UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ		Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 000-53555

HIBERNIA HOMESTEAD BANCORP, INC.

(Exact name of Registrant as specified in its charter)

Louisiana		26-2833386
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)
325 Carondelet Street, New Orleans, Louisiana		70130
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (504) 522-3203

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

Common Stock, $.01 par value per share
(Title of Class)

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

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 o NO þ

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

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 o NO o

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. þ

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

Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ
				(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 o NO þ

The aggregate market value of the 799,025 shares of the Registrant’s common stock held by non-affiliates, based upon the closing price of $15.50 for the common stock on June 30, 2010, the last business day of the registrant’s most recently completed second quarter, as reported by the OTC Bulletin Board, was approximately $12.4 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 24, 2011: 1,032,667

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement for the 2011 Annual Meeting of Shareholders are incorporated by reference into Part III, Items 10-14 of this Form 10-K.

 

 

HIBERNIA HOMESTEAD BANCORP, INC.
2010 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1. Business			1
Item 1A. Risk Factors			26
Item 1B. Unresolved Staff Comments			26
Item 2. Properties			26
Item 3. Legal Proceedings			26
Item 4. (Removed and Reserved)			26
PART II
Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			27
Item 6. Selected Financial Data			28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			29
Item 7A. Quantitative and Qualitative Disclosures about Market Risk			42
Item 8. Financial Statements and Supplementary Data			43
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			81
Item 9A(T). Controls and Procedures			81
Item 9B. Other Information			82
PART III
Item 10. Directors, Executive Officers and Corporate Governance			82
Item 11. Executive Compensation			82
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			82
Item 13. Certain Relationships and Related Transactions, and Director Independence			83
Item 14. Principal Accounting Fees and Services			83
PART IV
Item 15. Exhibits and Financial Statement Schedules			83
SIGNATURES
Exhibit 23.0
Exhibit 31.1
Exhibit 31.2
Exhibit 32.0

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 Hibernia Homestead 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 Hibernia Homestead 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 Hibernia Homestead 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 Hibernia Homestead Bancorp, Inc. will be engaged. Hibernia Homestead 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.

As used in this report, unless the context otherwise requires, the terms “we,” “our,” “us,” “Hibernia,” or the “Company” refer to Hibernia Homestead Bancorp, Inc., a Louisiana corporation, and the term the “Bank” refers to Hibernia Homestead Bank, a Louisiana 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.

PART I

Item 1.		Business.

General. Hibernia Homestead Bancorp, Inc. is a Louisiana corporation which was organized to be the stock holding company for Hibernia Homestead Bank in connection with our conversion and offering completed on January 27, 2009. Hibernia Homestead Bank is a Louisiana chartered community-oriented savings bank which was originally organized in 1903 as a Louisiana chartered mutual savings association and is headquartered in New Orleans, Louisiana. The Bank is a wholly owned subsidiary of the Company. As of December 31, 2010, Hibernia, on a consolidated basis, had total assets of $77.3 million, total deposits of $54.6 million, and total stockholders’ equity of $22.0 million.

On January 27, 2009, our conversion and offering were completed after which Hibernia Homestead Bancorp, Inc. was organized as the new stock-form holding company for the Bank. A total of 1,113,334 shares of common stock of the Company were sold at $10.00 per share in the subscription and community offerings through which the Company received proceeds of approximately $10.4 million, net of offering costs of approximately $766,000. As a result of the Bank’s election pursuant to Section 10(l) of the Home Owners’ Loan Act, the Company is a savings and loan holding company regulated by the Office of Thrift Supervision (the “OTS”). Pursuant to recently enacted regulations, after July 21, 2011, the Company’s primary federal regulator will be the Board of Governors of the Federal Reserve System. For further information on Hibernia Homestead Bank’s conversion, see Note 22 in the Notes to the Consolidated Financial Statements in Item 8 herein.

Prior to the conversion described above, the Board of Directors approved a plan of charter conversion in December 2007 by which Hibernia Homestead Bank would convert its charter from a Louisiana-chartered mutual homestead and savings association to a Louisiana-chartered mutual savings bank. Such conversion was subject to receipt of both member and regulatory approval. The members of Hibernia Homestead Bank approved the plan of charter conversion at the annual meeting held on February 29, 2008 and the Louisiana Office of Financial Institutions approved Hibernia Homestead Bank’s application to convert its charter effective March 17, 2008. As a result of the charter conversion, Hibernia Homestead Bank’s primary federal banking regulator changed from the OTS to the Federal Deposit Insurance Corporation (“FDIC”). The Louisiana Office of Financial Institutions remains as the Bank’s state banking regulator.

Hibernia Homestead Bank is primarily engaged in attracting deposits from the general public and using those funds to invest in loans and securities. Our principal sources of funds are customer deposits, repayments of loans, maturities of investments and funds borrowed from outside sources such as the FHLB of Dallas. These funds are primarily used for the origination of loans including single-family residential first mortgage loans, commercial real estate loans, commercial and industrial loans, home equity loans and lines of credit, construction and land loans and other loans. The Bank derives its income principally from interest earned on loans and investment securities and, to a lesser extent, from fees received in connection with the origination of loans, service charges on deposit accounts and for other services. The Bank’s primary expenses are interest expense on deposits and borrowings and general operating expenses.

We are an active originator of residential home mortgage loans in our market area. Historically, Hibernia Homestead Bank was a traditional thrift institution with an emphasis on fixed-rate long-term single-family residential first mortgage loans. As part of implementing our business strategy, beginning in fiscal 2008 we diversified the loan products we offer and increased our efforts to originate higher yielding commercial real estate loans and commercial and industrial loans. In connection therewith, we hired senior management officers with significant commercial lending experience in our market area. Commercial real estate loans and commercial and industrial loans were deemed attractive due to their generally higher yields and shorter anticipated lives compared to single-family residential mortgage loans.

Our headquarters office is located at 325 Carondelet Street, New Orleans, Louisiana, and our telephone number is (504) 522-3203. We maintain a website at www.hibbank.com, and provide our customers with on-line banking services. Information on our website should not be considered a part of this Form 10-K.

Market Area and Competition

Hibernia conducts its operations through its main office in New Orleans, Louisiana located in Orleans Parish, one additional branch office in New Orleans and one branch office located in Metairie, Louisiana, which is in Jefferson Parish. In August 2005, Hurricane Katrina affected a wide area along the Gulf Coast, including parts of Louisiana, Mississippi, and Alabama with the New Orleans metropolitan area incurring the greatest damage. Hibernia Homestead Bank’s three banking offices are located in business districts that did not suffer long-term damage from Hurricane Katrina and will likely lead other areas in recovery.

Rebuilding efforts continue in metropolitan New Orleans, and the pace of home renovations and demolitions has escalated, especially in Orleans Parish. Hibernia believes that there will continue to be significant long-term opportunities for it to participate in the rebuilding and relocation efforts in southern Louisiana and coastal Mississippi through lending and other banking services.

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.

Hibernia Homestead Bank’s Lending Activities

General. At December 31, 2010, Hibernia’s net loan portfolio amounted to $62.0 million, representing approximately 80.2% of its total assets at that date. The Company’s primary lending activity is the origination of residential mortgage loans and commercial loans secured by real estate. In 2010, the Bank converted to a fully integrated commercial banking system that allows us to compete against banks many times our size in areas such as cash management and online banking. At December 31, 2010, one-to-four family residential loans amounted to $41.4 million, or 66.5% of our total loan portfolio. At December 31, 2010, commercial real estate loans totaled $14.3 million, or 23.0% of our total loan portfolio. At December 31, 2010, residential construction and land loans totaled $3.4 million, or 5.4% of the total loan portfolio. We began offering commercial and industrial loans in fiscal 2010, which totaled $2.4 million, or 3.8% of our loan portfolio at December 31, 2010. Multi-family residential loans and home equity lines of credit totaled $173,000 and $426,000, or 0.3% and 0.7%, respectively, of the total loan portfolio at December 31, 2010.

The types of loans that Hibernia may originate 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 Louisiana-chartered savings bank, Hibernia Homestead Bank is subject to a regulatory loan-to-one borrower limit. As of December 31, 2010, the Bank’s regulatory limit on loans to one borrower was $4.6 million. Notwithstanding this regulatory limit, Hibernia Homestead Bank has set policy limits of $1.2 million for residential loans to any one individual and related parties, $1.5 million for commercial real estate, non-real estate commercial and industrial loans and commercial lines of credit to any one individual or entity and related parties, and $2.0 million for all loans to a single entity and related parties. Loans above regular policy limits are approved as exceptions by the Board of Directors. At December 31, 2010, our five largest loans or groups of loans-to-one borrower, including related parties, amounted to $2.5 million, $2.4 million, $1.8 million, $1.7 million and $1.5 million. All five largest loans or groups of loans were performing in accordance with their terms at December 31, 2010.

