UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended: December 31, 2013

or

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

For the transition period from ______ to ______

Commission File Number: 000-54234

MINDEN BANCORP, INC.

(Exact name of Registrant as specified in its charter)

Louisiana	90-0610674
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)
100 MBL Bank Drive, Minden, Louisiana	71055
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code:   (318) 371-4156

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

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

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

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 ý     NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months

(or for such shorter period that the registrant was required to submit and post such files). YES ý     NO ¨

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

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

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	ý
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES ¨ NO ý

The aggregate market value of the voting stock held by non-affiliates of the Registrant based on the closing price of $16.75 on June 28, 2013, the last business day of the Registrant's second quarter was approximately $30.0 million (2,373,909 shares outstanding less 582,131 shares held by affiliates at $16.75 per share). Although directors and officers and the ESOP were assumed to be "affiliates" of the Registrant for purposes of this calculation, the classification is not to be interpreted as an admission of such status.

Number of shares of common stock outstanding as of March 15, 2014: 2,352,490

DOCUMENTS INCORPORATED BY REFERENCE

1.          Portions of the definitive Proxy Statement for the 2014 Annual Meeting of Shareholders are incorporated by reference into Part III, Items 10−14 of this Form 10−K.

MINDEN BANCORP, INC.

2013 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	29
Item 1B.	Unresolved Staff Comments	29
Item 2.	Properties	30
Item 3.	Legal Proceedings	30
Item 4.	Mine Safety Disclosures	30
PART II
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	30
Item 6.	Selected Financial Data	31
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	45
Item 8.	Financial Statements and Supplementary Data	46
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	79
Item 9A.	Controls and Procedures	79
Item 9B.	Other Information	79
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	80
Item 11.	Executive Compensation	80
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	80
Item 13.	Certain Relationships and Related Transactions, and Director Independence	81
Item 14.	Principal Accounting Fees and Services	81
PART IV
Item 15.	Exhibits and Financial Statement Schedules	81
SIGNATURES		83

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). These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward looking statements are not historical facts but instead represent only the beliefs, expectations or opinions of Minden Bancorp, Inc. (“Minden Bancorp”) 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 Minden Bancorp 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 Minden Bancorp 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 Minden Bancorp is or will be engaged. Minden Bancorp 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,” or “Minden Bancorp,” refer to Minden Bancorp, Inc., a Louisiana corporation, and the term the “MBL Bank” refers to MBL Bank, a Louisiana-chartered commercial state bank and wholly owned subsidiary of Minden Bancorp. In addition, unless the context otherwise requires, references to the operations of Minden Bancorp include the operations of MBL Bank.

PART I

Item 1. Business.

BUSINESS

General

Effective February 5, 2014, Minden Bancorp, Inc. (“Minden Bancorp”) is a Louisiana corporation and a bank holding company which owns 100% of the capital stock of MBL Bank, which is a Louisiana-chartered, registered commercial state bank headquartered in Minden, Louisiana. Prior to February 5, 2014, Minden Bancorp was a savings and loan holding company that owned 100% of the capital stock of MBL Bank, which was a Louisiana-chartered, community-oriented building and loan association. While the federal law applicable to Minden Bancorp as a bank holding company is different than the law that was applicable to it as a savings and loan holding company, the two laws are substantially similar and both are under the jurisdiction of the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”).

MBL Bank operates a total of two banking offices located in Webster Parish, in northwest Louisiana. Our primary business consists of attracting deposits from the general public and using those funds, to originate loans to our customers and invest in securities such as U.S. Government and agency securities, mortgage-backed securities and municipal obligations. At December 31, 2013, we had total assets of $288.9 million, total deposits of $245.5 million and stockholders’ equity of $41.6 million.

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Historically, MBL Bank had operated as a traditional savings institution with an emphasis on originating longer term single-family residential first mortgage loans and, to a significantly lesser extent, consumer loans such as automobile and recreational vehicle loans. As part of implementing our business strategy, beginning in 2001 we started to diversify the loan products we offered and increased our efforts to originate higher yielding commercial real estate, commercial business and land loans. Our focus on land loans was to originate commercial purpose loans secured by income producing properties such as timber land or agricultural properties and not loans for the acquisition of raw land for development. In connection with the strategic determination to transform itself to a community bank, MBL Bank hired senior management with significant commercial lending experience in our market area. Commercial real estate and commercial business loans as well as land loans were deemed attractive due to their generally higher yields and shorter anticipated lives compared to single-family residential mortgage loans. As of December 31, 2013, commercial business and commercial real estate loans totaled $62.0 million or 38.8% of the total loan portfolio with land loans, most of which are secured by income producing properties, accounting for an additional $20.8 million or 13.0% of the total loan portfolio.

Minden Bancorp as a registered bank holding company is subject to supervision and regulation by the Federal Reserve Board. MBL Bank is subject to regulation by the Louisiana Office of Financial Institutions, as its chartering authority, and by the Federal Deposit Insurance Corporation, which insures MBL Bank’s deposits up to applicable legal limits.

Minden Bancorp’s only business activities are to hold all of the outstanding common stock of MBL Bank. Minden Bancorp is authorized to pursue other business activities permitted by applicable laws and regulations for savings and loan holding companies, which may include the issuance of additional shares of common stock to raise capital or to support mergers or acquisitions and borrowing funds for reinvestment in MBL Bank.

Minden Bancorp does not own or lease any property, but instead uses the premises, equipment and furniture of MBL Bank. At the present time, Minden Bancorp employs only persons who are officers of MBL Bank to serve as officers of Minden Bancorp and may also use the support staff of MBL Bank from time to time. These persons are not separately compensated by Minden Bancorp.

Market Area and Competition

Minden Bancorp is headquartered in Minden, Louisiana and conducts its business through its main office and an additional branch office both of which are located in Webster Parish, Louisiana. The primary market areas we serve are Webster Parish and the contiguous parishes of Claiborne and Bienville as well as the Shreveport-Bossier City-Minden Combined Statistical Area which consists of Webster, Caddo, DeSoto and Bossier Parishes. At June 30, 2013, the most recent date for which data is available, MBL Bank had a deposit market share of 36.9% for Webster Parish as a whole and 47.9% for Minden only, resulting in it having the largest deposit market share both in the parish and in Minden. The economy in our primary market area is fairly diversified with healthcare, retail trade, manufacturing, construction and government constituting the primary basis of the economy. The largest employer in Webster Parish is the Webster Parish School Board.

The population of Webster Parish was estimated at 41,000 in 2012. The population growth rate for Webster Parish has decreased slightly since 1990. The population is projected to decline an additional 1.1% for the period of 2010 through 2015 as compared to an estimated growth rate of 3.7% and 3.9% for Louisiana and the United States. The median household income for Webster Parish at $36,000 in 2010 is below Louisiana and national averages and is projected to lag behind both Louisiana as a whole and the United States. In December 2013, the unemployment rate for Webster Parish was approximately 5.3% as compared to 4.7% for Louisiana and 6.5% for the United States.

We face strong competition, both in attracting deposits and making real estate and commercial loans. Our most direct competition for deposits has historically come from commercial banks, credit unions and other savings institutions located in our market area. This includes many large regional financial institutions which have greater financial and marketing resources available to them. In addition, we face significant competition for investors’ funds from short-term money market securities, mutual funds and other corporate and government securities. We do not rely upon any individual group or entity for a material portion of our deposits. Our ability to attract and retain core deposits depends on our ability to provide a competitive rate of return, liquidity, and service convenience comparable to those offered by competing investment opportunities. Management remains focused on attracting core deposits through our branch network, business development efforts and commercial business relationships.

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Our competition for real estate loans comes principally from mortgage banking companies, commercial banks, other savings institutions and credit unions. We compete for loan originations primarily through the interest rates and loan fees we charge, and the efficiency and quality of services we provide borrowers. Factors which affect competition include general and local economic conditions, current interest rate levels and volatility in the mortgage markets. Competition may increase as a result of the continuing reduction of restrictions on the interstate operations of financial institutions.

