STATE INVESTORS BANCORP, INC. - FORM 10-K

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EXCEL - IDEA: XBRL DOCUMENT - STATE INVESTORS BANCORP, INC.	Financial_Report.xls
EX-32 - EXHIBIT 32 - STATE INVESTORS BANCORP, INC.	t81849_ex32-0.htm
EX-31.1 - EXHIBIT 31.1 - STATE INVESTORS BANCORP, INC.	t81849_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - STATE INVESTORS BANCORP, INC.	t81849_ex31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


(Mark One)
☒	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the fiscal year ended: December 31, 2014
	or
☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the transition period from ______ to ______

Commission File Number: 001-35221

STATE INVESTORS BANCORP, INC.

(Exact name of Registrant as specified in its charter)

Louisiana		27-5301129
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

1041 Veterans Boulevard, Metairie, Louisiana		70005
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (504) 832-9400

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


Title of each class		Name of each exchange on which registered
Common Stock (par value $.01 per share)		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 ☒

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 ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES ☒ 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. ☒

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.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
(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 ☒

The aggregate market value of the 1.8 million shares of the Registrant’s common stock held by non-affiliates, based upon the closing price of $16.80 for the common stock on June 30, 2014, the last business day of the registrant’s second quarter, was approximately $31.1 million. Shares of common stock held by the registrant’s executive officers, directors and certain benefit plans 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 26, 2015: 2,304,359

STATE INVESTORS BANCORP, INC.

2014 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS


		Page
PART I

Item 1.	Business	2

Item 1A.	Risk Factors	26

Item 1B.	Unresolved Staff Comments	26

Item 2.	Properties	27

Item 3.	Legal Proceedings	27

Item 4.	Mine Safety Disclosures	27
PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28

Item 6.	Selected Financial Data	29

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	40

Item 8.	Financial Statements and Supplementary Data	40

Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	81

Item 9A.	Controls and Procedures	81

Item 9B.	Other Information	81
PART III

Item 10.	Directors, Executive Officers and Corporate Governance	82

Item 11.	Executive Compensation	84

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	88

Item 13.	Certain Relationships and Related Transactions, and Director Independence	90

Item 14.	Principal Accounting Fees and Services	90

PART IV

Item 15.	Exhibits and Financial Statement Schedules	91

SIGNATURES		93

Forward-Looking Statements

This Annual Report on Form 10-K contains certain forward-looking statements (as defined in the Securities Exchange Act of 1934 and the regulations thereunder). Forward-looking statements are not historical facts but instead represent only the beliefs, expectations or opinions of State Investors Bancorp, Inc. and its management regarding future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly.”

Forward-looking statements include, but are not limited to, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to future operations, products and services; and statements regarding future performance. Such statements are subject to certain risks, uncertainties and assumption, many of which are difficult to predict and generally are beyond the control of State Investors Bancorp, Inc. and its management, that could cause actual results to differ materially from those expressed in, or implied or projected by, forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

(1)

Economic and competitive conditions which could affect the volume of loan originations, deposit flows and real estate values;

(2)

The levels of non-interest income and expense and the amount of loan losses;

(3)

Competitive pressure among depository institutions increasing significantly;

(4)

Changes in the interest rate environment causing reduced interest margins;

(5)

General economic conditions, either nationally or in the markets in which State Investors Bancorp, Inc. is or will be doing business, being less favorable than expected;

(6)

Political and social unrest, including acts of war or terrorism; or

(7)

Legislation or changes in regulatory requirements adversely affecting the business in which State Investors Bancorp, Inc. will be engaged. State Investors Bancorp, Inc. undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

PART I

As used in this report, unless the context otherwise requires, the terms “we,” “our,” “us,” “State Investors Bancorp,” or the “Company” refer to State Investors Bancorp, Inc., a Louisiana corporation, and the term the “Bank” refers to State-Investors Bank, a federally chartered savings bank and wholly owned subsidiary of the Company. In addition, unless the context otherwise requires, references to the operations of the Company include the operations of the Bank.

Item 1. Business.

General. State Investors Bancorp was organized by State-Investors Bank in February 2011 to facilitate the conversion of the Bank from the mutual to the stock form of ownership and commenced operations in July 2011. A total of 2,909,500 shares of common stock of the Company were sold at $10.00 per share in the subscription offering to eligible depositors and borrowers of the Bank through which the Company received proceeds of approximately $27.9 million, net of offering expenses. The Company is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. After completion of the conversion and the offering, all of State-Investors Bank’s stock is owned by State Investors Bancorp. The Company contributed approximately 50% of the net proceeds to the Bank. All remaining proceeds were retained by State Investors Bancorp for future capital needs.

On December 30, 2014, the Company and First NBC Bank Holding Company (“First NBC”) entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) pursuant to which State Investors Bancorp will merge with and into First NBC (the “Merger”). Promptly following consummation of the Merger, it is expected that State-Investors Bank will merge with and into First NBC Bank (the “Bank Merger”). Under the terms of the Merger Agreement, shareholders of State Investors Bancorp will receive $21.25 for each share of State Investors Bancorp common stock they own. Consummation of the Merger is subject to certain conditions, including, among others, approval of the Merger by shareholders of State Investors Bancorp, governmental filings and regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of the other party, absence of a material adverse effect, and obtaining material permits and authorizations for the lawful consummation of the Merger. The proposed transaction is expected to be completed during the second quarter of 2015. For further information on this transaction see Note 20 in the Notes to the Consolidated Financial Statements included in Item 8 herein.

State-Investors Bank is a federally chartered savings bank located in Metairie, Louisiana, which is in Jefferson Parish. State-Investors Bank’s business consists primarily of attracting deposits from the general public and using those funds to originate residential and commercial loans in Jefferson, Orleans and St. Tammany Parishes within the seven parish New Orleans-Metairie-Kenner Metropolitan Statistical Area.

Market Area and Competition

State-Investors Bank conducts its operations through its main office in Metairie, Louisiana located in Jefferson Parish, one additional branch office in Jefferson Parish, one branch office located in New Orleans, Louisiana, which is in Orleans Parish and one branch office located in Mandeville, Louisiana, which is in St. Tammany Parish. Jefferson and St. Tammany Parishes are suburbs of New Orleans and Orleans Parish consists solely of the city of New Orleans. Our business is dependent on the local economy in southeastern Louisiana, which includes the petrochemical industry, port activity along the Mississippi River, healthcare and tourism. Service jobs, primarily consisting of jobs in healthcare and tourism, represent the largest employment sector in Jefferson, St. Tammany and Orleans Parishes. Employment in government and the wholesale/retail trade sector historically have been the second and third largest employment sectors in our market area.

We face significant competition in originating loans and attracting deposits. This competition stems primarily from commercial banks, other savings banks and savings associations and mortgage-banking companies. Within our market area, more than 50 other banks, savings institutions and credit unions are operating. Many of the financial service providers operating in our market area are significantly larger, and have greater financial resources than us. We face additional competition for deposits from short-term money market funds and other corporate and government securities funds, mutual funds and from other non-depository financial institutions such as brokerage firms and insurance companies.

Lending Activities

General. At December 31, 2014, the Company’s net loan portfolio amounted to $218.2 million, representing approximately 80.25 % of its total assets at that date. The principal lending activity of State Investors Bancorp is the origination of one- to four-family residential loans and, to a lesser extent, commercial real estate loans. At December 31, 2014, one- to four-family residential loans amounted to $137.0 million, or 62.3 % of its total loan portfolio. At December 31, 2014, commercial real estate loans amounted to $57.5 million, or 26.1 % of the total loan portfolio. Multi-family residential loans totaled $7.3 million, or 3.3 % of the total loan portfolio. Construction loans totaled $10.1 million, or 4.6 % of total loans. Home equity lines of credit and land loans totaled $2.8 million and $3.4 million, or 1.3 % and 1.6 %, respectively, of the total loan portfolio at December 31, 2014. Consumer non-real estate loans totaled $1.3 million, or 0.6 % of the total loan portfolio at December 31, 2014.

The types of loans that State Investors Bancorp may originate or purchase are subject to federal and state laws and regulations. Interest rates charged on loans are affected principally by the demand for such loans, the supply of money available for lending purposes and the rates offered by our competitors. These factors are, in turn, affected by general and economic conditions, the monetary policy of the federal government, including the Federal Reserve Board, legislative and tax policies, and governmental budgetary matters.

As a federally chartered savings bank, State-Investors Bank is subject to a regulatory loans to one borrower limit. As of December 31, 2014, State-Investors Bank’s loans to one borrower limit was $10.1 million. At December 31, 2014, the five largest loans or groups of loans to one borrower, including related entities, aggregated $5.9 million, $5.5 million, $3.2 million, $2.6 million and $2.4 million. All of our largest loans or groups of loans were performing in accordance with their terms at December 31, 2014.

Loan Portfolio Composition. The following table shows the composition of our loan portfolio by type of loan at the dates indicated.

	December, 31
	2014						2013						2012						2011						2010
	Amount			%			Amount			%			Amount			%			Amount			%			Amount			%

Real estate loans:
One- to four-family residential	$	137,036			62.29	%	$	130,422			64.93	%	$	121,595			68.93	%	$	125,154			70.79	%	$	128,056			70.30	%
Commercial real estate		57,487			26.13			52,979			26.37			37,284			21.14			34,422			19.47			37,050			20.34
Multi-family residential		7,271			3.31			5,462			2.72			5,421			3.07			4,817			2.72			5,653			3.10
Land		3,428			1.56			3,441			1.71			2,916			1.65			3,371			1.91			2,743			1.50
Residential construction		10,075			4.58			4,464			2.22			2,309			1.31			2,874			1.63			2,904			1.60
Total real estate loans	$	215,297			97.86	%		196,768			97.95	%		169,525			96.10	%		170,638			96.52	%		176,406			96.84	%
Other loans:
Home equity lines of credit		2,819			1.28			2,241			1.12			4,641			2.64			4,522			2.56			4,360			2.40
Consumer non-real estate loans		1,268			0.58			1,210			0.60			1,560			0.88			1,636			0.93			1,390			0.76
Commercial business loans		607			0.28			660			0.33			675			0.38			--			--			6			--
Total other loans	$	4,694			2.14	%	$	4,111			2.05	%	$	6,876			3.90	%	$	6,158			3.48	%	$	5,756			3.16	%

Total loans	$	219,991			100.00	%	$	200,879			100.00	%	$	176,401			100.00	%	$	176,796			100.00	%	$	182,162			100.00	%

Less:

Deferred loan fees		(388	)					(263	)					(133	)					(70	)					(26	)
Allowance for loan losses		(1,397	)					(1,351	)					(1,436	)					(1,596	)					(1,505	)

Net loans	$	218,206					$	199,265					$	174,832					$	175,130					$	180,631

Origination and Purchase of Loans. Our lending activities are subject to the written underwriting standards and loan origination procedures established by the Board of Directors and management. Loan originations are obtained through a variety of sources, primarily existing customers as well as new customers obtained from referrals and local advertising and promotional efforts. Written loan applications are taken by a loan officer who also supervises the procurement of credit reports, appraisals and other documentation involved with a loan. In accordance with its lending policy and loan underwriting standards, State-Investors Bank obtains independent outside appraisals on its loans or broker valuations for small loans, under $250,000, or loans with low loan-to-value ratios. It is our practice to conduct an on-site visual inspection of real property collateral for all loans, including out-of-state properties, which are few in number. Borrowers must also obtain flood insurance policies when the property is in a flood hazard area. All loans considered for purchase are subject to the same underwriting standards as for loans we originate.

Our loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the loan and the value of the property that will secure the loan. Loans between $200,000 to $500,000 are approved by one outside director who is a member of our loan committee. The Board members of State-Investors Bank who serve on the loan committee are Messrs. Maslansky, Oustalet, and Albert, who is chair. All loans in excess of $500,000 are approved by the full loan committee and in excess of $1.0 million by the full Board of Directors. Mr. Carriere, our underwriter, is a non-voting member of the loan committee.

From time to time, we will purchase whole loans and loan participations secured by properties within and outside of our primary market area. Historically, the loan participations have been secured by one- to four-family residential properties and commercial properties. In these circumstances, we follow our customary loan underwriting and approval policies. Our participation interest in single-family residential loans is typically 90%. We have sufficient capital to take advantage of these opportunities to purchase loan participations, as well as strong relationships with other community banks in our primary market area that may desire to sell participations, and we intend to continue our purchases of participations in the future. At December 31, 2014, our loan participations totaled $25.8 million, or 11.7 % of our loan portfolio, of which $5.1 million, or 2.3 % of our loan portfolio, were outside our primary market area. The loan participations at December 31, 2014, included $ 17.3 million in commercial real estate, $7.8 million in residential real estate and $607,000 in commercial business loans. The average participation interest outside our market area was $231,000 as of December 31, 2014.

Loan Originations. The following table shows our total loans originated, purchased, sold and repaid during the periods indicated.


	2014			2013			2012
	(In thousands)
Loan originations:
One- to four-family residential	$	12,041		$	21,599		$	11,105
Commercial real estate		12,864			19,328			15,752
Multi-family residential		2,368			980			809
Land		534			964			387
Residential construction		2,767			2,208			975
Home equity lines of credit		1,563			691			584
Consumer non-real estate loans		748			314			400
Commercial business loans		--			--			--
Total loan originations		32,885			46,084			30,012
Loans purchased		15,261			12,267			11,030
Loans and participations sold		--			(906	)		--
Loan principal repayments		(29,034	)		(32,714	)		(40,941	)
Decrease due to other items, net		(171	)		(248	)		(399	)
Net increase (decrease) in net loans	$	18,941		$	24,483		$	(298	)

Although federal laws and regulations permit savings banks to originate and purchase loans secured by real estate located throughout the United States, State-Investors Bank concentrates its portfolio lending activity in its primary market area in Jefferson, Orleans and St. Tammany Parishes and, to a lesser extent, St. Charles Parish, Louisiana. We also purchase residential real estate loans from time to time outside of our market area.

Contractual Terms to Final Maturities. The following table shows the scheduled contractual maturities of our loans as of December 31, 2014, before giving effect to net items, including the allowance for loan losses. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments.

	One- to Four- Family Residential		Commercial Real Estate		Multi-family Residential		Land		Residential Construction		Home Equity Lines of Credit		Consumer Non-Real Estate Loans		Commercial Business Loans		Total
	(In thousands)
Amounts due in:
One year or less	$	3,724	$	1,172	$	--	$	--	$	7,127	$	466	$	848	$	--	$	13,337
After one year through two years		461		3,045		1,150		--		2,948		1,351		37		--		8,992
After two years through three years		492		902		521		--		--		372		24		--		2,311
After three years through five years		1,814		2,653		--		120		--		554		68		--		5,209
After five years through ten years		4,853		6,585		397		279		--		--		291		607		13,012
After ten years through 15 years		21,626		19,309		3,493		1,830		--		76		--		--		46,334
After 15 years		104,066		23,821		1,710		1,199		--		--		--		--		130,796
Total	$	137,036	$	57,487	$	7,271	$	3,428	$	10,075	$	2,819	$	1,268	$	607	$	219,991

The following table shows the dollar amount of our loans at December 31, 2014, due after December 31, 2015, as shown in the preceding tables, which have fixed interest rates or which have floating or adjustable interest rates.

	Fixed-Rate		Floating or Adjustable-Rate		Total
	(In thousands)
One- to four-family residential	$	118,106	$	15,206	$	133,312
Commercial real estate		33,694		22,621		56,315
Multi-family residential		2,965		4,306		7,271
Land		3,428		--		3,428
Residential construction		2,948		--		2,948
Home equity lines of credit		2,353		--		2,353
Consumer non-real estate loans		420		--		420
Commercial business loans		607		--		607
Total	$	164,521	$	42,133	$	206,654

Scheduled contractual maturities of loans do not necessarily reflect the actual expected term of the loan portfolio. The average life of mortgage loans is substantially less than their average contractual terms because of prepayments. The average life of mortgage loans tends to increase when current mortgage loan rates are higher than rates on existing mortgage loans and, conversely, decrease when rates on current mortgage loans are lower than existing mortgage loan rates (due to refinancing of fixed-rate loans at lower rates). Under the latter circumstance, the weighted average yield on loans decreases as higher yielding loans are repaid or refinanced at lower rates.

One- to Four-Family Residential Real Estate Loans. Our principal lending activity is the origination of loans secured by single-family residences. At December 31, 2014, $137.0 million, or 62.3%, of our total loan portfolio, before net items, consisted of one- to four-family residential loans including primarily owner occupied properties.

It is the policy of State-Investors Bank to originate loans as a first lien position on owner occupied residences. We primarily originate fixed-rate loans with terms of 15 to 20 years, and to a lesser extent, adjustable- rate loans of five to seven years. In recent periods, we reduced the origination of fixed-rate loans of 30 years in order to manage our interest rate risk. As of December 31, 2014, $104.1 million, or 75.9%, of our one- to four-family residential loans had contractual maturities of more than 15 years. Our residential loan portfolio includes both owner occupied and non-owner occupied properties. Mortgages without private mortgage insurance are generally limited to 80%, or less, of the appraised value, or purchase price, of the secured real estate property. Exceptions to this policy may be approved by the management loan committee.

Our guidelines for credit quality generally parallel the Federal National Mortgage Corporation, commonly called Fannie Mae, and the Federal Home Loan Mortgage Corporation, commonly called Freddie Mac, secondary market guidelines including income ratios and credit scores. We do, however, originate a small number of loans which do not conform to such requirements. We do not originate loans considered to be subprime under federal regulatory guidelines.

Commercial Real Estate Loans. As of December 31, 2014, loans secured by commercial real estate were $57.5 million, or 26.1 % of total loans before net items. Although commercial real estate and lines of credit are generally considered to have greater credit risk than certain other types of loans, management attempts to mitigate such risk by originating such loans in its local market area to known borrowers. At December 31, 2014, $17.3 million of our commercial real estate loans were loan participations. The loan-to-value ratios on participations are generally limited to 70% or less of the appraised value and we generally require that out of market loans are seasoned with a history of repayment. Our commercial real estate loans primarily consist of owner occupied business and retail properties.

It is our current policy to lend in a first lien position on real property occupied as a commercial business property or mixed use properties. Commercial real estate loans are limited to a maximum of 75% of the lesser of appraised value or purchase price and primarily have fixed-rates and terms up to five years. We originate fixed-rate and adjustable-rate commercial real estate loans. Extended amortization schedules up to 20 years may be offered if justified by the borrower’s financial strength and/or low loan-to-value ratio. Rate commitments are limited to five years with adjustments thereafter based on a negotiated rate or spread relative to a market index. Commercial real estate loans are presented to the loan committee for review and approval, including analysis of the creditworthiness of the borrower.

Land Loans. As of December 31, 2014, land loans were $3.4 million, or 1.6 % of the total loan portfolio before net items. Land loans primarily include land which has been acquired for the purpose of development and, to a lesser extent, unimproved land. Our loan policy provides for loan-to-value ratios up to 75% on improved land or land acquired for development and up to 65% for unimproved land loans. Land loans are originated with fixed rates and terms up to five years. Although land loans generally are considered to have greater credit risk than certain other types of loans, we attempt to mitigate such risk by originating loans to individuals who intend to build a single-family owner occupied home, rather than developers, and identifying a secondary source of repayment for the land loan other than the sale of the collateral.

Multi-family Residential Loans. We originate multi-family residential loans in our local market area primarily consisting of apartment rental properties with eight units or less. At December 31, 2014, our multi-family residential loans totaled $7.3 million, or 3.3% of total loans before net items. Multi-family residential loans have loan-to-value ratios up to 75% and terms up to five years. We require rental and cash flow data sufficient to cover the loan repayment as well as identify a secondary source of repayment, other than the sale of the collateral.

Residential Construction Loans. We originate residential construction loans to be converted to permanent financing. We do not actively solicit construction loans, but offer them as an accommodation to our borrowers. The same qualifications and loan-to-value ratios of real estate loans apply and no separate closing to convert to a permanent loan is required. Loans for the substantial renovation of an existing home are underwritten and administered as construction loans. At December 31, 2014, $10.1 million, or 4.6 % of our total loan portfolio, before net items, consisted of residential construction loans.

Home Equity Loans and Lines of Credit. We originate second mortgage residential loans and home equity lines of credit to finance minor renovations and repairs as well as for other consumer or investment purposes. Second mortgage loans and home equity lines of credit are primarily extended when State-Investors Bank holds the first mortgage on the collateral and together are limited to loan-to-value ratios of 80% or less. At December 31, 2014, $2.8 million, or 1.3 % of our total loans, before net items, consisted of home equity loans and lines of credit.

Consumer Non-real Estate Loans. We originate consumer non-real estate loans that have terms up to five years and generally higher interest rates than residential mortgage loans. The consumer loans consist of installment loans for various purposes including home improvement loans, auto loans, boat loans and loans on deposit accounts. We will make unsecured consumer loans to customers with an established history of performance and capacity for repayment. At December 31, 2014, our consumer loans totaled $1.3 million, or 0.6 % of our total loan portfolio before net items.

Commercial Business Loans. We do not generally originate commercial business loans secured by inventory and accounts receivable. At December 31, 2014, we had $607,000, or 0.3 % of our total loan portfolio before net items, in commercial business loans, all of which were loan participations. Although we do not actively solicit commercial business loans, we may also provide them as an accommodation to existing customers.

Loan Origination and Other Fees. In addition to interest earned on loans, we may also receive loan origination fees or “points” for originating loans. Loan points are a percentage of the principal amount of the mortgage loan and are charged to the borrower in connection with the origination of the loan. Such origination fees, net of certain direct loan origination costs, are deferred and recognized as an adjustment to the yield (interest income) of the related loans over the contractual life of the loan.

Asset Quality

General. State-Investors Bank’s collection procedures provide that when a loan is 30 and 60 days past due, a notice is sent to the borrower. Borrowers who are 61-89 days delinquent will be sent a letter advising that payments must be received by the last day of the month. For those who are 90 days delinquent, a demand letter is sent by State-Investors Bank giving them 10 days within which the loan must be brought current. Customers who have not responded to the 90-day demand letter will receive an attorney’s letter advising them to bring the loan current. Late charges will be assessed based on the number of days specified in the note beyond the due date. The Board of Directors is notified of all delinquencies ninety days past due. In most cases, deficiencies are cured promptly. While we generally prefer to work with borrowers to resolve such problems, we will institute foreclosure or other collection proceedings when necessary to minimize any potential loss.

Loans are placed on non-accrual status when management believes the probability of collection of principal or interest is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income.

Real estate and other assets acquired as a result of foreclosure or by deed-in-lieu of foreclosure are classified as real estate owned until sold. State Investors Bancorp had $150,000 of real estate owned at December 31, 2014 and none at December 31, 2013.

Delinquent Loans. The following table shows the delinquencies in our loan portfolio as of the dates indicated.

	December 31, 2014										December 31, 2013
	30-89 Days Overdue					90 or More Days Overdue					30-89 Days Overdue					90 or More Days Overdue
	Number of Loans		Principal Balance			Number of Loans		Principal Balance			Number of Loans		Principal Balance			Number of Loans		Principal Balance
	(Dollars in thousands)
One- to four-family residential		28	$	4,156			5	$	678			29	$	4,540			6	$	1,359
Commercial real estate		1		243			--		--			3		633			--		--
Multi-family residential		--		--			--		--			--		--			--		--
Land		--		--			--		--			3		79			--		--
Residential construction		1		653			--		--			--		--			--		--
Home equity lines of credit		--		--			--		--			--		--			--		--
Consumer non-real estate loans		1		7			1		--			1		6			--		--
Commercial business loans		--		--			--		213			--		--			--		--
Total delinquent loans		31	$	5,059			36	$	891			36	$	5,258			6	$	1,359

Delinquent loans to total net loans				2.32	%				0.41	%				2.64	%				0.68	%
Delinquent loans to total loans				2.30	%				0.41	%				2.62	%				0.68	%

Non-performing Assets. The following table shows the amounts of our non-performing assets, which include non-accruing loans, accruing loans 90 days or more past due, other real estate owned and troubled debt restructurings at any of the dates indicated.

	December 31,
	2014			2013			2012			2011			2010
	(Dollars in thousands)
Non-accruing loans:
One- to four-family residential	$	--		$	337		$	456		$	258		$	178
Commercial real estate		--			--			936			1,226			--
Multi-family residential		--			1,172			1,560			1,283			--
Land		--			--			--			--			--
Residential construction		--			--			--			--			--
Home equity lines of credit		--			--			--			--			--
Consumer non-real estate loans		--			--			--			--			--
Commercial business loans		--			--			--			--			--
Total non-accruing loans		--			1,509			2,952			2,767			178
Accruing loans 90 days or more past due:
One- to four-family residential		678			1,148			326			522			1,098
Commercial real estate		--			--			--			--			--
Multi-family residential		--			--			--			--			--
Land		--			--			--			58			--
Residential construction		--			--			--			--			--
Home equity lines of credit		--			--			--			--			--
Consumer non-real estate loans		--			--			--			26			20
Commercial business loans		213			--			--			--			--
Total accruing loans 90 days or more past due		891			1,148			326			606			1,118
Total non-performing loans (1)		891			2,657			3,278			3,373			1,296
Other real estate owned, net		150			--			--			--			167
Total non-performing assets	$	1,041		$	2,657		$	3,278		$	3,373		$	1,463
Troubled debt restructurings (2)		2,316			1,317			1,476			1,551			--

Total non-performing assets and troubled debt restructurings	$	3,357		$	3,974		$	4,754		$	4,924		$	1,463

Total non-performing loans as a percentage of loans, net		0.41	%		1.33	%		1.87	%		1.93	%		0.72	%
Total non-performing loans as a percentage of total assets		0.33	%		1.03	%		1.33	%		1.35	%		0.62	%
Total non-performing assets as a percentage of total assets		0.38	%		1.03	%		1.33	%		1.35	%		0.70	%
Total non-performing assets and troubled debt restructurings as a percentage of total assets		1.23	%		1.54	%		1.93	%		1.97	%		--	%

(1) Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due.