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

		December 31,
		2010								2009
		Amount				%				Amount				%
		(Dollars in thousands)
Real estate loans:
One-to four-family residential		$	41,421				66.50	%		$	35,736				78.95	%
Multi-family residential			173				0.28				184				0.41
Second mortgage residential			174				0.28				219				0.48
Residential construction and land loans			3,375				5.42				410				0.91
Commercial-real estate secured			14,317				22.99				8,447				18.66
Total real estate loans			59,460				95.47				44,996				99.41
Commercial and Industrial Loans			2,375				3.81				—				—
Other loans:
Home equity lines of credit			426				0.68				244				0.54
Loans secured by deposits			24				0.04				25				0.05
Total other loans			450				0.72				269				0.59
Total loans			62,285				100.00	%			45,265				100.00	%
Less:
Allowance for loan losses			(394	)							(330	)
Deferred loan fees			62								52
			(332	)							(278	)
Net loans		$	61,953							$	44,987

Origination of Loans. The Company’s lending activities are subject to the written underwriting standards and loan origination procedures established by the Board of Directors and management. Loan applications are generated through direct sales efforts as well as referrals from existing customers, and others such as attorneys, accountants, and real estate agents. Written loan applications are taken by one of our loan officers. The loan officer also supervises the procurement of credit reports, appraisals and other documentation involved with a loan. In accordance with its lending policy, Hibernia obtains independent outside appraisals on substantially all of its loans which must conform to Hibernia’s appraisal requirements. On occasion, we may purchase loans; however, any purchased loans must conform to our lending policy as if we had originated the loans. Borrowers must also obtain flood insurance policies when the property is in a flood hazard area.

In addition to originating loans, we occasionally purchase participation interests in larger balance loans, typically commercial real estate, from other financial institutions in our market area. Such participations are reviewed for compliance with our underwriting criteria before they are purchased. Generally, we have purchased such loans without any recourse to the seller. However, we actively monitor the performance of such loans through the receipt of regular reports from the lead lender regarding the loan’s performance, physically inspecting the loan security property on a periodic basis, discussing the loan with the lead lender on a regular basis and receiving copies of updated financial statements from the borrower. At December 31, 2010, the Bank’s total purchased interest in participation loans was $2.4 million. The participations purchased consist of two loans secured by commercial real estate, both of which were performing in accordance with their contractual terms.

Hibernia’s 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 up to $750,000 are approved by a Management Loan Committee. Loans in excess of $750,000, up to $2.0 million are approved by a Loan Committee of the Board of Directors, currently consisting of Messrs. Browne, Bush, Bethea, Brennan, Robert Saer and Lane, who is Chairman. The senior loan officer is an ex officio non-voting member of the board Loan Committee. Exceptions for loan limits will be approved by a majority of the board. All loans approved by the loan committees are ratified at the next regularly scheduled board meeting. Appraisals are obtained by a board-approved appraiser and assigned by an officer other than the originating loan officer.

The following table shows our total loans originated, purchased, and repaid during the periods indicated. We did not sell any loans during the periods indicated.

		Year Ended
		December 31,
		2010				2009
		(In thousands)
Loan originations:
One-to-four family residential		$	10,053			$	11,985
Multi-family residential			—				—
Second mortgage residential			—				196
Residential construction and land loans			3,426				1,222
Commercial-real estate secured			6,682				7,556
Commercial and Industrial			2,500				—
Other			2				261
Total loan originations			22,663				21,220
Loans purchased			733				1,750
Loans sold			—				—
Loan principal repayments			(6,376	)			(10,029	)
Total loans sold and principal repayments			(6,376	)			(10,029	)
Decrease due to other items, net(1)			(54	)			(227	)
Net increase in total loans		$	16,966			$	12,714

Although Louisiana laws and regulations permit savings banks to originate and purchase loans secured by real estate located throughout the United States, Hibernia concentrates its lending activity to its primary market area in Orleans and Jefferson Parishes, Louisiana and the surrounding area.

Loan Maturities. The following table shows the loan maturities as of December 31, 2010, before giving effect to net items. Overdrafts are reported as due in one year or less.

														Residential								Commercial
		One-to-Four				Multi-				Second				Construction				Commercial-				and
		Family				Family				Mortgage				and Land				Real Estate				Industrial
		Residential				Residential				Residential				Loans				Secured				Loans				Other				Total
		(In thousands)
Amounts due after December 31, 2010 in:
One year or less		$	2,157			$	—			$	—			$	—			$	1,601			$	—			$	98			$	3,856
After one year through two years			8				—				—				—				46				—				69				123
After two years through three years			292				—				—				—				—				—				61				353
After three years through five years			211				—				174				—				1,953				—				222				2,560
After five years through ten years			2,926				—				—				280				9,480				2,375				—				15,061
After ten years through 15 years			4,630				173				—				459				1,237				—				—				6,499
After 15 years			31,197				—				—				_2,636				—				—				—				33,833
Total		$	41,421			$	173			$	174			$	3,375			$	14,317			$	2,375			$	450			$	62,285

The following table shows the dollar amount of our loans at December 31, 2010, due after December 31, 2011 as shown in the preceding table, which have fixed interest rates or which have floating or adjustable interest rates.

						Floating or				Total at
		Fixed-Rate				Adjustable Rate				December 31, 2010
		(In thousands)
One-to-four family residential		$	37,864			$	1,400			$	39,264
Multi-family residential			173				—				173
Second mortgage residential			174				—				174
Residential construction and land loans			3,375				—				3,375
Commercial—real estate secured			12,670				46				12,716
Commercial and industrial loans			2,375				—				2,375
Other loans			—				352				352
Total		$	56,631			$	1,798			$	58,429

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 adjustable-rate and 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. A principal lending activity of Hibernia is the origination of loans secured by one-to-four family residences. At December 31, 2010, $41.4 million, or 66.5%, of our total loan portfolio consisted of one-to-four family residential loans including both owner occupied and non-owner occupied properties.

It is the policy of Hibernia to originate loans as a first lien position on owner occupied residences limited to $1.2 million with fixed rates and terms up to 30 years. 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, whichever is lower. Private mortgage insurance is required for loans in excess of 80% of the appraised value, or purchase price, whichever is lower. It is the policy of Hibernia to lend in a first lien position on non-owner occupied residential property with fixed rates and terms up to 20 years. Such loans are generally limited to 80%, or less, of the appraised value, or purchase price plus improvement costs of the secured real estate property, whichever is lower. Exceptions to these policies may be approved by the Board of Directors.

The Bank’s guidelines for credit quality generally parallel the Federal National Mortgage Association, commonly called Fannie Mae, and the Federal Home Loan Mortgage Corporation, commonly called Freddie Mac, secondary market guidelines including income ratios and credit scores.

In recent years, the majority of our residential real estate loans have been originated as fixed rate loans. Fixed rate loans do not have the same risks associated with a borrower’s ability to repay as adjustable rate loans in a rising interest rate environment; however, the costs of funding such loans are adversely affected by rising interest rates.

Residential Construction and Land Loans. Hibernia Homestead Bank originates residential construction and land loans only when it will also be the permanent lender following completion of the residence. In recent periods, the majority of our construction lending has been related to rebuilding in areas heavily affected by Hurricane Katrina. Residential construction loans are limited to $1.2 million and land loans for the construction of a primary or secondary residence are limited to $500,000. Loans for the substantial renovation of an existing home are underwritten and administered as construction loans. At December 31, 2010, $3.4 million, or 5.4%, of our total loan portfolio consisted of residential construction and land loans.

Residential Second Mortgage Loans and Lines of Credit. Hibernia Homestead Bank originates second mortgage residential loans limited to $500,000 and home equity lines of credit limited to $250,000 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 only extended when the Bank holds the first mortgage on the collateral. Loan-to-value ratios may not exceed 80%, including first mortgage debt. Non-revolving loans are originated with maturities up to 15 years. Home equity lines of credit have maturities of five years.