Lending Activities

General. At December 31, 2013, Minden Bancorp’s net portfolio of loans receivable amounted to $156.2 million, or 54.1%, of the $288.9 million of total assets at such time. Minden Bancorp traditionally concentrated its lending activities on first mortgage loans secured by residential property. Such loans amounted to $57.2 million or 35.7% of the total loan portfolio at December 31, 2013. We do not originate and have not originated single-family residential loans that are considered “sub prime,” “Alt-A”, “no-doc” or “low doc” loans due to credit scores of borrowers being lower than specified thresholds or due to reduced loan document requirements. For the past several years, Minden Bancorp has emphasized the origination of commercial real estate and commercial business loans as well as land loans. Consistent with such approach, commercial real estate, commercial business and land loans amounted to $44.8 million or 28.0%, $17.2 million or 10.8% and $20.8 million or 13.0%, respectively, of the total loan portfolio at December 31, 2013. As a consequence, such loans accounted for $82.8 million in the aggregate or 51.8% of the total loan portfolio as compared to $72.5 million or 48.2% at December 31, 2012. While Minden Bancorp intends to continue to originate single-family residential loans, it will continue its emphasis on the origination of commercial real estate, commercial business and land loans as part of its systematic and orderly transformation to a community bank. In addition, as part of its intent to be a full-service community bank, it will continue to offer a variety of other loan products including construction and consumer loans.

The types of loans that we may originate are subject to state and federal laws and regulations. Interest rates charged on loans are affected principally by the demand for such loans and 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 of December 31, 2013, MBL Bank generally may not make loans to one borrower and related entities in an amount which exceeds 15% of MBL Bank’s unimpaired capital and surplus, although loans in an amount equal to an additional 10% of unimpaired capital and surplus may be made to a borrower if the loans are fully secured by readily marketable securities. At December 31, 2013, our regulatory limit on loans-to-one borrower was approximately $6.2 million, and at such date our five largest loans orgroups of loans-to-one borrower, including related entities, aggregated $6.1 million, $5.3 million, $5.0 million, $4.5 million and $2.6 million. Each of our five largest loans or groups of loans was performing in accordance with its terms at December 31, 2013. The largest loan relationship consisted of twelve loans that are secured by deposit accounts and single-family owner and non-owner occupied real estate. The second largest relationship consisted of 46 loans totaling $5.3 million that are primarily commercial real estate and single-family non-owner occupied real estate. The third largest loan relationship consisted of one loan totaling $5.0 million that was secured by commercial real estate. The fourth largest loan relationship consisted of 6 loans with an aggregate principal balance of $4.5 million secured by commercial real estate and commercial business loans. The fifth relationship, aggregating $2.6 million, was secured by farm land and single-family owner occupied real estate.

Loan Portfolio Composition. The following table sets forth the composition of MBL Bank’s loan portfolio by type of loan at the dates indicated.

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	2013					2012					2011					2010					2009
	Amount		%			Amount		%			Amount		%			Amount		%			Amount		%
	(Dollars in thousands)
Real estate loans:
One- to four-family residential(1)	$	57,186		35.74	%	$	55,427		36.84	%	$	54,923		40.81	%	$	56,281		43.30	%	$	54,364		45.70	%
Commercial real estate		44,784		28.00			36,401		24.20			34,162		25.38			27,131		20.87			17,946		15.09
Land		20,807		13.01			20,176		13.41			13,750		10.22			11,473		8.83			10,929		9.19
Construction		4,908		3.07			9,049		6.01			4,110		3.05			4,464		3.43			4,129		3.47
Total real estate loans		127,685		79.82			121,053		80.46			106,945		79.46			99,349		76.43			87,368		73.45
Consumer loans:
Consumer loans(2)		7,606		4.75			8,845		5.88			10,427		7.75			12,156		9.35			12,688		10.67
Loans secured by deposits		7,470		4.67			4,592		3.05			4,162		3.09			6,300		4.85			8,706		7.32
Commercial business		17,207		10.76			15,960		10.61			13,063		9.70			12,177		9.37			10,190		8.56
Total loans		159,968		100.00	%		150,450		100.00	%		134,597		100.00	%		129,982		100.00	%		118,952		100.00	%
Less:
Allowance for loan losses		1,645					1,605					1,625					1,286					1,001
Loans in process		2,119					2,364					1,518					1,506					887
Net loans	$	156,204				$	146,481				$	131,454				$	127,190				$	117,064

______________________________

(1) At December 31, 2013, MBL Bank did not have any loans held for sale. The total includes a small amount of lines of credit for business purposes secured by residential properties. Such loans aggregated $2.1 million.

(2) Consumer loans include automobile, boat, recreational vehicle, equipment and lease loans. At December 31, 2013, the primary components were $6.2 million of automobile, boat and recreational vehicle loans and $68,000 of equipment loans.

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Contractual Terms to Final Maturities. The following table shows the scheduled contractual maturities of our loans as of December 31, 2013, before giving effect to the allowance for loan losses. Demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below do not take into account loan prepayments.

	At December 31, 2013
	One- to Four-Family Residential		Commercial Real Estate		Land		Construction(1)		Consumer		Deposit		Commercial Business		Total
	(In thousands)
Amounts due after    December 31, 2013 in:
One year or less	$	9,301	$	8,031	$	2,570	$	2,789	$	1,155	$	6,569	$	6,019	$	36,434
After one year through two years		6,050		4,169		9,863		—		1,592		376		2,640		24,690
After two years through three years		4,964		14,685		2,562		—		1,958		506		4,047		28,722
After three years through five years		13,610		17,439		5,738		—		2,539		19		3,712		43,057
After five years through ten years		8,567		460		59		—		362		—		789		10,237
After ten years through 15 years		9,684		—		15		—		—		—		—		9,699
After 15 years		5,010		—		—		—		—		—		—		5,010
Total	$	57,186	$	44,784	$	20,807	$	2,789	$	7,606	$	7,470	$	17,207	$	157,849

_____________________________

(1) Does not include loans in process.

Scheduled contractual amortization of loans does not reflect the expected term of the loan portfolio. The average life of loans is substantially less than their contractual terms because of prepayments and due-on-sale clauses, which gives Minden Bancorp the right to declare a conventional loan immediately due and payable in the event, among other things, that the borrower sells the real property subject to the mortgage and the loan is not repaid. 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 existing mortgage loans are lower than current mortgage loan rates (due to refinancings of adjustable-rate and fixed-rate loans at lower rates). Under the latter circumstance, the weighted average yield on the loan portfolio decreases as higher yielding loans are repaid or refinanced at lower rates.

The following table shows the dollar amount of our loans at December 31, 2013, due after December 31, 2014 as shown in the preceding table, which have fixed interest rates or which have floating or adjustable interest rates.

	Fixed-Rate		Floating or Adjustable-Rate		Total at December 31, 2013
	(In thousands)
One- to four-family residential	$	35,748	$	12,137	$	47,885
Commercial real estate		10,984		25,769		36,753
Land		4,740		13,497		18,237
Construction		—		—		—
Consumer		5,774		677		6,451
Consumer secured by deposits		901		—		901
Commercial business		552		10,636		11,188
Total	$	58,699	$	62,716	$	121,415

Origination, Purchase and Sale of Loans. Our lending activities are subject to the written, non-discriminatory, underwriting standards and loan origination procedures established by the board of directors and management. Loan originations are obtained by a variety of sources, including referrals from real estate brokers, builders, existing customers, advertising, walk-in and referrals from existing customers. 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. As a matter of practice, we obtain independent outside appraisals on substantially all of our loans although we may prepare an in-house valuation depending on the characteristics of the loan and the profile of the borrower. Our loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the loan and the value of the property that will secure the loan.

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We have originated and sold substantially all of our longer term (15 years or longer) fixed-rate conforming mortgages to a mortgage-banking company. For the year ended December 31, 2013, we originated and sold $6.6 million of one- to four-family residential loans. Loans are sold with servicing released and with limited recourse in the event that fraud in the sale exists. Such sales are affected in order to reduce the proportion of the loan portfolio comprised of longer term fixed-rate residential mortgages so as to reduce our interest rate risk. We will continue to sell loans in the future to the extent we believe the interest rate environment is unfavorable and the interest rate risk posed by retention of such loans is unacceptable.

