$	3,816	$	-	$	67,355

The amortized cost and fair value of available-for-sale and held-to-maturity securities by contractual maturity at December 31, 2011, are as follows. Actual maturities will differ from contractual maturities because borrowers may have the right to put or prepay obligations with or without call or prepayment penalties.

	Available-for-Sale Securities				Held-to-Maturity Securities
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(In Thousands)
Amounts Maturing in:
Less than One Year	$	150	$	160	$	-	$	-
One to Five Years		14,076		14,443		524		558
Five to Ten Years		4,730		5,113		14,184		15,310
Over Ten Years		2,641		2,851		44,873		47,199
		21,597		22,567		59,581		63,067

Other Equity Securities		183		183		-		-

Total	$	21,780	$	22,750	$	59,581	$	63,067

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 2.

Securities (Continued)

During the year ended December 31, 2011, the Company sold available-for-sale securities for aggregate proceeds of $1,202,000, resulting in realized gains of $72,000. During the year ended December 31, 2010, the Company sold available-for-sale securities for $5,635,000, resulting in realized gains of $194,000. During the year ended December 31, 2009, the Company sold available-for-sale securities for aggregate proceeds of $13,781,000, resulting in realized gains of $406,000.

During the year ended December 31, 2010, the Company sold certain investments from the held-to-maturity category for proceeds of $125,000, resulting in a realized gain of $10,000. These securities were sold in accordance with the limited exceptions as provided by ASC 320, Investments - Debt and Equity Securities. There were no such sales of held-to-maturity securities during the year ended December 31, 2011.

Information pertaining to securities with gross unrealized losses at December 31, 2011 and 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	Available-for-Sale
	Losses Less Than 12 Months				Losses Greater Than 12 Months
	Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value
	(In Thousands)
December 31, 2011
Mortgage-Backed Securities
GNMA	$	-	$	-	$	-	$	-
FNMA		-		-		-		-
FHLMC		-		-		-		-
		-		-		-		-
U.S. Government and Agency Obligations		-		-		-		-

Total	$	-	$	-	$	-	$	-


December 31, 2010
Mortgage-Backed Securities
GNMA	$	-	$	-	$	-	$	-
FNMA		-		-		-		-
FHLMC		-		-		-		-
		-		-		-		-
U.S. Government and Agency Obligations		125		22,875		-		-

Total	$	125	$	22,875	$	-	$	-

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 2.

Securities (Continued)

Held-to-Maturity

Losses Less Than 12 Months

Losses Greater Than 12 Months

Gross

Unrealized

Losses

Estimated

Fair

Value

Gross

Unrealized

Losses

Estimated

Fair

Value

(In Thousands)

December 31, 2011

Mortgage-Backed Securities

GNMA

FNMA

FHLMC

U.S. Government and Agency Obligations

Total

December 31, 2010

Mortgage-Backed Securities

GNMA

FNMA

FHLMC

U.S. Government and Agency Obligations

Total

The unrealized losses on the Company’s investments at December 31, 2010, were caused by interest rate increases. The Company purchased these investments at a premium relative to their face amount in anticipation of a continuing stable interest rate environment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, the Company did not consider these investments to be other-than-temporarily impaired at December 31, 2011 and 2010.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans

A summary of the balances of loans follows as of December 31, 2011 and 2010:


	2011			2010
	(In Thousands)
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	105,718		$	98,635
Home Equity Loans and Lines		18,467			15,745
Multi-Family Residential		14,591			11,785
Commercial Real Estate		56,492			52,594
Land		1,299			951

Total Loans Secured by Mortgages on Real Estate		196,567			179,710

Consumer and Other Loans
Loans Secured by Deposits		568			464
Other		452			900

Total Consumer and Other Loans		1,020			1,364

Less:
Allowance for Loan Losses		(1,805	)		(1,759	)
Net Deferred Loan Origination Fess/Costs		(150	)		(205	)

Total Loans, Net	$	195,632		$	179,110

A summary of our current, past due and non-accrual loans as of December 31, 2011 and 2010 follows:

December 31, 2011	30-89 Days Past Due		90 Days or More Past Due and Accruing		Non-Accrual Loans		Total Past Due		Current Loans		Total Loans
	(in Thousands)
Real Estate Secured Loans
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

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans (Continued)

December 31, 2010	30-89 Days Past Due		90 Days or More Past Due and Accruing		Non-Accrual Loans		Total Past Due		Current Loans		Total Loans
	(in Thousands)
Real Estate Secured Loans
1-4 Family Residential	$	94	$	-	$	123	$	217	$	98,418	$	98,635
Home Equity Loans and Lines		188		-		682		870		14,875		15,745
Multi-Family Residential		-		-		-		-		11,785		11,785
Commercial Real Estate		-		-		-		-		52,594		52,594
Land		-		-		34		34		917		951
Consumer and Other Loans		-		-		69		69		1,295		1,364

Total	$	282	$	-	$	908	$	1,190	$	179,884	$	181,074

For the years ended December 31, 2011 and 2010, approximately $65,000 and $34,000, respectively, of interest was foregone on non-accrual loans.

In the ordinary course of business, the Company has granted loans to directors, executive officers and their affiliates. In the opinion of management, such transactions were on substantially the same terms, including interest rates and collateral, as those prevailing at the time of comparable transactions with other persons and did not involve more than a normal risk of collectability or present any other unfavorable features to the Company.