Commercial Real Estate Loans. At December 31, 2010, $14.3 million, or 23.0%, of our total loan portfolio, consisted of commercial real estate loans including both owner occupied and non-owner occupied properties. Although commercial real estate loans are generally considered to have greater credit risk than other certain types of loans, management expects to mitigate such risk by originating such loans in its market area to borrowers with an established history of successful operations.

It is the current policy of Hibernia Homestead Bank to lend in a first lien position on real property. Hibernia offers fixed and variable rate mortgage loans with a policy limit of $2.0 million to any one individual or entity and related parties, subject to exception approved by the Board of Directors. The majority of our commercial real estate loans have been originated as fixed rate loans. Commercial real estate loans are limited to a maximum of 80% of the lesser of appraised value or purchase price and have terms up to 15 years. If the collateral consists of special purpose fixed assets, the maximum loan-to-value ratio is adjusted down based on the estimated cost to convert the property to general use. 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 generally limited to ten years or less with adjustments thereafter based on a negotiated rate or spread relative to a market index. Commercial real estate loans are presented to the applicable loan committee for review and approval, including analysis of the creditworthiness of the borrower.

Commercial and Industrial Loans. At December 31, 2010, $2.4 million, or 3.8%, of our total loan portfolio, consisted of commercial and industrial loans. Hibernia offers commercial term loans to finance business expansion, equipment purchases, modernization, acquisitions or other needs of growing businesses. Such loans are secured by conservatively margined fixed assets including industrial equipment, trucks and automobiles, marine equipment or other assets whose value can be reliably determined and for which a verifiable resale market exists. Collateral values will be based on independent appraisals provided by appraisers approved by the Bank’s Board of Directors for the type of asset being valued. Maturities may not exceed the useful life of the asset securing the loan. The maximum term is ten years. Rates may be variable based on a negotiated spread over a published index or may be fixed for no more than seven years.

The primary underwriting consideration in making commercial term loans is the borrower’s demonstrated and projected ability to make required payments based on a thorough cash flow analysis. In evaluating debt service coverage, the Bank considers projected capital expenditure and working capital requirements as well as the historical variability of the borrower’s cash flow.

Term loans are governed by a loan agreement requiring timely submission of detailed financial information and containing sufficient restrictive covenants and protective provisions to enable the Bank to accelerate maturity should the borrower’s financial condition deteriorate or other circumstances jeopardize the loan.

Consumer Loans. Hibernia Homestead Bank originates consumer loans that have shorter terms and higher interest rates than residential first mortgage loans. The consumer loans offered by the Bank consist of home equity loans and loans secured by deposit accounts with the Bank. Hibernia Homestead Bank does not make unsecured consumer loans other than overdraft protection lines of credit up to $5,000. Hibernia Homestead Bank does not intend to materially expand its consumer loan product offerings and instead intends to focus on increasing home equity loans, including home equity lines.

Loan Origination and Other Fees. In addition to interest earned on loans, Hibernia Homestead Bank may also receive fees in connection with the origination of loans, fees for managing draws on construction loans or fees for other services. We have historically charged loan points only at the request of the borrower in order to lower the rate charged over the life of the loan. Hibernia generally does not charge origination fees.

Asset Quality

General. Hibernia Homestead Bank’s collection procedures provide that when a loan is 30 and 60 days past due, a notice is sent to the borrower. Personal letters are then sent to the borrowers who are 61-89 days delinquent advising that payments must be received by the last day of the month and for those who are 90 days delinquent, giving them 10 days within which the loan must be brought current. Customers who have not responded to the 90-day notice will receive an attorney’s letter giving those customers who pay interest in advance an additional 10 days to bring the loan current and giving those customers who pay interest in arrears an additional 30 days 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 or more past due. In most cases, deficiencies are cured promptly. While Hibernia Homestead Bank generally prefers to work with borrowers to resolve such problems, the Bank 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 interest is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. Hibernia Homestead Bank generally discontinues the accrual of interest income when the loan becomes 90 days past due as to principal or interest unless the credit is well secured and Hibernia Homestead Bank believes it will fully collect.

Real estate and other assets acquired by Hibernia Homestead Bank as a result of foreclosure or by deed-in-lieu of foreclosure are classified as foreclosed real estate until sold. Hibernia Homestead Bank did not have any foreclosed real estate at December 31, 2010 or 2009.

Potential Problem Loans. As of December 31, 2010, Hibernia Homestead Bank had $695,000 of delinquent loans not yet classified as non-performing loans, but where some concern existed as to the borrowers’ abilities to comply with original loan terms. All of these delinquent loans are secured by 1-4 family residences in the New Orleans area. Management believes that the allowance for loan losses is sufficient to cover any losses that may be incurred on these loans.

Non-Performing Assets. The following table shows the amounts of our non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due and foreclosed property) at the dates indicated. Non-performing assets as of December 31, 2010 consisted of six non-performing loans totaling $1.1 million, including one troubled debt restructuring in the amount of $102,000. Non-performing assets as of December 31, 2009 consisted of three non-performing loans totaling $315,000, including one troubled debt restructuring in the amount of $54,000.

		December 31,
		2010				2009
		(Dollars in thousands)
Non-accruing loans:
One-to-four family residential (1)		$	1,138			$	315
Multi-family residential			—				—
Second mortgage residential			—				—
Residential construction and land loans			—				—
Commercial-real estate secured			—				—
Other loans			—				—
Total non-accruing loans			1,138				315
Accruing loans 90 days or more past due:
One-to-four family residential			—				—
Multi-family residential			—				—
Second mortgage residential			—				—
Residential construction and land loans			—				—
Commercial-real estate secured			—				—
Other			—				—
Total accruing loans 90 days or more past due			—				—
Total non-performing loans (2)			1,138				315
Real estate owned, net			—				—
Total non-performing assets		$	1,138			$	315
Total non-performing loans as a percentage of loans, net			1.84	%			0.70	%
Total non-performing assets as a percentage of total assets			1.47	%			0.47	%

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. 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. Federal examiners may disagree with an insured institution’s classifications and amounts reserved.

At December 31, 2010, Hibernia Homestead Bank had $1.2 million of assets classified as substandard and no assets classified as doubtful or loss.

Allowance for Loan Losses. At December 31, 2010, Hibernia Homestead Bank’s allowance for loan losses amounted to $394,000. 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. The management of Hibernia Homestead Bank 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 Hibernia Homestead Bank might sustain on them.

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,
		2010				2009
		(Dollars in thousands)
Total loans outstanding at end of period		$	62,285			$	45,265
Average loans outstanding			54,371				36,749
Allowance for loan losses, beginning of period			330				273
Provision for loan losses			64				78
Charge-offs			—				(21	)
Recoveries on loans previously charged off			—				—
Allowance for loan losses, end of period		$	394			$	330
Allowance for loan losses as a percent of non-performing loans			34.6	%			104.8	%
Ratio of net charge-offs during the period to average loans outstanding during the period			—	%			0.06	%

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

		December 31,
		2010								2009
						Loan								Loan
						Category								Category
		Amount of				as a % of				Amount of				as a % of
		Allowance				Total Loans				Allowance				Total Loans
		(Dollars in thousands)
One-to-four family residential		$	310				66.50	%		$	266				78.95	%
Multi-family residential			—				0.28				—				0.41
Second mortgage residential			—				0.28				—				0.48
Residential construction and land loans			—				5.42				—				0.91
Commercial, real estate secured			72				22.99				64				18.66
Commercial and industrial			12				3.81				—				—
Other			—				0.72				—				0.59
Total		$	394				100.00	%		$	330				100.00	%

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, 2010, our investment securities portfolio consisted of $3.7 million of mortgage-backed securities, $502,000 of U.S. government agencies, $210,000 of First National Bankers Bank (FNBB) stock and $171,000 of stock in FHLB of Dallas. At December 31, 2010, Hibernia Homestead Bank did not hold any Fannie Mae or Freddie Mac common or preferred stock. At December 31, 2010, two mortgage-backed securities with a carrying value of $402,000 had contractual maturities of one year or less. The estimated duration of our mortgage-backed securities portfolio was two years at such date. At December 31, 2010, we had no gross unrealized losses on our investment securities portfolio.

Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 320 “Investments-Debt and Equity Securities” (which includes former SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities), our securities are classified 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 retained earnings as accumulated other comprehensive income. At December 31, 2010, we had $4.2 million of securities classified as available for sale, and no securities classified as held to maturity or 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”), the Federal National Mortgage Association (“FNMA” or “Fannie Mae”) or the Federal Home Loan Mortgage Association (“FHLMC” or “Freddie Mac”). At December 31, 2010, 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.