(2)	Troubled debt restructurings not included in non-accruing loans and accruing loans 90 days or more past due.

At December 31, 2014, State Investors Bancorp had $891,000 of non-performing loans. Management believes that the six loans are supported by adequate collateral and does not expect that the loans represent a significant risk of loss. As a result of adopting the amendments in ASU 2011-2, the Company reassessed all restructurings that occurred on or after the beginning of the fiscal year of adoption (January 1, 2011) to determine whether they are considered troubled debt restructurings (TDRs) under the amended guidance. The Company identified as TDRs certain loans for which the allowance for loan losses had previously been measured under a general allowance methodology. Upon identifying those loans as TDRs, the Bank classified them as impaired under the guidance in ASC 310-10-35. The amendments in ASU 2011-2 require prospective application of the impairment measurement guidance in ASC 310-10-35 for those loans newly identified as impaired. The majority of the loans identified as TDRs had previously been considered impaired and subject to impairment measurement guidance. As of December 31, 2014, we had five loans totaling $2.4 million identified as troubled debt restructurings (TDRs) that are accruing interest totaling $16,000. The allowance for loan losses associated with the TDRs on the basis of a current evaluation of loss was $-0-.

Classified Assets. Federal regulations require that each insured savings institution classify its assets on a regular basis. In addition, in connection with examinations of insured institutions, federal examiners have authority to identify problem assets and, if appropriate, classify them. There are three classifications for problem assets: “substandard,” “doubtful” and “loss.” Substandard assets have one or more defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some loss if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing facts, conditions and values questionable, and there is a higher possibility of loss. An asset classified loss is considered uncollectible and of such little value that continuance as an asset of the institution is not warranted. Another category designated “special mention” also must be established and maintained for assets which do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss. Assets classified as substandard or doubtful require the institution to establish general allowances for loan losses. If an asset or portion thereof is classified as loss, the insured institution must either establish specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off such amount. General loss allowances established to cover possible losses related to assets classified substandard or doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for loan losses do not qualify as regulatory capital. Federal examiners may disagree with an insured institution’s classifications and amounts reserved.

At December 31, 2014, State Investors Bancorp had $6.2 million of assets classified substandard and none classified doubtful or loss. State Investors Bancorp had an additional $1.3 million of assets designated as special mention at December 31, 2014.

Allowance for Loan Losses. At December 31, 2014, the allowance for loan losses amounted to $1.4 million. The allowance for loan losses is maintained at a level believed, to the best of management’s knowledge, to cover all known and inherent losses in the portfolio both probable and reasonable to estimate at each reporting date. The level of allowance for loan losses is based on management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing conditions. State-Investors Bank is primarily engaged in originating single-family residential loans secured by owner occupied and non-owner occupied properties and commercial real estate loans to known borrowers in our market area. Management considers the deficiencies of all classified loans in determining the amount of allowance for loan losses required at each reporting date. Management analyzes the probability of the correction of the classified loans’ weaknesses and the extent of any known or inherent losses that may be sustained.

While management believes that it determines the size of the allowance based on the best information available at the time, the allowance will need to be adjusted as circumstances change and assumptions are updated. Future adjustments to the allowance could significantly affect net income.

The following table shows changes in our allowance for loan losses during the periods presented.

	At or for the Year Ended December 31,
	2014			2013			2012			2011			2010
	(Dollars in thousands)
Total loans outstanding at end of period	$	219,991		$	200,879		$	176,401		$	176,796		$	182,162
Allowance for loan losses, beginning of period		1,351			1,436			1,596			1,505			1,445
Provision for loan losses		200			156			142			154			93
Charge-offs:
One- to four-family residential		(78	)		(104	)		(12	)		(45	)		(33	)
Commercial real estate		(76	)		(300	)		(290	)		--			--
Multi-family residential		--			(22	)		--			(18	)		--
Land		--			--			--			--			--
Residential construction		--			--			--			--			--
Home equity lines of credit		--			--			--			--			--
Consumer non-real estate loans		--			(10	)		--			--			--
Commercial business loans		--			--			--			--			--
Total charge-offs		(154	)		(436	)		(302	)		(63	)		(33	)
Recoveries on loans previously charged-off		--			195			--			--			--
Allowance for loan losses, end of period	$	1,397		$	1,351		$	1,436		$	1,596		$	1,505
Allowance for loan losses as a percent of non-performing loans		156.79	%		50.85	%		43.81	%		47.32	%		116.13	%
Ratio of net charge-offs during the period to average loans outstanding during the period		0.07	%		0.13	%		0.17	%		0.03	%		0.02	%

The following table shows how our allowance for loan losses is allocated by type of loan at each of the dates indicated.


	December 31,
	2014					2013					2012					2011					2010
	Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans
	(Dollars in thousands)
One- to four-family residential	$	518		37.08	%	$	548		40.56	%	$	578		40.25	%	$	1,168		73.18	%	$	947		70.30	%
Commercial real estate		779		55.76			722		53.44			802		55.85			283		17.73			373		20.34
Multi-family residential		25		1.79			14		1.04			13		0.91			31		1.94			86		3.10
Land		9		0.64			10		0.74			8		0.56			21		1.32			18		1.50
Residential construction		26		1.86			14		1.04			9		0.63			30		1.88			23		1.60
Home equity lines of credit		22		1.57			24		1.78			21		1.46			52		3.26			44		2.40
Consumer non-real estate loans		15		1.07			15		1.11			5		0.34			11		0.69			14		0.76
Commercial business loans		3		0.21			4		0.29			--		--			--		--			--		--
Unallocated		--		--			--		--			--		--			--		--			--		--
Total	$	1,397		100.00	%	$	1,351		100.00	%	$	1,436		100.00	%	$	1,596		100.00	%	$	1,505		100.00	%

We regularly review the loan portfolio and make provisions for loan losses in order to maintain the allowance for loan losses in an amount management believes to be appropriate to absorb probable losses on existing loans. The allowance for loan losses consists primarily of two components: (1) specific allowances established for impaired loans; and (2) general allowances established for loan losses on a portfolio basis for loans that do not meet the definition of impaired loans. A loan is deemed impaired when, based on current information, it is probable that we will be unable to collect all amounts due under the loan contract. If impairment is determined, we will measure that impairment and create a specific valuation allowance for each such loan. General allowances are established for the remainder of the loan portfolio which is separated by category and, with respect to non-homogenous loans, further broken down into one of three risk classifications we have assigned to the loan. Appropriate provisions for each category are calculated taking total loans by type and/or risk class and applying the historical four-year charge off percentage for that category plus a current economic adjustment percentage. The economic adjustment used at each quarterly review period is analyzed to ensure that it is appropriate and reasonable based on current trends and economic conditions. Following the quarterly allowance for loan loss analysis, we will make additional loan loss provisions, if warranted.

Investment Activities

General. Our investment policy is designed primarily to manage the interest rate sensitivity of our assets and liabilities, to generate a favorable return without incurring undue interest rate and credit risk, to complement our lending activities and to provide and maintain liquidity.

At December 31, 2014, our mortgage-backed securities portfolio amounted to $35.5 million, or 13.1 % of total assets at such date. At December 31, 2014, we did not hold any Fannie Mae or Freddie Mac common or preferred stock.

At December 31, 2014, we had an aggregate of $803,000 in net unrealized gains on our mortgage-backed securities portfolio. Such unrealized gains reflect an increase in market value of securities as a result of changes in market rates of interest.

Management classifies securities as available-for-sale, held-to-maturity, or trading, at the time of acquisition. Securities classified as held to maturity must be purchased with the intent and ability to hold that security until its final maturity, and can be sold prior to maturity only under rare circumstances. Held to maturity securities are accounted for based upon the historical cost of the security. Available-for-sale securities can be sold at any time based upon needs or market conditions. Available-for-sale securities are accounted for at fair value, with unrealized gains and losses on these securities, net of income tax provisions, reflected in stockholders’ equity as accumulated other comprehensive income. At December 31, 2014, we had $35.3 million of mortgage-backed securities classified as available-for-sale, $249,000 of mortgage-backed securities classified as held-to-maturity and none classified as trading account.

We do not purchase mortgage-backed derivative instruments that would be characterized “high-risk” under Federal banking regulations at the time of purchase, nor do we purchase corporate obligations which are not rated investment grade or better.

Our mortgage-backed securities consist primarily of mortgage pass-through certificates issued by the Government National Mortgage Association (“GNMA” or “Ginnie Mae”), Fannie Mae or Freddie Mac. At December 31, 2014, all of our mortgage-backed securities were issued by the GNMA, Fannie Mae or Freddie Mac and we held no mortgage-backed securities from private issuers.

Investments in mortgage-backed securities involve a risk that actual prepayments will be greater than estimated prepayments over the life of the security, which may require adjustments to the amortization of any premium or accretion of any discount relating to such instruments thereby changing the net yield on such securities. There is also reinvestment risk associated with the cash flows from such securities or in the event such securities are redeemed by the issuer. In addition, the market value of such securities may be adversely affected by changes in interest rates.

Ginnie Mae is a government agency within the Department of Housing and Urban Development which is intended to help finance government-assisted housing programs. Ginnie Mae securities are backed by loans insured by the Federal Housing Administration, or guaranteed by the Veterans Administration. The timely payment of principal and interest on Ginnie Mae securities is guaranteed by Ginnie Mae and backed by the full faith and credit of the U.S. Government. Freddie Mac is a private corporation chartered by the U.S. Government. Freddie Mac issues participation certificates backed principally by conventional mortgage loans. Freddie Mac guarantees the timely payment of interest and the ultimate return of principal on participation certificates. Fannie Mae is a private corporation chartered by the U.S. Congress with a mandate to establish a secondary market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest on Fannie Mae securities. Freddie Mac and Fannie Mae securities are not backed by the full faith and credit of the U.S. Government, but because Freddie Mac and Fannie Mae are U.S. Government-sponsored enterprises, these securities are considered to be among the highest quality investments with minimal credit risks. In September 2008, the Federal Housing Finance Agency was appointed as conservator of Fannie Mae and Freddie Mac. The U.S. Department of the Treasury agreed to provide capital as needed to ensure that Fannie Mae and Freddie Mac continue to provide liquidity to the housing and mortgage markets.

Investment and Mortgage-backed Securities Portfolios. The following table sets forth certain information relating to our investment and mortgage-backed securities portfolios and our investment in FHLB stock at the dates indicated.

	December 31,
	2014				2013				2012
	Amortized Cost		Market Value		Amortized Cost		Market Value		Amortized Cost		Amortized Cost
	(Dollars in thousands)
Securities available-for-sale:
Mortgage-backed securities	$	34,501	$	35,296	$	37,254	$	37,948	$	45,003	$	46,074
Total securities available-for-sale		34,501	$	35,296		37,254		37,948		45,003		46,074
Securities held-to-maturity:
Mortgage-backed securities		249		257		319		331		400		416
Total securities held-to-maturity		249		257		319		331		400		416
FHLB stock		3,042		3,042		2,486		2,486		1,774		1,774
Total investment and mortgage-backed securities and FHLB stock	$	37,792	$	38,595	$	40,059	$	40,765	$	47,177	$	48,264

The following table sets forth the amount of investment and mortgage-backed securities which mature during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2014. As State Investors Bancorp held no tax-exempt securities during the periods presented, no yield adjustments were made.

	Amounts at December 31, 2014, Which Mature In
	One Year or Less			After One to Five Years			After Five to 10 Years			Over 10 Years			Total
	(Dollars in thousands)
Available-for-sale:
Mortgage-backed securities	$	--		$	30,609		$	3,571		$	1,116		$	35,296
Weighted average yield		--	%		1.94	%		1.97	%		1.59	%		1.94	%
Held to maturity:
Mortgage-backed securities	$	9		$	240		$	-		$	-		$	249
Weighted average yield		1.78	%		1.91	%		--	%		--	%		1.91	%
Total mortgage-backed securities	$	9		$	30,849		$	3,571		$	1,116		$	35,545
Weighted average yield		1.78	%		1.94	%		1.97	%		1.59	%		1.93	%

Mortgage-backed securities. The following table sets forth the composition of our mortgage-backed securities portfolio at each of the dates indicated.

			December 31,
	2014		2013		2012
	(In thousands)
Fixed-rate	$	--	$	--	$	--
Adjustable-rate:
Available-for-sale		35,296		37,948		46,074
Held-to-maturity		249		319		400
Total mortgage-backed securities	$	35,545	$	38,267	$	46,474

Sources of Funds

General. Deposits are the primary source of State Investors Bancorp’s funds for lending and, to a lesser extent, borrowings from the Federal Home Loan Bank of Dallas. In addition to deposits, principal and interest payments on loans are a source of funds. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may also be used on a short-term basis to compensate for reductions in the availability of funds from other sources and on a longer-term basis for general business purposes.

Deposits. Deposits are attracted principally from Jefferson, Orleans and St. Tammany Parishes, Louisiana. Deposit account terms vary, with the principal differences being the minimum balance required, the time periods the funds must remain on deposit and the interest rate.

The Company is affiliated with the Community Cash network. As part of the Community Cash network, customers of State-Investors Bank have access to over 200 ATMs in our market area with no service fee. We also utilize advertising, tiered rates on certain deposit accounts and Internet banking as a means to increase deposits. State-Investors Bank has not solicited deposits from outside Louisiana or paid fees to brokers to solicit funds for deposit.

Interest rates paid, maturity terms, service fees and withdrawal penalties are established on a periodic basis. Management determines the rates and terms based on rates paid by competitors, the need for funds or liquidity, growth goals and federal regulations. The Company attempts to control the flow of deposits by pricing its accounts to remain generally competitive with other financial institutions in its market area.

The following table shows the distribution of, and certain other information relating to, our deposits by type of deposit, as of the dates indicated.


	December 31,
	2014					2013					2012
	Amount		%			Amount		%			Amount		%
	(Dollars in thousands)
Certificate accounts:
0.00% - 0.99%	$	37,829		24.25	%	$	42,618		26.78	%	$	48,672		30.20	%
1.00% - 1.99%		22,600		14.49			20,183		12.68			18,600		11.54
2.00% - 2.99%		20,422		13.09			16,723		10.51			18,811		11.67
3.00% - 3.99%		9,152		5.87			11,609		7.29			13,393		8.31
4.00% - 4.99%		2,202		1.41			2,502		1.57			4,773		2.97
Total certificate accounts		92,205		59.11			93,635		58.83			104,249		64.69

Transaction accounts:
Savings		27,699		17.76			27,784		17.46			27,106		16.82
Checking:
Interest bearing		16,835		10.79			18,264		11.48			15,938		9.89
Non-interest bearing		9,487		6.08			8,863		5.57			5,855		3.63
Money market		9,762		6.26			10,601		6.66			8,015		4.97
Total transaction accounts		63,783		40.89			65,512		41.17			56,914		35.31
Total deposits	$	155,988		100.00	%	$	159,147		100.00	%	$	161,163		100.00	%

The following table shows the average balance of each type of deposit and the average rate paid on each type of deposit for the periods indicated.


	Year Ended December 31,
	2014							2013							2012
	Average Balance		Interest Expense		Average Rate Paid			Average Balance		Interest Expense		Average Rate Paid			Average Balance		Interest Expense		Average Rate Paid
	(Dollars in thousands)

Savings accounts	$	27,988	$	42		0.15	%	$	27,484	$	42		0.15	%	$	26,172	$	42		0.16	%
Checking-interest bearing		14,852		23		0.15			11,379		20		0.18			8,713		17		0.20
Money market		10,674		26		0.24			8,844		22		0.25			7,416		17		0.23
Certificates of deposit		92,937		1,498		1.61			97,327		1,587		1.63			101,880		1,827		1.79
Total interest-bearing deposits		146,451	$	1,589		1.09	%	$	145,034	$	1,671		1.15	%	$	144,181	$	1,903		1.32	%
Total deposits	$	158,401	$	1,589		1.00	%	$	157,615	$	1,671		1.06	%	$	155,107	$	1,903		1.23	%

The following table shows our deposit flows during the periods indicated.


	Year Ended December 31,
	2014			2013			2012

Deposits, net of withdrawals	$	(4,260	)	$	(3,260	)	$	2,132
Interest credited		1,190			1,244			1,470
Total increase (decrease) in deposits	$	(3,070	)	$	(2,016	)	$	3,602

The following table presents, by various interest rate categories and maturities, the amount of certificates of deposit at December 31, 2014.


	Balance at December 31, 2014 Maturing in the 12 Months Ending December 31,
Certificates of Deposit	2015		2016		2017		Thereafter		Total
	(In thousands)
0.00% - 0.99%	$	32,398	$	4,332	$	1,130	$	6	$	37,866
1.00% - 1.99%		3,821		2,929		6,513		9,018		22,281
2.00% - 2.99%		3,035		2,449		1,109		15,724		22,317
3.00% - 3.99%		4,725		1,291		--		3,418		9,434
4.00% - 4.99%		307		--		--		--		307
Total certificate accounts	$	44,286	$	11,001	$	8,752	$	28,166	$	92,205

The following table shows the maturities of our certificates of deposit of $100,000 or more at December 31, 2014, by time remaining to maturity.

	At December 31, 2014
Quarter Ending:	Amount		Weighted Average Rate
	(Dollars in thousands)
March 31, 2015	$	5,057		1.17	%
June 30, 2015		2,907		1.25
September 30, 2015		5,538		1.23
December 31, 2015		2,871		1.15
After December 31, 2015		25,494		2.22
Total certificates of deposit with balances of $100,000 or more	$	41,867		1.82	%

Borrowings. State-Investors Bank may obtain advances from the Federal Home Loan Bank of Dallas upon the security of the common stock it owns in that bank and certain of its residential mortgage loans and mortgage-backed and other investment securities, provided certain standards related to creditworthiness have been met. These advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Federal Home Loan Bank advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending.

As of December 31, 2014, State-Investors Bank was permitted to borrow up to an aggregate total of approximately $ 126.9 million from the Federal Home Loan Bank of Dallas. State-Investors Bank had $ 71.6 million of Federal Home Loan Bank advances outstanding at December 31, 2014. Additionally, at December 31, 2014, State-Investors Bank was a party to a Master Purchase Agreement with First National Bankers Bank whereby we may purchase Federal Funds from First National Bankers Bank in an amount not to exceed $14.0 million. There were no amounts purchased under this agreement as of December 31, 2014.

The following table shows certain information regarding our borrowings at or for the dates indicated:


	At or For the Year Ended December 31,
	2014			2013			2012
	(Dollars in thousands)
FHLB advances and other borrowings:
Average balance outstanding	$	63,323		$	47,977		$	43,811

Maximum amount outstanding at any month-end during the period	$	71,595		$	56,105		$	48,546
Balance outstanding at end of period	$	71,595		$	55,992		$	39,286
Average interest rate during the period		1.60	%		1.89	%		1.87	%

Weighted average interest rate at end of period		1.41	%		1.75	%		2.13	%

At December 31, 2014, $7.0 million of our borrowings were short-term (maturities of one year or less). Such short-term borrowings had a weighted average interest rate of 0.18%.

Subsidiaries

At December 31, 2014, State Investors Bancorp had one subsidiary, State-Investors Bank.

Total Employees

State Investors Bancorp had 30 full-time and five part-time employees at December 31, 2014. None of these employees are represented by a collective bargaining agreement, and State Investors Bancorp believes that it enjoys good relations with its personnel.

REGULATION

Set forth below is a brief description of certain laws relating to the regulation of State Investors Bancorp and State-Investors Bank. This description does not purport to be complete and is qualified in its entirety by reference to applicable laws and regulations.

General

State-Investors Bank, as a federally chartered savings bank, is subject to federal regulation and oversight by the Office of the Comptroller of the Currency extending to all aspects of its operations. State-Investors Bank also is subject to regulation and examination by the Federal Deposit Insurance Corporation, which insures the deposits of State-Investors Bank to the maximum extent permitted by law, and requirements established by the Federal Reserve Board. Federally chartered savings institutions are required to file periodic reports with the Office of the Comptroller of the Currency and are subject to periodic examinations by the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. The investment and lending authority of savings institutions is prescribed by federal laws and regulations, and such institutions are prohibited from engaging in any activities not permitted by such laws and regulations. Such regulation and supervision primarily are intended for the protection of depositors and not for the purpose of protecting shareholders.

State Investors Bancorp is subject to the examination and supervision of the Federal Reserve Board as to certain restrictions regarding its operations and activities.

Federal law provides the federal banking regulators, including the Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and the Federal Reserve Board, with substantial enforcement powers. The Office of the Comptroller of the Currency’s enforcement authority over all savings institutions and the Federal Reserve Board’s enforcement authority over all savings and loan holding companies includes, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely reports. Any change in these laws and regulations, whether by the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, the Federal Reserve Board or Congress, could have a material adverse impact on State Investors Bancorp and State-Investors Bank and our operations.

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in 2010, the powers of the Office of Thrift Supervision regarding State-Investors Bank, and State Investors Bancorp transferred to other federal financial institution regulatory agencies on July 21, 2011. See “— 2010 Regulatory Reform.” As of the transfer date, all of the regulatory functions related to State-Investors Bank that were under the jurisdiction of the Office of Thrift Supervision transferred to the Office of the Comptroller of the Currency. In addition, as of that same date, all of the regulatory functions related to State Investors Bancorp, as a savings and loan holding company that were under the jurisdiction of the Office of Thrift Supervision, transferred to the Federal Reserve Board.

2010 Regulatory Reform

On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The financial reform and consumer protection act imposes new restrictions and an expanded framework of regulatory oversight for financial institutions, including depository institutions. In addition, the new law changed the jurisdictions of existing bank regulatory agencies and, in particular transferred the regulation of federal savings associations from the Office of Thrift Supervision to the Office of Comptroller of the Currency. Savings and loan holding companies are now regulated by the Federal Reserve Board. The new law also established an independent federal consumer protection bureau within the Federal Reserve Board. The following discussion summarizes significant aspects of the law that may affect State-Investors Bank and State Investors Bancorp. Many regulations implementing these changes have not been promulgated, so we cannot determine the full impact on our business and operations at this time.

The following aspects of the financial reform and consumer protection act are related to the operations of State-Investors Bank:

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The Office of Thrift Supervision merged into the Office of the Comptroller of the Currency and the authority of the other remaining bank regulatory agencies were restructured. The federal thrift charter is preserved under the jurisdiction of the Office of the Comptroller of the Currency.

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A new independent consumer financial protection bureau was established within the Federal Reserve Board, empowered to exercise broad regulatory, supervisory and enforcement authority with respect to both new and existing consumer financial protection laws. Smaller financial institutions, like State-Investors Bank, are subject to the supervision and enforcement of their primary federal banking regulator with respect to the federal consumer financial protection laws.

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Tier 1 capital treatment for “hybrid” capital items like trust preferred securities was eliminated subject to various grandfathering and transition rules.

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The prohibition on payment of interest on demand deposits was repealed.

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State law is preempted only if it would have a discriminatory effect on a federal savings association or is preempted by any other federal law. The Office of the Comptroller of the Currency must make a preemption determination on a case-by-case basis with respect to a particular state law or other state law with substantively equivalent terms.

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Deposit insurance is permanently increased to $250,000.

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Deposit insurance assessment base calculation equals the depository institution’s total assets minus the sum of its average tangible equity during the assessment period.

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The minimum reserve ratio of the Deposit Insurance Fund increased to 1.35 percent of estimated annual insured deposits or assessment base; however, the Federal Deposit Insurance Corporation is directed to “offset the effect” of the increased reserve ratio for insured depository institutions with total consolidated assets of less than $10 billion.

The following aspects of the financial reform and consumer protection act are related to the operations of State Investors Bancorp:

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Authority over savings and loan holding companies transferred to the Federal Reserve Board.

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Leverage capital requirements and risk based capital requirements applicable to depository institutions and bank holding companies were extended to thrift holding companies.

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The Federal Deposit Insurance Act was amended to direct federal regulators to require depository institution holding companies to serve as a source of strength for their depository institution subsidiaries.

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The Securities and Exchange Commission is authorized to adopt rules requiring public companies to make their proxy materials available to shareholders for nomination of their own candidates for election to the board of directors.

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Public companies are now required to provide their shareholders with a non-binding vote: (i) at least once every three years on the compensation paid to executive officers, and (ii) at least once every six years on whether they should have a “say on pay” vote every one, two or three years.

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A separate, non-binding shareholder vote is now required regarding golden parachutes for named executive officers when a shareholder vote takes place on mergers, acquisitions, dispositions or other transactions that would trigger the parachute payments.

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Securities exchanges are now required to prohibit brokers from using their own discretion to vote shares not beneficially owned by them for certain “significant” matters, which include votes on the election of directors, executive compensation matters, and any other matter determined to be significant.

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Stock exchanges will be prohibited from listing the securities of any issuer that does not have a policy providing for (i) disclosure of its policy on incentive compensation payable on the basis of financial information reportable under the securities laws, and (ii) the recovery from current or former executive officers, following an accounting restatement triggered by material noncompliance with securities law reporting requirements, of any incentive compensation paid erroneously during the three-year period preceding the date on which the restatement was required that exceeds the amount that would have been paid on the basis of the restated financial information.

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Disclosure in annual proxy materials will be required concerning the relationship between the executive compensation paid and the financial performance of the issuer.

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Item 402 of Regulation S-K will be amended to require companies to disclose the ratio of the Chief Executive Officer’s annual total compensation to the median annual total compensation of all other employees.