An analysis of the changes in loans to such borrowers follows:

	2011			2010
	(In Thousands)

Balance, Beginning of Year	$	4,814		$	4,381
Additions		1,302			1,796
Payments		(3,597	)		(1,363	)

Balance, End of Year	$	2,519		$	4,814

An analysis of the allowance for loan losses is as follows for the years ended December 31st:

	2011			2010			2009
	(In Thousands)

Balance, Beginning of Year	$	1,759		$	1,661		$	1,952
Provision for Loan Losses		53			269			337
Loan Recoveries		1			3			-
Loans Charged-Off		(8	)		(174	)		(628	)

Balance, End of Year	$	1,805		$	1,759		$	1,661

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans (Continued)

The following table details the activity in the allowance for loan losses by portfolio segment for the years ended December 31, 2011 and 2010:

	Real Estate Secured Mortgage Loans
December 31, 2011	1-4 Family Residential			Home Equity Loans/Lines			Multi-Family Residential		Commercial		Land			Consumer and Other			Total
	(In Thousands)
Balance, Beginning of Year	$	858		$	270		$	100	$	442	$	9		$	80		$	1,759
Provision for (Recovery of) Loan Losses		33			(58	)		48		43		(7	)		(6	)		53
Loans Charged-Off		(2	)		(6	)		-		-		-			-			(8	)
Recoveries of Prior Charge-Offs		-			1			-		-		-			-			1

Balance, End of Year	$	889		$	207		$	148	$	485	$	2		$	74		$	1,805

Ending Balance Allocated to:
Loans Individually Evaluated for Impairment	$	2		$	61		$	-	$	-	$	-		$	65		$	128
Loans Collectively Evaluated for Impairment		887			146			148		485		2			9			1,677
	$	889		$	207		$	148	$	485	$	2		$	74		$	1,805

Ending Loan Balance Disaggregated by Evaluation Method
Loans Individually Evaluated for Impairment	$	-		$	167		$	-	$	-	$	-		$	65		$	232
Loans Collectively Evaluated for Impairment		105,718			18,300			14,591		56,492		1,299			955			197,355
	$	105,718		$	18,467		$	14,591	$	56,492	$	1,299		$	1,020		$	197,587

	Real Estate Secured Mortgage Loans
December 31, 2010	1-4 Family Residential		Home Equity Loans/Lines			Multi-Family Residential			Commercial		Land			Consumer and Other			Total
	(In Thousands)
Balance, Beginning of Year	$	726	$	273		$	167		$	397	$	10		$	88		$	1,661
Provision for (Recovery of) Loan Losses		129		-			104			45		(1	)		(8	)		269
Loans Charged-Off		-		(3	)		(171	)		-		-			-			(174	)
Recoveries of Prior Charge-Offs		3		-			-			-		-			-			3

Balance, End of Year	$	858	$	270		$	100		$	442	$	9		$	80		$	1,759

Ending Balance Allocated to:
Loans Individually Evaluated for Impairment	$	-	$	152		$	-		$	-	$	1		$	69		$	222
Loans Collectively Evaluated for Impairment		858		118			100			442		8			11			1,537
	$	858	$	270		$	100		$	442	$	9		$	80		$	1,759

Ending Loan Balance Disaggregated by Evaluation Method
Loans Individually Evaluated for Impairment	$	-	$	341		$	-		$	-	$	-		$	69		$	410
Loans Collectively Evaluated for Impairment		98,635		15,404			11,785			52,594		951			1,295			180,664
	$	98,635	$	15,745		$	11,785		$	52,594	$	951		$	1,364		$	181,074

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans (Continued)

A summary of the loans evaluated for possible impairment follows:

	2011		2010
	(In Thousands)

Impaired Loans Requiring a Loss Allowance	$	232	$	410
Imparied Loans not Requiring a Loss Allowance		842		498

Total Impaired Loans	$	1,074	$	908

Loss Allowance on Impaired Loans	$	128	$	222

At December 31, 2011 and 2010, all impaired loans were in non-accrual status. As of December 31, 2011 and 2010, the Company did not hold any renegotiated loans.

The following table provides additional information with respect to impaired loans by portfolio segment and the impairment methodology used to analyze the credit. The recorded investment is presented gross of any specific valuation allowance.

As of December 31, 2011	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment YTD		Interest Income Recognized
	(In Thousands)
Impaired Loans with No Related Allowance:
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

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans (Continued)

As of December 31, 2010	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment YTD		Interest Income Recognized
	(In Thousands)
Impaired Loans with No Related Allowance:
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	123	$	123	$	-	$	95	$	-
Home Equity Loans and Lines		341		341		-		209		-
Multi-Family Residential		-		-		-		-		-
Commercial Real Estate		-		-		-		-		-
Land		34		34		-		7		-
Consumer and Other Loans		-		-		-		-		-

Total	$	498	$	498	$	-	$	311	$	-

Impaired Loans with a Related Allowance:
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	-	$	-	$	-	$	-	$	-
Home Equity Loans and Lines		341		341		152		340		-
Multi-Family Residential		-		-		-		412		-
Commercial Real Estate		-		-		-		-		-
Land		-		-		1		-		-
Consumer and Other Loans		69		69		69		71		-

Total	$	410	$	410	$	222	$	823	$	-

Total Impaired Loans
Loans Secured by Mortgages on Real Estate
1-4 Family Residential	$	123	$	123	$	-	$	95	$	-
Home Equity Loans and Lines		682		682		152		549		-
Multi-Family Residential		-		-		-		412		-
Commercial Real Estate		-		-		-		-		-
Land		34		34		1		7		-
Consumer and Other Loans		69		69		69		71		-

Total	$	908	$	908	$	222	$	1,134	$	-

The Bank uses the following criteria to assess risk ratings with respect to its loan portfolio, which are consistent with regulatory guidelines:

Special Mention - Loans designated as “special mention” exhibit some weakness or risk that deserves management’s close attention, but do not contain the level of risk associated with an adverse classification. If left unresolved, this weakness may develop into a material deficiency in the credit quality of the loan.

Substandard - Loans classified as “substandard” have a well-defined material weakness or weaknesses based on objective evidence and are further characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Loss - Loans classified as “loss” are considered uncollectible, in whole or in part, and should not be carried on the books as an asset without the establishment of a specific valuation allowance or charge-off. This classification does not mean that an asset has no salvage value, but there is much doubt about how much, or when, the recovery will occur.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 3.

Loans (Continued)

The following table summarizes the credit grades assigned to our loan portfolio as of December 31, 2011 and 2010:

	Real Estate Secured Mortgage Loans
December 31, 2011	1-4 Family Residential		Home Equity Loans/Lines		Multi-Family Residential		Commercial		Land		Consumer and Other		Total
	(In Thousands)
Credit Classification:
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

	Real Estate Secured Mortgage Loans
December 31, 2010	1-4 Family Residential		Home Equity Loans/Lines		Multi-Family Residential		Commercial		Land		Consumer and Other		Total
	(In Thousands)
Credit Classification:
Pass	$	98,512	$	15,086	$	11,785	$	52,594	$	917	$	1,295	$	180,189
Special Mention		-		130		-		-		-		-		130
Substandard		123		318		-		-		34		-		475
Loss		-		211		-		-		-		69		280
Total	$	98,635	$	15,745	$	11,785	$	52,594	$	951	$	1,364	$	181,074

Note 4.