In February 2011, the Obama Administration delivered a report to Congress. The report states that the government is committed to ensuring that Freddie Mac and Fannie Mae have sufficient capital to perform under any guarantees issued now or in the future and the ability to meet any of their debt obligations, and further states that the Obama Administration will not pursue policies or reforms in a way that would impair the ability of Freddie Mac and Fannie Mae to honor their obligations.

Investment Securities Portfolio. The following table sets forth certain information relating to our investment and mortgage-backed securities portfolio at the dates indicated.

		December 31,
		2010								2009
		Amortized				Market				Amortized				Market
		Cost				Value				Cost				Value
		(In thousands)
Securities available for sale:
Mortgage-backed securities		$	3,609			$	3,728			$	6,591			$	6,784
U.S. Government Agencies			500				502				1,501				1,509
FNBB stock			210				210				210				210
FHLB stock			171				171				171				171
Total investment and mortgage-backed securities		$	4,490			$	4,611			$	8,473			$	8,674

The following table sets forth the amount of investment securities which mature during each of the periods indicated and the weighted-average yields for each range of maturities at December 31, 2010. As Hibernia Homestead Bank held no tax-exempt securities during the periods presented, no yield adjustments were made.

		Amounts at December 31, 2010 Which Mature In
										After Five
		One Year				After One to				to 10				Over 10
		or Less				Five Years				Years				Years				Total
		(Dollars in thousands)
Available for sale:
Mortgage-backed securities		$	402			$	2,434			$	669			$	223			$	3,728
U.S. Government Agency Securities			—				502				—				—				502
Total		$	402			$	2,936			$	669			$	223			$	4,230
Weighted-average yield			4.15	%			3.91	%			4.24	%			5.22	%			4.30	%

The following table sets forth the composition of our mortgage-backed investment securities, excluding equity securities, at each of the dates indicated.

		December 31,
		2010				2009
		(Dollars in thousands)
Fixed-rate		$	3,684			$	6,731
Adjustable-rate			44				53
Total mortgage-backed securities		$	3,728			$	6,784

Information regarding the contractual maturities and weighted-average yield of our mortgage-backed securities portfolio at December 31, 2010 is presented below. Due to repayments of the underlying loans, the actual maturities of mortgage-backed securities generally are substantially less than the scheduled maturities.

		Amounts at December 31, 2010 Which Mature in
										After
		One				Weighted-				One to				Weighted-				After Five				Weighted-								Weighted-
		Year or				average				Five				average				to Ten				average				Over 10				average
		Less				Yield				Years				Yield				Years				Yield				years				Yield
		(Dollars in thousands)
Fixed-rate		$	402				4.15	%		$	2,434				3.91	%		$	669				4.24	%		$	179				5.82	%
Adjustable-rate			—				—				—				—				—				—				44				2.75	%
Total mortgage-backed securities		$	402				4.15	%		$	2,434				3.91	%		$	669				4.24	%		$	223				5.22	%

Sources of Funds

General. Deposits are the primary source of Hibernia Homestead Bank’s funds for lending and other investment purposes. In addition to deposits, principal and interest payments on loans and maturities of investments are other sources of funds. Loan and investment repayments are relatively stable sources of funds, while deposit inflows and outflows are significantly influenced by general interest rates and financial 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 by Hibernia Homestead Bank principally from the east banks of Orleans Parish and Jefferson Parish, 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.

Hibernia Homestead Bank participates in the Certificate of Deposit Account Registry Service (“CDARS”) of Promontory Interfinancial Network, which allows the Bank to provide FDIC deposit insurance in excess of account coverage limits by exchanging deposits (known as “reciprocal deposits”) with other CDARS members. The Company may also purchase deposits (known as “One-Way Buy” deposits) from other CDARS members in an amount not to exceed $6.0 million, or 10% of the Bank’s total assets. Such deposits are generally considered a form of brokered deposits.

In addition, during 2010 the Bank signed an agreement with QwickRate, an internet-based certificate of deposit listing service, to utilize their program to raise institutional time deposits to supplement the liquidity needs of the Bank. Regulators have established that QwickRate is a “listing service,” not a “deposit broker” and therefore deposits raised using the QwickRate service are not considered a form of brokered deposits.

For further information concerning the Bank’s deposits, reference is made to Note 6 of the Notes to the Consolidated Financial Statements contained in Item 8 of this Form 10-K.

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. Hibernia Homestead Bank 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,
		2010								2009
		Amount				%				Amount				%
		(Dollars in thousands)
Certificate accounts:
0.00% – 1.00%		$	7,364				13.49	%		$	397				0.93	%
1.01% – 2.00%			15,027				27.52				14,720				34.52
2.01% – 3.00%			10,547				19.31				8,286				19.43
3.01% – 4.00%			1,339				2.45				984				2.31
4.01% – 5.00%			—				—				60				0.14
Total certificate accounts			34,277				62.77	%			24,447				57.33	%
Transaction accounts:
Savings			6,566				12.02	%			6,444				15.11	%
Checking:
Interest bearing			3,958				7.25				3,777				8.86
Non-interest bearing			3,156				5.78				2,404				5.64
Money market			6,650				12.18				5,568				13.06
Total transaction accounts			20,330				37.23				18,193				42.67
Total deposits		$	54,607				100.00	%		$	42,640				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,
		2010												2009
		Average				Interest				Average				Average				Interest				Average
		Balance				Expense				Rate Paid				Balance				Expense				Rate Paid
		(Dollars in thousands)
Savings accounts		$	6,352			$	41				0.65	%		$	7,118			$	52				0.74	%
Checking			3,590				9				0.25				3,853				15				0.39
Money market			6,761				64				0.95				3,422				35				1.02
Certificates of deposit			28,301				522				1.84				20,812				479				2.30
Total interest-bearing deposits		$	45,004			$	636				1.42	%		$	35,205			$	581				1.65	%

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

		Year Ended December 31,
		2010				2009
		(In thousands)
Net deposits (withdrawals)		$	11,501			$	(966	)
Interest credited			466				463
Total increase (decrease) in deposits		$	11,967			$	(503	)

The following table presents, by various interest rate categories and maturities, the amount of certificates of deposit at December 31, 2010.

		Balance at December 31, 2010
		Maturing in the 12 Months Ending December 31,
Certificates of Deposit		2011				2012				2013				Thereafter				Total
		(In thousands)
Less than 1.00%		$	5,977			$	1,142			$	245			$	—			$	7,364
1.01% – 2.00%			9,154				4,924				454				495				15,027
2.01% –3.00%			5,533				655				2,021				2,338				10,547
3.01% – 4.00%			—				—				52				1,287				1,339
Total certificate accounts		$	20,664			$	6,721			$	2,772			$	4,120			$	34,277

The following table shows the maturities of our certificates of deposit of $100,000 or more at December 31, 2010, by time remaining to maturity.

Quarter Ending:		Amount				Weighted-average Rate
		(Dollars in thousands)
March 31, 2011		$	1,672				1.07	%
June 30, 2011			989				1.57
September 30, 2011			2,629				1.80
December 31, 2011			2,472				1.55
After December 31, 2011			8,452				1.91
Total certificates of deposit with balances of $100,000 or more		$	16,214				1.73	%

As of December 31, 2010, the Bank had $3.0 million of reciprocal deposits or One-Way Buy deposits in the CDARS program. As of December 31, 2009, the Bank held no reciprocal deposits or One-Way Buy deposits in the CDARS program.

As of December 31, 2010, the Bank had $2.6 million of Internet deposits raised through the Bank’s subscription to QwickRate.

Borrowings. Hibernia Homestead 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, 2010, Hibernia Homestead Bank was permitted to borrow up to an aggregate total of $3.2 million from the Federal Home Loan Bank of Dallas. Hibernia did not have any Federal Home Loan Bank advances outstanding at December 31, 2010. Additionally, at December 31, 2010, Hibernia was a party to a Master Purchase Agreement with First National Bankers Bank whereby First National Bankers Bank may sell to Hibernia Homestead Bank Federal Funds in an amount not to exceed $5.7 million. There were no amounts purchased under this agreement as of December 31, 2010.