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Smaller reporting companies are exempt from complying with the internal control auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act.

Recent Regulatory Capital Regulations

The Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, adopted Basel III in September 2010, which constitutes a strengthened set of capital requirements for banking organizations in the United States and around the world. In July of 2013, the respective U.S. federal banking agencies issued final rules implementing Basel III and the Dodd-Frank Act capital requirements to be fully-phased in on a global basis on January 1, 2019. The new regulations establish a new tangible common equity capital requirement, increase the minimum requirement for the current Tier 1 risk-weighted asset (“RWA”) ratio, phase out certain kinds of intangibles treated as capital and certain types of instruments and change the risk weightings of certain assets used to determine required capital ratios. Provisions of the Dodd-Frank Act generally require these capital ratios to apply to savings and loan holding companies and their savings association subsidiaries. The new common equity Tier 1 capital component requires capital of the highest quality – predominantly composed of retained earnings and common stock instruments. For community banks such as State-Investors Bank, a common equity Tier 1 capital ratio 4.5% became effective on January 1, 2015. The new capital rules also increased the current minimum Tier 1 capital ratio from 4.0% to 6.0% beginning on January 1, 2015. In addition, institutions that seek the freedom to make capital distributions and pay discretionary bonuses to executive officers without restriction must also maintain greater than 2.5% in common equity attributable to a capital conservation buffer to be phased in from January 1, 2016 until January 1, 2019. The new rules also increase the risk weights for several categories of assets, including an increase from 100% to 150% for certain acquisition, development and construction loans and more than 90-day past due exposures. The new capital rules maintain the general structure of the prompt corrective action rules, but incorporate the new common equity Tier 1 capital requirement and the increased Tier 1 RWA requirement into the prompt corrective action framework.

Under the 2010 legislation, savings and loan holding companies became subject to statutory capital requirements, but legislation enacted in late 2014 exempts small savings and loan holding companies like State Investors Bancorp from those requirements. Regulations were recently promulgated to implement the exemption.

Recent Volcker Rule Regulations

Regulations were adopted in 2013 by the federal banking agencies to implement the provisions of the Dodd Frank Act commonly referred to as the Volcker Rule. The regulations contain prohibitions and restrictions on the ability of financial institution holding companies and their affiliates to engage in proprietary trading and to hold certain interests in, or to have certain relationships with, various types of investment funds, including hedge funds and private equity funds. The regulations became effective on April 1, 2014, with full compliance being phased in over a period ending on July 21, 2015. State Investors Bancorp is currently reviewing its investment portfolio to ensure compliance as the various provisions of the Volcker Rule regulations become effective.

Regulation of State Investors Bancorp

State Investors Bancorp, a Louisiana corporation, is a registered savings and loan holding company within the meaning of Section 10 of the Home Owners’ Loan Act, as amended, and is subject to examination and supervision by the Federal Reserve Board as well as certain reporting requirements. In addition, because State-Investors Bank is a subsidiary of a savings and loan holding company, it is, subject to certain restrictions in dealing with us and with other persons affiliated with the Bank.

Holding Company Acquisitions. State Investors Bancorp is a savings and loan holding company under the Home Owners’ Loan Act, as amended. Federal law generally prohibits a savings and loan holding company, without prior approval of the Federal Reserve Board, from acquiring the ownership or control of any other savings institution or savings and loan holding company, or all, or substantially all, of the assets or more than 5% of the voting shares of the savings institution or savings and loan holding company. These provisions also prohibit, among other things, any director or officer of a savings and loan holding company, or any individual who owns or controls more than 25% of the voting shares of such holding company, from acquiring control of any savings institution not a subsidiary of such savings and loan holding company, unless the acquisition is approved by the Federal Reserve Board.

The Federal Reserve Board may not approve any acquisition that would result in a multiple savings and loan holding company controlling savings institutions in more than one state, subject to two exceptions: (1) the approval of interstate supervisory acquisitions by savings and loan holding companies; and (2) the acquisition of a savings institution in another state if the laws of the state of the target savings institution specifically permit such acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company acquisitions.

Holding Company Activities. State Investors Bancorp operates as a unitary savings and loan holding company and is permitted to engage only in the activities permitted for financial institution holding companies or for multiple savings and loan holding companies. Multiple savings and loan holding companies are permitted to engage in the following activities: (i) activities permitted for a bank holding company under section 4(c) of the Bank Holding Company Act (unless the Federal Reserve Board prohibits or limits such 4(c) activities); (ii) furnishing or performing management services for a subsidiary savings association; (iii) conducting any insurance agency or escrow business; (iv) holding, managing, or liquidating assets owned by or acquired from a subsidiary savings association; (v) holding or managing properties used or occupied by a subsidiary savings association; (vi) acting as trustee under deeds of trust; or (vii) activities authorized by regulation as of March 5, 1987, to be engaged in by multiple savings and loan holding companies. While there are no specific restrictions on the payment of dividends or other capital distributions for savings and loan holding companies, federal regulations do prescribe such restrictions on subsidiary savings institutions, as described below. State-Investors Bank is required to notify the Federal Reserve Board 30 days before declaring any dividend. In addition, the financial impact of a holding company on its subsidiary institution is a matter that is evaluated by the Federal Reserve Board and the agency has authority to order cessation of activities or divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the institution.

All savings associations subsidiaries of savings and loan holding companies are required to meet a qualified thrift lender, or QTL, test to avoid certain restrictions on their operations. If the subsidiary savings institution fails to meet the QTL, as discussed below, then the savings and loan holding company must register with the Federal Reserve Board as a bank holding company, unless the savings institution requalifies as a QTL within one year thereafter.

Federal Securities Laws. State Investors Bancorp registered its common stock with the Securities and Exchange Commission under Section 12(b) of the Securities Exchange Act of 1934. State Investors Bancorp is subject to the proxy and tender offer rules, insider trading reporting requirements and restrictions, and certain other requirements under the Securities Exchange Act of 1934. Pursuant to applicable federal banking regulations we have agreed to maintain such registration for a minimum of three years following the conversion and offering completed on July 6, 2011.

The Sarbanes-Oxley Act. As a public company, State Investors Bancorp is subject to the Sarbanes-Oxley Act of 2002 which addresses, among other issues, corporate governance, auditing and accounting, executive compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act, our principal executive officer and principal financial officer are required to certify that our quarterly and annual reports do not contain any untrue statement of a material fact. The rules adopted by the Securities and Exchange Commission under the Sarbanes-Oxley Act have several requirements, including having these officers certify that: they are responsible for establishing, maintaining and regularly evaluating the effectiveness of our internal control over financial reporting; they have made certain disclosures to our auditors and the audit committee of the Board of Directors about our internal control over financial reporting; and they have included information in our quarterly and annual reports about their evaluation and whether there have been changes in our internal control over financial reporting or in other factors that could materially affect internal control over financial reporting.

Regulation of State-Investors Bank

General. State-Investors Bank is subject to the regulation of the Office of the Comptroller of the Currency, as its primary federal regulator and the Federal Deposit Insurance Corporation, as the insurer of its deposit accounts, and, to a limited extent, the Federal Reserve Board.

Insurance of Accounts. The deposits of State-Investors Bank are insured to the maximum extent permitted by the Deposit Insurance Fund and are backed by the full faith and credit of the U.S. Government. The 2010 financial institution reform legislation permanently increased deposit insurance on most accounts to $250,000. As insurer, the Federal Deposit Insurance Corporation is authorized to conduct examinations of, and to require reporting by, insured institutions. It also may prohibit any insured institution from engaging in any activity determined by regulation or order to pose a serious threat to the Federal Deposit Insurance Corporation. The Federal Deposit Insurance Corporation also has the authority to initiate enforcement actions against savings institutions, after giving the Office of the Comptroller of the Currency an opportunity to take such action.

The Federal Deposit Insurance Corporation’s risk-based premium system provides for quarterly assessments. Each insured institution is placed in one of four risk categories depending on supervisory and capital considerations. Within its risk category, an institution is assigned to an initial base assessment rate which is then adjusted to determine its final assessment rate based on its brokered deposits, secured liabilities and unsecured debt. To implement the 2010 legislation, the Federal Deposit Insurance Corporation amended its deposit insurance regulations (1) to change the assessment base for insurance from domestic deposits to average assets minus average tangible equity and (2) to lower overall assessment rates. The revised assessments rates are between 2.5 to 9 basis points for banks in the lowest risk category and between 30 to 45 basis points for banks in the highest risk category.

In addition, all institutions with deposits insured by the Federal Deposit Insurance Corporation are required to pay assessments to fund interest payments on bonds issued by the Financing Corporation, a mixed-ownership government corporation established to recapitalize the predecessor to the Deposit Insurance Fund. These assessments will continue until the Financing Corporation bonds mature in 2019.

The Federal Deposit Insurance Corporation may terminate the deposit insurance of any insured depository institution, including State-Investors Bank, if it determines after a hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the Federal Deposit Insurance Corporation. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the institution has no tangible capital. If insurance of accounts is terminated, the accounts at the institution at the time of the termination, less subsequent withdrawals, shall continue to be insured for a period of six months to two years, as determined by the Federal Deposit Insurance Corporation. Management is aware of no existing circumstances which would result in termination of State-Investors Bank’s deposit insurance.

Regulatory Capital Requirements. Federally insured savings institutions are required to maintain minimum levels of regulatory capital. Current Office of the Comptroller of the Currency capital standards require savings institutions to satisfy a tangible capital requirement, a leverage capital requirement and a risk-based capital requirement. The tangible capital must equal at least 1.5% of adjusted total assets. Leverage capital, also known as “core” capital, must equal at least 3.0% of adjusted total assets for the most highly rated savings associations. An additional cushion of at least 100 basis points is required for all other savings associations, which effectively increases their minimum Tier 1 leverage ratio to 4.0% or more. Under the Office of the Comptroller of the Currency’s regulation, the most highly-rated banks are those that the Office of the Comptroller of the Currency determines are strong associations that are not anticipating or experiencing significant growth and have well-diversified risk, including no undue interest rate risk exposure, excellent asset quality, high liquidity and good earnings. Under the risk-based capital requested, “total” capital (a combination of core and “supplementary” capital) must equal at least 8.0% of “risk-weighted” assets. The Office of the Comptroller of the Currency also is authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.

Core capital generally consists of common stockholders’ equity (including retained earnings). Tangible capital generally equals core capital minus intangible assets, with only a limited exception for purchased mortgage servicing rights. State-Investors Bank had no intangible assets at December 31, 2014. Both core and tangible capital are further reduced by an amount equal to a savings institution’s debt and equity investments in subsidiaries engaged in activities not permissible to national banks (other than subsidiaries engaged in activities undertaken as agent for customers or in mortgage banking activities and subsidiary depository institutions or their holding companies). These adjustments do not affect State-Investors Bank’s regulatory capital.

In determining compliance with the risk-based capital requirement, a savings institution is allowed to include both core capital and supplementary capital in its total capital, provided that the amount of supplementary capital included does not exceed the savings institution’s core capital. Supplementary capital generally consists of general allowances for loan losses up to a maximum of 1.25% of risk-weighted assets, together with certain other items. In determining the required amount of risk-based capital, total assets, including certain off-balance sheet items, are multiplied by a risk weight based on the risks inherent in the type of assets. The risk weights range from 0% for cash and securities issued by the U.S. Government or unconditionally backed by the full faith and credit of the U.S. Government to 100% for loans (other than qualifying residential loans weighted at 80%) and repossessed assets.

Savings institutions must value securities available-for-sale at amortized cost for regulatory capital purposes. This means that in computing regulatory capital, savings institutions should add back any unrealized losses and deduct any unrealized gains, net of income taxes, on debt securities reported as a separate component of capital, as defined by generally accepted accounting principles.

At December 31, 2014, State-Investors Bank exceeded all of its regulatory capital requirements, with tangible, core and risk-based capital ratios of 14.1%, 14.1% and 24.0%, respectively.

Any savings institution that fails any of the capital requirements is subject to possible enforcement actions by the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corporation. Such actions could include a capital directive, a cease and desist order, civil money penalties, the establishment of restrictions on the institution’s operations, termination of federal deposit insurance and the appointment of a conservator or receiver. The Office of the Comptroller of the Currency’s capital regulation provides that such actions, through enforcement proceedings or otherwise, could require one or more of a variety of corrective actions.

Prompt Corrective Action. The following table shows the amount of capital associated with the different capital categories set forth in the prompt corrective action regulations.


Capital Category	Total Risk- Based Capital	Tier 1 Risk- Based Capital	Tier 1 Leverage Capital
Well capitalized	10% or more	6% or more	5% or more
Adequately capitalized	8% or more	4% or more	4% or more
Undercapitalized	Less than 8%	Less than 4%	Less than 4%
Significantly undercapitalized	Less than 6%	Less than 3%	Less than 3%

In addition, an institution is “critically undercapitalized” if it has a ratio of tangible equity to total assets that is equal to or less than 2.0%. Under specified circumstances, a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an adequately capitalized institution or an undercapitalized institution to comply with supervisory actions as if it were in the next lower category (except that the Federal Deposit Insurance Corporation may not reclassify a significantly undercapitalized institution as critically undercapitalized).

An institution generally must file a written capital restoration plan which meets specified requirements within 45 days of the date that the institution receives notice or is deemed to have notice that it is undercapitalized, significantly undercapitalized or critically undercapitalized. A federal banking agency must provide the institution with written notice of approval or disapproval within 60 days after receiving a capital restoration plan, subject to extensions by the agency. An institution which is required to submit a capital restoration plan must concurrently submit a performance guaranty by each company that controls the institution. In addition, undercapitalized institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions.

At December 31, 2014, State-Investors Bank was deemed a well-capitalized institution for purposes of the prompt corrective action regulations and, as such, is not subject to the above mentioned restrictions.

Capital Distributions. Office of the Comptroller of the Currency regulations govern capital distributions by savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution to make capital distributions. A savings institution must file an application for Office of the Comptroller of the Currency approval of the capital distribution if either (1) the total capital distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years, (2) the institution would not be at least adequately capitalized following the distribution, (3) the distribution would violate any applicable statute, regulation, agreement or Office of the Comptroller of the Currency-imposed condition, or (4) the institution is not eligible for expedited treatment of its filings. If an application is not required to be filed, savings institutions must still file a notice with the Office of the Comptroller of the Currency at least 30 days before the Board of Directors declares a dividend or approves a capital distribution if either (1) the institution would not be well-capitalized following the distribution; (2) the proposed distribution would reduce the amount or retire any part of our common or preferred stock or retire any part of a debt instrument included in our regulatory capital; or (3) the savings institution is a subsidiary of a savings and loan holding company and the proposed capital distribution is not a cash dividend. If a savings institution, such as State-Investors Bank, that is the subsidiary of a stock savings and loan holding company, has filed a notice with the Federal Reserve Board for a cash dividend and it is not required to file an application or notice with the Office of the Comptroller of the Currency for any of the reasons described above, then the savings institution is only required to provide an informational copy to the Office of the Comptroller of the Currency of the notice filed with the Federal Reserve Board, at the same time that it is filed with the Federal Reserve Board.

An institution that either before or after a proposed capital distribution fails to meet its then applicable minimum capital requirement or that has been notified that it needs more than normal supervision may not make any capital distributions without the prior written approval of the Office of the Comptroller of the Currency. In addition, the Office of the Comptroller of the Currency may prohibit a proposed capital distribution, which would otherwise be permitted by Office of the Comptroller of the Currency regulations, if the Office of the Comptroller of the Currency determines that such distribution would constitute an unsafe or unsound practice.

Under federal rules, an insured depository institution may not pay any dividend if payment would cause it to become undercapitalized or if it is already undercapitalized. In addition, federal regulators have the authority to restrict or prohibit the payment of dividends for safety and soundness reasons. The FDIC also prohibits an insured depository institution from paying dividends on its capital stock or interest on its capital notes or debentures (if such interest is required to be paid only out of net profits) or distributing any of its capital assets while it remains in default in the payment of any assessment due the FDIC. State-Investors Bank is currently not in default in any assessment payment to the FDIC.

Qualified Thrift Lender Test. All savings institution subsidiaries of savings and loan holding companies are required to meet a qualified thrift lender, or QTL, test to avoid certain restrictions on their operations. A savings institution can comply with the QTL test by either qualifying as a domestic building and loan association as defined in the Internal Revenue Code or meeting the Office of the Comptroller of the Currency QTL test. Currently, the Office of the Comptroller of the Currency QTL test requires that 65% of an institution’s “portfolio assets” (as defined) consist of certain housing and consumer-related assets on a monthly average basis in nine out of every 12 months. To be a qualified thrift lender under the IRS test, the savings institution must meet a “business operations test” and a “60 percent assets test,” each defined in the Internal Revenue Code.

If a savings association fails to remain a QTL, it is immediately prohibited from the following:

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Making any new investments or engaging in any new activity not allowed for both a national bank and a savings association;

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Establishing any new branch office unless allowable for a national bank; and

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Paying dividends unless allowable for a national bank and necessary to meet the obligations of its holding company.

Any company that controls a savings institution that is not a qualified thrift lender must register as a bank holding company within one year of the savings institution’s failure to meet the QTL test. Three years from the date a savings association should have become or ceases to be a QTL, the institution must dispose of any investment or not engage in any activity unless the investment or activity is allowed for both a national bank and a savings association. A savings institution not in compliance with the QTL test is also subject to an enforcement action for violation of the Home Owners’ Loan Act, as amended.

At December 31, 2014, State-Investors Bank believes that it meets the requirements of the QTL test.

Community Reinvestment Act. All federal savings associations have a responsibility under the Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. An institution’s failure to comply with the provisions of the Community Reinvestment Act could result in restrictions on its activities. State-Investors Bank received a “satisfactory” Community Reinvestment Act rating in its most recently completed examination.

Limitations on Transactions with Affiliates. Transactions between savings associations and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act as made applicable to savings associations by Section 11 of the Home Owners’ Loan Act, as amended. An affiliate of a savings association includes any company or entity which controls the savings association or that is controlled by a company that controls the savings association. In a holding company context, the holding company of a savings association (such as State Investors Bancorp) and any companies which are controlled by such holding company are affiliates of the savings association. Generally, Section 23A limits the extent to which the savings association or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such association’s capital stock and surplus, and contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus. Section 23B applies to “covered transactions” as well as certain other transactions and requires that all transactions be on terms substantially the same, or at least as favorable, to the savings association as those provided to a non-affiliate. The term “covered transaction” includes the making of loans to, purchase of assets from and issuance of a guarantee to an affiliate and similar transactions. Section 23B transactions also include the provision of services and the sale of assets by a savings association to an affiliate. In addition to the restrictions imposed by Sections 23A and 23B, a savings association is prohibited from (i) making a loan or other extension of credit to an affiliate, except for any affiliate which engages only in certain activities which are permissible for bank holding companies, or (ii) purchasing or investing in any stocks, bonds, debentures, notes or similar obligations of any affiliate, except for affiliates which are subsidiaries of the savings association.

In addition, Sections 22(g) and (h) of the Federal Reserve Act as made applicable to savings associations by Section 11 of the Home Owners’ Loan Act, as amended, place restrictions on loans to executive officers, directors and principal shareholders of the savings association and its affiliates. Under Section 22(h), loans to a director, an executive officer and to a greater than 10% shareholder of a savings association, and certain affiliated interests of either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the savings association’s loans to one borrower limit (generally equal to 15% of the association’s unimpaired capital and surplus). Section 22(h) also requires that loans to directors, executive officers and principal shareholders be made on terms substantially the same as offered in comparable transactions to other persons unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the association and (ii) does not give preference to any director, executive officer or principal shareholder, or certain affiliated interests of either, over other employees of the savings association. Section 22(h) also requires prior board approval for certain loans. In addition, the aggregate amount of extensions of credit by a savings association to all insiders cannot exceed the association’s unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers. State-Investors Bank is subject to Section 22(g) and (h) of the Federal Reserve Act and at December 31, 2014, was in compliance with the above restrictions.

Anti-Money Laundering. All financial institutions, including savings associations, are subject to federal laws that are designed to prevent the use of the U.S. financial system to fund terrorist activities. Financial institutions operating in the United States must develop anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such compliance programs are intended to supplement compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control Regulations. State-Investors Bank has established policies and procedures to ensure compliance with these provisions.

Federal Home Loan Bank System. State-Investors Bank is a member of the Federal Home Loan Bank of Dallas, which is one of 12 regional Federal Home Loan Banks that administers a home financing credit function primarily for its members. Each Federal Home Loan Bank serves as a reserve or central bank for its members within its assigned region. The Federal Home Loan Bank of Dallas is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the Federal Home Loan Bank. At December 31, 2014, State-Investors Bank had $71.6 million of Federal Home Loan Bank advances and $57.1 million available on its credit line with the Federal Home Loan Bank.

As a member, State-Investors Bank is required to purchase and maintain stock in the Federal Home Loan Bank of Dallas in an amount equal to 0.04% of its total assets. At December 31, 2014, State-Investors Bank had $3.0 million in Federal Home Loan Bank stock, which was in compliance with the applicable requirement.

The Federal Home Loan Banks are required to provide funds for the resolution of troubled savings institutions and to contribute to affordable housing programs through direct loans or interest subsidies on advances targeted for community investment and low- and moderate-income housing projects. These contributions have adversely affected the level of Federal Home Loan Bank dividends paid in the past and could do so in the future. These contributions also could have an adverse effect on the value of Federal Home Loan Bank stock in the future.

Federal Reserve System. The Federal Reserve Board requires all depository institutions to maintain reserves against their transaction accounts (primarily NOW and Super NOW checking accounts) and non-personal time deposits. The required reserves must be maintained in the form of vault cash or an account at a Federal Reserve Bank. At December 31, 2014, State-Investors Bank had met its reserve requirement.

TAXATION

Federal Taxation

General. State Investors Bancorp and State-Investors Bank are subject to federal income taxation in the same general manner as other corporations with some exceptions listed below. The following discussion of federal, state and local income taxation is only intended to summarize certain pertinent income tax matters and is not a comprehensive description of the applicable tax rules. State-Investors Bank’s federal and state income tax returns for taxable years through December 31, 2009 have been closed for purposes of examination by the Internal Revenue Service.

State Investors Bancorp files a consolidated federal income tax return with State-Investors Bank. Accordingly, cash distributions made by State Investors Bancorp to its stockholders, if any, would be treated as cash dividends and not as a non-taxable return of capital to stockholders for federal and state tax purposes.

Method of Accounting. For federal income tax purposes, State-Investors Bank reports income and expenses on the accrual method of accounting and uses a December 31 tax year for filing its federal income tax return.

Bad Debt Reserves. The Small Business Job Protection Act of 1996 eliminated the use of the reserve method of accounting for bad debt reserves by savings institutions, effective for taxable years beginning after 1995. Prior to that time, State-Investors Bank was permitted to establish a reserve for bad debts and to make additions to the reserve. These additions could, within specified formula limits, be deducted in arriving at taxable income. As a result of the Small Business Job Protection Act of 1996, savings associations must use the specific charge-off method in computing their bad debt deduction beginning with their 1996 federal tax return. In addition, federal legislation required the recapture over a six year period of the excess of tax bad debt reserves at December 31, 1995, over those established as of December 31, 1987.

Taxable Distributions and Recapture. Prior to the Small Business Job Protection Act of 1996, bad debt reserves created prior to January 1, 1988, were subject to recapture into taxable income if State-Investors Bank failed to meet certain thrift asset and definitional tests. New federal legislation eliminated these savings association related recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should State-Investors Bank make certain non-dividend distributions or cease to maintain a bank charter.

At December 31, 2014, the total federal pre-1988 reserve was approximately $2.6 million. The reserve reflects the cumulative effects of federal tax deductions by State-Investors Bank for which no federal income tax provisions have been made.

Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a rate of 20% on a base of regular taxable income plus certain tax preferences. The alternative minimum tax is payable to the extent such alternative minimum tax is in excess of the regular income tax. Net operating losses, of which State-Investors Bank has none, can offset no more than 90% of alternative minimum taxable income. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. State-Investors Bank has not been subject to the alternative minimum tax or any such amounts available as credits for carryover.

Corporate Dividends-Received Deduction. State Investors Bancorp may exclude from its income 100% of dividends received from State-Investors Bank as a member of the same affiliated group of corporations. The corporate dividends received deduction is 80% in the case of dividends received from corporations which a corporate recipient owns less than 80%, but at least 20% of the distribution corporation. Corporations which own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received.

State and Local Taxation

State Investors Bancorp is subject to the Louisiana Corporation Income Tax based on our Louisiana taxable income. The Corporation Income Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these purposes, “Louisiana taxable income” means net income which is earned by us within or derived from sources within the State of Louisiana, after adjustments permitted under Louisiana law, including a federal income tax deduction. For the year ended December 31, 2014, State Investors Bancorp did not meet the minimum taxable income for Louisiana Corporation Income Tax purposes.

In addition, State-Investors Bank is subject to the Louisiana Shares Tax which is imposed on the assessed value of State-Investors Bank’s capital. The formula for deriving the assessed value is to apply the applicable rate to the sum of:

(a)

20% of our capitalized earnings, plus

(b)

80% of our taxable stockholders’ equity, minus

(c)

50% of our real and personal property assessment.

Various items may also be subtracted in calculating a company’s capitalized earnings. The Louisiana Shares Tax has been provided for by State-Investors Bank for the year ended December 31, 2014.

Item 1A. Risk Factors.

If the Merger is not completed, State Investors Bancorp will have incurred substantial expenses without realizing the expected benefits of the Merger.