Although we have rarely purchased loans or loan participations in the past, we will continue to evaluate the opportunity to purchase loans or loan participations in the future. However, consistent with our past practice, we would expect such loans to be secured by property located in our market area.

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

	Year Ended December 31,
	2013			2012			2011
	(In thousands)
Loan originations:
One- to four-family residential	$	24,041		$	20,109		$	16,597
Commercial real estate		28,292			24,660			29,733
Land		17,787			19,986			14,285
Construction		5,814			7,573			7,690
Consumer		9,298			17,768			11,421
Commercial business		20,424			18,261			16,002
Total loan originations		105,656			108,357			95,728
Loans purchased		—			—			—
Loans sold		6,636			6,657			4,783
Loan principal repayments		89,092			85,847			86,309
Total loans sold and principal repayments		95,728			92,504			91,092
Decrease due to other items, net(1)		(205	)		(826	)		(372	)
Net increase in total loans	$	9,723		$	15,027		$	4,264

(1) Other items consist of loans in process, deferred fees and the allowance for loan losses.

Although federal laws and regulations permit insured depository institutions to originate and purchase loans secured by real estate located throughout the United States, we concentrate our lending activity in our primary market area in Webster Parish, Louisiana and the surrounding area. Subject to our loans-to-one borrower limitation as of December 31, 2013, as a savings association we were permitted to invest without limitation in residential mortgage loans and up to 400% of our capital in loans secured by non-residential or commercial real estate. We were also allowed to invest in secured and unsecured consumer loans in an amount not exceeding 35% of total assets. This 35% limitation may be exceeded for certain types of consumer loans, such as home equity and property improvement loans secured by residential real property. In addition, we were also allowed to invest up to 10% of our total assets in secured and unsecured loans for commercial, corporate, business or agricultural purposes. At December 31, 2013, we were within each of the above lending limits.

The board of directors has granted certain loan approval authority to individual officers and to an officer loan committee as well as to the loan committee of the board. Our three loan officers have individual loan authority to approve secured loans of any type in amounts up to $175,000 and unsecured up to $25,000. Our Senior Vice President in charge of lending has authority to approve secured and unsecured loans in amounts up to $275,000 and $100,000 respectively, while the President and Chief Executive Officer can individually approve secured and unsecured loans up to $2.0 million and $500,000, respectively. The officers’ loan committee comprised of the President and Chief Executive Officer and the Senior Vice President in charge of lending can approve secured loans up to $2.0 million while the loan committee of the board can approve loans up to the regulatory limit. In some cases, depending on the size and complexity of the proposed extension of credit, loans may be presented to the full board for its review and approval.

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Single-Family Residential Real Estate Loans. Historically we concentrated our lending activities on the origination of loans secured primarily by first mortgage liens on existing single-family residences and we intend to continue to originate permanent loans secured by first mortgage liens on single-family residential properties in the future. At December 31, 2013, $57.2 million or 35.7% of our total loan portfolio consisted of single-family residential real estate loans. At December 31, 2013, $35.8 million or 62.5% of our single-family residential real estate loans had fixed rates of interest. However, of such amount, $32.8 million consisted of loans structured to provide for a balloon payment after three or five years at which time the principal balance outstanding was due and payable or had terms of 15 years or less at the date of origination.

We have continued to originate fixed-rate mortgage loans with terms up to 30 years. The majority of our fixed-rate loans with terms of over 15 years are originated pursuant to a commitment to sell such loans to a correspondent mortgage banking institution. Fixed-rate loans with terms of 15 years or less are generally originated for our portfolio. Our loans for portfolio are typically structured to provide for balloon payment with payments due at three or five years with a 15 to 30 year amortization schedule. We will also originate fixed-rate loans with terms of 15 years or less. At December 31, 2013, 29.2% of our single-family loans were structured as balloon loans.

We are permitted to lend up to 100% of the appraised value of the real property securing a residential loan; however, if the amount of a residential loan originated or refinanced exceeds 90% of the appraised value, we are required by federal regulations to obtain private mortgage insurance on the portion of the principal amount that exceeds 80% of the appraised value of the security property. Pursuant to underwriting guidelines adopted by our board of directors, we may lend up to an 90% loan-to-value ratio without private mortgage insurance unless it is determined that additional collateral in the form of private mortgage insurance or other acceptable collateral is needed. We may lend up to a 100% loan-to-value ratio on owner-occupied residential property as long as additional collateral in the form of private mortgage insurance is obtained. These loans are amortized on a monthly basis with principal interest due each month.

We also offer home equity loans. We do not require that we hold the first mortgage on the secured property; however, the principal balance on all mortgages on the secured property cannot exceed 80% of the value of the secured property. At December 31, 2013, home equity loans amounted to approximately $547,000 and are included in single-family loans. We also have a small amount of revolving lines of credit secured by either first or second mortgages on residential properties. At December 31, 2013, such loans totaled approximately $2.9 million.

Commercial Real Estate Loans. We originate loans for the acquisition and refinancing of existing commercial real estate properties. At December 31, 2013, $44.8 million or 28.0% of the loan portfolio consisted of loans secured by existing commercial real estate properties. Our holdings of commercial real estate loans have increased steadily over the past five years. Such increase was due to our strategy to increase such lending due to the higher average yields and generally shorter terms to maturity provided by commercial real estate loans compared to single-family residential mortgage loans. We intend to continue to emphasize commercial real estate lending.

The majority of commercial real estate loans are primarily secured by owner-occupied small office buildings, small retail establishments, restaurants, hotels, churches and other facilities. These types of properties constitute the majority of our commercial real estate loan portfolio. The substantial majority of the commercial real estate loan portfolio at December 31, 2013 was secured by properties located in our primary market area. The five largest commercial real estate loan relationships or loan balances outstanding to one borrower at December 31, 2013 amounted to $5.9 million, $5.0 million, $4.2 million, $4.1 million and $3.8 million, respectively, all of which were performing in accordance with their terms and were current at such date.

Commercial real estate mortgage loans are typically made with 15 to 20 years amortization schedules and balloon payment provisions ranging from three to five years. We will originate these loans either with fixed interest rates or with interest rates which adjust in accordance with a designated index, generally either the Wall Street Journal prime rate or the MBL Bank prime rate plus a margin. Loan to value ratios on commercial real estate loans are typically limited to 80% of appraised value at the time the loan is granted. As part of the criteria for underwriting commercial real estate we generally impose a debt coverage ratio (the ratio of net cash from operations before payment of debt service to debt service) of not less than 1.2. It is also our general policy to obtain in substantially all cases corporate or personal guarantees, as applicable, on our commercial real estate loans from the principals of the borrower. The average individual loan balance of our commercial real estate loans was approximately $263,000 at December 31, 2013.

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Commercial real estate lending entails significant additional risks as compared with single-family residential property lending. Such loans typically involve large loan balances to single borrowers or groups of related borrowers. The payment experience on such loans is typically dependent on the successful operation of the real estate project. The success of such projects is sensitive to changes in supply and demand conditions in the market for commercial real estate as well as economic conditions generally. At December 31, 2013, we had one non-performing commercial real estate loan with an aggregate balance of $33,000 at such date.

Commercial Business Loans. We offer a full range of commercial loan products to small business customers in our primary marketing area. These loans generally have shorter terms and higher interest rates as compared to mortgage loans. Such loans amounted to $17.2 million or 10.8% of our total loan portfolio at December 31, 2013 and were primarily secured by inventories, accounts receivable and other business assets. If the loans are secured by deposits, they are classified as consumer loans. Our commercial business loans generally have terms of two years or less and bear adjustable rates tied to the Wall Street Journal or MBL Bank prime rate plus a margin. In addition, we generally require personal guarantees from the principals involved.

