Regulatory Matters

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

Regulatory Matters

Note F Regulatory Matters

On April 19, 2011, the Bank consented to a Memorandum of Understanding (the “MOU”) issued by the Federal Deposit Insurance Corporation (FDIC) and the Office of Financial Institutions (OFI). The MOU provides for, among other things, the following items within specified time periods:

·  The Bank shall reduce its level of adversely classified assets. 

·  The Bank shall reduce its level of past due loans. 

·  The Bank shall eliminate the extension of credit until all appropriate underwriting documentation is obtained. 

·  The Bank shall eliminate the extension of credit to borrowers for whom the Bank holds an uncollected charged-off asset or for which their credit is classified as “Substandard”. 

·  The Bank shall strengthen its loan review program. 

·  The Bank shall maintain an appropriate Allowance for Loan and Lease Losses. 

·  The Bank shall maintain a Tier I leverage capital ratio equal of at least 9%, a Tier 1 Risk Based Capital Ratio of 11%, and a Total Risk Based Capital Ratio of 13% 

·  The Bank shall not declare or pay any cash dividend without regulatory approval 

·  The Bank shall review and amend its interest rate risk policy and procedures. 

·  The Bank shall provide for an independent evaluation of its management and information systems. 

·  The Bank shall review and update the Bank’s written strategic plan and profit plan. 

In addition, the Company entered into an agreement on August 9, 2011, with the Federal Reserve Bank (FRB) whereby the Company will not incur additional debt, declare or pay dividends without approval of the FRB, reduce its capital position by purchasing or redeeming treasury stock, make any distributions of interest or principal on subordinated debentures or trust preferred securities without prior written approval of the FRB and the Louisiana Office of Financial Institutions (OFI), provide the FRB and OFI with quarterly financial updates and provide written confirmation that the Company has complied with all resolutions on a quarterly basis.

While no assurance can be given, Bank management believes it has taken action toward complying with the provisions of the MOU. It is not presently determinable what actions, if any, bank regulators might take if requirements of the Memorandum are not complied with in the specified time periods.