State Investors Bancorp has incurred substantial expenses in connection with the Merger. The completion of the Merger depends on the satisfaction of specified conditions and the receipt of regulatory approvals and the approval of State Investors Bancorp’s shareholders. The Company cannot guarantee that these conditions will be met. If the Merger is not completed, these expenses could have a material adverse impact on the Company’s financial condition and results of operations on a stand-alone basis. In addition, the market price of the Company’s common stock would likely decline in the event that the Merger is not consummated as the current market price likely reflects an assumption that the Merger will be completed.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The Company conducts business from State-Investors Bank’s main office and three full-service banking offices. The following table sets forth the net book value of the land, building and leasehold improvements and certain other information with respect to our offices and real property at December 31, 2014.

Date of Lease

Net Book Value

Amount of

Description/Address

Leased/Owned

Expiration

of Property

Deposits

(In thousands)

Main Office:

1041 Veterans Boulevard

Own

N/A

6,020

84,152

Metairie, Louisiana 70005

Branch Offices:

8384 Jefferson Highway

Own

N/A

154

17,910

Harahan, Louisiana 70123

2909 Highway 190

Own

N/A

1,197

35,377

Mandeville, Louisiana 70471

301 Harrison Avenue

Lease

(1)

409

18,549

New Orleans, Louisiana 70124

Real Property:

6319 Milne Street

New Orleans, Louisiana 70124

Own

N/A

201

Total

7,981

155,988

(1) We have five-year renewal options on the term of this lease through August 30, 2034.

Item 3. Legal Proceedings.

The Company is not presently involved in any legal proceedings of a material nature. From time to time, we are a party to legal proceedings incidental to our business to enforce our security interest in collateral pledged to secure loans made by State-Investors Bank.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

(a) State Investors Bancorp’s common stock is traded on the Nasdaq Capital Market under the symbol “SIBC”. As of March 26, 2015, there were 2,304,359 shares of common stock outstanding, held by approximately 200 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks.

Presented below is the high and low sales price information for State Investors Bancorp’s common stock for each of the quarters in fiscal 2014 and 2013. The Company has not declared or paid any cash dividends.


Fiscal 2014
Quarter Ended:	High		Low
December 31, 2014	$	20.80	$	15.12
September 30, 2014	$	16.80	$	15.50
June 30, 2014	$	16.80	$	15.40
March 31, 2014	$	16.00	$	14.97

Fiscal 2013
Quarter Ended:	High		Low
December 31, 2013	$	16.19	$	14.81
September 30, 2013	$	16.64	$	13.91
June 30, 2013	$	14.99	$	13.28
March 31, 2013	$	14.99	$	13.50

(b) Not applicable.

The Company’s repurchases of its common stock made during the quarter ended December 31, 2014, are set forth in the table below:


Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs (a)(b)

October 1, 2014 – October 31, 2014		100	$	16.80		100		28,767
November 1, 2014 – November 30, 2014		--		--		--		28,767
December 1, 2014 – December 31, 2014		--		--		--		28,767
Total		100	$	16.80		100		28,767

Notes to this table:

(a)

On November 22, 2013, the Company announced by a Form 8-K filed with the Securities and Exchange Commission a fourth repurchase program to repurchase up to 118,100 shares, or approximately 5.0% of the Company’s outstanding shares of common stock. The repurchase program does not have an expiration date.

Item 6. Selected Financial Data.

Set forth below is selected financial and other data of State Investors Bancorp. The information at December 31, 2014 and 2013, and for the years ended December 31, 2014 and 2013 is derived in part from the audited financial statements that appear in Item 8 of this Form 10-K. The information at or for the years ended December 31, 2012, 2011 and 2010, is also derived from audited financial statements that do not appear in this document.


	At December 31,
	2014		2013		2012		2011		2010
	(In thousands)
Selected Financial Data:
Total assets	$	271,900	$	258,685	$	245,955	$	249,616	$	208,688
Cash and cash equivalents		5,212		8,734		12,729		7,700		7,031
Investment securities, available for sale		-		--		--		--		--
Mortgage-backed securities:
Held to maturity		249		319		400		485		577
Available for sale		35,296		37,948		46,074		52,876		8,802
FHLB stock		3,042		2,486		1,774		2,487		1,361
Loans receivable, net		218,206		199,265		174,832		175,130		180,631
Deposits		155,988		159,147		161,163		157,561		159,130
FHLB advances		71,595		55,992		39,286		42,308		26,483
Total equity		42,033		41,566		43,502		47,971		21,291


	At December 31,
	2014			2013			2012			2011			2010
	(Dollars in thousands, except per share data)
Selected Operating Data:
Total interest income	$	11,454		$	10,059		$	10,407		$	10,799		$	11,597
Total interest expense		2,605			2,577			2,724			3,410			4,426
Net interest income		8,849			7,482			7,683			7,389			7,171
Provision for loan losses		200			156			142			154			93
Net interest income after provision for loan losses		8,649			7,326			7,541			7,235			7,078
Total non-interest income (loss)		190			147			239			257			(49	)
Total non-interest expense		6,819			6,590			6,537			5,889			5,515
Income before income taxes		2,020			883			1,243			1,603			1,514
Income taxes		753			375			491			553			538
Net income	$	1,267		$	508		$	752		$	1,050		$	976
Earnings per share – basic(1)	$	0.54		$	0.20		$	0.26		$	0.74		NA
Earnings per share – diluted(1)	$	0.53		$	0.20		$	0.26		$	0.74		NA

Selected Operating Ratios:(2)
Average yield on interest-earning assets		4.56	%		4.28	%		4.48	%		4.99	%		5.82	%
Average rate on interest-bearing liabilities		1.24			1.34			1.45			1.75			2.38
Average interest rate spread(3)		3.32			2.94			3.03			3.24			3.44
Net interest margin(3)		3.52			3.18			3.30			3.41			3.60
Average interest-earning assets to average interest-bearing liabilities		119.79			121.77			123.70			111.09			107.03
Net interest income after provision for loan losses to non-interest expense		126.84			111.17			115.36			122.86			128.34
Total non-interest expense to average assets		2.57			2.63			2.63			2.50			2.60
Efficiency ratio(4)		75.44			86.38			82.52			77.02			77.44
Return on average assets		0.48			0.20			0.30			0.45			0.46
Return on average equity		3.06			1.19			1.58			3.23			4.70
Average equity to average assets		15.59			17.03			19.14			13.84			9.78

(Footnotes on the following page)


	At or For the Year Ended December 31,
	2014			2013			2012			2011			2010
Asset Quality Ratios:(5)
Non-performing loans as a percent of total loans receivable(6)		1.41	%		1.32	%		1.86	%		1.91	%		0.71	%
Non-performing assets as a percent of total assets(6)		0.38			1.03			1.33			1.35			0.70
Allowance for loan losses as a percent of Non-performing loans		156.79			50.85			43.81			47.32			116.13
Net charge-offs to average loans receivable		0.07			0.13			0.17			0.03			0.02

Capital Ratios:(5)

Tier 1 leverage ratio		14.10	%		14.78	%		15.16	%		14.86	%		10.12	%
Tier 1 risk-based capital ratio		23.11			25.23			29.01			28.31			16.46
Total risk-based capital ratio		23.96			26.12			30.13			29.56			17.63

Other Data:
Banking offices		4			4			4			4			4

(1)

Due to the timing of State-Investors Bank’s conversion from the mutual to the stock form of organization as a subsidiary of State Investors Bancorp, Inc., and the completion of the Company’s initial public offering on July 6, 2011, earnings per share for the year ended December 31, 2011, is calculated based on the weighted average common shares outstanding for the entire year. Thus, the denominator used in the earnings per share calculations for the fiscal year is lower than it would have been had the shares been outstanding for a full year.

(2)	With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods.

(3)	Average interest rate spread represents the difference between the average yield on interest-earning assets and the average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage of average interest-earning assets.

(4)	The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income.

(5)	Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable.

(6)

Non-performing assets consist of non-performing loans and real estate owned. Non-performing loans consist of non-accruing loans and accruing loans 90 days or more past due. Real estate owned consists of real estate acquired through foreclosure and real estate acquired by acceptance of a deed-in-lieu of foreclosure.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

State Investors Bancorp’s profitability depends primarily on net interest income, which is the difference between interest income earned on interest-earning assets, principally loans, and interest expense paid on interest-bearing liabilities, principally deposits. Net interest income is dependent upon the level of interest rates and the extent to which such rates are changing. State Investors Bancorp’s profitability also depends, to a lesser extent, on interest-earning deposits in other institutions, non-interest income, borrowings from the Federal Home Loan Bank of Dallas, provisions for loan losses, non-interest expenses and federal income taxes. On December 30, 2014, State Investors Bancorp entered into a definitive Agreement and Plan of Reorganization with First NBC under which First NBC will acquire all outstanding shares of common stock of the Company in a cash-for-stock transaction. For further information on the Company’s proposed merger with First NBC, see Note 20 in the Notes to the Consolidated Financial Statements included in Item 8 herein.

State Investors Bancorp’s primary lending activity is the origination of one- to four-family residential loans for portfolio. Historically, we have not originated residential mortgage loans for sale into the secondary market. We also originate or participate in commercial real estate loans which amounted to $ 57.5 million, or 26.1% of our total loans, before net items, at December 31, 2014. Typically, single-family loans involve a lower degree of risk and carry a lower yield than commercial real estate loans. State Investors Bancorp’s loans are primarily funded by certificates of deposit, which typically have a higher interest rate than savings accounts. At December 31, 2014, certificates of deposit amounted to 59.1% of total deposits. We had $ 71.6 million of borrowings from the Federal Home Loan Bank of Dallas as of December 31, 2014, compared to $56.0 million as of December 31, 2013.

State Investors Bancorp’s results of operations are also significantly affected by general economic and competitive conditions, particularly with respect to changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially affect our financial condition and results of operations.

Critical Accounting Policies

In reviewing and understanding financial information for State Investors Bancorp, you are encouraged to read and understand the significant accounting policies used in preparing our financial statements. These policies are described in Note 1 of the notes to our financial statements contained in Item 8 of this Form 10-K. The accounting and financial reporting policies of State Investors Bancorp conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. Accordingly, the financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable, based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods presented. The following accounting policies comprise those that management believes are the most critical to aid in fully understanding and evaluating our reported financial results. These policies require numerous estimates or economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our reported results and financial condition for the period or in future periods.

Allowance for Loan Losses. The allowance for loan losses is maintained at a level to provide for probable credit losses related to specifically identified loans and for losses inherent in the loan portfolio that have been incurred as of the balance sheet date. The allowance for loan losses is comprised of specific allowances and a general allowance. Specific provisions are assessed for each loan that is reviewed for impairment or for which a probable loss has been identified. The allowance related to loans that are identified as impaired is based on discounted expected future cash flows using the loan’s initial effective interest rate, the observable market value of the loan, or the estimated fair value of the collateral for certain collateral dependent loans. Factors contributing to the determination of specific provisions include the financial condition of the borrower, changes in the value of pledged collateral and general economic conditions. General allowances are established based on historical charge-offs considering factors that include risk rating, concentrations and loan type. For the general allowance, management also considers trends in delinquencies and non-accrual loans, concentrations, volatility of risk ratings and the evolving mix in terms of collateral, relative loan size and the degree of seasoning within the various loan products.

Our allowance levels may be impacted by changes in underwriting standards, credit administration and collection policies, regulation and other factors which affect the credit quality and collectability of the loan portfolio also impact the allowance levels. The allowance for loan losses is based on management’s estimate of probable credit losses inherent in the loan portfolio; actual credit losses may vary from the current estimate. The allowance for loan losses is reviewed periodically, taking into consideration the risk characteristics of the loan portfolio, past charge-off experience, general economic conditions and other factors that warrant current recognition. As adjustments to the allowance for loan losses become necessary, they are reflected as a provision for loan losses in current-period earnings. Actual loan charge-offs are deducted from and subsequent recoveries of previously charged-off loans are added to the allowance.

Other-Than-Temporary Impairment. We review our investment portfolio on a quarterly basis for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer including any specific events that may influence the operations of the issuer, and the intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. Inherent in this analysis is a certain amount of imprecision in the judgment used by management.

We recognize credit-related other-than-temporary impairment on debt securities in earnings while noncredit-related other-than-temporary impairment on debt securities not expected to be sold is recognized in accumulated other comprehensive income. We assess whether the credit loss existed by considering whether (a) we have the intent to sell the security, (b) it is more likely than not that we will be required to sell the security before recovery, or (c) we do not expect to recover the entire amortized cost basis of the security. We may bifurcate the other-than-temporary impairment on securities not expected to be sold or where the entire amortized cost of the security is not expected to be recovered into the components representing credit loss and the component representing loss related to other factors. The portion of the fair value decline attributable to credit loss is recognized through earnings.

Corporate debt securities are evaluated for other-than-temporary impairment by determining whether it is probable that an adverse change in estimated cash flows has occurred. Determining whether there has been an adverse change in estimated cash flows involves the calculation of the present value of remaining cash flows compared to previously projected cash flows. We consider the discounted cash flow analysis to be our primary evidence when determining whether credit-related other-than-temporary impairment exists on corporate debt securities.

Income Taxes. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. Realizing our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change.

Comparison of Financial Condition at December 31, 2014 and December 31, 2013

State Investors Bancorp’s total assets increased by $13.2 million, or 5.1%, to $271.9 million at December 31, 2014, compared to $258.7 million at December 31, 2013. For the year ended December 31, 2014, the largest increase in our assets was in loans receivable, net, which increased $18.9 million, or 9.5%. The largest decrease was in cash and cash equivalents, which decreased $3.5 million, or 40.3% at December 31, 2014. Federal funds sold increased to $1.8 million at December 31, 2014 compared to $750,000 at December 31, 2013. Federal Home Loan Bank stock increased $556,000, or 22.4%, at December 31, 2014 compared to December 31, 2013, and other assets decreased $22,000, or 4.6%. Investment securities decreased $2.7 million, or 7.1%, at December 31, 2014, compared to December 31, 2013.

Loans receivable, net, increased by $18.9 million, or 9.5%, to $218.2 million at December 31, 2014 compared to $199.3 million at December 31, 2013. During the year ended December 31, 2014, our total loan originations amounted to $32.9 million and loan principal payments were $29.0 million. The increase in loans receivable, net, was primarily due to increases in one-to-four family residential loans of $6.6 million, residential construction loans of $5.6 million, commercial real estate loans of $4.5 million, multi-family residential loans of $1.8 million, home equity lines of credit of $578,000, and consumer non-real estate loans of $58,000. Such increases were partially offset by decreases of $53,000 in commercial business loans and $13,000 in land loans.

Investment and mortgage-backed securities amounted to $35.5 million at December 31, 2014 compared to $38.3 million at December 31, 2013, a decrease of $2.7 million, or 7.1%. The decrease in investment securities at December 31, 2014, was due to maturities and pay-downs received during the 12-month period, partially offset by unrealized gains on available for sale mortgage-backed securities.

Total liabilities increased $12.7 million, or 5.9%, at December 31, 2014, to $229.9 million compared to $217.1 million at December 31, 2013, primarily due to an increase of $15.6 million in advances from the Federal Home Loan Bank of Dallas. Deposits decreased by $3.2 million, or 2.0%, to $156.0 million at December 31, 2014, compared to $159.1 million at December 31, 2013, primarily due to a decrease in certificates of deposits of $1.4 million, or 1.5%, interest bearing checking accounts of $1.4 million, or 7.8%, money market accounts of $839,000, or 7.9%, savings accounts of $85,000, or 0.3%, partially offset by an increase of $624,000, or 7.0% of non-interest bearing checking accounts. We held $71.6 million of Federal Home Loan Bank advances at December 31, 2014, compared to $56.0 million at December 31, 2013. The increase in Federal Home Loan Bank advances was to fund loan originations and cover deposit outflows.

Total equity amounted to $42.0 million at December 31, 2014, compared to $41.6 million at December 31, 2013, an increase of $467,000, or 1.1%. The reason for the increase in our total equity was primarily due to net income of $1.3 million, and an increase in unrealized gain on securities available for sale of $66,000, net of deferred tax effect, stock awards and options under our stock compensation plan of $231,000 and common stock earned by participants in the employee stock ownership plan of $204,000, partially offset by the purchase of 82,315 shares under the Company’s stock repurchase program for an aggregate purchase price of $1.3 million for the year ended December 31, 2014.

Comparison of Operating Results for the Years Ended December 31, 2014 and 2013

General. State Investors Bancorp’s net income amounted to $1.3 million for the year ended December 31, 2014, an increase of $759,000 or 149.4% compared to net income of $508,000 for the year ended December 31, 2013. This increase was primarily due to an increase of $1.4 million, or 13.9%, in interest income, an increase of $43,000, or 29.3%, in non-interest income, partially offset by increases of $378,000, or 100.8%, in the provision for income taxes, an increase of $229,000, or 3.5%, in non-interest expense, an increase of $44,000, or 28.2% in provision for loan losses, and an increase of $28,000, or 1.1% in total interest expense.

Net Interest Income. Net interest income amounted to $8.8 million for the year ended December 31, 2014 compared to $7.5 million for the year ended December 31, 2013. The $1.4 million or 18.3% increase was primarily due to a $1.4 million or 13.9% increase in total interest income due to a 14 basis point increase in the average yield on investment and mortgage-backed securities and a 9 basis point increase in the average yield on loans receivable, partially offset by a $28,000, or 1.1%, increase in interest expense due to a $15.3 million increase in average Federal Home Loan Bank advances.

The average interest rate spread increased 37 basis points from 2.94% for the year ended December 31, 2013 to 3.32% for the year ended December 31, 2014, while average interest-earning assets increased from $235.0 million to $251.3 million during the same periods. Average interest-earning assets to average interest-bearing liabilities decreased from 121.77% for the year ended December 31, 2013, to 119.79% for the year ended December 31, 2014. The increase in the average interest rate spread primarily reflects the increase in average yield on interest earning assets from 4.28% in fiscal 2013 to 4.56% in fiscal 2014 and a decrease in the average rate paid on interest-bearing liabilities from 1.34% in 2013 to 1.24% in 2014. Net interest margin increased 34 basis points from 3.18% to 3.52% at December 31, 2013 and 2014, respectively, primarily due to an increase of 28 basis points in the average yield on interest earning assets and a decrease of 9 basis points in the average rate paid on interest-bearing liabilities for the periods.

Interest income increased by $1.4 million, or 13.9%, to $11.5 million for the year ended December 31, 2014, compared to $10.1 million for the year ended December 31, 2013. Such an increase was primarily due to an increase in the average yield on investment and mortgage-backed securities from 1.10% in fiscal 2013 to 1.24% in fiscal 2014. To a lesser extent, the increase in interest income was due to an increase in average yield on loans receivable from 5.15% in fiscal 2013 to 5.24% in fiscal 2014. The increase in the interest income was primarily due to a $16.3 million increase in average interest earning assets.

Interest expense increased by $28,000, or 1.1%, to $2.6 million for the year ended December 31, 2014, compared to $2.6 million for the year ended December 31, 2013 primarily as a result of an increase of $16.8 million in average interest-bearing liabilities, partially offset by a 29 basis point decrease in the average cost on Federal Home Loan Bank advances, and a seven basis point decrease in the average rate paid on deposit accounts. The increase in Federal Home Loan Bank advances was to fund loan originations and cover deposit outflows.

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. As State-Investors Bank owned no tax-exempt securities during the periods presented, no yield adjustments were made. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.


	Year Ended December 31,
	2014							2013
	Average Balance		Interest		Average Yield/ Rate			Average Balance		Interest		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable(1)	$	209,850	$	10,987		5.24	%	$	186,240	$	9,587		5.15	%
Investment and mortgage-backed securities		36,782		456		1.24	%		42,122		463		1.10	%
Other interest-earning assets		4,665		11		0.24	%		6,659		9		0.14	%
Total interest-earning assets		251,297		11,454		4.56	%		235,021		10,059		4.28	%
Non-interest-earning assets		14,488							15,674
Total assets	$	265,785						$	250,695
Interest-bearing liabilities:
Savings, NOW and money market accounts	$	53,514	$	91		0.17	%	$	47,707	$	84		0.18	%
Certificates of deposit		92,937		1,498		1.61	%		97,327		1,587		1.63	%
Total deposits		146,451		1,589		1.09	%		145,034		1,671		1.15	%
FHLB advances		63,323		1,016		1.60	%		47,977		906		1.89	%
Total interest-bearing liabilities		209,774		2,605		1.24	%		193,011		2,577		1.34	%
Non-interest-bearing liabilities		14,562							14,998
Total liabilities		224,336							208,009
Total stockholders’ equity		41,449							42,686
Total liabilities and stockholders’ equity	$	265,785						$	250,695
Net interest-earning assets	$	41,523						$	42,010
Net interest income; average interest rate spread			$	8,849		3.32	%			$	7,482		2.94	%
Net interest margin(2)						3.52	%						3.18	%

Average interest-earning assets to average interest-bearing liabilities						119.79	%						121.77	%

(1)	Includes non-accrual loans during the respective periods. Calculated net of deferred fees and discounts, loans in process and allowance for loan losses.

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

Rate/Volume Analysis. The following table shows the extent to which changes in interest rates and changes in volume of interest-earning assets and interest-bearing liabilities affected our interest income and expense during the periods indicated. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (1) changes in rate, which is the change in rate multiplied by prior year volume, and (2) changes in volume, which is the change in volume multiplied by prior year rate. The combined effect of changes in both rate and volume has been allocated proportionately to the change due to rate and the change due to volume.


	Year Ended December 31, 2014 compared to 2013									Year Ended December 31, 2013 compared to 2012
	Increase (Decrease) Due to						Total Increase			Increase (Decrease) Due to						Total Increase
	Rate			Volume			(Decrease)			Rate			Volume			(Decrease)
	(In thousands)
Interest income:
Loans receivable	$	166		$	1,234		$	1,400		$	(106	)	$	113		$	7
Investment and mortgage-backed securities		55			(64	)		(9	)		(240	)		(115	)		(355	)
Other interest-earning assets		7			(3	)		4			(2	)		2			--
Total interest income		228			1,169			1,395			(348	)		--			(348	)
Interest expense:
Savings, NOW and money market accounts		(3	)		10			7			(2	)		10			8
Certificates of deposit		(18	)		(71	)		(89	)		(161	)		(79	)		(240	)
Total deposits		(21	)		(61	)		(82	)		(163	)		(69	)		(232	)
FHLB advances and other borrowings		(97	)		207			110			6			79			85
Total interest expense		(118	)		146			28			(157	)		10			(147	)
Increase (decrease) in net interest income	$	346		$	1,023		$	1,367		$	(191	)	$	(10	)	$	(201	)

Provision for Loan Losses. The allowance for loan losses is established through a provision for loan losses charged to earnings as losses are estimated to have occurred in our loan portfolio. The allowance for loan losses is maintained at a level to provide for probable credit losses related to specifically identified loans and for losses inherent in the loan portfolio that have been incurred as of the balance sheet date. The allowance for loan losses is comprised of specific allowances and a general allowance.

Specific provisions are assessed for each loan that is reviewed for impairment or for which a probable loss has been identified. The allowance related to loans that are identified as impaired is based on discounted expected future cash flows using the loan’s initial effective interest rate, the observable market value of the loan, or the estimated fair value of the collateral for certain collateral dependent loans. Factors contributing to the determination of specific provisions include the financial condition of the borrower, changes in the value of pledged collateral and general economic conditions. General allowances are established based on historical charge-offs considering factors that include risk rating, concentrations and loan type. For the general allowance, management also considers trends in delinquencies and non-accrual loans, concentrations, volatility of risk ratings and the evolving mix in terms of collateral, relative loan size and the degree of seasoning within the various loan products.

Changes in underwriting standards, credit administration and collection policies, regulation and other factors which affect the credit quality and collectability of the loan portfolio also impact the allowance levels. The allowance for loan losses is based on management’s estimate of probable credit losses inherent in the loan portfolio; actual credit losses may vary from the current estimate. The allowance for loan losses is reviewed periodically, taking into consideration the risk characteristics of the loan portfolio, past charge-off experience, general economic conditions and other factors that warrant current recognition. As adjustments to the allowance for loan losses become necessary, they are reflected as a provision for loan losses in current-period earnings. Actual loan charge-offs are deducted from and subsequent recoveries of previously charged-off loans are added to the allowance.

During the year ended December 31, 2014, we made a provision of $200,000, compared to a provision of $156,000 in fiscal 2013. To the best of management’s knowledge, the allowance is maintained at a level believed to cover all known and inherent losses in the loan portfolio, both probable and reasonable to estimate.

Non-Interest Income. Non-interest income, which includes fees and service charges, realized gains and losses on investments and sales of real estate owned, amounted to income of $190,000 for the year ended December 31, 2014, a increase of $43,000 or 29.3% compared to non-interest income of $147,000 for the year ended December 31, 2013. The increase was primarily due to a $21,000 loss on the sale of other real estate during the year ended December 31, 2014 compared to an $86,000 loss in the year ended December 31, 2013, partially offset by a $22,000 net decrease in service charges, application fees, and other operating income.

Non-Interest Expense. Non-interest expense increased by $229,000, or 3.5 % to $6.8 million for the year ended December 31, 2014, compared to $6.6 million for the year ended December 31, 2013. The increase in non-interest expense was primarily due to an increase in professional fees of $124,000, or 32.5%, as well as increases of $109,000, or 3.1%, in salaries and employee benefits expense, $46,000, or 80.7%, in bank service charge expense, $23,000, or 18.0%, in deposit insurance premiums, $16,000, or 17.0%, in office supplies and postage expense, $12,000, or 2.4%, in occupancy expense, $11,000, or 4.2%, in taxes and licenses, partially offset by decreases of $77,000, or 12.9%, in data processing expense, $25,000 or 33.8% in advertising expense, $5,000, or 2.3% in security expense, and $5,000, or 0.6%, in other non-interest expense. We expect our professional fees to remain elevated in 2015 as a result of fees incurred in relation to our announced merger with First NBC.