Unlike one-to-four-family mortgage loans, which generally are made on the basis of the borrower’s ability to make repayment from his or her employment or other income, and which are secured by real property the value of which tends to be more easily ascertainable, commercial loans are of higher risk and typically are made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business. As a result, the availability of funds for the repayment of commercial loans may depend substantially on the success of the business itself. Further, any collateral securing such loans may depreciate over time, may be difficult to appraise and may fluctuate in value. Although commercial business loans generally are considered to involve greater credit risk than other certain types of loans, management intends to continue to emphasize the origination of commercial business loans to small and medium-sized businesses located in MBL Bank’s primary market area. At December 31, 2013, we had one non-performing commercial business loan with an aggregate balance of $12,000 at such date.

Land Loans. We also originate land loans which are secured primarily by income producing properties, such as land utilized for growing timber or agricultural properties. Such loans are often used to finance the day-to-day operations of agricultural production or timber operations and substantially lower risks are involved in these loans than the typical land loan which often consists of a loan to acquire land for development. Only a small percentage of the land loans are for acquisition of residential property and none for commercial properties. Our land loans typically are three-to-five year balloon loans with 10 year amortization schedules. At December 31, 2013, we had $20.8 million or 13.0% of the total loan portfolio invested in land loans with the average balance of individual land loans amounting to approximately $105,000 at such date.

Consumer Loans. We offer consumer loans, consisting primarily of loans secured by automobile loans, boat loans, recreation vehicle loans and equipment loans, in order to provide a full range of financial services to our customers and because such loans generally have shorter terms and higher interest rates than mortgage loans. In addition, a substantial portion of our consumer loans consist of loans secured by deposits. Consumer loans, excluding loans secured by deposits, amounted to $7.6 million or 4.8% of the total loan portfolio at December 31, 2013. Loans secured by deposit accounts amounted to $7.5 million or 4.7% of the total loan portfolio at December 31, 2013.

We also offer loans for automobiles, primarily used, boats and recreational vehicles, unsecured and other. Such loans typically have terms of no more than 60 months, bear fixed rates and a maximum loan-to-value ratio of 80%. At December 31, 2013, automobile, boat and recreational vehicle loans amounted to $6.2 million, or 3.9% of our total loan portfolio.

8

Consumer loans generally have shorter terms and higher interest rates than mortgage loans but generally involve more credit risk than mortgage loans because of the type and nature of the collateral and, in certain cases, the absence of collateral. In addition, consumer lending collections are dependent on the borrower’s continuing financial stability, and thus are more likely to be adversely effected by job loss, divorce, illness and personal bankruptcy. In most cases, any repossessed collateral for a defaulted consumer loan will not provide an adequate source of repayment of the outstanding loan balance because of improper repair and maintenance of the underlying collateral. The remaining deficiency often does not warrant further substantial collection efforts against the borrower. We believe that the generally higher yields earned on consumer loans compensate for the increased credit risk associated with such loans and that consumer loans are an important part of our effort to provide a full range of services to our customers. At December 31, 2013, there were fifteen non-performing consumer loans totaling $116,000.

Construction Loans. We also originate residential construction loans, and to a limited degree, commercial construction as well as land acquisition and development loans. Our construction lending activities generally are limited to our primary market area. At December 31, 2013, construction loans amounted to $4.9 million or 3.1% of the total loan portfolio. Of this amount, approximately $536,000 or 10.9% of the construction loans consisted of speculative construction loans.

Our residential construction loans are primarily made to individuals to finance the construction of residential dwellings or to local real estate builders and developers for the purpose of constructing pre-sold single-family homes. Upon successful application, credit review and analysis of personal and corporate financial statements, we will grant local builders loans allowing them to build generally one and occasionally two speculative homes or model homes. Generally, Minden Bancorp makes payments under the stage of completion method. Prior to making payment, Minden Bancorp inspects all construction sites and verifies that the work being submitted for payments has been performed.

Our construction loans generally have maturities of 6 to 12 months, with payments being made monthly on an interest-only basis. These interest payments are generally paid monthly out of an interest reserve, which is established in connection with the origination of the loan. Generally, such loans adjust monthly based on the Wall Street Journal or MBL Bank prime rate plus a margin. Residential real estate construction loans are generally made with maximum loan to value ratios of 80% on an as completed basis. Our largest construction loan is a $415,000 loan to construct an owner-occupied home . We have committed to extend the permanent financing upon completion of construction.At December 31, 2013, the average individual construction loan balance was approximately $140,000.

Construction lending is generally considered to involve a higher level of risk as compared to single-family residential lending, due to the concentration of principal in a limited number of loans and borrowers and the effects of general economic conditions on developers and builders. Moreover, a construction loan can involve additional risks because of the inherent difficulty in estimating both a property’s value at completion of the project and the estimated cost (including interest) of the project. The nature of these loans is such that they are generally more difficult to evaluate and monitor. In addition, speculative construction loans to a builder are not pre-sold and thus pose a greater potential risk to Minden Bancorp than construction loans to individuals on their personal residences.

We have attempted to minimize the foregoing risks by, among other things, limiting most of our construction loans to loans for pre-sold residences and adopting underwriting guidelines which impose stringent loan-to-value, debt service and other requirements for loans which are believed to involve higher elements of credit risk, by generally limiting the geographic area in which we will do business and by working with builders with which we have established relationships. At December 31, 2013, we had no non-performing construction loans.

Loan Fee Income. In addition to interest earned on loans, we receive income from fees in connection with loan originations, loan modifications, late payments, prepayments and for miscellaneous services related to our loans. Income from these activities varies from period to period with the volume and type of loans made and competitive conditions. Loan origination and commitment fees and all incremental direct loan origination costs are deferred and recognized over the contractual remaining lives of the related loans on a level yield basis. Discounts and premiums on loans purchased are amortized in the same manner.

9

Asset Quality

Loans are placed on non-accrual status when, in the judgment of management, the probability of collection of interest is deemed to be insufficient to warrant further accrual. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from interest income. We do not accrue interest on real estate loans past due 90 days or more unless, in the opinion of management, the value of the property securing the loan exceeds the outstanding balance of the loan (principal, interest and escrows) and collection is probable.

Real estate acquired by Minden Bancorp as a result of foreclosure or by deed-in-lieu of foreclosure is classified as real estate until sold and is initially recorded at the lower of cost to acquire or fair value at the date of acquisition. After the date of acquisition, all costs incurred in maintaining the property are expensed and costs incurred for the improvement or development of such property are capitalized up to the extent of their fair value.

Under accounting principles generally accepted in the United States of America, we are required to account for certain loan modifications or restructurings as “troubled debt restructurings.” In general, the modification or restructuring of a debt constitutes a troubled debt restructuring if we, for economic or legal reasons related to the borrower’s financial difficulties, grant a concession to the borrower that we would not otherwise consider. Debt restructurings or loan modifications for a borrower do not necessarily always constitute troubled debt restructurings, however, and troubled debt restructurings do not necessarily result in non-accrual loans. We had 25 loans classified as troubled debt restructurings which had an outstanding aggregate balance of approximately $357,000 at December 31, 2013. All such loans were on non-accrual status at such date. At December 31, 2012, we had 26 loans with an aggregate balance outstanding of $1.1 million classified as trouble debt restructurings. Management will continue to maintain the troubled debt restructurings that are on non-accrual in such status until the borrowers demonstrate the ability to pay in accordance with the restructured terms for a sufficient period of time, usually six months.

10

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

	December 31, 2013										December 31, 2012
	30-89 Days Overdue					90 or More Days Overdue					30-89 Days Overdue					90 or More Days Overdue
	Number of Loans		Principal Balance			Number of Loans		Principal Balance			Number of Loans		Principal Balance			Number of Loans		Principal Balance
	(Dollars in thousands)
One- to four-family residential		32	$	1,121			7	$	184			68	$	3,535			10	$	285
Commercial real estate and land		1		5			2		53			11		1,162			3		96
Construction		—		—			—		—			—		—			—		—
Consumer		20		107			10		90			36		232			14		130
Loans secured by deposits		2		65			—		—			5		187
Commercial business		5		165			—		—			4		1,188			2		39
Total delinquent loans		60	$	1,463			19	$	327			124	$	6,304			29	$	550
Delinquent loans to total net loans				.94	%				.21	%				4.30	%				.38	%
Delinquent loans to total loans				.91	%				.20	%				4.19	%				.37	%

11

Non-performing Assets. The following table shows the amounts of our non-performing assets, which include non-accruing loans, accruing loans delinquent 90 days or more as to principal or interest, real estate owned and troubled debt restructured at the dates indicated.