Accrued Interest Receivable

Accrued interest receivable at December 31, 2011 and 2010, consisted of the following:

	2011		2010
	(In Thousands)
Loans	$	755	$	760
Investments		74		120
Mortgage-Backed Securities		252		316

Total Accrued Interest	$	1,081	$	1,196

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 5.

Premises and Equipment

A summary of the cost and accumulated depreciation of premises and equipment as of December 31st follows:

	2011			2010
	(In Thousands)
Land, Buildings and Improvements	$	4,045		$	4,018
Furniture and Fixtures		1,793			1,804
Automobiles		96			94
		5,934			5,916
Accumulated Depreciation and Amortization		(4,298	)		(4,228	)

Total	$	1,636		$	1,688

Depreciation expense for the years ended December 31, 2011, 2010 and 2009, was approximately $189,000, $218,000, and $239,000, respectively.

Note 6.

Deposits

Interest bearing deposit account balances at December 31, 2011 and 2010, are summarized as follows:

	Weighted-Average						Account Balances at December 31,
	Rate at December 31,						2011					2010
	2011			2010			Amount		Percent			Amount		Percent
							(In Thousands)

NOW and MMDA		0.20	%		0.28	%	$	28,487		15.44	%	$	26,030		14.44	%
Savings Accounts		0.25	%		0.50	%		21,621		11.71	%		19,368		10.75	%
Certificates of Deposit		1.67	%		2.07	%		134,454		72.85	%		134,834		74.81	%

Total							$	184,562		100.00	%	$	180,232		100.00	%

The aggregate amount of time deposits in denominations of $100,000 or more at December 31, 2011 and 2010, was $57,435,000 and $53,925,000, respectively. On October 3, 2008, President George W. Bush signed the Emergency Economic Stabilization Act of 2008, which temporarily increased the basic FDIC coverage limits from $100,000 to $250,000 per depositor, through December 31, 2009. On May 20, 2009, President Barack Obama passed legislation that extended the $250,000 coverage limit through December 31, 2013. This temporary increase was made permanent effective July 22, 2010, by the FDIC.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 6.

Deposits (Continued)

Certificates of deposit at December 31, 2011, mature as follows (in thousands):

	Amount		Percent
Certificate Accounts Maturing
One Year or Less	$	85,713		63.75	%
One to Two Years		14,562		10.83	%
Two to Three Years		18,232		13.56	%
Three to Five Years		15,947		11.86	%

Total	$	134,454		100.00	%

Interest expense by deposit type for each of the following periods was as follows:

	2011		2010		2009
	(In Thousands)

Certificates of Deposit	$	2,506	$	3,032	$	3,537
Interest Bearing Demand Deposits		58		70		84
Savings Accounts		82		92		93

Total	$	2,646	$	3,194	$	3,714

The Bank held deposits of approximately $13,611,000 and $13,781,000, for related parties at December 31, 2011 and 2010, respectively.

Note 7.

Borrowings

Federal Home Loan Bank Advances

Pursuant to collateral agreements with the Federal Home Loan Bank of Dallas (“FHLB”), advances issued by the Federal Home Loan Bank are secured by a blanket floating lien on first mortgage loans. Total interest expense recognized on FHLB advances in 2011, 2010 and 2009, was $1,470,000, $1,648,000, and $1,542,000, respectively.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 7.

Borrowings (Continued)

Federal Home Loan Bank Advances (Continued)

Advances consisted of the following at December 31, 2011 and 2010, respectively.

	FHLB Advance Total
Contract Rate	2011		2010
	(In Thousands)
0% - 0.99%	$	-	$	-
1% - 1.99%		-		-
2% - 2.99%		651		458
3% - 3.99%		13,626		21,097
4% - 4.99%		16,367		18,411
5% - 5.99%		469		2,282

Total	$	31,113	$	42,248

Maturities of FHLB Advances at December 31, 2011, were as follows:

Year Ending December 31,	Amount Maturing
	(In Thousands)
2012	$	8,938
2013		3,991
2014		65
2015		7,023
2016		6,935
Thereafter		4,161

Total	$	31,113

Reverse Repurchase Agreements

Periodically, the Company accesses other borrowing sources as a source of liquidity and term funding. To date, these other borrowings have been structured as reverse repurchase agreements secured by US Government or US Agency securities. Reverse repurchase agreements totaled $26,000,000 at both December 31, 2011 and 2010.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 7.

Borrowings (Continued)

Reverse Repurchase Agreements (Continued)

Reverse repurchase agreements consisted of the following at December 31, 2011 and 2010:

	Repurchase Agreement Total
Contract Rate	2011		2010
	(In Thousands)
3% - 3.99%	$	16,000	$	16,000
4% - 4.99%		10,000		10,000
Total	$	26,000	$	26,000

Maturities of reverse repurchase agreements at December 31, 2011, are as follows:

Year Ending December 31,	Amount Maturing
	(In Thousands)
2012	$	10,000
2013		16,000
Total	$	26,000

Interest expense on reverse repurchase agreements totaled $1,022,000, $1,021,000 and $1,021,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

Note 8.

Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities as of December 31, 2011 and 2010, were as follows:

	2011			2010
	(In Thousands)
Deferred Tax Assets
Allowance for Loan Losses	$	470		$	523
Deferred Loan Fees		51			69
Deferred Compensation		567			528
OREO Write Down		95			80
Stock Options		208			154
Other		36			89

Total Deferred Tax Assets		1,427			1,443

Deferred Tax Liabilities
Market Value Adjustment to Available-for-Sale Securities		(330	)		(360	)
FHLB Stock Dividends		(101	)		(132	)

Total Deferred Tax Liabilities		(431	)		(492	)

Net Deferred Tax Asset	$	996		$	951

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 8.