Income Tax Expense. The income tax expense amounted to $753,000 and $375,000 for the fiscal years ended December 31, 2014 and 2013, respectively. Our effective federal tax rate was 37% and 42% for the years ended December 31, 2014 and 2013, respectively.

Exposure to Changes in Interest Rates

State Investors Bancorp’s ability to maintain net interest income depends upon its ability to earn a higher yield on assets than the rates it pays on deposits and borrowings. State Investors Bancorp’s interest-earning assets consist primarily of residential mortgage loans which have fixed rates of interest. State Investors Bancorp’s interest-bearing liabilities primarily consist of higher rate certificates of deposit rather than other types of deposit products. Consequently, State Investors Bancorp’s ability to maintain a positive spread between the interest earned on assets and the interest paid on deposits and borrowings can be adversely affected when market rates of interest rise. At December 31, 2014, certificates of deposit amounted to $92.2 million or 40.1% of total liabilities and 33.9% of total assets at such date.

Gap Analysis. The matching of assets and liabilities may be analyzed by examining the extent to which such assets and liabilities are “interest rate sensitive” and by monitoring a bank’s interest rate sensitivity “gap.” An asset and liability is said to be interest rate sensitive within a specific time period if it will mature or reprice within that time period. The interest rate sensitivity gap is defined as the difference between the amount of interest-earning assets maturing or repricing within a specific time period and the amount of interest-bearing liabilities maturing or repricing within that same time period. A gap is considered positive when the amount of interest rate sensitive assets exceeds the amount of interest rate sensitive liabilities. A gap is considered negative when the amount of interest rate sensitive liabilities exceeds the amount of interest rate sensitive assets. During a period of rising interest rates, a negative gap would tend to adversely affect net interest income while a positive gap would tend to result in an increase in net interest income. Conversely, during a period of falling interest rates, a negative gap would tend to result in an increase in net interest income while a positive gap would tend to adversely affect net interest income. Our one-year cumulative gap was a negative 1.43% at December 31, 2014.

The following table sets forth the amounts of our interest-earning assets and interest-bearing liabilities outstanding at December 31, 2014, which we expect, based upon certain assumptions, to reprice or mature in each of the future time periods shown (the “GAP Table”). Except as stated below, the amount of assets and liabilities shown which reprice or mature during a particular period were determined in accordance with the earlier of term to repricing or the contractual maturity of the asset or liability. The table sets forth an approximation of the projected repricing of assets and liabilities at December 31, 2014, on the basis of contractual maturities, anticipated prepayments, and scheduled rate adjustments within a three-month period and subsequent selected time intervals. The loan amounts in the table reflect principal balances expected to be redeployed and/or repriced as a result of contractual amortization and anticipated prepayments of adjustable-rate loans and fixed-rate loans, and as a result of contractual rate adjustments on adjustable-rate loans. Annual prepayment rates for adjustable-rate and fixed-rate single-family and multi-family mortgage loans are assumed to range from 11% to 23%. The annual prepayment rate for mortgage-backed securities is assumed to range from 10% to 12%. Money market deposit accounts, savings accounts and interest-bearing checking accounts are assumed to have annual rates of withdrawal, or “decay rates,” of 15%, 7% and 7%, respectively.


	3 Months or Less			More than 3 Months to 1 Year			More than 1 Year to 3 Years			More than 3 Years to 5 Years			More than 5 Years			Total Amount
	(Dollars in thousands)
Interest-earning assets(1)
Loans receivable(2)	$	17,525		$	38,517		$	68,917		$	37,257		$	57,775		$	219,991
Investment securities		5,037			12,903			16,811			--			--			34,751
Other interest-earning assets		683			--			--			--			--			683
Total interest-earning assets		23,245			51,420			85,728			37,257			57,775			255,425
Interest-bearing liabilities:
Savings accounts		488			1,466			3,910			3,910			17,925			27,699
Checking accounts		516			1,549			4,130			4,130			15,997			26,322
Money market accounts		444			1,331			3,550			3,550			887			9,762
Certificate accounts		14,603			29,664			19,765			11,206			16,967			92,205
FHLB advances		9,864			18,609			36,135			5,885			1,102			71,595
Total interest-bearing liabilities		25,915			52,619			67,490			26,681			52,898			227,583

Interest-earning assets less interest-bearing liabilities	$	(2,670	)	$	(1,199	)	$	18,238		$	8,576		$	4,897		$	27,842
Cumulative interest rate sensitivity gap(3)	$	(2,670	)	$	(3,869	)	$	14,369		$	22,945		$	27,842		$	27,842
Cumulative interest-rate gap as a percentage of total assets at December 31, 2014		(0.98	)%		(1.43	)%		5.29	%		8.45	%		10.24	%		10.24	%
Cumulative interest-earning assets as a percentage of cumulative interest-bearing liabilities at December 31, 2014		0.90	%		0.95	%		1.10	%		1.13	%		1.13	%		1.13	%

(1)	Interest-earning assets are included in the period in which the balances are expected to be redeployed and/or repriced as a result of anticipated prepayments, scheduled rate adjustments and contractual maturities.

(2)	For purposes of the gap analysis, loans receivable includes non-performing loans gross of the allowance for loan losses, undisbursed loan funds, unamortized discounts and deferred loan fees.

(3)	Interest-rate sensitivity gap represents the difference between net interest-earning assets and interest-bearing liabilities.

Net Portfolio Value Analysis. Our interest rate sensitivity is monitored by management through the use of models which generate estimates of the change in net portfolio value (“NPV”) over a range of interest rate scenarios. NPV represents the market value of portfolio equity, which is different from book value, and is equal to the market value of assets minus the market value of liabilities with adjustments made for off-balance sheet items. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The following table sets forth our NPV as of December 31, 2014 and reflects the changes to NPV as a result of immediate and sustained changes in interest rates as indicated.


Change in Interest Rates In Basis Points (Rate Shock)	Net Portfolio Value								NPV as % of Portfolio Value of Assets
Change in Interest Rates In Basis Points (Rate Shock)	Amount		$ Change			% Change			NPV Ratio			Change
	(Dollars in thousands)
300bp	$	39,878	$	(9,778	)		(20	)%		16.02	%		(2.04	)%
200		43,891		(5,765	)		(12	)		17.03			(1.03	)
100		47,425		(2,231	)		(5	)		17.77			(0.29	)
Static		49,656		--			--			18.06			--
(50)		49,728		72			--			17.88			(0.18	)
(100)		49,204		(450	)		(1	)		17.53			(0.53	)

Net Interest Income Analysis. In addition to modeling changes in NPV, we also analyze potential changes to net interest income (“NII”) for a 12-month period under rising and falling interest rate scenarios. The following table shows our NII model as of December 31, 2014.


Change in Interest Rates In Basis Points (Rate Shock)		Net Interest Income		$ Change			% Change
		(Dollars in thousands)
300	bp	$	7,822	$	(1,203	)		(13.33	)%
200			8,423		(602	)		(6.68	)
100			8,797		(228	)		(2.53	)
50			8,919		(106	)		(1.17	)
Static			9,025		--			--
(50	)		9,076		51			0.56
(100	)		9,089		64			0.71
(200	)		9,100		75			0.83
(300	)		9,056		31			0.34

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in NPV requires the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the models presented assume that the composition of our interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities. Accordingly, although the NPV simulation model above provides an indication of interest rate risk exposure at a particular point in time, such model is not intended to and does not provide a precise forecast of the effect of changes in market interest rates on net interest income and will differ from actual results.

Liquidity and Capital Resources

State Investors Bancorp maintains levels of liquid assets deemed adequate by management. State Investors Bancorp adjusts its liquidity levels to fund deposit outflows, repay its borrowings and to fund loan commitments. State Investors Bancorp also adjusts liquidity as appropriate to meet asset and liability management objectives.

State Investors Bancorp’s primary sources of funds are deposits, amortization and prepayment of loans and to a lesser extent, funds provided from operations. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. State Investors Bancorp sets the interest rates on its deposits to maintain a desired level of total deposits. In addition, State Investors Bancorp invests excess funds in short-term interest-earning accounts and other assets, which provide liquidity to meet lending requirements. State Investors Bancorp’s cash and cash equivalents amounted to $5.2 million at December 31, 2014.

A significant portion of State Investors Bancorp’s liquidity consists of non-interest earning deposits. State Investors Bancorp’s primary sources of cash are principal repayments on loans and increases in deposit accounts. If we require funds beyond our ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Dallas, which provide an additional source of funds. At December 31, 2014, State-Investors Bank had $71.6 million of advances from the Federal Home Loan Bank of Dallas and had $57.1 million in additional borrowing capacity. Additionally, at December 31, 2014, State-Investors Bank was a party to a Master Purchase Agreement with First National Bankers Bank whereby we may purchase Federal Funds from First National Bankers Bank in an amount not to exceed $14.0 million. There were no amounts purchased under this agreement as of December 31, 2014.

At December 31, 2014, State Investors Bancorp had outstanding loan commitments of $5.0 million to originate loans. At December 31, 2014, certificates of deposit scheduled to mature in less than one year totaled $16.4 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case. In addition, in a rising interest rate environment, the cost of such deposits could be significantly higher upon renewal. State Investors Bancorp intends to utilize its liquidity to fund its lending activities.

Under applicable banking regulations, State-Investors Bank is required to maintain regulatory capital sufficient to meet Tier 1 leverage, Tier 1 risk-based and total risk-based capital ratios of at least 4.0%, 4.0% and 8.0%, respectively. At December 31, 2014, State-Investors Bank exceeded each of its capital requirements with ratios of 14.1%, 23.1% and 24.0%, respectively.

Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with generally accepted accounting principles are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. Our exposure to credit loss from non-performance by the other party to the above-mentioned financial instruments is represented by the contractual amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet instruments. In general, we require collateral or other security to support financial instruments with off–balance sheet credit risk.

Commitments. The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans in process at December 31, 2014.


	Total Amounts Committed at December 31, 2014		Amount of Commitment Expiration - Per Period
	Total Amounts Committed at December 31, 2014		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
	(In thousands)
Unused lines of credit	$	3,679	$	381	$	2,405	$	859	$	34
Undisbursed portion of loans in process		2,974		2,974		--		--		--
Commitments to originate loans		4,981		4,981		--		--		--
Total commitments	$	11,634	$	8,336	$	2,405	$	859	$	34

Contractual Cash Obligations. The following table summarizes our contractual cash obligations, consisting of certificates of deposit, Federal Home Loan Bank advances and operating lease obligations, at December 31, 2014.


			Payments Due By Period
	Total at December 31, 2014		Less than 1 Year		1-3 Years		4-5 Years		After 5 Years
	(In thousands)
Certificates of deposit	$	92,205	$	44,286	$	11,001	$	8,752	$	28,166
FHLB advances		71,595		25,000		35,149		8,883		2,563
Total long-term debt		163,800		69,286		46,150		17,635		30,729
Operating lease obligations		--		--		--		--		--
Total contractual obligations	$	163,800	$	69,286	$	46,150	$	17,635	$	30,729

Impact of Inflation and Changing Prices

The financial statements and related financial data presented herein regarding State Investors Bancorp have been prepared in accordance with accounting principles generally accepted in the United States of America which generally require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of State Investors Bancorp’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on State Investors Bancorp’s performance than does the effect of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such prices are affected by inflation to a larger extent than interest rates.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 8. Financial Statements and Supplementary Data.

REPORT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

State Investors Bancorp, Inc. and Subsidiary
Metairie, Louisiana

We have audited the accompanying consolidated balance sheets of State Investors Bancorp, Inc. and Subsidiary, as of December 31, 2014 and 2013, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2014. The management of State Investors Bancorp, Inc. and Subsidiary is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

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 audits 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of State Investors Bancorp, Inc. and Subsidiary, as of December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ T. E. LOTT & COMPANY

Tuscaloosa, Alabama

March 31, 2015

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

AT DECEMBER 31, 2014 AND 2013

	2014			2013
	(Dollars in thousands)
ASSETS

Cash - non-interest bearing	$	2,704		$	5,381
Cash - interest bearing		683			2,603
Federal funds sold		1,825			750
Cash and cash equivalents		5,212			8,734
Investment securities:
Available-for-sale		35,296			37,948
Held-to-maturity		249			319
Loans, net		218,206			199,265
Federal Home Loan Bank Stock		3,042			2,486
Accrued interest receivable		992			961
Premises and equipment, net		7,981			8,224
Other Real Estate, net		150			--
Deferred income taxes		315			269
Other assets		457			479

TOTAL ASSETS	$	271,900		$	258,685

LIABILITIES AND STOCKHOLDERS’ EQUITY

Liabilities:
Deposits	$	155,988		$	159,147
Advances from Federal Home Loan Bank		71,595			55,992
Advance payments by borrowers for
taxes and insurance		976			1,000
Accrued interest payable		93			91
Other liabilities		1,215			889

TOTAL LIABILITIES		229,867			217,119

Stockholders’ Equity:
Preferred Stock, $01 par value - 1,000,000 shares authorized;
none issued		--			--
Common Stock, $.01 par value - 9,000,000 shares authorized;
2,909,500 issued; 2,308,019 outstanding at December 31, 2014 and 2,390,334 outstanding at December 31, 2013		29			29
Additional Paid-In Capital		28,503			28,341
Treasury stock, 601,481 and 519,166 shares outstanding at December 31, 2014 and 2013, respectively, at cost		(8,580	)		(7,279	)
Unallocated ESOP Shares		(1,920	)		(2,037	)
Unallocated Recognition and Retention Plan (RRP) shares		(1,205	)		(1,361	)
Retained earnings-substantially restricted		24,682			23,415
Accumulated other comprehensive income		524			458

TOTAL STOCKHOLDERS’ EQUITY		42,033			41,566

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	271,900		$	258,685

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2014 AND 2013

	2014			2013
	(In thousands, except per share data)

INTEREST INCOME:
Interest and fees on loans	$	10,987		$	9,587
Interest on investment securities		456			463
Other interest and dividends		11			9

TOTAL INTEREST INCOME		11,454			10,059

INTEREST EXPENSE:
Interest on deposits		1,589			1,671
Interest on Federal Home Loan Bank advances		1,016			906

TOTAL INTEREST EXPENSE		2,605			2,577

NET INTEREST INCOME		8,849			7,482

PROVISION FOR LOAN LOSSES		200			156

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		8,649			7,326

NON-INTEREST INCOME:
Loss on sale of other real estate		(21	)		(86	)
Application fee income		44			82
Service charges, fees and other		167			151

TOTAL NON-INTEREST INCOME		190			147

NON-INTEREST EXPENSES:
Salaries and employee benefits		3,603			3,494
Occupancy expense		514			502
Data Processing		518			595
Security		217			222
Deposit insurance premiums		151			128
Advertising		49			74
Professional fees		505			381
Taxes and licenses		275			264
Office Supplies and postage		110			94
Service Charges		103			57
Other		774			779

TOTAL NON-INTEREST EXPENSES		6,819			6,590

INCOME BEFORE INCOME TAXES		2,020			883

INCOME TAX EXPENSE		753			375

NET INCOME	$	1,267		$	508

Earnings per share
Basic	$	0.54		$	0.20
Diluted	$	0.53		$	0.20

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

YEARS ENDED DECEMBER 31, 2014 AND 2013


	2014			2013
	(In thousands)
Net income	$	1,267		$	508

Other Comprehensive Income (Loss):

Unrealized gains (losses) on investment securities		100			(377	)

Income tax effect		(34	)		129

OTHER COMPREHENSIVE INCOME (LOSS), net of taxes		66			(248	)

COMPREHENSIVE INCOME	$	1,333		$	260

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

YEARS ENDED DECEMBER 31, 2014 AND 2013

	Common Stock		Additional Paid-In Capital			Treasury Stock, at Cost			Unallocated ESOP Shares			Unallocated RRP Shares			Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total
Balance, December 31, 2012	$	29	$	28,166		$	(4,636	)	$	(2,153	)	$	(1,517	)	$	22,907	$	706		$	43,502
Comprehensive Income:
Net Income		--		--			--			--			--			508		--			508
Other Comprehensive Loss		--		--			--			--			--			--		(248	)		(248	)
RRP shares released for allocation		--		(128	)		--			--			156			--		--			28
ESOP shares released for allocation		--		57			--			116			--			--		--			173
Share based compensation cost		--		246			--			--			--			--		--			246
Treasury Stock, acquired at cost, 175,658 shares		--		--			(2,643	)		--			--			--		--			(2,643	)

Balance, December 31, 2013	$	29	$	28,341		$	(7,279	)	$	(2,037	)	$	(1,361	)	$	23,415	$	458		$	41,566
Comprehensive Income:
Net Income		--		--			--			--			--			1,267		--			1,267
Other Comprehensive Income		--		--			--			--			--			--		66			66
RRP shares released for:
allocation		--		(38	)		--			--			156			--		--			118
ESOP shares released for allocation		--		87			--			117			--			--		--			204
Share based compensation cost		--		113			--			--			--			--		--			113
Treasury Stock, acquired at cost, 82,315 shares		--		--			(1,301	)		--			--			--		--			(1,301	)

Balance, December 31, 2014	$	29	$	28,503		$	(8,580	)	$	(1,920	)	$	(1,205	)	$	24,682	$	524		$	42,033

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2014 AND 2013

	2014			2013
	(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,267		$	508
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		200			156
Depreciation and amortization		277			278
Amortization (accretion) of securities		440			422
Stock dividend on FHLB stock		(5	)		(5	)
Loss on sale of other real estate		61			86
Deferred income taxes provision (benefit)		(80	)		20
Non-cash compensation		435			447
Changes in operating assets and liabilities:
(Increase) decrease in accrued interest receivable		(31	)		68
Decrease in other assets		22			189
Increase in accrued interest payable		2			10
Increase (decrease) in other liabilities		326			(7	)

NET CASH PROVIDED BY OPERATING ACTIVITIES		2,914			2,172

CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans		(19,382	)		(24,837	)
Purchase of securities available for sale		(6,345	)		(3,303	)
Proceeds from principal repayments of mortgage-backed securities		8,728			10,711
Purchase of FHLB stock		(551	)		(707	)
Purchase of premises and equipment		(35	)		(215	)
Proceeds from sale of foreclosed real estate		30			164

NET CASH USED IN INVESTING ACTIVITIES		(17,555	)		(18,187	)

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2014 AND 2013

(Continued)

	2014			2013
	(In thousands)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposit accounts		(3,159	)		(2,016	)
Decrease in advances by borrowers for insurance and taxes		(24	)		(27	)
Advances from the FHLB		42,337			42,786
Payments on advances from the FHLB		(26,734	)		(26,080	)
Purchase of treasury stock		(1,301	)		(2,643	)

NET CASH PROVIDED BY FINANCING ACTIVITIES		11,119			12,020

DECREASE IN CASH AND CASH EQUIVALENTS		(3,522	)		(3,995	)

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		8,734			12,729

CASH AND CASH EQUIVALENTS - END OF YEAR	$	5,212		$	8,734

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Interest on deposits and borrowings	$	2,603		$	2,566

Income taxes	$	611		$	531

See notes to consolidated financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

State Investors Bancorp, Inc., a Louisiana chartered corporation (the Company) was organized by State-Investors Bank (the Bank) to facilitate the conversion of the Bank from the mutual to the stock form (the Conversion) of ownership. The Conversion was completed on July 6, 2011, at which time the Company became the holding company for the Bank, with the Company owning all of the issued and outstanding shares of the Bank’s common stock. Shares of the Company’s common stock were issued and sold in an offering to certain depositors of the Bank. As a result of the offering, the Company sold 2,909,500 shares of its common stock, raising proceeds of approximately $27.9 million, net of offering expenses.

On December 30, 2014, the Company and First NBC Bank Holding Company, (“First NBC”) entered into a definitive Agreement and Plan of Reorganization under which First NBC will acquire all outstanding shares of common stock of the Company in a cash-for-stock transaction. Under the terms of the agreement, shareholders of the Company will receive $21.25 for each share of common stock of the Company. The proposed transaction is expected to be completed during the second quarter of 2015. For further information on this transaction, see Note 20.

State-Investors Bank is a federally chartered stock savings bank and currently conducts business from its main office in Metairie, Louisiana, as well as three additional full service banking centers in the surrounding areas. The Bank is subject to regulation by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation. The Company is subject to regulation by the Board of Governors of the Federal Reserve System (“Federal Reserve Board”).

The Bank is primarily engaged in attracting deposits from the general public and using those funds to invest in loans and investment securities. The Bank’s primary sources of funds are customer deposits, repayments of loans, repayments of investments and funds borrowed from outside sources such as the Federal Home Loan Bank (FHLB) of Dallas. The Bank derives its income primarily from interest earned on loans and investment securities, and the bank’s primary expenses are interest expense on deposits and borrowings and general operating expenses.

Principles of Consolidation

The consolidated financial statements include the accounts of State Investors Bancorp, Inc. and its wholly-owned subsidiary, State-Investors Bank. All significant intercompany transactions and amounts have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the 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 in the near term relate to the determination of the allowance for losses on loans and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for losses on loans and foreclosed real estate, management obtains independent appraisals for significant properties.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s loan portfolio consists largely of real estate loans. The majority of loans are secured by first mortgages on area real estate and are expected to be repaid from cash flow of the debtor. A substantial portion of the debtors’ ability to honor their contracts is dependent on the economy and the industries of the region of Louisiana in which the Company operates, including the petrochemical industry, port activity along that region of the Mississippi River, healthcare and tourism.

While management uses available information to recognize losses on loans and foreclosed real estate, further reductions in the carrying amounts of loans and foreclosed assets may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans and foreclosed real estate. Such agencies may require additional losses to be recognized based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans and foreclosed real estate may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Cash Equivalents

For purposes of the statements of cash flows, the Company considers all cash, amounts due from depository institutions and federal funds sold to be cash equivalents.

Investment Securities

FASB ASC 320, Investments, requires the classification of securities as 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.

Trading account securities are held for resale in anticipation of short-term market movements and are recorded at fair value. Gains and losses, both realized and unrealized, are reflected in earnings. The Company held no trading account securities at December 31, 2014 and 2013.

Debt securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity.

Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, with unrealized gains and losses, net of tax, reported in other comprehensive income (loss). Realized gains and losses are included in net securities gains in non-interest income, and, when applicable, are reported as a reclassification adjustment in other comprehensive income (loss). Gains and losses on securities sold are determined based on the specific identification method.

Declines in the fair value of individual held-to-maturity and available-for-sale securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The written down amount then becomes the security’s new cost basis. The related write-downs are included in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

1.	NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Loans

The Company grants mortgage, commercial and consumer loans to customers. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding unpaid principal balances adjusted for unearned income, the allowance for loan losses, and any unamortized deferred fee or costs on originated loans.

Loan origination and commitment fees are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method. Discounts on consumer loans are recognized over the lives of the loans using methods that approximate the interest method.

The accrual of interest on loans is discontinued at the time the loan is 90 days past due unless the credit is well-secured and in the process of collection. Past due status is based on contractual terms of the loan. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the reasons for the delay, the borrower’s prior payment record, and the amount of shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis by either the present value of expected cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level which, in management’s judgment, is considered to be adequate to absorb credit losses inherent in the loan portfolio. The allowance for loan losses is based upon management’s review and evaluation of the loan portfolio.

The allowance for loan losses is established, as losses are estimated to have occurred, through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect a borrower’s ability to repay, estimated value of any underlying collateral, and prevailing economic conditions. For loans that are classified as impaired, an allowance is established based on the discounted cash flows for collateral value or observable market price of the impaired loan. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Although management uses available information to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that a material change could occur in the allowance for loan losses in the near term. However, the amount of the change that is reasonably possible cannot be estimated.

Other Real Estate

Real estate properties acquired through, or in lieu of, loan foreclosure are recorded at fair value less estimated selling cost at the date of foreclosure. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses. After foreclosure, valuations are periodically performed by management and property held for sale is carried at the lower of the new cost basis or fair value less cost to sell. Impairment losses on property to be held and used are measured as the amount by which the carrying amount of a property exceeds its fair value. Costs of significant property improvements are capitalized whereas costs relating to holding property are expensed. The portion of interest costs relating to development of real estate is capitalized. Valuations are periodically performed by management, and any subsequent write-downs are recorded as a charge to operations, if necessary, to reduce the carrying value of a property to the lower of its cost or fair value less cost to sell.

Premises and Equipment

Land is carried at cost. Buildings, leasehold improvements and furniture, fixtures and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization are calculated on the straight-line basis over the estimated useful lives of the assets which range from 3 to 39 years.

Income Taxes

Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes.

The Company determines deferred income taxes using the liability method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities. Enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized.

The Company evaluates all significant tax positions as required by accounting principles generally accepted in the United States of America. As of December 31, 2014, the Company does not believe that it has taken any uncertain positions that would qualify for recognition or disclosure in the consolidated financial statements, nor does it believe that there are any unrealized tax benefits that would either increase or decrease within the next year.

The Company files income tax returns in the U.S. federal jurisdiction. With few exceptions, the Company is no longer subject to federal tax examinations by tax authorities for years before 2009. Any interest and penalties assessed by income taxing authorities are not significant and are included in non-interest expense in these consolidated financial statements.

Earnings per Share

Earnings per share represent income available to common shareholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Comprehensive Income

Generally accepted accounting principles (“GAAP”) generally require that recognized revenues, expenses, gains, and losses be included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported, net of tax, in accumulated other comprehensive income, a separate component of the equity section of the balance sheets, such items, along with net earnings, are components of comprehensive income.

Advertising

The Company follows the policy of charging the costs of advertising to expense as incurred. Advertising expense included in operations amounted to $49,000 and $74,000 in 2014 and 2013, respectively.