	December 31,
	2013			2012			2011			2010			2009
	(Dollars in thousands)
Non-accruing loans:
One- to four-family residential	$	192		$	237		$	227		$	363		$	581
Commercial real estate and land		45			74			4			4			—
Construction		—			—			—			—			—
Consumer		108			81			88			100			21
Commercial business loans		12			15			19			—			—
Total non-accruing loans		357			407			338			467			602
Accruing loans 90 days or more past due		116			311			88			37			222
Total non-performing loans (1)		473			718			426			504			824
Real estate/other assets owned		—			—			10			10			130
Total non-performing assets	$	473		$	718		$	436		$	514		$	954
Troubled debt restructured		—			706			703			22			67
Total non-performing assets and troubled debt restructured	$	473		$	1,424		$	1,139		$	536		$	1,021
Total non-performing loans as a percentage of loans, net		0.30	%		0.49	%		0.32	%		0.40	%		0.70	%
Total non-performing loans as a percentage of total assets		0.16	%		0.26	%		0.16	%		0.20	%		0.39	%
Total non-performing assets as a percentage of total assets		0.16	%		0.26	%		0.17	%		0.21	%		0.45	%
Total non-performing assets and troubled debt restructured as a percentage of total assets		0.16	%		0.52	%		0.43	%		0.22	%		0.48	%

(1) Includes at December 31, 2013 twenty-five troubled debt restructurings which were on non-accrual. Thirteen of the loans are consumer loans secured by automobiles, boats or equipment with an aggregate principal balance of approximately $108,000 at December 31, 2013. Eight loans were single-family residential mortgage loans with an aggregate principal balance of approximately $192,000 at December 31, 2013. There were three land loans with an aggregate balance of approximately $45,000 and one commercial business loan with an approximate balance of $12,000.

If the $357,000 of non-accruing loans at December 31, 2013 had been current in accordance with their terms during 2013, the gross income on such loans would have been approximately $34,000 for 2013.

Non-performing assets, which consist of non-accruing loans, accruing loans 90 days or more delinquent and other assets owned (which includes real estate acquired through, or in lieu of, foreclosure) decreased to $474,000 or 0.16% of total assets at December 31, 2013 from $718,000 or 0.26% of total assets at December 31, 2012. This decrease was due to a $50,000 decrease in non-accruing loans and a decrease of $194,000 in accruing loans 90 or more days past due.

At December 31, 2013, we had $357,000 of non-accruing loans consisting of eight single-family real estate loans aggregating $192,000, 13 consumer loans totaling $108,000, three land loans totaling $45,000 and one commercial business loan in the amount of $12,000. Management continues to aggressively pursue the collection and resolution of all delinquent loans. There was one performing commercial real estate property in the amount of $706,000 classified as troubled debt restructured as of December 31, 2012. Such loan was subsequently paid in full in January 2013 with no loss recognized.

12

Classified Assets. Federal regulations require that each insured commercial bank 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 regulatory 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 high 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 have a weakness but do not currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard, doubtful or loss.

At December 31, 2013 and 2012, we had $599,000 and $640,000, respectively, of assets classified as substandard and no assets classified as doubtful or loss. In addition, at December 31, 2013, we had $1.2 million of assets designated special mention, which consisted primarily of $540,000 of single-family real estate loans and $584,000 of commercial real estate loans. All substandard and special mention assets were loans that are secured by property located in our primary market area.

Allowance for Loan Losses. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Allowances are provided for specific loans when losses are probable and can be estimated. When this occurs, management considers the remaining principal balance, fair value and estimated net realizable value of the property collateralizing the loan. Current and future operating and/or sales conditions are also considered. These estimates are susceptible to changes that could result in material adjustments to results of operations. Recovery of the carrying value of such loans is dependent to a great extent on economic, operating and other conditions that may be beyond management’s control.

General loan loss valuations are established as an allowance for losses based on inherent probable risk of loss in the loan portfolio. In assessing risk, management considers historical experience, volume and composition of lending conducted, industry standards, status of nonperforming loans, delinquency levels, general economic conditions as they relate to the market area and other factors related to the collectibility of the loan portfolio.

Impaired loans are predominantly measured based on the fair value of the collateral. The provision for loan losses charged to expense is based upon past loan loss experience and an evaluation of probable losses and impairment existing in the current loan portfolio. A loan is considered to be impaired when, based upon current information and events, it is probable that we will be unable to collect all amounts due according to the original contractual terms of the loan. An insignificant delay or insignificant shortfall in amounts of payments does not necessarily result in the loan being identified as impaired. For this purpose, delays less than 90 days are considered to be insignificant. Large groups of smaller balance homogeneous loans, including residential real estate and consumer loans, are collectively evaluated for impairment, except for loans restructured under a troubled debt restructuring.

Although management uses the best information available to make determinations with respect to the provisions for loan losses, additional provisions for loan losses may be required to be established in the future should economic or other conditions change substantially. In addition, the Federal Deposit Insurance Corporation and the Louisiana Office of Financial Institutions, as an integral part of their examination process, periodically review MBL Bank’s allowance for loan losses. Such agencies may require MBL Bank to recognize additions to such allowance based on their judgments about information available to them at the time of their examination.

13

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

	At or for the Year Ended December 31,
	2013			2012			2011			2010			2009
	(Dollars in thousands)
Total loans outstanding at end of period	$	159,968		$	150,450		$	134,597		$	129,982		$	118,952
Average loans outstanding		153,805			139,157			129,235			123,993			116,691
Allowance for loan losses, beginning of period		1,605			1,625			1,286			1,001			1,000
Provision for loan losses		92			120			370			370			60
Charge-offs:
One- to four-family residential		—			142			2			54			—
Commercial real estate		—			—			—			—			—
Land		—			—			—			—			—
Construction		—			—			—			—			—
Consumer non-real estate		42			45			36			68			64
Commercial business		22			—			—			—			—
Total charge-offs		64			187			38			122			64
Recoveries on loans previously charged off		12			47			7			37			5
Allowance for loan losses, end of period	$	1,645		$	1,605		$	1,625		$	1,286		$	1,001
Allowance for loan losses as a percent of non-performing loans		347.05	%		223.54	%		381.46	%		255.16	%		121.48	%
Ratio of net charge-offs during the period to average loans outstanding during the period		0.03	%		0.10	%		0.02	%		0.07	%		0.05	%

14

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

	2013					2012					2011					2010					2009
	Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans			Amount of Allowance		Loan Category as a % of Total Loans
	(Dollars in thousands)
One-to four-family residential	$	640		35.74	%	$	638		36.84	%	$	322		40.81	%	$	188		43.30	%	$	246		45.70	%
Commercial real estate and land		694		41.01			620		37.61			692		35.60			506		29.70			271		24.28
Construction		—		3.07			—		6.01			—		3.05			—		3.43			—		3.47
Consumer-other		129		4.75			179		5.88			378		7.75			369		9.35			316		10.67
Consumer-deposit		2		4.67			—		3.05			—		3.09			—		4.85			—		7.32
Commercial business		180		10.76			168		10.61			233		9.70			223		9.37			168		8.56
Total	$	1,645		100.00	%	$	1,605		100.00	%	$	1,625		100.00	%	$	1,286		100.00	%	$	1,001		100.00	%

15

Investment Activities

We have authority to invest in various types of securities, including mortgage-backed securities, U.S. Treasury obligations, securities of various federal agencies and of state and municipal governments, certificates of deposit at federally insured banks and savings institutions, and certain mutual funds. Our investment strategy is established by the board of directors.