Income Taxes (Continued)

Generally accepted accounting principles do not require that deferred income taxes be provided on certain portions of the allowance for loan losses that existed as of December 31, 1987. At December 31, 2011, retained earnings included approximately $1,600,000 representing such bad debt deductions for which the related deferred income taxes of approximately $470,000 have not been provided.

The provision for income taxes for 2011, 2010 and 2009, consisted of the following for the years ended December 31st:

	2011			2010			2009
	(In Thousands)
Current Expense	$	1,346		$	1,554		$	1,773
Deferred Tax Benefit		(190	)		(387	)		(343	)

Total	$	1,156		$	1,167		$	1,430

The provision for Federal income taxes differs from that computed by applying Federal statutory rates to income before Federal income tax expense, as indicated in the following analysis:

	2011					2010					2009
	(In Thousands)
Expected Tax Provision	$	1,113		34.0	%	$	1,266		34.0	%	$	1,348		34.0	%
Non-Deductible Expenses		8		0.2			3		0.1			4		0.1
Effect of Tax Exempt Income		(1	)	(0.0	)		(17	)	(0.5	)		(19	)	(0.5	)
Other		36		1.1			(85	)	2.3			97		2.4

Total	$	1,156		35.3	%	$	1,167		35.9	%	$	1,430		36.0	%

The Company had no amount of interest and/or penalties related to tax positions recognized in the consolidated statements of income for the years ended December 31, 2011, 2010, or 2009, nor any amount of interest and/or penalties payable related to tax positions that were recognized in the consolidated balance sheets as of December 31, 2011 and 2010.

As of December 31, 2011 and 2010, the Company had no uncertain tax positions. As of December 31, 2011, the tax years that remain open for examination by tax jurisdictions include 2010, 2009 and 2008.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 9.

Comprehensive Income

Comprehensive income was comprised of changes in the Bank’s unrealized holding gains or losses on securities available-for-sale during 2011, 2010, or 2009. The components of comprehensive income and related tax effects were as follows for the years indicated:

	2011			2010			2009
	(In Thousands)
Gross Unrealized Holding Losses Arising During the Period	$	(18	)	$	(139	)	$	(226	)
Tax Benefit		6			47			77

Total		(12	)		(92	)		(149	)

Reclassification Adjustment for Gains Included in Net Income		(72	)		(194	)		(406	)
Tax Expense		24			66			138

Total		(48	)		(128	)		(268	)

Net Unrealized Holding Losses Arising During the Period	$	(60	)	$	(220	)	$	(417	)

Note 10.

Regulatory Matters

The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the Office of the Comptroller of the Currency (“OCC”). Failure to meet the minimum regulatory capital requirements can result in certain mandatory, and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank and the financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines involving quantitative measures of the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios of: total risk-based capital and Tier I capital to risk-weighted assets (as defined in the regulations), Tier I capital to adjusted total assets (as defined), tangible capital to adjusted total assets (as defined), and tangible equity to adjusted total assets (as defined). As of December 31, 2011, the Bank met all of the capital requirements to which it is subject and was deemed to be well capitalized. There have been no subsequent conditions or events which management believes have changed the Bank’s status.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 10.

Regulatory Matters (Continued)

The actual and required capital amounts and ratios applicable to the Bank for the years ended December 31, 2011 and 2010, are presented in the following tables:

	Actual					Minimum for Adequacy Purposes					Minimum to be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in Thousands)
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	%

December 31, 2010
Tangible Capital	$	51,060		16.02	%	$	4,780		1.50	%		N/A		N/A
Core/Leverage Capital		51,060		16.02	%		9,559		3.00	%	$	15,932		5.00	%
Tier 1 Risk-Based Capital		50,999		33.68	%		6,056		4.00	%		9,084		6.00	%
Total Risk-Based Capital		52,537		34.70	%		12,112		8.00	%		15,140		10.00	%

The Bank’s capital under generally accepted accounting principles (“GAAP”) is reconciled as follows:

	2011			2010
	(In Thousands)

Capital Under GAAP	$	47,277		$	51,697
Unrealized Gains on Available-for-Sale Securities		(593	)		(637	)

Tier 1 Capital		46,684			51,060

Allowance for Loan Losses		1,677			1,538
Recourse Obligations		(61	)		(61	)

Total Risk-Based Capital	$	48,300		$	52,537

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 11.

Financial Instruments with Off-Balance Sheet Risk

The Company has entered into certain credit related commitments with off-balance sheet risk in the normal course of business in order to meet the financing needs of its customers. The financial instruments include commitments to extend credit and commitments to sell loans. Such commitments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The contract amounts of those instruments reflect the extent of the involvement the Company has in particular classes of financial instruments. The Company’s exposure to credit loss is represented by the contractual amount of these commitments. The Company follows the same credit policies in making commitments as it does for on-balance sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the commitment. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. The commitments for lines of credit may expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Company, is based on management’s credit evaluation of the customer.

As of December 31, 2011 and 2010, the Company had outstanding commitments to extend credit totaling approximately $18,518,000 and $17,398,000, respectively, and had no commitments to sell loans at a loss. Of the $18,518,000 in outstanding commitments at December 31, 2011, approximately $2,395,000 were for fixed rate loans with interest rates ranging from 3.25% to 7.50%, and approximately $16,123,000 were for variable rate loans with interest ranging from 3.50% to 9.50%. No material losses or gains are anticipated as a result of these outstanding commitments.

Note 12.

Commitments and Contingencies

Operating Leases

The Company conducts certain of its operations in leased facilities. At December 31, 2011, minimum rental commitments under non-cancelable operating leases were as follows (in thousands):

Years Ending December 31,	Amount

2012	$	34
2013		34
2014		34
2015		34
2016		9

Total	$	145

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 12.

Commitments and Contingencies (Continued)

Operating Leases (Continued)

Total rent expense incurred by the Company under leases amounted to $53,000, $60,000 and $72,000 for the years ended December 31, 2011, 2010, and 2009, respectively.

It is expected that in the normal course of business, expiring leases will be renewed or replaced by leases on other property.