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40). The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. This Update is not expected to have a significant impact on the Company’s financial statements.

Reclassifications

Certain reclassifications have been made to the 2013 financial statements to conform with the 2014 financial statement presentation. Such reclassifications had no effect on net income or retained earnings as previously reported.

Subsequent Events

Management has evaluated the effect of subsequent events on these financial statements through March 31, 2015, the date the financial statements were issued.

2.	RESTRICTION ON CASH AND DUE FROM BANKS

The Bank is required to maintain reserve funds in cash or on deposit. The Bank has on deposit the required reserve of $358,000 and $275,000 with First National Bankers Bank at December 31, 2014 and 2013, respectively.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

3. INVESTMENT SECURITIES

A summary of the amortized cost and fair values of the securities is presented below:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
December 31, 2014

Held-to-maturity:
Mortgage-backed securities:
GNMA Certificates	$	211	$	6	$	--		$	217
FNMA Certificates		30		2		--			32
FHLMC Certificates		8		--		--			8

Total held-to-maturity securities		249		8		--			257

Available-for-sale:
Mortgage-backed securities:
GNMA Certificates		34,501		796		(1	)		35,296

Total securities	$	34,750	$	804	$	(1	)	$	35,553

December 31, 2013

Held-to-maturity:
Mortgage-backed securities:
GNMA Certificates	$	256	$	9	$	--		$	265
FNMA Certificates		52		2		--			54
FHLMC Certificates		11		1		--			12

Total held-to-maturity securities		319		12		--			331

Available-for-sale:
Mortgage-backed securities:
GNMA Certificates		37,254		701		(7	)		37,948

Total securities	$	37,573	$	713	$	(7	)	$	38,279

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

3. INVESTMENT SECURITIES (Continued)

The amortized cost and fair values of the mortgage-backed securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Held-to-maturity				Available-for-sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
December 31, 2014

Amounts maturing in:
One to five years	$	249	$	257	$	29,945	$	30,609
After five years through ten years		--		--		3,469		3,571
After ten years		--		--		1,087		1,116
	$	249	$	257	$	34,501	$	35,296

Securities with a carrying value of $34.6 million and $37.3 million were pledged to secure advances from the FHLB as of December 31, 2014 and 2013, respectively.

Investment in stock of the Federal Home Loan Bank of Dallas (FHLB) is carried at cost and is pledged to secure advances from the FHLB. The balance at December 31, 2014 and 2013, is $3.0 million and $2.5 million, respectively.

Gross unrealized losses in investment securities at December 31, 2014 and 2013, existing for continuous periods of less than 12 months and for continuous periods of 12 months or more, are as follows:

December 31, 2014

	Less than 12 Months					12 Months or More				Totals
Security Description	Fair Value		Gross Unrealized (Loss)			Fair Value		Gross Unrealized (Loss)		Fair Value		Gross Unrealized (Loss)
	(In thousands)
Mortgage-backed securities:
GNMA Certificates	$	581	$	(1	)	$	--	$	--	$	581	$	(1	)

December 31, 2013

	Less than 12 Months					12 Months or More				Totals
Security Description	Fair Value		Gross Unrealized (Loss)			Fair Value		Gross Unrealized (Loss)		Fair Value		Gross Unrealized (Loss)
	(In thousands)
Mortgage-backed securities:
GNMA Certificates	$	1,417	$	(7	)	$	--	$	--	$	1,417	$	(7	)

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

3.	INVESTMENT SECURITIES (Continued)

Management evaluates securities for other-than-temporary impairment on a periodic and regular basis, as well as when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other-than-temporary.

4.	LOANS AND THE ALLOWANCE FOR LOAN LOSSES

Loans receivable at December 31 are summarized as follows:

	2014			2013
	(In thousands)
Real estate loans:
One-to-four family residential	$	137,036		$	130,422
Commercial real estate		57,487			52,979
Multi-family residential		7,271			5,462
Land		3,428			3,441
Residential construction		10,075			4,464

Total real estate loans		215,297			196,768

Other loans:
Home equity lines of credit		2,819			2,241
Consumer non-real estate loans		1,268			1,210
Commercial business loans		607			660

Total other loans		4,694			4,111

Total loans		219,991			200,879

Less:
Deferred loan fees		(388	)		(263	)
Allowance for loan losses		(1,397	)		(1,351	)

Net loans	$	218,206		$	199,265

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4.	LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

In the ordinary course of business, the Company has granted loans to directors, officers and employees and their affiliates. Such loans were made on substantially the same terms as those prevailing at the time for comparable transactions with other customers. Such loans amounted to approximately $1.6 million and $2.4 million at December 31, 2014 and 2013, respectively.

Activity in loans to directors, officers and employees was as follows:

	2014			2013
	(In thousands)

Balance at beginning of year	$	2,407		$	2,607

Add: New loans or advances		45			41
Less: Payments		(877	)		(241	)

Balance at end of year	$	1,575		$	2,407

Management segregates the loan portfolio into portfolio segments, which is defined as the level at which the Company develops and documents a systematic method for determining its allowance for loan losses. The portfolio segments are segregated based on loan types and the underlying risk factors present in each loan type. Such risk factors are periodically reviewed by management and revised as deemed appropriate. The following tables set forth, as of December 31, 2014 and 2013, the balance of the allowance for loan losses by portfolio segment, disaggregated by impairment methodology, which is then further segregated by amounts evaluated for impairment collectively and individually. The allowance for loan losses allocated to each portfolio segment is not necessarily indicative of future losses in any particular portfolio segment and does not restrict the use of the allowance to absorb losses in other portfolio segments.

Allowance for Credit Losses and Recorded Investment in Loans Receivable for the Year Ended December 31, 2014

	Mortgage- Permanent- 1 to 4 Family			Mortgage- Permanent- Other			Mortgage- Construction		Commercial			Consumer		Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	548		$	770		$	14	$	4		$	15	$	1,351
Charge-offs		(78	)		(76	)		--		--			--		(154	)
Recoveries		--			--			--		--			--		--
Provision		48			141			12		(1	)		--		200
Ending balance	$	518		$	835		$	26	$	3		$	15	$	1,397

Ending balance evaluated for impairment:
Individually	$	--		$	--		$	--	$	--		$	--	$	--
Collectively	$	518		$	835		$	26	$	3		$	15	$	1,397

Loans receivable:
Ending balance	$	139,855		$	68,186		$	10,075	$	607		$	1,268	$	219,991

Ending balance evaluated for impairment:
Individually	$	1,322		$	1,525		$	--	$	--		$	--	$	2,847
Collectively	$	138,533		$	66,661		$	10,075	$	607		$	1,268	$	217,144

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4.	LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

Allowance for Credit Losses and Recorded Investment in Loans Receivable for the Year Ended December 31, 2013

	Mortgage- Permanent- 1 to 4 Family			Mortgage- Permanent- Other			Mortgage- Construction		Commercial		Consumer			Total
	(In thousands)
Allowance for credit losses:
Beginning balance	$	578		$	844		$	9	$	--	$	5		$	1,436
Charge-offs		(104	)		(322	)		--		--		(10	)		(436	)
Recoveries		91			104			--		--		--			195
Provision		(17	)		144			5		4		20			156
Ending balance	$	548		$	770		$	14	$	4	$	15		$	1,351

Ending balance evaluated for impairment:
Individually	$	30		$	--		$	--	$	--	$	--		$	30
Collectively	$	518		$	770		$	14	$	4	$	15		$	1,321

Loans receivable:
Ending balance	$	132,663		$	61,882		$	4,464	$	660	$	1,210		$	200,879

Ending balance evaluated for impairment:
Individually	$	1,655		$	1,578		$	--	$	--	$	--		$	3,233
Collectively	$	131,008		$	60,304		$	4,464	$	660	$	1,209		$	197,645

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

At December 31, 2014 and 2013, the credit quality indicators, disaggregated by class of loan, are presented in the following tables.


	December 31, 2014
	(In thousands)
	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family residential	$	131,737	$	995	$	4,304	$	--	$	137,036
Commercial real estate		56,462		243		782		--		57,487
Multi-family residential		6,144		--		1,127		--		7,271
Land		3,428		--		--		--		3,428
Residential construction		10,075		--		--		--		10,075
Home equity lines of credit		2,784		35		--		--		2,819
Consumer non-real estate loans		1,268		--		--		--		1,268
Commercial business loans		607		--		--		--		607
Total Loans	$	212,505	$	1,273	$	6,213	$	--	$	219,991

	December 31, 2013
	(In thousands)
	Pass		Special Mention		Substandard		Doubtful		Total
One-to-four family residential	$	125,155	$	1,004	$	4,263	$	--	$	130,422
Commercial real estate		51,917		253		809		--		52,979
Multi-family residential		4,290		--		1,172		--		5,462
Land		3,441		--		--		--		3,441
Residential construction		4,464		--		--		--		4,464
Home equity lines of credit		2,206		35		--		--		2,241
Consumer non-real estate loans		1,201		--		9		--		1,210
Commercial business loans		660		--		--		--		660
Total Loans	$	193,334	$	1,292	$	6,253	$	--	$	200,879

The above classifications follow regulatory guidelines and can generally be described as follows:

●

Pass loans are of satisfactory quality.

●

Special mention loans have existing weakness that could cause future impairment, including the deterioration of financial ratios, past due status, questionable management capabilities and possible reduction in collateral values.

●

Substandard loans have an existing specific and well defined weakness that may include poor liquidity and deterioration of financial ratios. The loan may be past due. Immediate corrective action is necessary.

●

Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full highly questionable and improbable.

These classifications were the most current available as of December 31, 2014.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

The following tables reflect certain information with respect to the loan portfolio delinquencies by loan class and amount as of December 31, 2014 and 2013:

Aged Analysis of Past Due Loans Receivable as of December 31, 2014

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment Over 90 Days Past Due and Still Accruing
	(In thousands)
Mortgage Loans:
Permanent:
1 to 4 Family	$	2,938	$	1,218	$	678	$	4,834	$	135,021	$	139,855	$	678
Multifamily		--		--		--		--		7,271		7,271		--
Commercial RE		243		--		--		243		57,244		57,487		--
Other		--		--		--		--		3,428		3,428		--
Construction-Residential		--		653		--		653		9,422		10,075		--
Nonmortgage Loans:
Commercial		--		--		213		213		394		607		213
Consumer		7		--		--		7		1,261		1,268		--
Total	$	3,188	$	1,871	$	891	$	5,950	$	214,041	$	219,991	$	891

Aged Analysis of Past Due Loans Receivable as of December 31, 2013

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Loans Receivable		Recorded Investment Over 90 Days Past Due and Still Accruing
	(In thousands)
Mortgage Loans:
Permanent:
1 to 4 Family	$	2,969	$	1,571	$	1,359	$	5,899	$	126,764	$	132,663	$	1,148
Multifamily		--		--		--		--		5,462		5,462		--
Commercial RE		633		--		--		633		52,346		52,979		--
Other		14		65		--		79		3,362		3,441		--
Construction- Residential		--		--		--		--		4,464		4,464		--
Nonmortgage Loans:
Commercial		--		--		--		--		660		660		--
Consumer		6		--		--		6		1,204		1,210		--
Total	$	3,622	$	1,636	$	1,359	$	6,617	$	194,262	$	200,879	$	1,148

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

Loan Receivables on Nonaccrual Status

	December 31, 2014		December 31, 2013
	(In thousands)
Mortgage Loans
Permanent, Secured by
1 to 4 Family	$	--	$	337
Multifamily		--		1,172
Commercial RE		--		--

Total	$	--	$	1,509

A summary of the impaired loans by class of loans as of December 31, 2014 and 2013, is as follows:

Impaired Loans For the Year Ended December 31, 2014

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With an allowance recorded:
Mortgage Loans
Permanent, Secured by
1-4 Family	$	--	$	--	$	--	$	--	$	--
Multifamily		--		--		--		--		--
Commercial RE		--		--		--		--		--
Other		--		--		--		--		--
Construction – Residential		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
	$	--	$	--	$	--	$	--	$	--

With no allowance recorded:
Mortgage Loans
Permanent, Secured by
1-4 Family	$	1,322	$	1,322	$	--	$	1,322	$	72
Multifamily		1,127		1,127		--		1,127		69
Commercial RE		398		398		--		398		18
Other		--		--		--		--		--
Construction – Residential		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
	$	2,847	$	2,847	$	--	$	2,847	$	159


Total Impaired Loans:
Mortgage Loans
Permanent	$	2,847	$	2,847	$	--	$	2,847	$	159
Construction		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--

	$	2,847	$	2,847	$	--	$	2,847	$	159

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

Impaired Loans For the Year Ended December 31, 2013

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With an allowance recorded:
Mortgage Loans
Permanent, Secured by
1-4 Family	$	126	$	126	$	30	$	126	$	6
Multifamily		--		--		--		--		--
Commercial RE		--		--		--		--		--
Other		--		--		--		--		--
Construction - Residential		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
	$	126	$	126	$	30	$	126	$	6

With no allowance recorded:
Mortgage Loans
Permanent, Secured by
1-4 Family	$	1,529	$	1,529	$	--	$	1,529	$	69
Multifamily		1,172		1,172		--		1,172		--
Commercial RE		406		406		--		406		18
Other		--		--		--		--		--
Construction - Residential		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
	$	3,107	$	3,107	$	--	$	3,107	$	87
Total Impaired Loans:
Mortgage Loans
Permanent	$	3,233	$	3,233	$	30	$	3,233	$	93
Construction		--		--		--		--		--
Nonmortgage Loans
Commercial		--		--		--		--		--
Consumer		--		--		--		--		--
	$	3,233	$	3,233	$	30	$	3,233	$	93

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

4. LOANS AND THE ALLOWANCE FOR LOAN LOSSES (Continued)

The Company seeks to assist customers that are experiencing financial difficulty by renegotiating loans within lending regulations and guidelines. The Company makes loan modifications primarily utilizing internal renegotiation programs through direct customer contact. During the years ended December 31, 2014 and 2013, the concessions granted to certain borrowers included extending the payment due dates or maturities and lowering of the contractual interest rates.

Once modified in a troubled debt restructuring, a loan is considered impaired until its contractual maturity. At the time of the restructuring, the loan is evaluated for an asset-specific allowance for credit losses. The Company continues to specifically reevaluate the loan in subsequent periods, regardless of the borrower’s performance under the modified terms. If a borrower subsequently defaults on the loan after it is restructured, the Company provides an allowance for credit losses for the amount of the loan that exceeds the value of the related collateral.

The following tables summarize information relative to the loan modifications as of December 31, 2014 and 2013. All of these loans are included in impaired loans as of December 31, 2014 and 2013.

December 31, 2014	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt restructurings
Mortgage Loans
Permanent		5	$	2,875	$	2,446
Construction		--		--		--
Nonmortgage Loans
Commercial		--		--		--
Consumer		--		--		--
Total Loans		5	$	2,875	$	2,446

December 31, 2013	Number of Contracts		Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
Troubled Debt restructurings
Mortgage Loans
Permanent		7	$	3,114	$	2,747
Construction		--		--		--
Nonmortgage Loans
Commercial		--		--		--
Consumer		--		--		--
Total Loans		7	$	3,114	$	2,747

None of the troubled debt restructurings defaulted subsequent to the restructuring through the date the financial statements were issued.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

5. ACCRUED INTEREST RECEIVABLE

Accrued interest receivable at December 31 is summarized as follows:

	2014		2013
	(In thousands)

Loans receivable	$	919	$	881
Investment securities		73		80

	$	992	$	961

6. PREMISES AND EQUIPMENT

Premises and equipment, at cost, at December 31 are summarized as follows:

	2014			2013
	(In thousands)

Buildings	$	5,981		$	5,967
Leasehold improvements		572			572
Furniture, fixtures and equipment		1,117			1,095
		7,670			7,634
Less accumulated depreciation and amortization		(2,552	)		(2,273	)
		5,118			5,361
Land		2,863			2,863

	$	7,981		$	8,224

Depreciation and amortization of premises and equipment amounted to $277,000 and $278,000 in 2014 and 2013, respectively.

7. DEPOSITS

Deposit account balances at December 31 are summarized as follows:

	2014		2013
	(In thousands)

NOW accounts
Interest bearing	$	16,835	$	18,264
Non-interest bearing		9,487		8,863
Money Market funds		9,762		10,601
Savings		27,699		27,784
Certificates of deposit		92,205		93,635

	$	155,988	$	159,147

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

7. DEPOSITS (Continued)

Scheduled maturities of certificates of deposit at December 31, 2014, are summarized as follows:

Due In	Amount
	(In thousands)

2015	$	44,286
2016		11,001
2017		8,752
2018		5,157
2019 and thereafter		23,009
	$	92,205

The aggregate amount of time deposits with a minimum denomination of $100,000 was approximately $41.9 million and $41.1 million at December 31, 2014 and 2013, respectively. The weighted average interest rate on deposits at December 31, 2014 and 2013, was 1.00% and 1.03%, respectively. The Company held deposits of approximately $2.6 million and $2.5 million for related parties at December 31, 2014 and 2013, respectively.

8. ADVANCES FROM FEDERAL HOME LOAN BANK (FHLB)

The FHLB advances consisted of the following obligations at December 31, 2014 and 2013:

		2014		2013
Fixed Interest Rate		Amount		Amount
	(In thousands)

0.00% to 0.99%		$	42,614	$	27,671
1.00% to 1.99%			11,981		11,321
2.00% to 2.99%			--		--
3.00% to 3.99%			17,000		17,000
		$	71,595	$	55,992

Scheduled maturities of FHLB advances at December 31, 2014, are summarized as follows:

Due In	Amount
	(In thousands)

2015	$	25,000
2016		8,000
2017		27,149
2018		4,368
2019 and thereafter		7,078

	$	71,595

At December 31, 2014, the advances are secured by a blanket lien on the Bank’s mortgage loans of approximately $94.1 million, pledge of FHLB stock in the amount of $3.0 million and pledge of mortgage-backed securities with a carrying amount of approximately $34.6 million.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

8. ADVANCES FROM FEDERAL HOME LOAN BANK (FHLB) (Continued)

The Bank has an additional available borrowing capacity of approximately $57.1 million with the FHLB at December 31, 2014.

9. INCOME TAXES

Income tax expense (benefit) for the years ended December 31 is summarized as follows:

	2014			2013
	(In thousands)

Current Taxes – Federal	$	833		$	355
Deferred Taxes		(80	)		20

	$	753		$	375

Total income tax expense (benefit) differs from the amounts computed by applying the federal statutory rate of 34% to income before income taxes as a result of the following:

	2014						2013
	Amount			%			Amount		%
	(In thousands)
Expected income tax expense at statutory rate	$	687			34	%	$	300		34	%
Increase (decrease) in income taxes resulting from:
Non-deductible expenses		73			4	%		72		7
Other adjustments		(7	)		(1	)%		3		1

	$	753			37	%	$	375		42	%

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

9. INCOME TAXES (Continued)

Temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities that gave rise to the deferred tax asset or (liability) at December 31 relate to the following:

	2014			2013
	(In thousands)

Deferred loan fees	$	132		$	89
Deferred retirement agreements		290			284
Excess tax depreciation		(180	)		(199	)
Prepaid mortgage interest		4			6
FHLB stock basis difference		(64	)		(62	)
Bad debt difference Post 1987		367			508
		549			626
Unrealized gains on available-for-sale securities		(234	)		(357	)

Net Deferred Tax Asset	$	315		$	269

Retained earnings at December 31, 2014 and 2013, include approximately $2.6 million for which no deferred income tax liability has been recognized. These amounts represent an allocation of income to bad debt deductions for tax purposes only. Reduction of amounts so allocated for purposes other than tax bad debt losses or adjustments arising from carry back of net operating losses would create income for tax purposes only, which would be subject to the then current corporate income tax rate. The unrecorded deferred income tax liability on the above amount is approximately $888,000 at December 31, 2014 and 2013.

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 capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators, which 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. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act the Board of Governors of the Federal Reserve System as the primary regulator for the Company is authorized to extend leverage capital requirements and risk based capital requirements applicable to depository institutions and bank holding companies to thrift holding companies.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

10. REGULATORY MATTERS (Continued)

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 1 capital to risk-weighted assets (as defined in the regulations), Tier 1 capital to adjusted total assets (as defined) and tangible capital to adjusted total assets (as defined). As of December 31, 2014, management believes that the Bank meets all the capital adequacy requirements to which it is subject.

As of December 31, 2014 and 2013, the most recent notification from the OCC, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as adequately capitalized, the Bank would have to maintain minimum total risk-based, Tier 1 risk-based, Tier 1 leverage and tangible capital ratios as disclosed in the table below. There are no conditions or events since the most recent notification that management believes have changed the Bank’s prompt corrective action category.

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2014

Total Risk Based Capital
(to Risk Weighted Assets)	$	39,720		23.96	%	$	10,263		8.00	%	$	12,828		10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	38,323		23.11	%	$	5,133		4.00	%	$	7,699		6.00	%
Tier 1 Capital
(to Adjusted Total Assets)	$	38,323		14.10	%	$	9,822		4.00	%	$	12,278		5.00	%
Tangible Capital
(to Adjusted Total Assets)	$	38,323		14.10	%	$	3,683		1.50	%		N/A		N/A

	Actual					For Capital Adequacy Purposes					To be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
	(Dollars in thousands)
December 31, 2013

Total Risk Based Capital
(to Risk Weighted Assets)	$	39,489		26.12	%	$	10,263		8.00	%	$	12,828		10.00	%
Tier 1 Capital
(to Risk Weighted Assets)	$	38,138		25.23	%	$	5,133		4.00	%	$	7,699		6.00	%
Tier 1 Capital
(to Adjusted Total Assets)	$	38,138		14.78	%	$	9,822		4.00	%	$	12,278		5.00	%
Tangible Capital
(to Adjusted Total Assets)	$	38,138		14.78	%	$	3,683		1.50	%		N/A		N/A

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

10. REGULATORY MATTERS (Continued)

A reconciliation of the Bank’s capital determined under accounting principles generally accepted in the United States of America to Tier 1 Capital and Total Risk Based Capital as of December 31, 2014, is as follows:

	2014
	(In thousands)

Capital Under GAAP	$	38,777
Unrealized Gain on Available-for-Sale Securities		(454	)

Tier 1 Capital		38,323
Allowance for Loan Losses		1,397

Total Risk Based Capital	$	39,720

11. STOCKHOLDERS’ EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Stockholder’s Equity of the Company includes the undistributed earnings of the Bank. Distributions are paid by the Company from its assets, which are provided primarily by the distributions from the Bank.

Distributions are payable only out of retained earnings and current earnings of the Company. Certain restrictions exist regarding the ability of the Bank to transfer funds to the Company in the form of cash distributions. Louisiana statues require approval to pay distributions in excess of a state bank’s earnings in the current year plus retained net profits for the preceding year.

The following is a summary of the changes in the balances of each component of accumulated other comprehensive income (loss) for the years ended December 31, 2014 and 2013:

	2014			2013
	(In thousands)

Unrealized Gain (Losses) on Securities:
Available for Sale:
Beginning Balance	$	458		$	706
Other Comprehensive Income (Loss)
Before Adjustments		100			(377	)

Adjustments		(34	)		129
Other Comprehensive Income (Loss), net of taxes		66			(248	)

Ending Balance	$	524		$	458

12. EMPLOYEE BENEFIT PLANS

401(k) Plan - The Bank sponsors a 401(k) profit sharing plan for eligible employees. Contributions may be made by eligible employees subject to the limits of the Internal Revenue Service. The Bank makes matching contributions based on a percentage of each participant’s contribution and may also make discretionary contributions to the plan.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

Profit Sharing Plan - The Bank maintains a qualified defined contribution profit sharing plan covering substantially all of its employees. Employees must complete one year of service and obtain the age of 21 in order to participate in the plan. Participants are 100% vested upon entry into the plan. Contributions to the plan are based on percentages of the participants’ annual compensation. Contributions are determined annually by the Bank and are not mandatory.

Contributions to the plans charged to income for 2014 and 2013 amounted to $192,000 and $200,000, respectively. Contributions as a percentage of participants’ annual compensation amounted to 7% for both 2014 and 2013, respectively.

Other Retirement Agreements - During 2009, the Bank entered into retirement agreements with the chief executive officer and the non-employee directors of the Bank.

Under the Supplemental Executive Retirement Agreement for the chief executive officer, after ten years in the plan and attaining the age of 72, and following his retirement, the Bank is to provide the chief executive officer an annual benefit of $100,000 for 10 years. (This benefit would be paid to the chief executive officer’s beneficiaries until all 10 installments are paid or in a lump sum upon the chief executive officer’s death if the officer’s death is subsequent to age 72.)

Under the Supplemental Retirement Plan for non-employee directors, the Bank is to provide to each covered non-employee director an annual supplemental retirement benefit equal to $7,500 payable in equal annual installments for ten (10) consecutive years upon retirement, if the covered director is 100% vested. Participants who are not 100% vested would be entitled to receive the accrued amount payable in a lump sum. (This benefit would be paid to the non-employee director’s beneficiaries until all 10 installments are paid or in a lump sum upon the director’s death if the director’s death is during the active service of the Bank.)

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

12. EMPLOYEE BENEFIT PLANS (Continued)

The estimated present value of future benefits to be paid is being accrued over the period from the effective date of the agreements until the dates payments are expected to expire. The expense incurred for this plan for the years ended December 31, 2014 and 2013, amounted to $93,000 for both years. The accrued liability recorded for this plan was $854,000 and $836,000 at December 31, 2014 and 2013, respectively.

Employee Stock Ownership Plan - In 2011, the Company established an ESOP for the benefit of all eligible employees of the Company. The leveraged ESOP is accounted for in accordance with the requirements of ASC 718, Compensation - Stock Compensation.