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

		At or For the Year Ended December 31,
		2010				2009
		(Dollars in thousands)
FHLB advances and Federal Funds Purchased:
Average balance outstanding		$	197			$	15
Maximum amount outstanding at any month-end during the period			2,500				—
Balance outstanding at end of period			—				—
Interest expense (1)			—				—
Average interest rate during the period			—	%			—	%
Weighted-average interest rate at end of period			—	%			—	%

We had no short-term borrowings (maturities of one year or less) at December 31, 2010 or 2009.

Subsidiaries

At December 31, 2010, Hibernia Homestead Bancorp, Inc. had one subsidiary, Hibernia Homestead Bank.

Employees

Hibernia Homestead Bank had 19 full-time employees and no part-time employees at December 31, 2010. None of these employees are represented by a collective bargaining agreement, and Hibernia Homestead Bank believes that it enjoys good relations with its personnel.

REGULATION

General

Hibernia Homestead Bancorp, Inc. a Louisiana corporation, is the parent holding company for Hibernia Homestead Bank. Hibernia Homestead Bank made an election to be considered a “savings association” for purposes of holding company regulations. Hibernia Homestead Bancorp, Inc. registered as a savings and loan holding company and is required to file certain reports with, is subject to examination by, and otherwise must comply with the rules and regulations of the OTS. Hibernia Homestead Bancorp, Inc. is also subject to the rules and regulations of the Securities and Exchange Commission under the federal securities laws.

Hibernia Homestead Bank is a Louisiana-chartered savings bank and is subject to extensive regulation and examination by the Louisiana Office of Financial Institutions and by the FDIC, and is also subject to certain requirements established by the Federal Reserve Board. The federal and state laws and regulations which are applicable to savings banks regulate, among other things, the scope of their business, their investments, their reserves against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for certain loans. There are periodic examinations by the Louisiana Office of Financial Institutions and the FDIC to test Hibernia Homestead Bank’s compliance with various regulatory requirements. This regulation and supervision establishes a comprehensive framework of activities in which an institution can engage and is intended primarily for the protection of the deposit insurance fund and depositors. The regulatory structure also gives the regulatory authorities extensive discretion in connection with their supervisory and enforcement activities and examination policies, including policies with respect to the classification of assets and the establishment of adequate loan loss reserves for regulatory purposes. Any change in such regulation by the Louisiana Office of Financial Institutions, the FDIC, the OTS or a change in applicable law by Congress could have a material adverse impact on Hibernia Homestead Bancorp, Inc., Hibernia Homestead Bank and their operations.

Certain of the statutory and regulatory requirements that are applicable to Hibernia Homestead Bank and Hibernia Homestead Bancorp, Inc. are described below. This description of statutes and regulations is not intended to be a complete explanation of such statutes and regulations and their effects on Hibernia Homestead Bank and Hibernia Homestead Bancorp, Inc. and is qualified in its entirety by reference to the actual statutes and regulations.

Recently Enacted 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 changes the jurisdictions of existing bank regulatory agencies and in particular transfers the regulation of federal savings associations from the OTS to the Office of Comptroller of the Currency, effective one year from the effective date of the legislation, with a potential extension up to six months. Savings and loan holding companies will be regulated by the Federal Reserve Board. The new law also establishes an independent federal consumer protection bureau within the Federal Reserve Board. The following discussion summarizes significant aspects of the new law that may affect Hibernia Homestead Bank and Hibernia Homestead Bancorp, Inc. 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 Hibernia Homestead Bank:

•

A new independent consumer financial protection bureau will be 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 Hibernia Homestead Bank, will be subject to the supervision and enforcement of their primary federal banking regulator with respect to the federal consumer financial protection laws.

•

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

•

The current prohibition on payment of interest on demand deposits was repealed, effective July 21, 2011.

•

Deposit insurance is permanently increased to $250,000 and unlimited deposit insurance for noninterest-bearing transaction accounts extended through the end of 2012.

•

The deposit insurance assessment base calculation will equal the depository institution’s total assets minus the sum of its average tangible equity during the assessment period.

•

The minimum reserve ratio of the Deposit Insurance Fund increased to 1.35 percent of estimated annual insured deposits or assessment base; however, the FDIC 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 Hibernia Homestead Bancorp, Inc.:

•

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

•

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

•

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.

•

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.

•

Public companies will be 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.

•

A separate, non-binding shareholder vote will be 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.

•

Securities exchanges will be 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.

•

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.

•

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

•

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.

•

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

Regulation of Hibernia Homestead Bank

Louisiana Banking Law. The Louisiana Savings Bank Act of 1990, and regulations promulgated thereunder, contains detailed provisions governing the organization, location of offices, rights and responsibilities of directors, officers, employees and members, as well as corporate powers, savings and investment operations and other aspects of Hibernia Homestead Bank and its affairs. The Louisiana Savings Bank Act of 1990 delegates extensive rulemaking power and administrative discretion to the commissioner of financial institutions so that the supervision and regulation of state-chartered savings banks may be flexible and readily responsive to changes in economic conditions and in savings and lending practices, although provisions related to safety and soundness of operations, investments and management are strictly construed.

One of the purposes of the Louisiana Savings Bank Act of 1990 is to provide savings banks with the opportunity to be competitive with each other and with other financial institutions existing under the Louisiana Banking Law and other state, federal and foreign laws. A Louisiana savings bank may locate or change the location of its principal place of business and establish an office anywhere in the state, with the prior approval of the Louisiana Office of Financial Institutions.

The Louisiana Office of Financial Institutions examines each savings bank on a recurring schedule, generally not less frequently than once every two years. If the Louisiana Office of Financial Institutions determines that corrective action is necessary, the commissioner shall request that such action be taken. If corrective action is not taken, the commissioner will seek to compel enforcement by formal order followed by institution of suit, if necessary.

Insurance of Accounts. The deposits of Hibernia Homestead Bank are insured to the maximum extent permitted by the Deposit Insurance Fund (“DIF”), administered by the FDIC, and are backed by the full faith and credit of the U.S. Government. As insurer, the FDIC 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 FDIC.

The recently enacted financial institution reform legislation permanently increased deposit insurance on most accounts to $250,000. In addition, pursuant to Section 13(c)(4)(G) of the Federal Deposit Insurance Act, the FDIC has implemented two temporary programs to provide deposit insurance for the full amount of most non-interest bearing transaction deposit accounts and to guarantee certain unsecured debt of financial institutions and their holding companies. Under the unsecured debt program, the FDIC’s guarantee expires on the earlier of the maturity date of the debt or December 31, 2012. The unlimited deposit insurance for noninterest-bearing transaction accounts was extended by the Dodd-Frank Act through the end of 2012 for all insured institutions without a separate insurance assessment (but the cost of the additional insurance coverage will be considered under the risk-based assessment system). On December 29, 2010, the President of the United States signed into law an amendment to the Federal Deposit Insurance Act to include Interest on Lawyers Trust Accounts (“IOLTA”) within the definition of noninterest-bearing transaction accounts. This amendment will provide IOLTAs with the same temporary, unlimited insurance coverage afforded to noninterest-bearing transaction accounts under the Dodd-Frank Act. This unlimited coverage for noninterest-bearing transaction accounts became effective on December 31, 2010 and terminates on December 31, 2012.

The FDIC’s risk-based premium system provides for quarterly assessments. Each insured institution is placed in one of four risk categories based upon supervisory and capital evaluations. 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. Assessment rates range from seven to 77.5 basis points, with less risky institutions paying lower assessments. The FDIC recently 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 assessment rates are between 2.5 and 9 basis points for banks in the lower risk category and between 30 to 45 basis points for banks in the highest risk category. The amendments will become effective for the quarter beginning April 1, 2011 with the new assessment methodology being reflected in the premium invoices due September 30, 2011.

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

The FDIC may terminate the deposit insurance of any insured depository institution, including Hibernia Homestead 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 FDIC. 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 FDIC. Management is aware of no existing circumstances which would result in termination of Hibernia’s deposit insurance.

On May 22, 2009, the FDIC announced a five basis point special assessment on each insured depository institution’s assets minus its Tier 1 capital as of June 30, 2009. The FDIC collected the special assessment on September 30, 2009. Based on our assets and Tier 1 capital at June 30, 2009, the impact of the special assessment was $19,000, which was expensed in the second quarter of fiscal 2009.