The Company is the lessor of office space to a director of the Company, under an operating lease expiring in 2014. Terms of the lease are on current market conditions and rates. Minimum future rentals to be received on non-cancelable leases as of December 31, 2011, are as follows (in thousands):

Years Ending December 31,	Amount

2012	$	20
2013		20
2014		5

Total	$	45

Total rental income from this lease amounted to $20,000, $20,000 and $19,000 for the years ended December 31, 2011, 2010, and 2009, respectively.

Employment Contracts

The Company has entered into employment contracts with key employees. These compensation commitments expire as follows:

Years Ending December 31,	Amount

2012	$	430,000
2013		430,000
2014		370,000

Total	$	1,230,000

Note 13.

Concentration of Credit Risk

In accordance with industry practices, the Company has deposits in other financial institutions for more than the insured limit. These deposits in other institutions do not represent more than the normal industry credit risk.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 14.

Estimated Fair Value of Financial Instruments

The following disclosure is made in accordance with the requirements of ASC 825, Financial Instruments. Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques. The results of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments. ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. These disclosures should not be interpreted as representing an aggregate measure of the underlying value of the Company.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

Cash and Cash Equivalents

The carrying amount of cash and due from financial institutions, federal funds sold and short-term investments approximates fair value.

Certificates of Deposit

The fair values for certificates of deposit are estimated through discounted cash flow analysis, using current rates at which certificates of deposit with similar terms could be obtained.

Securities

Fair values for securities, excluding Federal Home Loan Bank stock, are based on quoted market prices. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

Loans Receivable, Net

The fair values of loans are estimated through discounted cash flow analysis, using current rates at which loans with similar terms would be made to borrowers with similar credit quality. Appropriate adjustments are made to reflect probable credit losses. The carrying amount of accrued interest on loans approximated its fair value.

Federal Home Loan Bank Stock

The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank.

Deposit Liabilities

ASC 825 specifies that the fair value of deposit liabilities with no defined maturity is the amount payable on demand at the reporting date, i.e., their carrying or book value. These deposits include interest and non-interest bearing checking, passbook, and money market accounts. The fair value of fixed rate certificates of deposit is estimated using a discounted cash flow calculation that applies interest rates currently offered on certificates of similar remaining maturities to a schedule of aggregate expected cash flows on time deposits.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 14.

Estimated Fair Value of Financial Instruments (Continued)

Borrowings

The fair value of fixed rate borrowings is estimated using discounted cash flows, based on current incremental borrowing rates for similar types of borrowing arrangements.

Off-Balance Sheet Instruments

Off-balance sheet financial instruments include commitments to extend credit and undisbursed lines of credit. The fair value of such instruments is estimated using fees currently charged for similar arrangements in the marketplace, adjusted for changes in terms and credit risk as appropriate.

The estimated fair values of the Company’s financial instruments are as follows:

	December 31, 2011						December 31, 2010
	Carrying Amount			Fair Value			Carrying Amount			Fair Value
	(In Thousands)
Financial Assets
Cash and Cash Equivalents	$	27,589		$	27,589		$	6,610		$	6,610
Certificates of Deposit		742			745			635			640
Securities		82,331			85,817			126,028			129,844

Loans		197,437			206,594			180,869			187,846
Less Allowance for Loan Losses		(1,805	)		(1,805	)		(1,759	)		(1,759	)
Loans, Net of Allowance		195,632			204,789			179,110			186,087

Federal Home Loan Bank Stock		1,543			1,543			2,002			2,002


Financial Liabilities
Deposits	$	194,326		$	200,413		$	188,362		$	193,225
Borrowings		57,113			60,489			68,248			71,556

Unrecognized Financial Instruments
Commitments to Extend Credit	$	18,518		$	18,523		$	17,398		$	17,739

The Company adopted 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 on a recurring basis (at least annually). ASC 820 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 14.

Estimated Fair Value of Financial Instruments (Continued)

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 the Company’s own credit risk.

In addition to defining fair value, 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. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

·	Level 1 - Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

Level 2 - Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used during the year ended December 31, 2011.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 14.

Estimated Fair Value of Financial Instruments (Continued)

The following table presents the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2011 and 2010:

	Fair Value Measurements
December 31, 2011	Total		Level 1		Level 2		Level 3
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	$	22,750	$	183	$	22,567	$	-

	Fair Value Measurements
December 31, 2010	Total		Level 1		Level 2		Level 3
Assets:	(In Thousands)
Available-for-Sale Securities
Mortgage-Backed Securities	$	15,383	$	-	$	15,383	$	-
US Government and Agency Obligations		47,106		-		47,106		-
Loans Held-for-Sale		187		187		-		-

Total	$	62,676	$	187	$	62,489	$	-

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 December 31, 2011 or 2010.

The following table presents the Company’s assets and liabilities measured at fair value on a non-recurring basis at December 31, 2011 and 2010:

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

Total		1,479		-		532		947

	Fair Value Measurements
December 31, 2010	Total		Level 1		Level 2		Level 3
Assets:	(In Thousands)
Impaired Loans		522		-		-		522
Other Real Estate Owned		1,696		-		1,696		-

Total		2,218		-		1,696		522

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 15.

Employee Benefits

The Bank has a 401(k) plan covering all employees who meet certain age and service requirements. Contributions to the plan are made at the discretion of the Board of Directors. The 401(k) expense amounted to approximately $13,000, $14,000 and $13,000 for the years ended December 31, 2011, 2010, and 2009, respectively. The plan contains profit sharing provisions, with employer contributions to the plan based on a percentage of wages, net of forfeitures. There was no profit sharing contribution during 2011, 2010 or 2009.

The Bank adopted a Supplemental Executive Retirement Plan (“SERP”) during 2006 for its Chief Executive Officer. The agreement requires the Bank’s Chief Executive Officer to remain employed by the Bank through January 15, 2013 in exchange for retirement benefits payable in equal quarterly installments of $25,000 for ten consecutive years. In the event of disability, the Bank’s Chief Executive Officer is entitled to receive equal quarterly installments of $25,000 for ten consecutive years. In the event of termination, other than for disability, the Bank’s Chief Executive Officer is entitled to benefits accrued through that period. In the event of death, benefits will be payable to the Chief Executive Officer’s designated beneficiary. For the years ended December 31, 2011, 2010 and 2009, the Bank accrued $95,000, $91,000 and $86,000, respectively, in accordance with this agreement. The Bank’s future compensation expense under this plan is $64,000 per year.