The following table sets forth certain information relating to our investment securities portfolio and our investment in FHLB stock and FNBB stock at the dates indicated.

	2013				2012				2011
	Amortized Cost		Market Value		Amortized Cost		Market Value		Amortized Cost		Market Value
	(In thousands)
Securities available-for-sale:
Mortgage-backed securities	$	69,849	$	69,489	$	62,249	$	63,255	$	46,603	$	46,930
U.S. Government and agency obligations		10,039		10,104		18,694		18,897		24,887		25,139
Municipal obligations		10,303		9,683		6,029		6,036		868		886
Equity securities		—		—		—		—		—		—
Mutual funds		—		—		—		—		—		—
Total securities available-for-sale		90,191		89,276		86,972		88,188		72,358		72,955
Securities held to maturity:
Mortgage-backed securities		—		—		—		—		—		—
Total securities held to maturity		—		—		—		—		—		—
FHLB stock		111		111		109		109		240		240
FNBB stock		210		210		210		210		210		210
Total investment securities, FHLB and FNBB stock	$	90,512	$	89,597	$	87,291	$	88,507	$	72,808	$	73,405

The following table sets forth the amount of investment securities (at amortized cost) which mature during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2013. The Bank did not have any securities held to maturity as of such date.

	Amounts at December 31, 2013, Which Mature In
	One Year or Less			After One to Five Years			After Five to 10 Years			Over 10 Years			Total
	(Dollars in thousands)
Available-for-sale:
Mortgage-backed securities	$	—		$	60,385		$	9,464		$	—		$	69,849
U.S. Government & agency obligations		8,039			2,000			—			—			10,039
Municipal obligations		—			301			2,793			7,209			10,303
Total	$	8,039		$	62,686		$	12,257		$	7,209		$	90,191
Weighted average yield		1.39	%		1.77	%		1.87	%		3.11	%		1.85	%

Mortgage-backed securities represent a participation interest in a pool of one- to four-family or multi-family mortgages. The mortgage originators use intermediaries (generally U.S. Government agencies and government-sponsored enterprises) to pool and repackage the participation interests in the form of securities, with investors receiving the principal and interest payments on the mortgages. Such U.S. Government agencies and government-sponsored enterprises guarantee the payment of principal and interest to investors.

16

Mortgage-backed securities are typically issued with stated principal amounts, and the securities are backed by pools of mortgages that have loans with interest rates that are within a range and have varying maturities. The underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the certificate holder. The life of a mortgage-backed pass-through security approximates the life of the underlying mortgages.

Our mortgage-backed securities consist of Ginnie Mae securities, Freddie Mac securities and Fannie Mae securities. 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. 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.

Mortgage-backed securities generally yield less than the loans which underlie such securities because of their payment guarantees or credit enhancements which offer nominal credit risk. In addition, mortgage-backed securities are more liquid than individual mortgage loans and may be used to collateralize our borrowings or other obligations.

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

	December 31,
	2013		2012		2011
	(In thousands)
Fixed-rate:
Available-for-sale	$	69,849	$	62,249	$	46,603
Held to maturity		—		—		—
Total fixed-rate		69,849		62,249		46,603
Adjustable-rate:
Available-for-sale		—		—		—
Held to maturity		—		—		—
Total adjustable-rate		—		—		—
Total mortgage-backed securities	$	69,849	$	62,249	$	46,603

Mortgage-backed securities generally increase the quality of Minden Bancorp’s assets by virtue of the insurance or guarantees that back them, are more liquid than individual mortgage loans and may be used to collateralize borrowings or other obligations of Minden Bancorp. At December 31, 2013, approximately $76.5 million of our mortgage-backed and investment securities were pledged to secure various obligations of Minden Bancorp. See Note 2 to the consolidated financial statements contained in Exhibit 8 to this Annual Report on Form 10-K.

The actual maturity of a mortgage-backed security is typically less than its stated maturity due to prepayments of the underlying mortgages. Prepayments that are faster than anticipated may shorten the life of the security and increase or decrease its yield to maturity if the security was purchased at a discount or premium, respectively. The yield is based upon the interest income and the amortization of any premium or discount related to the mortgage-backed security. In accordance with accounting principles generally accepted in the United States of America, premiums and discounts are amortized over the estimated lives of the loans, which decrease and increase interest income, respectively. The prepayment assumptions used to determine the amortization period for premiums and discounts can significantly affect the yield of the mortgage-backed security, when premiums or discounts are involved, and these assumptions are reviewed periodically to reflect actual prepayments. Although prepayments of underlying mortgages depend on many factors, including the type of mortgages, the coupon rate, the age of mortgages, the geographical location of the underlying real estate collateralizing the mortgages and general levels of market interest rates, the difference between the interest rates on the underlying mortgages and the prevailing mortgage interest rates generally is the most significant determinant of the rate of prepayments. During periods of falling mortgage interest rates, if the coupon rate of the underlying mortgages exceeds the prevailing market interest rates offered for mortgage loans, refinancing generally increases and accelerates the prepayment of the underlying mortgages and the related security. Under such circumstances, Minden Bancorp may be subject to reinvestment risk because to the extent that the mortgage-backed securities amortize or prepay faster than anticipated, Minden Bancorp may not be able to reinvest the proceeds of such repayments and prepayments at a comparable rate. During periods of rising interest rates, prepayment of the underlying mortgages generally slow down when the coupon rate of such mortgages is less than the prevailing market rate. We may be subject to extension risk when this occurs.

17

Sources of Funds

General. Deposits are the primary source of Minden Bancorp’s funds for lending and other investment purposes. In addition to deposits, Minden Bancorp derives funds from loan principal repayments and prepayments and proceeds from sales of investment securities. Loan repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by general interest rates and money market conditions. Borrowings may be used on a short-term basis to compensate for reductions in the availability of funds from other sources. They may also be used on a longer term basis for general business purposes.

Deposits. Our deposit products include a broad selection of deposit instruments, including NOW accounts, money market accounts, regular savings accounts and term certificate accounts. Deposit account terms vary, with the principal difference being the minimum balance required, the time periods the funds must remain on deposit and the interest rate.

We consider our primary market area to be Webster Parish, Louisiana. We attract deposit accounts by offering a wide variety of accounts, competitive interest rates, and convenient office locations and service hours. We utilize traditional marketing methods to attract new customers and savings deposits, including print media advertising and direct mailings. We do not advertise for deposits outside of our primary market area or utilize the services of deposit brokers, and management believes that an insignificant number of deposit accounts were held by non-residents of Louisiana at December 31, 2013.

We have been competitive in the types of accounts and in interest rates we have offered on our deposit products but do not necessarily seek to match the highest rates paid by competing institutions. Although market demand generally dictates which deposit maturities and rates will be accepted by the public, we intend to continue to promote longer term deposits to the extent possible and consistent with our asset and liability management goals. We have also emphasized the development of non-interest bearing accounts in connection with the expansion of our commercial banking relationships.

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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,
	2013					2012					2011
	Amount		% of Deposits			Amount		% of Deposits			Amount		% of Deposits
	(Dollars in thousands)
Certificate accounts:
0.01% - 0.99%	$	55,763		22.72	%	$	38,266		16.36	%	$	13,089		5.85	%
1.00% - 1.99%		37,097		15.11			51,015		21.80			70,712		31.61
2.00% - 2.99%		—		—			906		0.39			1,060		0.47
3.00% - 3.99%		—		—			—		—			—		—
4.00% - 4.99%		—		—			—		—			—		—
Total certificate accounts	$	92,860		37.83	%	$	90,187		38.55	%	$	84,861		37.93	%
Transaction accounts:
Savings		15,789		6.43			15,446		6.60			14,415		6.45
Checking:
Interest-bearing		33,753		13.75			31,899		13.63			30,293		13.54
Non-interest-bearing		38,437		15.66			41,461		17.72			37,850		16.92
Money market		64,635		26.33			54,970		23.50			56,294		25.16
Total transaction accounts		152,614		62.17			143,776		61.45			138,852		62.07
Total deposits	$	245,474		100.00	%	$	233,963		100.00	%	$	223,713		100.00	%

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

	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Total deposits	$	1,222,419	$	1,195,371	$	1,083,313
Total withdrawals		1,212,194		1,186,414		1,073,256
Interest credited		1,286		1,293		1,571
Total increase in deposits	$	11,511	$	10,250	$	11,628

The following table shows the maturities of our certificates of deposit of $100,000 or more at December 31, 2013 by time remaining to maturity.