In order to restore reserves and ensure that the DIF will be able to adequately cover losses from future bank failures, the FDIC, in November 2009, required insured depository institutions to prepay their estimated quarterly risk-based assessments for all of 2010, 2011, and 2012. On December 30, 2009, the Bank prepaid its assessment in the amount of $153,000 related to years 2010 through 2012. As of December 31, 2010 the remaining balance of our prepaid FDIC assessment was $103,000.

Capital Requirements. The FDIC has promulgated regulations and adopted a statement of policy regarding the capital adequacy of state-chartered savings banks which, like Hibernia Homestead Bank, are not members of the Federal Reserve System. These requirements are substantially similar to those adopted by the Federal Reserve Board regarding bank holding companies.

The FDIC’s capital regulations establish a minimum 3.0% Tier I leverage capital requirement for the most highly-rated state-chartered, non-member banks, with an additional cushion of at least 100 to 200 basis points for all other state-chartered, non-member banks, which effectively will increase the minimum Tier I leverage ratio for such other banks to 4.0% to 5.0% or more. Under the FDIC’s regulation, highest-rated banks are those that the FDIC determines are not anticipating or experiencing significant growth and have well diversified risk, including no undue interest rate risk exposure, excellent asset quality, high liquidity, good earnings and, in general, which are considered a strong banking organization and are rated composite 1 under the Uniform Financial Institutions Rating System. Leverage or core capital is defined as the sum of common stockholders’ equity (including retained earnings), noncumulative perpetual preferred stock and related surplus, and minority interests in consolidated subsidiaries, minus all intangible assets other than certain qualifying supervisory goodwill and certain purchased mortgage servicing rights.

The FDIC also requires that savings banks meet a risk-based capital standard. The risk-based capital standard for savings banks requires the maintenance of total capital (which is defined as Tier I capital and supplementary (Tier 2 capital) to risk weighted assets of 8%. In determining the amount of risk-weighted assets, all assets, plus certain off balance sheet assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the FDIC believes are inherent in the type of asset or item. The components of Tier I capital are equivalent to those discussed above under the 3% leverage capital standard. The components of supplementary capital include certain perpetual preferred stock, certain mandatory convertible securities, certain subordinated debt and intermediate preferred stock and general allowances for loan and lease losses. Allowance for loan and lease losses includable in supplementary capital is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of capital counted toward supplementary capital cannot exceed 100% of core capital.

At December 31, 2010, Hibernia Homestead Bank’s capital ratios exceeded each of its capital requirements. See Note 15 to the notes to our consolidated financial statements included elsewhere herein.

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.

		Total Risk-based		Tier 1 Risk-based		Tier 1 Leverage
Capital Category		Capital		Capital		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 FDIC 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, 2010, Hibernia Homestead Bank was deemed a well capitalized institution for purposes of the prompt corrective regulations and as such is not subject to the above mentioned restrictions.

Activities and Investments of Insured State-Chartered Savings Banks. The activities and equity investments of FDIC-insured, state-chartered savings banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank. An insured state bank is not prohibited from, among other things:

•

acquiring or retaining a majority interest in a subsidiary;

•

investing as a limited partner in a partnership the sole purpose of which is direct or indirect investment in the acquisition, rehabilitation or new construction of a qualified housing project, provided that such limited partnership investments may not exceed 2% of the bank’s total assets;

•

acquiring up to 10% of the voting stock of a company that solely provides or reinsures directors’, trustees’ and officers’ liability insurance coverage or bankers’ blanket bond group insurance coverage for insured depository institutions; and

•

acquiring or retaining the voting shares of a depository institution if certain requirements are met.

The FDIC has adopted regulations pertaining to the other activity restrictions imposed upon insured state banks and their subsidiaries. Pursuant to such regulations, insured state banks engaging in impermissible activities may seek approval from the FDIC to continue such activities. State banks not engaging in such activities but that desire to engage in otherwise impermissible activities either directly or through a subsidiary may apply for approval from the FDIC to do so; however, if such bank fails to meet the minimum capital requirements or the activities present a significant risk to the Deposit Insurance Fund, such application will not be approved by the FDIC. Pursuant to this authority, the FDIC has determined that investments in certain majority-owned subsidiaries of insured state banks do not represent a significant risk to the deposit insurance funds. Investments permitted under that authority include real estate activities and securities activities.

Restrictions on Capital Distributions. OTS 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. These regulations apply to Hibernia Homestead Bancorp, Inc. because Hibernia Homestead Bank is considered a savings association for certain purposes under OTS regulations. Under applicable regulations, a savings association must file an application for OTS approval of the capital distribution if:

•

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;

•

the institution would not be at least adequately capitalized following the distribution;

•

the distribution would violate any applicable statute, regulation, agreement or OTS-imposed condition; or

•

the institution is not eligible for expedited treatment of its filings with the OTS.

If an application is not required to be filed, state savings banks that elect to be treated as savings associations such as Hibernia Homestead Bank and which are a subsidiary of a holding company (as well as certain other institutions) must still file a notice with the OTS at least 30 days before the board of directors declares a dividend or approves a capital distribution.

A savings association 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 OTS. In addition, the OTS may prohibit a proposed capital distribution, which would otherwise be permitted by OTS regulations, if the OTS determines that such distribution would constitute an unsafe or unsound practice.

The FDIC 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. Hibernia Homestead Bank is currently not in default in any assessment payment to the FDIC.

Loans-to-One Borrower Limitations. The Louisiana Savings Bank Act of 1990 imposes limitations on the aggregate amount of loans that a Louisiana-chartered savings bank can make to any one borrower. The permissible amount of loans-to-one borrower, on a secured and unsecured basis, may not exceed 25% of a savings bank’s total net worth. In addition, a savings bank may make loans in an amount equal to an additional 10% of a savings bank’s net worth if the loans are 100% secured by readily marketable collateral. A savings bank’s net worth is calculated based on its last quarterly call report and consists of (i) outstanding and unimpaired common stock; (ii) outstanding and unimpaired perpetual preferred stock; (iii) unimpaired capital surplus, undivided profits, capital reserves, minus intangible assets; (iv) purchased mortgage servicing rights; and (v) mandatory convertible debt up to 20% of categories (i) through (iv). Readily marketable collateral consists of financial instruments or bullion, which are salable under ordinary circumstances with reasonable promptness at fair market value on an auction or a similarly available daily bid and ask price market. At December 31, 2010, our limit on loans-to-one borrower was approximately $4.6 million. At December 31, 2010 Hibernia Homestead Bank’s five largest loans or groups of loans-to-one borrower ranged from $1.5 to $2.5 million. All of the Bank’s five largest loans were performing in accordance with their terms.

Privacy Requirements. Federal law places limitations on financial institutions like Hibernia Homestead Bank regarding the sharing of consumer financial information with unaffiliated third parties. Specifically, these provisions requires all financial institutions offering financial products or services to retail customers to provide such customers with the financial institution’s privacy policy and provide such customers the opportunity to “opt out” of the sharing of personal financial information with unaffiliated third parties. Hibernia Homestead Bank currently has a privacy protection policy in place and believes such policy is in compliance with the regulations.

Anti-Money Laundering. Federal anti-money laundering rules impose various requirements on financial institutions, including insured state savings banks such as Hibernia Homestead Bank, to prevent the use of the U.S. financial system to fund terrorist activities. These provisions include a requirement that financial institutions operating in the United States to develop anti-money laundering compliance programs, due diligence policies and controls to ensure the detection and reporting of money laundering. Such compliance programs supplemented existing compliance requirements, also applicable to financial institutions, under the Bank Secrecy Act and the Office of Foreign Assets Control Regulations. Hibernia Homestead Bank has established policies and procedures to ensure compliance with the anti-money laundering rules.

Regulatory Enforcement Authority. The federal banking laws provide substantial enforcement powers available to federal banking regulators. This enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. 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 filed with regulatory authorities.

Regulation of Hibernia Homestead Bancorp, Inc.

General. Hibernia Homestead Bancorp, Inc. is subject to regulation as a savings and loan holding company under the Home Owners’ Loan Act, as amended, because Hibernia Homestead Bank made an election under Section 10(l) of the Home Owners’ Loan Act to be treated as a “savings association” for purposes of Section 10 of the Home Owners’ Loan Act. As a result, Hibernia Homestead Bancorp, Inc. registered with the OTS and is subject to OTS regulations, examinations, supervision and reporting requirements relating to savings and loan holding companies. The jurisdiction of the OTS regarding savings and loan holding companies will transfer to the Federal Reserve Board on July 21, 2011 unless extended up to an additional six months. Hibernia Homestead Bancorp, Inc. is also required to file certain reports with, and otherwise comply with, the rules and regulations of Louisiana Office of Financial Institutions and the Securities and Exchange Commission. As a subsidiary of a savings and loan holding company, Hibernia Homestead Bank is subject to certain restrictions in its dealings with Hibernia Homestead Bancorp, Inc. and affiliates thereof, including the Office of Thrift Supervision’s qualified thrift lender (“QTL”) requirement, dividend restrictions and transactions with affiliates regulations.