In March 2007, the Bank implemented a SERP for the benefit of the Bank’s Chief Financial Officer. The Plan provides for annual credits to an accumulation account at the rate of 10% of the Executive’s annual base pay. The account is credited with earnings on an annual basis at a rate determined by the Board of Directors. The Executive will be fully vested (100%) in his Accumulation Account at age 65. The Plan provides for partial vesting when the Executive reaches the “Early Retirement Age” of 55 and remains in the employ of the Bank. Upon reaching the Early Retirement Age, the Executive will be vested 75% in the Accumulation Account. Additional vesting will be credited at the rate of 2.5% per annum for years of service after attaining the Early Retirement Age. Notwithstanding the other provisions of the agreement, the Executive will be 100% vested in the Accumulation Account in the event of death, permanent disability, termination without cause, or termination following a change of control. For the years ended December 31, 2011, 2010 and 2009, the Bank accrued $11,600, $10,100 and $9,700, respectively, in accordance with this agreement in the respective periods.

Note 16.

Related Party Transactions

The Bank purchased insurance policies through an insurance agency of which one of its directors is an executive officer. Premiums for such policies totaled $427,000, $535,000 and $414,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 17.

Employee Stock Ownership Plan

During 2007, Louisiana Bancorp, Inc. instituted an employee stock ownership plan. The Louisiana Bancorp Employee Stock Ownership Plan (“ESOP”) enables all eligible employees of the Bank to share in the growth of the Company through the acquisition of stock. Employees are generally eligible to participate in the ESOP after completion of one year of service and attaining age 21.

The ESOP purchased eight percent of the shares offered in the initial public offering of the Company (507,659 shares). This purchase was facilitated by a loan from the Company to the ESOP in the amount of $5,077,000. The loan is secured by a pledge of the ESOP shares. The shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheets. The corresponding note is being paid back in 80 equal quarterly payments of $130,000 on the last business day of each quarter, beginning September 30, 2007, at the rate of 8.25%. The note payable and the corresponding note receivable have been eliminated for consolidation purposes.

The Company may contribute to the plan, in the form of debt service, at the discretion of its Board of Directors. Dividends received on the ESOP shares are utilized to service the debt. Shares are released for allocation to plan participants based on principal and interest payments of the note. Compensation expense is recognized based on the number of shares allocated to plan participants each year and the average market price of the stock for the current year. Released ESOP shares become outstanding for earnings per share computations.

As compensation expense is incurred, the unearned ESOP shares account is reduced based on the original cost of the stock. The difference between the cost and average market price of shares released for allocation is applied to additional paid-in capital. ESOP compensation expense was approximately $392,000, $371,000, and $343,000 for the years ended December 31, 2011, 2010 and 2009, respectively.

The ESOP shares as of December 31, 2011 and 2010, were as follows:

	2011		2010
Allocated Shares		88,838		63,455
Shares Released for Allocation		25,383		25,383
Unallocated Shares		393,438		418,821

Total ESOP Shares		507,659		507,659

Fair Value of Unallocated Shares	$	6,235,992	$	6,114,787

Stock Price at December 31	$	15.85	$	14.60

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 18.

Recognition and Retention Plan

On February 14, 2008, the shareholders of Louisiana Bancorp approved the Company’s 2007 Recognition and Retention Plan. The 2007 Recognition and Retention Plan provides the Company’s directors and key employees with an equity interest in the Company as compensation for their contributions to the success of the Company, and as an incentive for future such contributions. The Compensation Committee of the Company makes grants under the 2007 Recognition and Retention Plan to eligible participants based on these factors. Plan participants vest in their share awards at a rate of 20% per year over a five year period, beginning on the date of the plan share award. If service to the Company is terminated for any reason other than death, disability or change in control, the unvested shares awards shall be forfeited.

The Recognition and Retention Plan Trust (the “Trust”) has been established to acquire, hold, administer, invest, and make distributions from the Trust in accordance with provisions of the Plan and Trust. The Trust acquired 4%, or 253,829 shares, of the then issued and outstanding shares of the Company, which are held pursuant to the plan’s vesting requirements. The Recognition and Retention Plan provides that grants to each officer or employee and non-employee director shall not exceed 25% and 5%, respectively. Shares awarded to non-employee directors in the aggregate shall not exceed 30% of the shares available under the plan. As of December 31, 2011, 234,677 shares had been awarded under the provisions of the plan to directors, officers and employees of the Company.

The Company recognized compensation expense during 2011 at a weighted-average per-share grant date fair value of $11.56. Compensation expense related to the Recognition and Retention Plan was $521,000, $500,000 and $512,000 for the years ended December 31, 2011, 2010 and 2009, respectively. At December 31, 2011, there were 25,752 shares available for future grants under the plan, which includes 6,600 shares that were forfeited by former participants in the plan.

A summary of the changes in the Company’s granted, but nonvested shares, as of December 31, 2011, follows:

	Nonvested Shares
	Shares			Weighted-Average Grant Date Fair Value

Balance - December 31, 2010		134,752		$	11.66
Granted		4,000			15.36
Vested		(44,184	)		11.65
Forfeited		-			-

Balance - December 31, 2011		94,568		$	11.82

100

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 19.

Stock Option Plan

On February 14, 2008, the shareholders of Louisiana Bancorp, Inc. also approved the Company’s 2007 Stock Option Plan. The 2007 Stock Option Plan provides the Company’s directors and key employees with an equity interest in the Company as compensation for their contributions to the success of the Company, and as an incentive for future such contributions. The Compensation Committee of the Company grants options to eligible participants based on these factors. Plan participants vest in their options at a rate of 20% per year over a five year period, beginning on the grant date of the option. Vested options have an exercise period of ten years commencing on the date of grant. If service to the Company is terminated for any reason other than death, disability or change in control, the unvested options shall be forfeited.