Employees of the Bank who have been employed for one year and who have attained age 21 are eligible to participate in the ESOP. It is anticipated that contributions will be made to the plan in amounts necessary to amortize the debt to the Company over a period of 20 years.

Under ASC 718, unearned ESOP shares are not considered outstanding and are shown as a reduction of shareholders’ equity as unearned compensation. Dividends on unallocated ESOP shares are considered to be compensation expense. The Company recognizes compensation cost equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differ from the cost of such shares, the differential is credited to shareholders’ equity. The Company receives a tax deduction equal to the cost of the shares released. As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a Company liability.

Compensation costs related to the ESOP were $186,000 and $174,000 for the years ended December 31, 2014 and 2013, respectively. The fair value of the unearned ESOP shares, using the closing quoted market price per share as of year-end, was approximately $4.0 million and $3.1 million as of December 31, 2014 and 2013, respectively. A summary of the ESOP share allocation as of December 31, 2014 and 2013, follows.

	2014		2013
Shares allocated, beginning of year		29,095		17,457
Shares allocated during the year		11,638		11,638
Allocated shares held by ESOP trust as of year end		40,733		29,095
Unallocated shares		192,027		203,665
Total ESOP shares		232,760		232,760

Recognition and Retention Plan

In January 2012, the shareholders of State Investors Bancorp approved the adoption of the 2012 Recognition and Retention Plan (the “RRP”) and Trust Agreement. In order to fund the RRP, the RRP Trust acquired 116,380 shares of the Company’s stock in the open market at an average price of $12.73 per share. Pursuant to the RRP, 81,462 shares were granted to certain officers, employees and directors of the Company in January 2012, with 34,918 shares remaining available for future grant. The RRP share awards have vesting periods from five to seven years.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

A summary of the status of the shares under the RRP as of December 31, 2014, and changes during the year is as follows:

12. EMPLOYEE BENEFIT PLANS (Continued)

Recognition and Retention Plan - (Continued)

	December 31, 2014
	Number of Shares		Weighted Average Grant Date Fair Value
Balance at the beginning of the year		69,231	$	11.82
Granted		--		--
Forfeited		--		--
Released		12,331		11.82
Balance at the end of the period		56,900	$	11.82

The weighted average grant date fair value is the last sale price as quoted on the Nasdaq stock market on January 24, 2012. Compensation expense on the RRP shares granted is recognized ratably over the five to seven year vesting period in an amount which is equal to the fair value of the common stock at the date of grant. During the year ended December 31, 2014, $145,000 in compensation expense was recognized. As of December 31, 2014, approximately $509,000 in additional compensation expense will be recognized over the remaining average service period of approximately 4.3 years. Under the terms of the RRP, any unvested RRP awards will become fully vested upon change in control, such as the proposed merger with First NBC, resulting in the full recognition of any unrecognized expense.

Stock Options

In January 2012, the stockholders of State Investors Bancorp approved the adoption of the 2012 Stock Option Plan (the “Option Plan”). The Option Plan authorizes the grant of stock options to officers, employees and directors of the Company to acquire 290,950 shares of common stock with an exercise price no less than the fair market value on the date of the grant. The Company granted 216,755 stock options on January 24, 2012, to certain officers, employees and directors of the Company at an exercise price of $11.82 per share, equal to the fair market value of the common stock on the grant date. On January 24, 2014, the Compensation Committee granted 20,000 options to certain officers at an excise price of $15.99 per share. The remaining 54,195 stock options are available for future grant. All incentive stock options issued under the Option Plan are intended to comply with the requirements of Section 422 of the Internal Revenue Code. Options will become vested and exercisable over a five to seven year period and are generally exercisable for a period of ten years after the grant date.

The fair value of each option granted is estimated on the grant date using the Black-Scholes option pricing model. This model requires management to make certain assumptions, including the expected life of the option, the risk-free interest rate, expected volatility and the expected dividend yield. The following assumptions were made in estimating fair values:

	2013			2014
Expected dividends		0	%		0	%
Expected volatility		13.35	%		16.61	%
Risk-free interest rate		2.08	%		2.75	%
Expected term (in years)		10			10

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

12. EMPLOYEE BENEFIT PLANS (Continued)

Stock Options - (Continued)

A summary of option activity under the Company’s Option Plan as of December 31, 2014, and changes during the year is as follows:


	December 31, 2014
	Number of Shares			Weighted Average Exercise Price		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the year		216,173		$	11.82	$	3.11
Granted		20,000			15.99		5.22
Exercised		(4,156	)		16.06		3.11
Forfeited		--			--		--
Outstanding at the end of the year		232,017		$	12.10	$	3.29
Exercisable at the end of the year		95,907		$	11.98	$	3.19

During the year ended December 31, 2014, $102,000 in compensation expense was recognized. As of December 31, 2014, approximately $437,000 in additional compensation expense will be recognized over the remaining average service period of approximately 4.3 years. Under the terms of the Option Plan, any unvested options will become fully vested upon change in control, such as the proposed merger with First NBC, resulting in the full recognition of any unrecognized expense.

13. MUTUAL TO STOCK CONVERSION

As disclosed in Note 1, on July 6, 2011, the Bank completed its conversion to a federally chartered stock savings bank and formed State Investors Bancorp, Inc. to serve as the stock holding company for the Bank. In connection with the conversion, the Company sold 2,909,500 shares of its common stock at $10.00 per share. The Company’s ESOP purchased 232,760 shares, financed by a loan from the Company. The net proceeds from the sale of this stock were approximately $27.9 million, and the cost associated with the stock conversion was approximately $1.2 million.

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.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

14. EARNINGS PER SHARE

Earnings per common share was computed based on the following:

	Years ended December 31,
	2014		2013
	(in thousands, except per share data)
Numerator
Income applicable to common shares	$	1,267	$	508
Denominator
Weighted average common shares outstanding		2,327		2,489
Effect of dilutive securities		85		58
Weighted average common shares outstanding – assuming dilution		2,412		2,547
Earnings per common share	$	0.54	$	0.20
Earnings per common share - assuming dilution	$	0.53	$	0.20

15. COMMITMENTS AND CONTINGENCIES

In the ordinary course of business, the Bank has various outstanding commitments that are not reflected in the accompanying financial statements. The principal commitments of the Bank are as follows:

Lease Commitment:

At December 31, 2014, the Bank is contracted on a month to month basis on its location on Harrison Avenue in the city of New Orleans. Total rental expense was approximately $30,000 for each of the years ended December 31, 2014 and 2013.

Loan Commitments:

At December 31, 2014, the Bank had outstanding commitments to originate fixed-rate loans in the amount of $1.9 million. The Bank also had commitments for unused lines of credit of $3.7 million and undisbursed portion of loans in process of $3.0 million at December 31, 2014.

Borrowings:

At December 31, 2014, the Bank had unused borrowing capacity of approximately $57.1 million with the Federal Home Loan Bank. Additionally, the Bank has a Master Purchase Agreement with First National Bankers’ Bank (FNBB) whereby the Bank may purchase federal funds from FNBB in an amount not to exceed $14.0 million.

Other:

In the normal course of business, the Company is involved in various legal proceedings. In the opinion of management and counsel, the disposition or ultimate resolution of such proceedings would not have a material adverse effect on the Bank’s financial statements.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

16. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments consist of commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the Balance Sheet.

The Bank’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the notional amount which was $5.0 million at December 31, 2014. The Bank uses the same credit policies in making commitments to extend credit 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 contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s creditworthiness on a case-by-case basis and in accordance with established loan underwriting policies.

17. CONCENTRATION OF CREDIT RISK

The Bank maintains amounts on deposit and federal funds sold with correspondent banks which may periodically exceed the federally insured amount.

Most of the Bank’s lending activity is represented by loans secured principally by first mortgages on real estate located primarily in Orleans, Jefferson and St. Tammany and surrounding parishes within Louisiana. Additionally, the substantial portion of the real estate upon which the Bank has extended credit is residential properties.

18. FAIR VALUES OF FINANCIAL INSTRUMENTS

Fair Value Disclosures

The Company groups its financial assets and liabilities measured at fair value in three levels. Fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

●

Level 1 - Includes the most reliable sources, and includes quoted prices in active markets for identical assets or liabilities.

●

Level 2 - Includes observable inputs. Observable inputs include inputs other than quoted prices that are observable for the asset or liability (for example, interest rates and yield curves at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks, and default rates) as well as inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

●

Level 3 - Includes unobservable inputs and should be used only when observable inputs are unavailable.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

18.	FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

Recurring Basis

Fair values of investment securities available-for-sale were primarily measured using information from a third-party pricing service. This pricing service provides information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data from market research publications.

The following tables present the balance of assets and liabilities measured on a recurring basis as of December 31, 2014 and 2013. The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.

	Fair Value at Reporting Date Using
December 31, 2014	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(In thousands)
Available-for-sale:
Mortgage Backed Securities	$	35,296	$	--	$	35,296	$	--

	Fair Value at Reporting Date Using
December 31, 2013	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(In thousands)
Available-for-sale:
Mortgage Backed Securities	$	37,948	$	--	$	37,948	$	--

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

18. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

Nonrecurring Basis

The Bank has segregated all financial assets and liabilities that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date in the table below. The Bank did not record any liabilities at fair value for which measurement of the fair value was made on a non-recurring basis.

The fair value of the impaired loans is measured at the fair value of the collateral for collateral-dependent loans. Impaired loans are Level 2 assets measured using appraisals from external parties of the collateral less any prior liens. Repossessed assets are initially recorded at fair value less estimated costs to sell. The fair value of repossessed assets is based on property appraisals and an analysis of similar properties available. As such, the Bank records repossessed assets as Level 2.


	Fair Value at Reporting Date Using
December 31, 2014	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(In thousands)
Assets
Impaired Loans	$	2,847	$	--	$	2,847	$	--

	Fair Value at Reporting Date Using
December 31, 2013	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(In thousands)
Assets
Impaired Loans	$	3,204	$	--	$	3,204	$	--

Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. In accordance with generally accepted accounting principles, certain financial instruments and all non-financial instruments are excluded from these disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

18. FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash and Short-Term Investments - For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities - Fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans - The fair value for loans is estimated using discounted cash flow analyses, with interest rates currently being offered for similar loans to borrowers with similar credit rates. Loans with similar classifications are aggregated for purposes of the calculations. The allowance for loan losses, which was used to measure the credit risk, is subtracted from loans.

Deposits - The fair value of demand deposits, savings account, and certain money market deposits is the amount payable at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using discounted cash flow analyses, with interest rates currently offered for deposits of similar remaining maturities.

Borrowings - The fair value of FHLB advances is estimated using the rates currently offered for advances of similar maturities.

Commitments to Extend Credit and Standby Letters of Credit - The fair values of commitments to extend credit and standby letters of credit do not differ significantly from the commitment amount and are, therefore, omitted from this disclosure.

The estimated approximate fair values of the Company’s financial instruments as of December 31, 2014 and 2013, are as follows:


	Fair Value Measurements at December 31, 2014
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and Short-Term Investments	$	5,212	$	5,212	$	5,212	$	--	$	--
Investment Securities
Available-for-sale		35,296		35,296		--		35,296		--
Investment Securities
Held-to-maturity		249		257		--		257		--
Loans – Net		218,206		222,000		--		--		222,000

Financial Liabilities:
Deposits	$	155,988	$	148,000	$	--	$	--	$	148,000
FHLB Borrowings		71,595		72,000		--		72,000		--

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)


	Fair Value Measurements at December 31, 2013
	Carrying Amount		Total		Level 1		Level 2		Level 3
	(In thousands)
Financial Assets:
Cash and Short-Term Investments	$	8,734	$	8,734	$	8,734	$	--	$	--
Investment Securities
Available-for-sale		37,948		37,948		--		37,948		--
Investment Securities
Held-to-maturity		319		331		--		331		--
Loans – Net		199,265		201,000		--		--		201,000

Financial Liabilities:
Deposits	$	159,147	$	150,000	$	--	$	--	$	150,000
FHLB Borrowings		55,992		57,000		--		57,000		--

19. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

Condensed financial statements of State Investors Bancorp, Inc. (parent company only) are shown below. The parent company has no significant operating activities. The balance sheets, statements of income and cash flows as of and for the years ended December 31, 2014 and December 31, 2013, are shown.


CONDENSED BALANCE SHEETS
	December 31,
	2014		2013
	(In thousands)
ASSETS

Cash - non-interest bearing	$	2,934	$	2,846
Investment in subsidiary		38,779		38,526
Other assets		356		230

TOTAL ASSETS	$	42,069	$	41,602

LIABILITIES AND STOCKHOLDERS’ EQUITY

Total Liabilities	$	36	$	36

Stockholders’ Equity		42,033		41,566

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	42,069	$	41,602

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

19. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

CONDENSED STATEMENTS OF INCOME

For the years ended December 31, 2014 and December 31, 2013


	2014			2013
	(In thousands)
OPERATING INCOME:
Interest on investment securities	$	--		$	--

TOTAL OPERATING INCOME		--			--

OPERATING EXPENSES:
Salaries and employee benefits		453			450
Other		82			81

TOTAL OPERATING EXPENSES		535			531

LOSS BEFORE INCOME TAXES AND INCREASE IN EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY		(535	)		(531	)

INCOME TAX BENEFIT		126			128

LOSS BEFORE INCREASE IN EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY		(409	)		(403	)

INCREASE IN EQUITY IN UNDISTRIBUTED EARNINGS OF SUBSIDARY		1,676			911

NET INCOME	$	1,267		$	508

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

19. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS (Continued)

CONDENSED STATEMENTS OF CASH FLOWS

For the years ended December 31, 2014 and December 31, 2013

	2014			2013
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	1,267		$	508
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Non-cash compensation		435			448
Increase in equity in net income of subsidiary		(1,676	)		(911	)
Increase in other assets		(126	)		(128	)
Dividend from subsidiary		1,489			--

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		1,389			(83	)

CASH FLOWS FROM FINANCING ACTIVITIES:


Purchase of treasury stock		(1,301	)		(2,643	)

NET CASH USED IN FINANCING ACTIVITIES		(1,301	)		(2,643	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		88			(2,728	)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		2,846			5,572

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	2,934		$	2,846

20. MERGER AGREEMENT WITH FIRST NBC BANK HOLDING COMPANY

On December 30, 2014, the Company and First NBC entered into an Agreement and Plan of Reorganization (the “Merger Agreement”) pursuant to which the Company will merge with and into First NBC (the “Merger”). Promptly following consummation of the Merger, it is expected that the Bank will merge with and into First NBC Bank (the “Bank Merger”). The Merger is expected to be completed during the second quarter of 2015.

Under the terms of the Merger Agreement, upon consummation of the Merger, shareholders of the Company will receive $21.25 for each share of the Company’s common stock they own. The Merger Agreement also provides that all options to purchase Company stock which are outstanding and unexercised immediately prior to the closing under the Company’s Option Plan shall be cancelled and converted into the right to receive cash in the amount of $21.25 minus the exercise price of the option.

The Merger Agreement contains (a) customary representations and warranties of the Company and First NBC, including, among others, with respect to corporate organization, capitalization, corporate authority, third party and governmental consents and approvals, financial statements, and compliance with applicable laws, (b) covenants of the Company to conduct its business in the ordinary course until the Merger is completed; and (c) covenants of the Company and First NBC not to take certain actions. The Company has also agreed not to (i) solicit proposals relating to alternative business combination transactions or (ii) subject to certain exceptions, enter into discussions concerning, or provide confidential information in connection with, any alternative transactions.

STATE INVESTORS BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2014 AND 2013 (Continued)

20. MERGER AGREEMENT WITH FIRST NBC BANK HOLDING COMPANY (continued)

Consummation of the Merger is subject to certain conditions, including, among others, approval of the Merger by shareholders of the Company, governmental filings and regulatory approvals and expiration of applicable waiting periods, accuracy of specified representations and warranties of the other party, and absence of a material adverse effect.

The Merger Agreement also contains certain termination rights for the Company and First NBC, as the case may be, applicable upon the occurrence or non-occurrence of certain events. If the Merger is not consummated under certain circumstances, the Company has agreed to pay First NBC a termination fee of $1.75 million.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A. Controls and Procedures.

(a) As of December 31, 2014, our management evaluated, with the participation of our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based on such evaluation, our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.

(b) Management’s Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of December 31, 2014.

(c) No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the fourth fiscal quarter of 2013 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Directors. Our Articles of Incorporation provide that the Board of Directors shall be divided into three classes as nearly equal in number as possible. The directors are elected by our shareholders for staggered terms and until their successors are elected and qualified. No director is related to any other director or executive officer by blood, marriage or adoption.

The following table presents information concerning our directors, all of whom also serve as directors of State-Investors Bank. Ages are reflected as of March 4, 2015.

Name		Age and Principal Occupation During the Past Five Years/Public Directorships
Jules G. Albert, Jr.		Director. Owner and manager of a condominium development. Retired owner of Jules Albert Construction, L.L.C., Metairie, Louisiana. Member of the Audit Committee and Chairman of the Nominating and Corporate Governance Committee. Mr. Albert brings extensive knowledge of the local construction industry in the New Orleans metropolitan area to the Board. Director since 1968. Age 87.
Joseph J. Lepow		Director. Attorney in Metairie, Louisiana since 1980. Chairman of the Audit Committee and member of the Compensation Committee. Mr. Lepow brings extensive knowledge of and contacts with local government to the Board. Director since 2008. Age 61.
Sanford R. Maslansky		Director. Chief Financial Officer of the Better Business Bureau of Southeast Louisiana in New Orleans, Louisiana since 1992. Chairman of the Compensation Committee and member of the Audit Committee. Mr. Maslansky brings significant ties to and knowledge of the local business community to the Board. Director since 2011. Age 80.
Daniel M. McGowan		Director. Chief Financial Officer of State Investors Bancorp since April 2011. Director, Chief Financial Officer of State-Investors Bank since 1995. Prior thereto, Mr. McGowan served as Comptroller and in various other positions with State-Investors Bank since August 1983. Mr. McGowan brings substantial institutional and financial knowledge to the Board, having served in various capacities at State-Investors Bank for over 30 years. Director since 2000. Age 54.
Anthony S. Sciortino		Chairman of the Board, President and Chief Executive Officer of State Investors Bancorp since April 2011. Chairman of the Board of State-Investors Bank since 2008. President and Chief Executive Officer of State-Investors Bank since December 1985 and April 2005, respectively. Member of the Board of Directors of the Federal Home Loan Bank of Dallas from 2003 to December 1, 2013. Mr. Sciortino brings substantial institutional knowledge and banking expertise to the Board having served at State-Investors Bank in various capacities for more than 40 years. Age 67.
Dalton L. Woolverton		Director. Retired mechanical engineer and President of Rumold Construction, Inc., a general contractor, New Orleans, Louisiana. Prior thereto, construction manager, Moses Engineers, New Orleans, Louisiana. Director of Administration for the law firm of Deutsch, Kerrigan & Stiles, New Orleans, Louisiana from 1989 to 1993. Member of the Audit Committee and Nominating and Corporate Governance Committee. Mr. Woolverton brings substantial business experience and knowledge of the local construction industry to the Board. Director since 1971. Age 76.

Executive Officers Who Are Not Also Directors of State Investors Bancorp. Set forth below is certain information with respect to current executive officers of State Investors Bancorp and/or State-Investors Bank who are not also directors. Ages are reflected as of March 4, 2015.

Stephen O. Carriere, age 51 years, has served as Executive Vice President-Chief Credit Officer, Compliance and CRA Officer of State-Investors Bank since May 1981. Member of the Board of Directors of State-Investors Bank.

Christopher G. Pike, age 59 years, has served as Senior Vice President and Chief Lending Officer of State-Investors Bank since 1983.

Angelle S. Reeves, age 42 years, has served as Vice President of State-Investors Bank since 1998, responsible for financial reporting. Member of the Board of Directors of State-Investors Bank.

Anthony S. Sciortino, Jr., age 35 years, has served as Senior Vice President since May 2014, Chief Operating Officer since 2012 and Director of the Information Technology Department since 2011.

Our executive officers are elected annually and hold office until their successors have been elected and qualified or until death, resignation or removal by the board of directors.

Audit Committee. State Investors Bancorp has a standing Audit Committee that reviews with management and our independent registered public accounting firm State Investors Bancorp’s systems of internal controls, reviews our annual financial statements, including the Form 10-K and monitors State Investors Bancorp’s adherence to generally accepted accounting principles in our accounting and financial reporting. The Audit Committee is currently comprised of four directors, Messrs. Albert, Maslansky, Woolverton and Lepow, who is Chairman, all of whom are independent directors as defined in the Nasdaq’s rules and the rules and regulations of the Securities and Exchange Commission. The Board of Directors has not identified a member of the Audit Committee who meets the Securities and Exchange Commission’s definition of audit committee financial expert. The Board of Directors believes that the Audit Committee members have sufficient expertise to fulfill their fiduciary duties.

Code of Ethics. State Investors Bancorp maintains a comprehensive Code of Ethics for Employees, Officers and Directors which requires that our directors, officers and employees avoid conflicts of interest; maintain the confidentiality of information relating to State-Investors Bank and its customers; engage in transactions in the common stock only in compliance with applicable laws and regulations and the requirements set forth in the Code of Ethics; and comply with other requirements which are intended to ensure that they conduct business in an honest and ethical manner and otherwise act with integrity and in the best interest of State Investors Bancorp. Our separate Code of Ethics for Senior Financial Officers specifically imposes standards of conduct on our chief executive officer, chief financial and accounting officer and other persons with financial reporting responsibilities who are identified in regulations issued by the U.S. Securities and Exchange Commission dealing with corporate codes of conduct.

Our directors, officers and employees are required to affirm in writing that they have reviewed and understand the Code of Ethics. Copies of our Code of Ethics and Code of Ethics for Senior Financial Officers are available on our website at http://www.stateinvestors.com under the “Investor Relations” heading. In accordance with the requirements of the Securities and Exchange Commission’s Form 8-K, we will disclose on Form 8-K the nature of any amendments to the Code of Ethics for Senior Financial Officers (other than technical, administrative, or other non-substantive amendments), our approval of any material departure from a provision of the Code of Ethics for Senior Financial Officers, and our failure to take action within a reasonable period of time regarding any material departure from a provision of this Code of Ethics for Senior Financial Officers that has been made known to any of our executive officers.

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the officers and directors, and persons who own more than 10% of State Investors Bancorp’s common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. We know of no person who owns 10% or more of State Investors Bancorp’s common stock.

Based solely on our review of the copies of such forms furnished to us, or written representations from our officers and directors, we believe that during, and with respect to, the fiscal year ended December 31, 2014, our officers and directors complied in all respects with the reporting requirements promulgated under Section 16(a) of the Securities Exchange Act of 1934, except that Messrs. Sciortino and Carriere were late reporting one transaction each on Form 4 and Mr. McGowan was late reporting two transactions on Form 4.

Director Nominees. There have been no material changes to the procedures by which our shareholders may recommend nominees to our Board of Directors.

Item 11. Executive Compensation.

Director Compensation Table. The following table sets forth total compensation paid to directors of State Investors Bancorp during fiscal 2014, other than Messrs. Sciortino and McGowan whose compensation is set forth below under “— Summary Compensation Table.”

Name	Board/Committee Fees Earned or Paid in Cash		All Other Compensation(1)		Total(2)
Jules G. Albert, Jr.	$	18,500	$	1,000	$	19,500
Joseph J. Lepow		18,500		8,300		26,800
Sanford R. Maslansky		18,500		1,000		19,500
Mahlon L. Oustalet(3)		7,000		--		7,000
Dalton L. Woolverton		17,500		1,000		18,500

(1)	Consists of holiday bonus paid in December 2014 for all directors and for Mr. Lepow, $7,300 accrued for his benefit under the supplemental retirement plan.

(2)

As of December 31, 2014, our non-employee directors, other than Mr. Maslansky, had 1,397 shares subject to outstanding restricted stock awards and each of our non-employee directors other than Messrs. Lepow and Maslansky had 7,274 option grants. Mr. Maslansky had 700 unvested stock awards and 2,328 stock options and Mr. Lepow had 5,819 stock options as of December 31, 2014.

(3)	Mr. Oustalet was deceased on August 2, 2014.

Narrative to Director Compensation Table. During fiscal 2014, each director of State Investors Bancorp received fees of $1,000 per board meeting, attended, and $150 per committee meeting, attended, if held on a date other than that of a regular board meeting, including for service on the Board and committees of State-Investors Bank. During fiscal 2014, each director received a holiday bonus of $1,000.

Retirement Plan for Non-Employee Directors. State Investors Bank maintains a 2009 Supplemental Retirement Plan for Non-Employee Directors for our non-employee directors other than Mr. Maslansky who joined the Board of Directors after the plan was adopted. The plan provides that upon retirement after reaching age 65, with 15 years of service, each participating non-employee director will receive an annual supplemental retirement benefit equal to $7,500 payable in equal annual installments for ten (10) consecutive years, if the covered director is 100% vested. In the event of a participant’s separation from service prior to becoming 100% vested, the participant would be entitled to receive his accrued amount payable in a lump sum. In the event of a director’s separation from service within two years following a change in control, the director shall receive the full supplemental retirement benefit payable in 10 equal annual installments. In the event of a participant’s death after separation from service but prior to the receipt of 10 annual installments, any remaining installment payments shall be paid to the participant’s beneficiary until all 10 installments have been paid. If a participant dies while in active service, the full supplemental retirement benefit will be payable to his beneficiary in a lump sum. All non-employee directors were 100% vested as of the effective date, except for Mr. Lepow. As of the date of this Form 10-K, Mr. Lepow is 50% vested and is vesting at the rate of 10% per year on each June 30.