Restrictions Applicable to Hibernia Homestead Bancorp, Inc. Because Hibernia Homestead Bancorp, Inc. operates as a non-grandfathered savings and loan holding company, it is permitted to engage only in the following activities:

•

furnishing or performing management services for a subsidiary savings institution;

•

conducting an insurance agency or escrow business;

•

holding, managing, or liquidating assets owned or acquired from a subsidiary savings institution;

•

holding or managing properties used or occupied by a subsidiary savings institution;

•

acting as trustee under a deed of trust;

•

any other activity (i) that the Federal Reserve Board, by regulation, has determined to be permissible for bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956, unless the Director of the OTS, by regulation, prohibits or limits any such activity for savings and loan holding companies, or (ii) in which multiple savings and loan holding companies were authorized by regulation to directly engage in on March 5, 1987;

•

purchasing, holding, or disposing of stock acquired in connection with a qualified stock issuance if the purchase of such stock by such holding company is approved by the Director of the OTS; and

•

any activity permissible for financial holding companies under section 4(k) of the Bank Holding Company Act.

Permissible activities which are deemed to be financial in nature or incidental thereto under section 4(k) of the Bank Holding Company Act include:

•

lending, exchanging, transferring, investing for others, or safeguarding money or securities;

•

insurance activities or providing and issuing annuities, and acting as principal, agent, or broker;

•

financial, investment, or economic advisory services;

•

issuing or selling instruments representing interests in pools of assets that a bank is permitted to hold directly;

•

underwriting, dealing in, or making a market in securities;

•

activities previously determined by the Federal Reserve Board to be closely related to banking;

•

activities that bank holding companies are permitted to engage in outside of the U.S.; and

•

portfolio investments made by an insurance company.

In addition, Hibernia Homestead Bancorp, Inc. cannot be acquired unless the acquirer is engaged solely in financial activities or to acquire a company unless the company is engaged solely in financial activities.

If a savings and loan holding company acquires or merges with another holding company, the holding company acquired or the holding company resulting from such merger or acquisition may only invest in assets and engage in the activities listed above, and it has a period of two years to cease any non-conforming activities and divest any non-conforming investments. As of December 31, 2010, Hibernia Homestead Bancorp, Inc. was not engaged in any non-conforming activities and it did not have any non-conforming investments.

If the subsidiary savings association fails to meet the Qualified Thrift Lender test set forth in Section 10(m) of the Home Owners’ Loan Act, 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 Qualified Thrift Lender within one year thereafter.

Qualified Thrift Lender Test. A savings association can comply with the Qualified Thrift Lender test by either meeting the Qualified Thrift Lender test set forth in the Home Owners’ Loan Act and implementing regulations or qualifying as a domestic building and loan association as defined in Section 7701(a)(19) of the Internal Revenue Code of 1986, as amended. A savings association subsidiary of a savings and loan holding company that does not comply with the Qualified Thrift Lender test must comply with the following restrictions on its operations:

•

the institution may not engage in any new activity or make any new investment, directly or indirectly, unless such activity or investment is permissible for a national bank;

•

the branching powers of the institution shall be restricted to those of a national bank; and

•

payment of dividends by the institution shall be subject to the rules regarding payment of dividends by a national bank.

Upon the expiration of three years from the date the institution ceases to meet the Qualified Thrift Lender test, it must cease any activity and not retain any investment not permissible for a national bank (subject to safety and soundness considerations). Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, a savings institution not in compliance with the QTL test is also prohibited from paying dividends and is subject to an enforcement action for violation of the Home Owners’ Loan Act, as amended.

Hibernia Homestead Bank believes that it meets the provisions of the Qualified Thrift Lender test.

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. 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 Hibernia Homestead Bancorp, Inc.) 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 contain 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, Section 11 of the Home Owners’ Loan Act prohibits a savings association 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, 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. As an insured state chartered savings bank, Hibernia Homestead Bank currently is subject to Sections 22(g) and (h) of the Federal Reserve Act and at December 31, 2010, was in compliance with the above restrictions.

Restrictions on Acquisitions. Except under limited circumstances, savings and loan holding companies are prohibited from acquiring, without prior approval of the Director of the OTS, (i) control of any other savings association or savings and loan holding company or substantially all the assets thereof or (ii) more than 5% of the voting shares of a savings association or holding company thereof which is not a subsidiary. Except with the prior approval of the Director, no director or officer of a savings and loan holding company or person owning or controlling by proxy or otherwise more than 25% of such company’s stock, may acquire control of any savings association, other than a subsidiary savings association, or of any other savings and loan holding company.

The Director of the OTS may only approve acquisitions resulting in the formation of a multiple savings and loan holding company which controls savings associations in more than one state if (i) the multiple savings and loan holding company involved controls a savings association which operated a home or branch office located in the state of the association to be acquired as of March 5, 1987; (ii) the acquiror is authorized to acquire control of the savings association pursuant to the emergency acquisition provisions of the Federal Deposit Insurance Act; or (iii) the statutes of the state in which the association to be acquired is located specifically permit associations to be acquired by the state-chartered associations or savings and loan holding companies located in the state where the acquiring entity is located (or by a holding company that controls such state-chartered savings associations).

Federal Securities Laws. Hibernia’s common stock is registered with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934, as amended. We are subject to information, proxy solicitation, insider trading restrictions, and other requirements under the Securities Exchange Act of 1934.

The Sarbanes-Oxley Act. Hibernia Homestead Bancorp, Inc. is subject to the Sarbanes-Oxley Act of 2002, which implements a broad range of corporate governance and accounting measures for public companies designed to promote honesty and transparency in corporate America and better protect investors from corporate wrongdoing. The Sarbanes-Oxley Act’s principal legislation and the derivative regulation and rule-making promulgated by the Securities and Exchange Commission include:

•

the creation of an independent accounting oversight board;

•

auditor independence provisions that restrict non-audit services that accountants may provide to their audit clients;

•

additional corporate governance and responsibility measures, including the requirement that the chief executive officer and chief financial officer certify financial statements;

•

a requirement that companies establish and maintain a system of internal control over financial reporting and that a company’s management provide an annual report regarding its assessment of the effectiveness of such internal control over financial reporting to the company’s independent accountants and that such accountants provide an attestation report with respect to management’s assessment of the effectiveness of the company’s internal control over financial reporting;

•

the forfeiture of bonuses or other incentive-based compensation and profits from the sale of an issuer’s securities by directors and senior officers in the twelve month period following initial publication of any financial statements that later require restatement;

•

an increase in the oversight of, and enhancement of certain requirements relating to audit committees of public companies and how they interact with the company’s independent auditors;

•

the requirement that audit committee members must be independent and are absolutely barred from accepting consulting, advisory or other compensatory fees from the issuer;

•

the requirement that companies disclose whether at least one member of the committee is a “financial expert” (as such term is defined by the Securities and Exchange Commission) and if not, why not;

•

expanded disclosure requirements for corporate insiders, including accelerated reporting of stock transactions by insiders and a prohibition on insider trading during pension blackout periods;

•

a prohibition on personal loans to directors and officers, except certain loans made by insured financial institutions;

•

disclosure of a code of ethics and the requirement of filing of a Form 8-K for a change or waiver of such code;

•

mandatory disclosure by analysts of potential conflicts of interest; and

•

a range of enhanced penalties for fraud and other violations.

Hibernia Homestead Bancorp, Inc. is considered a smaller reporting company and is therefore exempt from complying with the internal control auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act. The Company has incurred additional expense in complying with the provisions of the Sarbanes-Oxley Act and the resulting regulations, and the impact is reflected in its results of operations and financial condition.

TAXATION

Federal Taxation

General. Hibernia Homestead Bancorp, Inc. and Hibernia Homestead Bank are subject to federal income tax provisions of the Internal Revenue Code of 1986, as amended, in the same general manner as other corporations with some exceptions listed below. For federal income tax purposes, Hibernia Homestead Bancorp, Inc. files a consolidated federal income tax return with its wholly owned subsidiaries on a fiscal year basis. The applicable federal income tax expense or benefit is properly allocated to each subsidiary based upon taxable income or loss calculated on a separate company basis.