Pursuant to the terms of the Stock Option Plan, 634,573 shares, or 10%, of common stock of the Company at the time of the plan’s adoption have been reserved for future issuance. The Stock Option Plan provides that grants to each officer or employee and non-employee director shall not exceed 25% and 5%, respectively. Options granted to non-employee directors in the aggregate shall not exceed 30% of the shares available under the plan.

As of December 31, 2011, options to acquire 567,197 shares of common stock had been granted under the provisions of the plan to directors, officers and employees of the Company, net of options forfeited and vested by former participants in the plan, at a weighted-average exercise price of $11.77. During the year ended December 31, 2011, there were no options awarded to directors, officers, or employees.

A summary of the activity in the Stock Option Plan is as follows:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contract Term		Remaining Contract Term		Aggregate Intrinsic Value

Outstanding, December 31, 2010		532,197		$	11.79
Options Granted		-			-
Options Exercised		-			-
Options Forfeited		(6,000	)		13.50

Outstanding, December 31, 2011		526,197		$	11.77		6.33 Years		6.33 Years	$	2,146,393

Options Exercisable at December 31, 2011		309,118		$	11.72		6.29 Years		6.29 Years	$	1,276,790

101

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 19.

Stock Option Plan (Continued)

A summary of the status of the Company’s nonvested options as of December 31, 2011, and changes during the year ended December 31, 2011, is as follows:

	Shares			Weighted- Average Grant Date Fair Value
Nonvested at December 31, 2010		329,516		$	11.86
Options Granted		-			-
Options Vested		(106,440	)		11.75
Options Forfeited		(6,000	)		13.50

Nonvested at December 31, 2011		217,076		$	11.87

As of December 31, 2011, there was $324,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 1.6 years. The Company recognizes compensation expense during the vesting period based on the fair value of the option on the date of grant. Compensation expense related to the Stock Option Plan was $244,000, $241,000 and $239,000, respectively, for the years ended December 31, 2011, 2010 and 2009.

102

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 20.

Earnings per Common Share

The Company computes earnings per share in accordance with FASB ASC 260-10, Earnings per Share. Net income is divided by the weighted-average number of shares outstanding during the year to calculate basic net earnings per common share. Diluted earnings per common share are calculated to give effect to stock options.

	2011		2010		2009
	(Dollars in Thousands, Except per Share Data)
Numerator
Net Income	$	2,117	$	2,558	$	2,534
Effect of Dilutive Securities		-		-		-

Numerator for Diluted Earnings Per Share	$	2,117	$	2,558	$	2,534

Denominator
Weighted-Average Shares Outstanding		2,902,747		3,640,521		4,659,328
Effect of Potentially Dilutive Securities		125,286		106,056		72,559

Denominator for Diluted Earnings Per Share		3,028,033		3,746,577		4,731,887

Earnings Per Share
Basic	$	0.73	$	0.71	$	0.54
Diluted	$	0.70	$	0.69	$	0.54

The following table presents the components of average outstanding shares for purposes of calculating earnings per share:

	2011			2010			2009
Average Common Shares Issued		6,345,732			6,345,732			6,345,732
Average Unearned ESOP Shares		(418,713	)		(444,134	)		(469,516	)
Average Unearned RRP Shares		(127,228	)		(170,547	)		(215,150	)
Average Treasury Shares		(2,897,044	)		(2,090,530	)		(1,001,738	)

		2,902,747			3,640,521			4,659,328

103

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 21.

Condensed Financial Information - Parent Company Only

Financial information pertaining only to Louisiana Bancorp, Inc. is as follows:

LOUISIANA BANCORP, INC.
Condensed Balance Sheets
As of December 31, 2011 and 2010
(Dollars in Thousands)

	2011		2010
Assets
Cash and Cash Equivalents	$	4,144	$	2,430
Certificates of Deposits		93		187
Securities Available for Sale, at Fair Value		1,084		1,336
Investment in Subsidiary		51,211		55,885
Loan to ESOP		4,522		4,662
Accrued Interest Receivable		4		6
Other Assets		410		69

Total Assets	$	61,468	$	64,575


Liabilities and Shareholders' Equity
Liabilities
Due to Subsidiary	$	-	$	101
Other Liabilities		14		8

Total Liabilities		14		109

Total Shareholders' Equity		61,454		64,466

Total Liabilities and Shareholders' Equity	$	61,468	$	64,575

104

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 21.

Condensed Financial Information - Parent Company Only (Continued)

LOUISIANA BANCORP, INC.
Statements of Operations
For the Years Ended December 31, 2011, 2010 and 2009
(Dollars in Thousands)

	2011			2010			2009
Income
Interest Income ESOP Loan	$	380		$	391		$	401
Interest Income Investment Securities		66			205			510
Dividend Income from Subsidiary		6,800			9,882			-
Other Interest Income		1			156			39

Total Income		7,247			10,634			950

Operating Expenses		313			302			385

Income Before Income Taxes and Undistributed Earnings of Subsidiary		6,934			10,332			565

Federal Income Tax Expense		(49	)		(142	)		(194	)

Equity in Undistributed Earnings of Subsidiary		(4,768	)		(7,632	)		2,163

Net Income	$	2,117		$	2,558		$	2,534

105

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 21.

Condensed Financial Information - Parent Company Only (Continued)

LOUISIANA BANCORP, INC.
Statements of Cash Flows
For the Years Ended December 31, 2011, 2010 and 2009
(Dollars in Thousands)

	2011			2010			2009
Cash Flows from Operating Activities
Net Income	$	2,117		$	2,558		$	2,534
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Equity in Undistributed Income of Subsidiaries		4,768			7,632			(2,163	)
Net Increase in Recognition and Retention Plan Shares Earned		514			514			516
Stock Option Plan Expense		244			242			239
Discount Accretion Net of Premium Amortization		(2	)		(11	)		(24	)
Deferred Income Tax Benefit		(30	)		(16	)		(18	)
Gain on Sale of Securities		-			(150	)		(7	)
Decrease in Accrued Interest Receivable		2			52			90
Increase in Other Assets		(300	)		(46	)		(22	)
(Decrease) Increase in Due to Subsidiary		(101	)		(1	)		95
Increase (Decrease) in Other Liabilities		3			(5	)		(128	)