	At December 31, 2013
Quarter Ending:	Amount		Weighted Average Rate
	(Dollars in thousands)
March 31, 2014	$	7,249		.83	%
June 30, 2014		10,905		.90
September 30, 2014		10,528		1.24
December 31, 2014		9,715		.96
After December 31, 2014		13,197		1.43
Total certificates of deposit with balances of $100,000 or more	$	51,594		1.11	%

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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.

	2013							2012							2011
	Average Balance		Interest Expense		Average Rate Paid			Average Balance		Interest Expense		Average Rate Paid			Average Balance		Interest Expense		Average Rate Paid
	(Dollars in thousands)
Savings accounts	$	15,808	$	32		0.20	%	$	15,262	$	31		0.20	%	$	13,613	$	27		0.20	%
Checking – interest bearing		33,594		54		0.16			31,864		50		0.16			24,456		43		0.18
Money market		59,228		218		0.37			55,243		172		0.31			55,606		217		0.40
Certificates of deposit		93,714		977		1.04			88,458		1,029		1.16			82,740		1,222		1.48
Total interest-bearing deposits		202,344		1,281		0.63			190,827		1,282		0.67			176,415		1,509		0.86
Non-interest-bearing deposits		31,628		—		—			32,277		—		—			24,809		—		—
Total deposits	$	233,972	$	1,281		0.55	%	$	223,104	$	1,282		0.58	%	$	201,224	$	1,509		0.75	%

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The following table presents, by various interest rate categories and maturities, the amount of certificates of deposit, excluding time deposits in individual retirement accounts, at December 31, 2013.

	Balance at December 31, 2013 Maturing in the 12 Months Ending December 31,
Certificates of Deposit	2014		2015		2016		Thereafter		Total
	(In thousands)
0.01% -0.99%	$	51,240	$	306	$	—	$	—	$	51,546
1.00% - 1.99%		15,129		10,496		8,309		—		33,934
Total certificate accounts	$	66,369	$	10,802	$	8,309	$	—	$	85,480

Borrowings. We may obtain advances from the Federal Home Loan Bank of Dallas upon the security of the common stock we own in that bank and certain of our loans, provided certain standards related to creditworthiness have been met. Such advances are made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Such advances are generally available to meet seasonal and other withdrawals of deposit accounts and to permit increased lending. We have used advances only to a limited extent in recent periods and at December 31, 2013 and 2012, we did not have any advances outstanding from the Federal Home Loan Bank of Dallas. While we will consider using advances, it is our intent generally to fund our operations with deposits. At December 31, 2013, we had $111,000 of Federal Home Loan Bank of Dallas stock. At such date, we were permitted to borrow up to an aggregate total of $68.6 million.

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

	At or For the Year Ended December 31,
	2013			2012			2011
	(in thousands)
FHLB advances and other borrowings:
Average balance outstanding	$	—		$	—		$	—
Maximum amount outstanding at any month-end during the period		—			—			10
Balance outstanding at end of period		—			—			—
Average interest rate during the period		—	%		—	%		0.7	%
Weighted average interest rate at end of period		—	%		—	%		—	%

Employees

We had 30 full-time employees at December 31, 2013. None of these employees are represented by a collective bargaining agent, and we believe that we enjoy good relations with our personnel.

Subsidiaries

Minden Bancorp has no indirect subsidiaries and only one direct subsidiary, MBL Bank.

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Regulation

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

General. Effective February 5, 2014, MBL Bank, as a Louisiana-chartered commercial bank, is subject to regulation and oversight by both the Louisiana Office of Financial Institutions and the Federal Deposit Insurance Corporation extending to all aspects of its operations. MBL Bank also is subject to certain requirements established by the Federal Reserve Board. Louisiana-chartered financial institutions are required to file periodic reports with the Louisiana Office of Financial Institutions and the Federal Deposit Insurance Corporation and are subject to periodic examinations by the Louisiana Office of Financial Institutions and the Federal Deposit Insurance Corporation. The investment and lending authority of commercial banks are prescribed by state and federal laws and regulations, and such banks are prohibited from engaging in any activities not permitted by such laws and regulations. Such regulation and supervision primarily is intended for the protection of depositors and not for the purpose of protecting shareholders.

Federal law provides the federal banking regulators, including the Federal Deposit Insurance Corporation, with substantial enforcement powers. The Federal Deposit Insurance Corporation’s 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. 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. Any change in such regulations, whether by the Federal Deposit Insurance Corporation, the Louisiana Office of Financial Institutions, the Federal Reserve Board or Congress, could have a material adverse impact on Minden Bancorp and MBL Bank and our operations.

Regulation of Minden Bancorp

General. Prior to February 5, 2014, Minden Bancorp was a registered savings and loan holding company within the meaning of Section 10 of the Home Owners’ Loan Act and was subject to examination and supervision by the Federal Reserve Board as well as certain reporting requirements. The rules and regulations that it is subject to effective February 5, 2014 following its becoming a bank holding company are substantially similar and are also under the jurisdiction of the Federal Reserve Board.

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

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

Federal Securities Laws. Minden Bancorp’s common stock is registered with the Securities and Exchange Commission under Section 12(g) of the Securities Exchange Act of 1934. We are subject to the proxy and tender offer rules, insider trading reporting requirements and restrictions, and certain other requirements under the Securities Exchange Act of 1934. Pursuant to regulations governing mutual holding company conversions and our plan of conversion and reorganization, we agreed to register new Minden Bancorp common stock for a minimum of three years following the conversion and offering. Effective, February 7, 2014, Minden Bancorp filed to de-register as a reporting company under the Securities Exchange Act of 1924. As a result, upon the expiration of 90 days thereafter, Minden Bancorp will no longer be subject to reporting requirement under federal securities laws.

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

Regulation of MBL Bank

General. As the primary federal regulator of MBL Bank, before and after its conversion to a commercial bank, the Federal Deposit Insurance Corporation has extensive authority over its operations. As part of this authority, MBL Bank is required to file periodic reports with the Federal Deposit Insurance Corporation and is subject to periodic examinations by the Federal Deposit Insurance Corporation. The investment and lending authority of savings institutions and commercial banks is prescribed by state and federal laws and regulations, and such institutions are prohibited from engaging in any activities not permitted by such laws and regulations. MBL Bank, when it was a Louisiana-chartered savings institution and now as a Louisiana-chartered commercial bank, is also subject to regulation by the Louisiana Office of Financial Institutions, including the requirement to file periodic reports therewith and being subject to examination thereby.

Insurance of Accounts. The deposits of MBL Bank are insured to the maximum extent permitted by the Deposit Insurance Fund and are backed by the full faith and credit of the U.S. Government. Financial institution reform legislation signed into law in 2010 permanently increased deposit insurance on most accounts to $250,000. As insurer, the Federal Deposit Insurance Corporation is authorized to conduct examinations of, and to require reporting by, insured institutions. It also may prohibit any insured institution from engaging in any activity determined by regulation or order to pose a serious threat to the Federal Deposit Insurance Corporation. The Federal Deposit Insurance Corporation also has the authority to initiate enforcement actions against depository institutions.

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

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

The Federal Deposit Insurance Corporation may terminate the deposit insurance of any insured depository bank, including MBL Bank, if it determines after a hearing that the bank has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, order or any condition imposed by an agreement with the Federal Deposit Insurance Corporation. It also may suspend deposit insurance temporarily during the hearing process for the permanent termination of insurance, if the bank has no tangible capital. If insurance of accounts is terminated, the accounts at the institution at the time of the termination, less subsequent withdrawals, shall continue to be insured for a period of six months to two years, as determined by the Federal Deposit Insurance Corporation. Management is not aware of any existing circumstances which would result in termination of MBL Bank’s deposit insurance.