Method of Accounting. For federal income tax purposes, income and expenses are reported on the accrual method of accounting and Hibernia Homestead Bancorp, Inc. files its federal income tax return using a December 31 fiscal year end.

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, Hibernia Homestead 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, savings associations must use the specific chargeoff method in computing their bad debt deduction beginning with their 1996 federal tax return.

Taxable Distributions and Recapture. Prior to the Small Business Job Protection Act, bad debt reserves created prior to January 1, 1988 were subject to recapture into taxable income if a savings bank failed to meet certain thrift asset and definitional tests. New federal legislation eliminated these thrift related recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should a savings bank make certain non-dividend distributions or cease to maintain a savings bank charter. At December 31, 2010, Hibernia Homestead Bank did not have federal pre-1988 reserves subject to recapture.

Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax (“AMT”) at a rate of 20% on a base of regular taxable income plus certain tax preferences (“alternative minimum taxable income” or “AMTI”). The AMT is payable to the extent such AMTI is in excess of an exemption amount. Net operating losses can offset no more than 90% of AMTI. Certain payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. Hibernia Homestead Bank has not been subject to the AMT nor does it have any such amounts available as credits for carryover.

Net Operating Loss Carryovers. Under the Internal Revenue Code, Hibernia Homestead Bank may elect to carry back net operating losses for a period of up to two years and then forward to twenty years following the loss years to offset taxable income in those years. At December 31, 2010, Hibernia Homestead Bank had $1.4 million net operating loss carry forwards for federal income tax purposes and none available to carryback.

Corporate Dividends Received Deduction. Hibernia Homestead Bancorp, Inc. may exclude from income 100% of dividends received from 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 that own less than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received.

Other Matters. Neither Hibernia Homestead Bancorp, Inc. nor Hibernia Homestead Bank has been audited by the IRS during the last five years.

State and Local Taxation

Hibernia Homestead Bancorp, Inc. 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. In addition, Hibernia Homestead Bank is subject to the Louisiana Shares Tax which is imposed on the assessed value of a bank’s stock. The formula for deriving the assessed value is to calculate 15% of 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 bank’s capitalized earnings.

Item 1A.		Risk Factors.

Not applicable.

Item 1B.		Unresolved Staff Comments.

Not applicable.

Item 2.		Properties.

We currently conduct business from our main office and two full-service banking offices. The following table sets forth the net book value of the land, building and certain other information with respect to our offices at December 31, 2010.

				Net Book Value				Amount of
Description/Address		Leased/Owned		of Property				Deposits
				(In thousands)
Main Office:
325 Carondelet Street New Orleans, Louisiana 70130		Owned		$	2,912			$	22,110
Branch Offices:
700 S. Carrollton Avenue New Orleans, Louisiana 70118		Owned			377				8,248
933 Metairie Road Metairie, Louisiana 70005		Owned			1,384				24,249
Total				$	4,673			$	54,607

Item 3.		Legal Proceedings.

We are 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 Hibernia Homestead Bank.

Item 4.		(Removed and Reserved)

PART II

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

(a) Hibernia Homestead Bancorp, Inc.’s common stock is quoted on the OTC Bulletin Board under the symbol “HIBE”. The common stock was issued at a price of $10.00 per share in connection with the Bank’s mutual to stock conversion and the initial public offering of the Company’s common stock. The common stock commenced trading on the OTC Bulletin Board on January 28, 2009. As of March 29, 2011, there were approximately 130 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 bid information for Hibernia’s common stock for the periods presented. High and low sales prices are also presented. The over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Information relating to bid quotations has been obtained from the Nasdaq Stock Market, Inc. The Company has not declared or paid cash dividends.

		Year Ended December 31, 2010
Quarter Ended		High Bid				Low Bid				High Sale				Low Sale
December 31, 2010		$	—			$	—			$	15.00			$	14.50
September 30, 2010			—				—				14.75				14.75
June 30, 2010			15.45				15.45				15.50				14.05
March 31, 2010			14.00				14.00				14.00				14.00

		Year Ended December 31, 2009
Quarter Ended		High Bid				Low Bid				High Sale				Low Sale
December 31, 2009		$	13.75			$	13.75			$	13.75			$	13.75
September 30, 2009			13.90				13.90				14.00				14.00
June 30, 2009			14.00				10.31				14.00				10.50
March 31, 2009			10.50				10.50				12.00				10.10

(b) Not applicable.

(c) Purchases of Equity Securities.

The Company’s repurchases of its common stock made during the three month period ended December 31, 2010, are set forth in the table below:

										Total Number of
										Shares				Maximum
										Purchased as				Number of Shares
		Total				Average				Part of Publicly				that May Yet Be
		Number of				Price				Announced				Purchased Under
		Shares				Paid per				Plans or				the Plans or
Period		Purchased				Share				Programs				Programs (a)
October 1, 2010 – October 31, 2010			25,000			$	14.55				25,000				27,883
November 1, 2010 – November 30, 2010			—				—				—				27,883
December 1, 2010 – December 31, 2010			—				—				—				27,883
Total			25,000			$	14.55				25,000				27,883

The following table represents the purchasing activity of the Recognition and Retention Plan Trust during the quarter:

										Total Number of				Maximum Number
										Shares Purchased as				of Shares that May
		Total Number				Average				Part of Publicly				Yet Be Purchased
		of Shares				Price Paid				Announced Plans or				Under the Plans or
Period		Purchased				per Share				Programs				Programs
October 1, 2010 – October 31, 2010			—			$	—				—				24,533
November 1, 2010 – November 30, 2010			—				—				—				24,533
December 1, 2010 – December 31, 2010			—				—				—				24,533
Total			—			$	—				—				24,533

Item 6.		Selected Financial Data.

Set forth below is selected summary historical financial and other data of Hibernia Homestead Bancorp, Inc. We have prepared this information using the financial statements of Hibernia Homestead Bancorp, Inc. and its subsidiary, Hibernia Homestead Bank for the two years ended December 31, 2010. When you read this summary historical financial data, it is important that you also read the historical financial statements and related notes contained in Item 8 of this Form 10-K, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

		At December 31,
(Dollars in thousands, except per share amounts)		2010				2009
Selected Financial and Other Data:
Total assets		$	77,253			$	66,503
Cash and cash equivalents			4,593				6,233
Investment securities, available for sale			4,230				8,293
Loans receivable, net			61,953				44,987
Deposits			54,607				42,640
FHLB advances and Federal Funds Purchased			—				—
Equity capital			21,953				23,396
Banking offices			3				3

		For the
		Year Ended December 31,
		2010				2009
Selected Operating Data:
Total interest income		$	3,249			$	2,541
Total interest expense			636				581
Net interest income			2,613				1,960
Provision for loan losses			64				78
Net interest income after provision for loan losses			2,549				1,882
Total non-interest income			144				233
Total non-interest expense			2,783				2,605
Loss before income tax benefit			(90	)			(490	)
Income tax benefit			(8	)			(166	)
Net loss		$	(82	)		$	(324	)

		At or For the
		Year Ended December 31,
		2010				2009
Selected Operating Ratios:(1)
Average yield on interest-earning assets			5.21	%			4.92	%
Average rate on interest-bearing liabilities			1.42				1.65
Average interest rate spread(2)			3.79				3.27
Net interest margin(2)			4.19				3.79
Average interest-earning assets to average interest-bearing liabilities			137.86				146.69
Net interest income after provision for loan losses to non-interest expense			91.59				72.26
Total non-interest expense to average assets			3.97				4.40
Efficiency ratio(3)			100.94				118.77
Return on average assets			(0.12	)			(0.55	)
Return on average equity			(0.36	)			(1.41	)
Average equity to average assets			32.20				38.71
Asset Quality Ratios:(4)
Non-performing loans as a percent of total loans receivable, net			1.84	%			0.70	%
Non-performing assets as a percent of total assets			1.47				0.47
Allowance for loan losses as a percent of non-performing loans			34.62				104.76
Net charge-offs to average loans receivable			—				0.06
Capital Ratios:(5)
Tier 1 leverage ratio			25.61	%			29.37	%
Tier 1 risk-based capital ratio			35.97	%			50.41	%
Total risk-based capital ratio			36.73	%			51.31	%