Net Cash Provided by Operating Activities		7,215			10,769			1,112

Cash Flows from Investing Activities
Purchases of Certificates of Deposit		(16	)		(77	)		(1,280	)
Purchases of Investment Securities - Available-for-Sale		(1,500	)		-			(3,997	)
Proceeds from Maturities of Certificates of Deposit		110			822			982
Proceeds from Maturities of Securities Available-for-Sale		1,914			1,097			12,112
Proceeds from Sales of Securities Available-for-Sale		-			5,135			5,007
Repayments of ESOP Loan by Subsidiary		139			128			118

Net Cash Provided by Investing Activities		647			7,105			12,942

Cash Flows from Financing Activities
Purchase of Treasury Stock		(5,965	)		(16,628	)		(15,595	)
Proceeds from Exercise of Stock Options		-			93			-

Net Cash Used in Financing Activities		(5,965	)		(16,535	)		(15,595	)

Net Increase (Decrease) in Cash and Cash Equivalents		1,897			1,339			(1,541	)

Cash and Cash Equivalents, Beginning of Year		2,430			1,091			2,632

Cash and Cash Equivalents, End of Year	$	4,327		$	2,430		$	1,091

106

LOUISIANA BANCORP, INC.

Notes to Consolidated Financial Statements

Note 22.

Plan of Reorganization and Stock Issuance

As disclosed in Note 1, on March 16, 2007, Bank of New Orleans completed its reorganization to a federally-chartered stock savings bank and formed Louisiana Bancorp, Inc. to serve as the stock holding company for the Bank. In connection with the reorganization, the Company sold 6,345,732 shares of its common stock at $10.00 per share. The Company’s ESOP purchased 507,659 shares, financed by a loan from the Company. The net proceeds from the sale of this stock were approximately $62,126,000, and the cost associated with the stock conversion was approximately $1,300,000.

As part of the Conversion, the Bank established a liquidation account in an amount equal to the net worth of the Bank as of the date of the latest consolidated balance sheet distributed in connection with the Conversion. The liquidation account is maintained for the benefit of eligible account holders and supplemental eligible account holders who maintain their accounts at the Bank after the Conversion. The liquidation account will be reduced annually to the extent that such account holders have reduced their qualifying deposits as of each anniversary date. Subsequent increases will not restore an account holder’s interest in the liquidation account. In the event of a complete liquidation, each eligible account holder will be entitled to receive balances for accounts then held.

Note 23.

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 December 31, 2011. In preparing these financial statements, the Company evaluated the events and transactions that occurred through the date these financial statements were issued. There were no material subsequent events that required recognition or additional disclosure in these financial statements.

107

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)

(1)

The following financial statements are incorporated by reference from Item 8 hereof:

Consolidated Statements of Financial Condition as of December 31, 2011 and 2010

Consolidated Statements of Income for the Years Ended December 31, 2011, 2010 and 2009

Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2011, 2010 and 2009

Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2011, 2010 and 2009

Consolidated Statements of Cash Flows for the Years Ended December 31, 2011, 2010 and 2009

Notes to Consolidated Financial Statements

(2)

All schedules are omitted because they are not required or applicable, or the required information is shown in the consolidated financial statements or the notes thereto.

	(3)	Exhibits
	The following exhibits are filed as part of this Form 10-K and this list includes the Exhibit Index.

No.	Description	Location
3.1	Articles of Incorporation of Louisiana Bancorp, Inc.	(1)
3.2	Bylaws of Louisiana Bancorp, Inc.	(1)
4.0	Form of Common Stock Certificate of Louisiana Bancorp, Inc.	(1)
10.1	Amended and Restated Supplemental Executive Retirement Plan with Lawrence J. LeBon, III*	(2)
10.2	Amended and Restated Supplement Executive Retirement Plan with John LeBlanc*	(2)
10.3	Amended and Restated Directors Deferred Compensation Plan*	(2)
10.4	Amended and Restated Employment Agreement between Louisiana Bancorp, Inc. and Lawrence J. LeBon, III*	(2)
10.5	Amended and Restated Employment Agreement between Bank of New Orleans and Lawrence J. LeBon, III*	(2)
10.6	Amended and Restated Employment Agreement between Louisiana Bancorp, Inc. and John LeBlanc*	(2)
10.7	Amended and Restated Employment Agreement between Bank of New Orleans and John LeBlanc*	(2)
10.8	Employment Agreement between Bank of New Orleans and C. Holly Callia	(3)
10.8	2007 Stock Option Plan*	(4)
10.9	2007 Recognition and Retention Plan and Trust Agreement*	(4)
22.0	Subsidiaries of the Registrant – Reference is made to “Item 1. Business - Subsidiaries” of this Form 10-K for the required information	--
23.1	Consent of LaPorte, A Professional Accounting Corporation	Filed herewith
31.1	Certification of Chief Executive Officer	Filed herewith
31.2	Certification of Chief Financial Officer	Filed herewith
32.0	Section 1350 Certification of the Chief Executive Officer and Chief Financial Officer	Filed herewith

_______________________

*	Denotes management compensation plan or arrangement.

(1)	Incorporated by reference from the Company’s Registration Statement on Form S-1, filed with the SEC on March 21, 2007, as amended, and declared effective on May 14, 2007 (File No. 333-141465).

(2)	Incorporated by reference from the Company’s Current Report on Form 8-K, dated as of October 28, 2008.

(3)	Incorporated by reference from the Company’s Current Report on Form 8-K, date as of October 25, 2011.

(4)	Incorporated by reference from the Company’s definitive proxy statement for the special meeting of stockholders to be held on February 14, 2008, filed with the SEC on December 28, 2007.

(b)	Exhibits

	The exhibits listed under (a)(3) of this Item 15 are filed herewith.

(c)	Reference is made to (a)(2) of this Item 15.

111

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.
May 2, 2012	By:	/s/ Lawrence J. LeBon, III Lawrence J. LeBon, III Chairman of the Board, President and Chief Executive Officer


May 2, 2012	By:	/s/ John LeBlanc John LeBlanc Senior Vice President and Chief Financial Officer (principal financial and principal accounting officer)

112

LOUISIANA BANCORP INC - FORM 10-K/A - May 2, 2012

Attached files

LOUISIANA BANCORP INC Reports