Summary Compensation Table. The following table shows the compensation paid to our President and Chief Executive Officer and two other most highly compensated executive officers for the years ended December 31, 2014 and 2013.


Name and Principal Position	Year	Salary		Bonus		All Other Compensation(1)		Total
Anthony S. Sciortino	2014	$	173,250	$	66,400	$	159,430	$	399,080
President and Chief Executive Officer	2013		173,250		66,400		150,643		390,293
Daniel McGowan	2014		118,750		39,500		55,361		213,611
Chief Financial Officer	2013		118,750		39,500		49,033		207,283
Stephen O. Carriere	2014		103,750		34,500		43,128		181,378
Executive Vice President, Compliance	2013		103,750		34,500		41,070		179,320

(1)

All other compensation does not include amounts attributable to other miscellaneous benefits. The costs to State Investors Bancorp of providing such benefits during fiscal 2014 did not exceed $10,000 Includes for Messrs. Sciortino, McGowan and Carriere the fair market value of the shares of State Investors Bancorp common stock allocated to their employee stock ownership plan accounts during fiscal 2014 based on a closing price of $20.72 on December 31, 2014, directors’ and committee fees of $18,500, $18,500 and $16,000 for Messrs. Sciortino, McGowan and Carriere, respectively, a director’s holiday bonus of $1,000, matching and profit sharing contributions under State-Investors Bank’s 401(k) retirement plan of $26,454, $17,471 and $12,318 for Messrs. Sciortino, McGowan and Carriere, respectively and life insurance premiums. Also includes for Mr. Sciortino, $86,000 accrued under his supplemental executive retirement agreement.

Narrative to Summary Compensation Table. The Board of Directors approved base salaries in 2014 for Messrs. Sciortino, McGowan and Carriere of $173,250, $118,750 and $103,750, respectively, which remained the same from 2013 levels. The dollar amount of total salary was based on the Board’s perception of the local market for compensation and was intended to ensure that we remain competitive in attracting and retaining qualified executive officers. State Investors Bancorp does not maintain a written bonus plan, although we have historically paid bonuses to our employees. All other compensation for Mr. Sciortino includes $86,000 accrued under his supplemental executive retirement agreement during the year ended December 31, 2014.

Employment Agreements. State Investors Bancorp and State-Investors Bank each entered into separate employment agreements with Messrs. Sciortino and McGowan and State-Investors Bank entered into an employment agreement with Anthony S. Sciortino, Jr. Pursuant to the agreements, Messrs. Sciortino, McGowan and Sciortino, Jr. serve as President and Chief Executive Officer, Executive Vice President and Chief Financial Officer, and Senior Vice President and Chief Operations Officer, respectively, for a term of three years (two in the case of Mr. Sciortino, Jr.). The employment agreements provide for minimum base salaries of $173,250, $118,750 and $95,000 for Messrs. Sciortino, McGowan and Sciortino, Jr., respectively.

The employment agreements are terminable with or without cause by State Investors Bancorp or State-Investors Bank. The employment agreements provide that in the event of an involuntary termination of employment (including a termination by Messrs. Sciortino, McGowan or Sciortino, Jr. for “good reason” before or following a change in control of State Investors Bancorp or State-Investors Bank, including a material change in the executive’s position, salary or duties without his consent) other than for cause, each of Messrs. Sciortino, McGowan and Sciortino, Jr. would be entitled to (1) an amount of cash severance which is equal to three times (two times in the case of Mr. Sciortino, Jr.) the sum of his base salary as of the date of termination plus his prior year’s bonus and (2) continued participation in certain employee benefit plans, including life, health and disability plans, until the earlier of 36 months (24 months in the case of Mr. Sciortino, Jr.) or the date the executive receives substantially similar benefits from full-time employment with another employer. The new termination and release agreements discussed below under “- Termination and Release Agreements” cover the rights of Messrs. Sciortino and McGowan and the payments and benefits to be received under their employment agreements in connection with the proposed merger with First NBC.

The employment agreements with State-Investors Bank provide that in the event any of the payments to be made thereunder or otherwise upon termination of employment are deemed to constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code, then such payments and benefits received thereunder shall be reduced by the minimum amount necessary to result in no portion of the payments and benefits being non-deductible by State-Investors Bank for federal income tax purposes. Parachute payments generally are payments equal to or greater than three times the executive’s base amount, which is defined to mean the executive’s average annual compensation from the employer includable in the executive’s gross income during the most recent five taxable years ending before the year in which a change in control of the employer occurs. Recipients of parachute payments are subject to a 20% excise tax on the amount by which such payments exceed the base amount, in addition to regular income taxes, and payments in excess of the base amount are not deductible by the employer as compensation expense for federal income tax purposes.

The employment agreements with State Investors Bancorp provide that severance payments payable to Messrs. Sciortino and McGowan by State Investors Bancorp shall include the amount by which the severance benefits payable by State-Investors Bank are reduced as a result of Section 280G of the Internal Revenue Code, if the parachute payments exceed 105% of three times the executive’s “base amount” as defined in Section 280G of the Internal Revenue Code. If the parachute payments are not more than 105% of the amount equal to three times the executive’s base amount, the severance benefits payable by State Investors Bancorp will be reduced so they do not constitute “parachute payments” under Section 280G of the Internal Revenue Code. If the total parachute payments exceed 105% of three times the executive’s base amount, then the agreements with State Investors Bancorp provide that State Investors Bancorp shall reimburse Messrs. Sciortino and McGowan for any resulting excise taxes payable by them, plus such additional amount as may be necessary to compensate them for the payment of state and federal income, excise and other employment-related taxes on the additional payments. Under the employment agreements, the executive’s compensation, benefits and expenses will be paid by State Investors Bancorp and State-Investors Bank in the same proportion as the time and services actually expended by the executives on behalf of each company.

Termination and Release Agreements. In accordance with the merger agreement and in connection with the merger, First NBC, First NBC Bank, State Investors Bancorp and State-Investors Bank will enter into separate termination and release agreements (the “separation agreements”) with Anthony S. Sciortino, our President and Chief Executive Officer, and Daniel McGowan, our Chief Financial Officer. The separation agreements provide for the executive’s separation from service with State Investors Bancorp and State-Investors Bank upon completion of the merger. The separation agreements specify the amount of cash severance to be paid to the executive upon completion of the merger, provide for the continuation of insurance benefits as specified in each executive’s current employment agreement, and retain each executive’s right to a Section 280G gross-up payment in the event such payment is subsequently deemed triggered. The separation agreements also provide for the release of any claims against State Investors Bancorp, First NBC and their subsidiaries, affiliates, directors, officers, employees and others. In the event the merger is terminated for any reason, the separation agreements will become null and void.

Retirement Benefits

Retirement benefits are an important element of a competitive compensation program for attracting senior executives, especially in the financial services industry. Our executive compensation program currently includes a 401(k) profit sharing plan which enables our employees to supplement their retirement savings with elective deferral contributions and with matching and discretionary contributions by us, and an employee stock ownership plan that allows participants to accumulate retirement benefits in the form of employer stock at no current cost to the participant. We also maintain a Supplemental Executive Retirement Plan for the benefit of Mr. Sciortino.

401(k) Plan. State-Investors Bank sponsors the State-Investors Bank 401(k) Plan which is a qualified, tax-exempt defined contribution plan with a salary deferral feature. An employee of State-Investors Bank is eligible to become a participant in the plan after reaching age 21 and completing one year of employment in which the employee completed at least 1,000 hours of service.

Under the 401(k) plan, participants are permitted to make salary reduction contributions (in whole percentages) in any amount up to the maximum percentage of compensation allowed by law ($17,500 for 2014). Participants who are age 50 or older are permitted to make “catch up” contributions to the plan up to $5,500 (for 2014, as indexed annually). State-Investors Bank currently contributes a matching contribution amount equal to 100% of the first 3.0% of the participant’s elective deferral, plus 50% of the next 2.0% of the participant’s elective deferral. State-Investors Bank may also make a discretionary, fully-vested profit sharing contribution to the 401(k) Plan which historically has been determined on the basis of a fixed percentage of participants’ compensation.

Employee Stock Ownership Plan. In July 2011, we established an employee stock ownership plan for our eligible employees. The employee stock ownership plan acquired 232,760 shares of State Investors Bancorp’s common stock equal to 8.0% of the shares sold in the offering. The employee stock ownership plan utilized a $2.3 million loan from State Investors Bancorp to acquire the common stock. The loan to the employee stock ownership plan has a term of 20 years and shares are released for allocation to employees’ accounts as the debt service payments are made.

Shares released from the suspense account are allocated to each eligible participant’s plan account pro rata based on compensation. Forfeitures may be used for the payment of expenses or be reallocated among the remaining participants. Participants become 100% vested after three years of service. Participants also become fully vested in their account balances upon a change in control (as defined), death, disability or retirement. Benefits may be payable upon retirement or separation from service.

Supplemental Executive Retirement Agreement. State-Investors Bank maintains a Supplemental Executive Retirement Agreement for the benefit of Mr. Sciortino, Chairman, President and Chief Executive Officer. Under the agreement, after attaining the age of 72, and following his retirement, Mr. Sciortino will receive an annual benefit of $100,000 for 10 years. In the event of his retirement prior to reaching age 72, Mr. Sciortino shall receive his accrued benefit payable in a lump sum. In the event of his separation from service within two years following a change in control, Mr. Sciortino shall receive his full supplemental retirement benefit payable in 10 equal annual installments. In the event of his death, after retirement, but before all payments have been made, any remaining benefits will be paid to Mr. Sciortino’s beneficiaries until all 10 annual installments have been made. In the event of his death while in active service after attaining age 72, his beneficiaries would receive a lump sum payment. As of the date of this proxy statement, Mr. Sciortino is 70% vested in his benefits under the plan and is vesting at 5% per year on each June 30.

Stock Benefit Plans

In January 2012, shareholders approved our 2012 Stock Option Plan and our 2012 Recognition and Retention Plan and Trust Agreement. As of the date hereof, options to acquire up to 236,755 shares of common stock of State Investors Bancorp have been granted to employees and non-employee directors and 54,195 are available for future grants pursuant to the terms of the 2012 Stock Option Plan. Awards of 81,462 shares of common stock of State Investors Bancorp have been made to employees and non-employee directors and 34,918 shares are available for future awards, pursuant to the terms of the 2012 Recognition and Retention Plan and Trust Agreement. During the time these plans remain in effect, the aggregate grants of options and restricted stock awards to each employee and each non-employee director shall not exceed 25% and 5%, respectively, of the shares of common stock initially available under the plans, and options and restricted stock awards granted to all non-employee directors in the aggregate may not exceed 30% of the number of options or shares initially available under these plans.

Outstanding Equity Awards at Fiscal Year-End. State Investors Bancorp made awards of restricted stock and grants of stock options during fiscal 2012 to its executive officers and other employees, which began vesting in 2013. The table below sets forth outstanding equity awards at December 31, 2014 to our named executive officers.

	Option Awards							Stock Awards
	Number of Securities							Number of		Market Value of
	Underlying						Option	Shares or Units		Shares or Units of
	Unexercised Options				Exercise		Expiration	of Stock That		Stock That Have Not
Name	Exercisable		Unexercisable		Price		Date(1)	Have Not Vested		Vested(2)

Anthony S. Sciortino		20,782		51,955	$	11.82	1/24/2022		20,783	$	430,624
Daniel McGowan		5,818		14,548	$	11.82	1/24/2022		8,314		172,266
Stephen O. Carriere		4,156		10,391	$	11.82	1/24/2022		4,157		86,133

(1)	Granted pursuant to our 2012 Stock Option Plan and vesting at a rate of 14.285% per year, commencing on January 24, 2013.

(2)	Calculated by multiplying the closing market price of our common stock on December 31, 2014, which was $20.72, by the applicable number of shares of common stock underlying the executive officer’s stock awards.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management. The following table sets forth as of March 4, 2015, certain information as to the common stock beneficially owned by (a) each person or entity, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, who or which was known to us to be the beneficial owner of more than 5% of the issued and outstanding common stock, (b) the directors and director nominees of State Investors Bancorp, (c) named executive officers of State Investors Bancorp, and (d) all directors and executive officers of State Investors Bancorp as a group.

Name of Beneficial Owner or Number of Persons in Group	Amount and Nature of Beneficial Ownership as of March 4, 2015(1)			Percent of Common Stock
5% Shareholders:
Brown Trout Management, LLC 311 South Wacker Drive, Suite 6025 Chicago, Illinois 60606		141,283	(2)		6.1	%

Michael T. O’Brien Deerhill Management, LLC Deerhill Pond GP, LLC 29 Deerhill Drive Ho-Ho-Kus, New Jersey 07423		121,151	(3)		5.2	%

Sandler O’Neill Asset Management LLC 150 East 52nd Street, 30th Floor New York, New York 10022		232,300	(4)		9.9	%

State-Investors Bank Employee Stock Ownership Plan Trust 1041 Veterans Boulevard Metairie, Louisiana 70005		232,760	(5)		9.9	%

Name of Beneficial Owner or Number of Persons in Group	Amount and Nature of Beneficial Ownership as of March 4, 2015(1)			Percent of Common Stock			Options Exercisable Within 60 Days		Recognition and Retention Plan(6)
Directors:
Jules G. Albert, Jr.		23,295	(7)		1.0	%		4,362		932
Joseph J. Lepow		30,316	(8)		1.3	%		3,489		932
Sanford R. Maslansky		12,910	(9)		*			1,164		468
Daniel McGowan		44,722	(10)		1.9	%		8,727		6,652
Anthony S. Sciortino		101,564	(11)		4.3	%		31,173		16,627
Dalton L. Woolverton		33,989			1.5	%		4,362		932

Other Named Executive Officer:
Stephen O. Carriere		40,040	(12)		1.7	%		6,234		3,326

All Directors and Executive Officers as a Group (10 persons)		375,681	(13)		15.5	%		80,213		37,849

*	Represents less than 1% of outstanding common stock.

(Footnotes continued on the following page)

(1)

Based upon filings made pursuant to the Securities Exchange Act of 1934 and information furnished by the respective individuals. Under regulations promulgated pursuant to the Securities Exchange Act of 1934, shares of common stock are deemed to be beneficially owned by a person if he or she directly or indirectly has or shares (i) voting power, which includes the power to vote or to direct the voting of the shares, or (ii) investment power, which includes the power to dispose or to direct the disposition of the shares. Unless otherwise indicated, the named beneficial owner has sole voting and dispositive power with respect to the shares and none of the shares are pledged. Shares of common stock which are subject to stock options are deemed to be outstanding for the purpose of computing the percentage of outstanding common stock owned by such person or group but not deemed outstanding for the purpose of computing the percentage of common stock owned by any other person or group.

(2)

Based on a Schedule 13G filed with the SEC on January 26, 2015 by (i) Brown Trout Management, LLC, an Illinois limited liability company (“BTM”) with respect to 141,283 shares beneficially owned by Chicago Capital Management, LP (“CCM”) an Illinois limited partnership of which BTM is the general partner and a separate account (“Separate Account”) which BTM manages, and (ii) Steven R. Gerbel, managing member of BTM, with respect to 141,283 shares beneficially owned by CCM and the Separate Account. BTM and Mr. Gerbel report shared voting and dispositive power over the 141,283 shares.

(3)

Based on a Schedule 13G filed with the SEC on December 31, 2014 by (i) Deerhill Management, LLC, a New Jersey limited liability company (“DM”) with respect to 103,151 shares held by certain clients of DM, (ii) Deerhill Pond GP, LLC, a New Jersey limited liability company (“DPGC”), with respect to 103,151 shares, and (iii) Michael T. O’Brien managing member of DM, with respect to 103,151 shares beneficially owned by DM and 18,000 shares held in two IRA accounts and 8,600 shares held in a trust account for his wife and children. Mr. O’Brien has sole voting and dispositive power over the 18,000 shares held in his IRAs and shared dispositive power over 121,151 shares.

(4)

Based on a Schedule 13G filed with the SEC on February 12, 2014 by (i) Sandler O’Neill Asset Management LLC, a New York limited liability company (“SOAM”) with respect to 232,300 shares held by certain clients of SOAM, (ii) SOAM Holdings, LLC, a Delaware limited liability company (“Holdings”), with respect to 172,700 shares beneficially owned by certain partnerships, of which Holdings is the general partner, and (iii) Terry Maltese, managing member of SOAM, with respect to 232,300 shares beneficially owned by SOAM.

(5)

As of December 31, 2014, 40,733 shares were allocated to participants in the State-Investors Bank Employee Stock Ownership Plan Trust (“ESOP”) and 192,027shares were unallocated and held in the ESOP trust for future allocation to the accounts of participating employees. Amounts held by the plan trustees, Messrs. Daniel McGowan and Anthony S. Sciortino, Jr., exclude the shares held in the ESOP trust other than those shares specifically allocated to Messrs. McGowan and Sciortino, Jr. Under the terms of the ESOP, the plan trustees vote all allocated shares in accordance with the instructions of the participating employees. Any unallocated shares are generally required to be voted by the plan trustees in the same manner that the majority of the allocated shares have voted.

(6)	Reflects unvested shares awarded pursuant to the 2012 Recognition and Retention Plan to executive officers and directors which vest at a rate of 14.285% and 20% per year, respectively, but over which the directors and executive officers do not have current voting or investing power.

(7)	Includes 7,032 shares held in Mr. Albert’s individual retirement account.

(8)	Includes 23,500 shares held by Mr. Lepow’s spouse.

(9)	The 10,000 shares are held by Mr. Maslansky’s spouse.

(10)

Includes 25,101.4679 units of common stock held in Mr. McGowan’s account in the State-Investors Bank 401(k) Plan; however, Mr. McGowan had voting power over 23,408 shares in the 401(k) Plan, 3,021.0527shares allocated to Mr. McGowan’s account in the employee stock ownership plan, 100 shares held jointly with Mr. McGowan’s children and 100 shares held as custodian for his children.

(11)

Includes 38,695.6342 units of common stock held in Mr. Sciortino’s account in the State-Investors Bank 401(k) Plan; however, Mr. Sciortino had voting power over 36,085 shares in the 401(k) Plan. Also includes 3,819 shares held by Mr. Sciortino’s spouse and 4,599.2475 shares allocated to Mr. Sciortino’s account in the employee stock ownership plan.

(12)	Includes 27,315.8059 shares held in Mr. Carriere’s account in the State-Investors Bank 401(k) Plan; however, Mr. Carriere had voting power over 25,473 shares in the 401(k) Plan and 2,653.7182 shares allocated to Mr. Carriere’s account in the employee stock ownership plan.

(13)	Includes an aggregate of 141,051.5832 units held in the State-Investors Bank 401(k) Plan on behalf of the executive officers and 17,235.5036 shares allocated to the accounts of all executive officers as a group in the employee stock ownership plan.

Equity Compensation Plan Information. The following table provides information as of December 31, 2014 with respect to shares of common stock that may be issued under our existing equity compensation plans, which consist of the 2012 Stock Option Plan and 2012 Recognition and Retention Plan, which were approved by our shareholders.

Number of Securities

Number of Securities to be

Weighted-Average

Remaining Available for

Issued Upon Exercise of

Exercise Price of

Future Issuance Under Equity

Outstanding Options,

Outstanding

Compensation Plans

Warrants

Options, Warrants

(Excluding Securities

and Rights

Reflected in Column(a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders

298,217

11.82

109,113

Equity compensation plans not approved by security holders

Total

298,217

11.82

109,113

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Related Party Transactions. During fiscal 2014, State Investors Bancorp has had, and expects to have in the future, banking transactions, including loans, with its directors and officers, and other related parties. These loans were made in the ordinary course of business, on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable loans with persons not related to State-Investors Bank. The loans do not involve more than the normal risk of collectability or present other unfavorable features. None of these loans are disclosed as non-accrual, past due, restructured or potential problem loans. Under State Investors Bancorp’s Audit Committee Charter, the Audit Committee is required to review and approve all related party transactions, as described in Item 404 of Regulation S-K promulgated by the U.S. Securities and Exchange Commission.

Director Independence. Our Board of Directors has determined that Messrs. Lepow, Maslansky, Woolverton and Jules G. Albert, Jr. are independent directors as defined in the Nasdaq listing standards and each of the members of the compensation committee, nominating and corporate governance committee and audit committee are independent under the applicable standards of the Nasdaq and Securities and Exchange Commission with respect to such committees.

Item 14. Principal Accounting Fees and Services.

Audit Fees. The following table sets forth the aggregate fees paid by us to T.E. Lott & Company, PA for professional services rendered in connection with the audit of our consolidated financial statements for fiscal 2014 and 2013.

	Year Ended December 31,
	2014		2013
Audit fees(1)	$	56,582	$	67,040
Audit-related fees		--		--
Tax fees		--		--
All other fees		--		--
Total	$	56,582	$	67,040

(1)

Audit fees consist of fees incurred in connection with the audit of our annual financial statements, the review of the interim financial statements included in our quarterly reports filed with the Securities and Exchange Commission, as well as work generally only the independent auditor can reasonably be expected to provide, such as statutory audits, consents and assistance with and review of documents filed with the Securities and Exchange Commission.

The Audit Committee selects our independent registered public accounting firm and pre-approves all audit services to be provided by it to State Investors Bancorp. The Audit Committee also reviews and pre-approves all audit-related and non-audit related services rendered by our independent registered public accounting firm in accordance with the Audit Committee’s charter. In its review of these services and related fees and terms, the Audit Committee considers, among other things, the possible effect of the performance of such services on the independence of our independent registered public accounting firm.

The Audit Committee pre-approves certain audit-related services which are specifically described by the Audit Committee on an annual basis and separately approves other individual engagements as necessary.

Each new engagement of T.E. Lott & Company, PA was approved in advance by the Audit Committee, and none of those engagements made use of the de minimis exception to pre-approval contained in the Securities and Exchange Commission’s rules.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)(1)

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

Report of Independent Registered Public Accounting Firm		40
Consolidated Balance Sheets at December 31, 2014 and 2013		41
Consolidated Statements of Income for the years ended December 31, 2014 and 2013		42
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014 and 2013		43
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2014 and 2013		44
Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013		45
Notes to Consolidated Financial Statements		47

(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
2.1	Agreement and Plan of Reorganization, dated December 30, 2014, by and among First NBC Bank Holding Company, State Investors Bancorp, Inc. and First NBC Acquisition Company	(1)
2.2	Form of Support Agreement	(1)
2.3	Form of Voting Agreement	(1)
3.1	Articles of Incorporation of State Investors Bancorp, Inc.	(2)
3.2	Bylaws of State Investors Bancorp, Inc.	(2)
4.0	Form of Stock Certificate of State Investors Bancorp, Inc.	(2)
10.1	State-Investors Bank Supplemental Executive Retirement Agreement for Anthony S. Sciortino*	(2)
10.2	State-Investors Bank 2009 Supplemental Retirement Plan for Non-Employee Directors*	(2)
10.3	Form of Employment Agreement between State-Investors Bank and Anthony S. Sciortino*	(2)
10.4	Form of Employment Agreement between State Investors Bancorp, Inc. and Anthony S. Sciortino*	(2)
10.5	Form of Employment Agreement between State-Investors Bank and Daniel McGowan*	(2)
10.6	Form of Employment Agreement between State Investors Bancorp, Inc. and Daniel McGowan*	(2)
10.7	Employment Agreement between State Investors Bank and Anthony S. Sciortino, Jr.*	(3)
10.8	State Investors Bancorp, Inc. 2012 Stock Option Plan	(4)
10.9	State Investors Bancorp, Inc. 2012 Recognition and Retention Plan and Trust Agreement	(4)
21.0	Subsidiaries of the Registrant	Reported in Item 1
31.1	Rule 13(a)-14(a) Certification of the Chief Executive Officer	Filed herewith
31.2	Rule 13(a)-14(a) Certification of the Chief Financial Officer	Filed herewith
32.0	Section 1350 Certification	Filed herewith
101.INS	XBRL Instance Document	Filed herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document	Filed herewith

(Footnotes on following page)

Denotes a management contract or compensatory plan or arrangement.

(1)

Incorporated by reference from the like-numbered exhibits included in State Investors Bancorp, Inc.’s current report on Form 8-k, filed January 6, 2015 (SEC File No. 001-35221).

(2)

Incorporated by reference from the like-numbered exhibit included in State Investors Bancorp, Inc.’s registration statement on Form S-1, filed March 7, 2011, as amended (SEC File No. 333-172659).

(3)

Incorporated by reference from the State Investors Bancorp, Inc.’s quarterly report on Form 10-Q, filed November 14, 2014, as amended (SEC File No. 001-35221).

(4)

Incorporated by reference to Appendices A and B of the definitive proxy statement, dated December 14, 2011, filed by State Investors Bancorp, Inc. with the SEC on December 14, 2011 (SEC File No. 001-35221).

(b)

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

(c)

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

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.


	STATE INVESTORS BANCORP, INC.


March 31, 2015	By:	/s/ Anthony S. Sciortino
		Anthony S. Sciortino
		Chairman, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.

Name	Title	Date


/s/ Anthony S. Sciortino
Anthony S. Sciortino	Chairman of the Board, President and Chief Executive Officer (principal executive officer)	March 31, 2015

/s/ Daniel M. McGowan	Director, Chief Financial Officer	March 31, 2015
Daniel M. McGowan	(principal financial and accounting officer)
/s/ Jules G. Albert, Jr.	Director	March 31, 2015
Jules G. Albert, Jr.

/s/ Joseph J. Lepow	Director	March 31, 2015
Joseph J. Lepow

/s/ Sanford R. Maslansky	Director	March 31, 2015
Sanford R. Maslansky

/s/ Dalton L. Woolverton	Director	March 31, 2015
Dalton L. Woolverton

Attached files

STATE INVESTORS BANCORP, INC. Reports

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