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Regulatory Capital Requirements. As of December 31, 2013, federally insured depository institutions are required to maintain minimum levels of regulatory capital. Current Federal Deposit Insurance Corporation capital standards applicable to state-chartered depository institutions require such institutions to satisfy a tangible capital requirement, a leverage capital requirement and a risk-based capital requirement. The tangible capital must equal at least 1.5% of adjusted total assets. Leverage capital, also known as “core” capital, must equal at least 3.0% of adjusted total assets for the most highly rated depository institutions. An additional cushion of at least 100 basis points is required for all other depository institutions, which effectively increases their minimum Tier 1 leverage ratio to 4.0% or more. Under the Federal Deposit Insurance Corporation’s regulation, the most highly-rated banks are those that the Federal Deposit Insurance Corporation determines are strong institutions that are not anticipating or experiencing significant growth and have well-diversified risk, including no undue interest rate risk exposure, excellent asset quality, high liquidity and good earnings. Under the risk-based capital requirement, “total” capital (a combination of core and “supplementary” capital) must equal at least 8.0% of “risk-weighted” assets. The Federal Deposit Insurance Corporation also is authorized to impose capital requirements in excess of these standards on individual institutions on a case-by-case basis.

Core capital generally consists of common stockholders’ equity (including retained earnings). Tangible capital generally equals core capital minus intangible assets, with only a limited exception for purchased mortgage servicing rights. MBL Bank had no intangible assets at December 31, 2013. Both core and tangible capital are further reduced by an amount equal to a depository institution’s debt and equity investments in subsidiaries engaged in activities not permissible to national banks (other than subsidiaries engaged in activities undertaken as agent for customers or in mortgage-banking activities and subsidiary depository institutions or their holding companies). MBL Bank had no subsidiaries as of December 31, 2013.

In determining compliance with the risk-based capital requirement, a depository institution is allowed to include both core capital and supplementary capital in its total capital, provided that the amount of supplementary capital included does not exceed the depository institution’s core capital. Supplementary capital generally consists of general allowances for loan losses up to a maximum of 1.25% of risk-weighted assets, together with certain other items. In determining the required amount of risk-based capital, total assets, including certain off-balance sheet items, are multiplied by a risk weight based on the risks inherent in the type of assets. The risk weights range from 0% for cash and securities issued by the U.S. Government or unconditionally backed by the full faith and credit of the U.S. Government to 100% for loans (other than qualifying residential loans weighted at 50%) and repossessed assets.

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

At December 31, 2013, MBL Bank exceeded all of its regulatory capital requirements, with tangible, core and risk-based capital ratios of 13.6%, 13.6% and 27.8%, respectively.

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

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

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

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

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

At December 31, 2013, MBL Bank was deemed a well capitalized institution for purposes of the above regulations and as such is not subject to the above mentioned restrictions.

The table below sets forth MBL Bank’s capital position relative to its regulatory capital requirements at December 31, 2013 (dollars in thousands).

	Actual					Required for Capital Adequacy Purpose					To Be Well Capitalized Under Prompt Corrective Action Provision					Excess Over Well-Capitalized Provision
	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 risk-based capital	$	39,407		26.65	%		N/A		N/A	%	$	8,874		6.0	%	$	30,533		20.65	%
Total risk-based capital		41,052		27.76			11,832		8.0			14,790		10.0			26,262		17.76
Tier 1 leverage capital		39,407		13.64			11,555		4.0			14,444		5.0			24,963		8.64
Tangible capital		39,407		13.64			4,333		1.5			N/A		N/A			N/A		N/A

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

Capital Distributions. Until MBL Bank’s conversion, it was subject to Federal Deposit Insurance Corporation regulations which govern capital distributions by state-chartered savings institutions, which include cash dividends, stock repurchases and other transactions charged to the capital account of a savings institution to make capital distributions. A savings institution must file an application for Federal Deposit Insurance Corporation approval of the capital distribution if either (1) the total capital distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus the institution’s retained net income for the preceding two years, (2) the institution would not be at least adequately capitalized following the distribution, (3) the distribution would violate any applicable statute, regulation, agreement or Federal Deposit Insurance Corporation-imposed condition, or (4) the institution is not eligible for expedited treatment of its filings. If an application is not required to be filed, a savings institution which is a subsidiary of a savings and loan holding company (as well as certain other institutions) must still file a notice with the Federal Deposit Insurance Corporation at least 30 days before the board of directors declares a dividend or approves a capital distribution.

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An institution that either before or after a proposed capital distribution fails to meet its then applicable minimum capital requirement or is subject to restrictions on capital distributions imposed thereon may not make any capital distributions without the prior written approval of the Federal Deposit Insurance Corporation. In addition, the Federal Deposit Insurance Corporation may prohibit a proposed capital distribution, which would otherwise be permitted by Federal Deposit Insurance Corporation regulations, if the Federal Deposit Insurance Corporation determines that such distribution would constitute an unsafe or unsound practice.

Qualified Thrift Lender Test. All savings institutions, but not commercial banks, are required to meet a qualified thrift lender, or QTL, test to avoid certain restrictions on their operations. A savings institution can comply with the QTL test by either qualifying as a domestic building and loan association as defined in the Internal Revenue Code or meeting the Federal Deposit Insurance Corporation QTL test. MBL Bank, as a result of its conversion to a commercial bank, is no longer subject to compliance with the QTL test.

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

Limitations on Transactions with Affiliates. Transactions between an insured depository institution and any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate of an insured depository institution is any company or entity which controls, is controlled by or is under common control with the insured depository institution. In a holding company context, the holding company of an insured depository institution (such as Minden Bancorp) and any companies which are controlled by such holding company are affiliates of the insured depository institution. Generally, Section 23A limits the extent to which the depository institution or its subsidiaries may engage in “covered transactions” with any one affiliate to an amount equal to 10% of such association’s capital stock and surplus, and contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital stock and surplus. Section 23B applies to “covered transactions” as well as certain other transactions and requires that all transactions be on terms substantially the same, or at least as favorable, to the depository institution 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 depository institution to an affiliate. In addition to the restrictions imposed by Sections 23A and 23B, a depository institution is prohibited from (i) making a loan or other extension of credit to an affiliate, except for any affiliate which engages only in certain activities which are permissible for bank holding companies, or (ii) purchasing or investing in any stocks, bonds, debentures, notes or similar obligations of any affiliate, except for affiliates which are subsidiaries of the depository institution.

In addition, Sections 22(g) and (h) of the Federal Reserve Act place restrictions on loans to executive officers, directors and principal shareholders of the depository institution and its affiliates. Under Section 22(h), loans to a director, an executive officer and to a greater than 10% shareholder of a depository institution, and certain affiliated interests of either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the depository institution’s loans to one borrower limit (generally equal to 15% of the institution’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 institution 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 depository institution. Section 22(h) also requires prior board approval for certain loans. In addition, the aggregate amount of extensions of credit by a depository institution to all insiders cannot exceed the institution’s unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers. MBL Bank currently is subject to Section 22(g) and (h) of the Federal Reserve Act and at December 31, 2013, was in compliance with the above restrictions.

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

Federal Home Loan Bank System. MBL Bank is a member of the Federal Home Loan Bank of Dallas, which is one of 12 regional Federal Home Loan Banks that administers the home financing credit function primarily for its members. Each Federal Home Loan Bank serves as a reserve or central bank for its members within its assigned region. The Federal Home Loan Bank of Dallas is funded primarily from proceeds derived from the sale of consolidated obligations of the Federal Home Loan Bank System. It makes loans to members (i.e., advances) in accordance with policies and procedures established by the board of directors of the Federal Home Loan Bank. At December 31, 2013, MBL Bank did not have any Federal Home Loan Bank advances and had $68.6 million available on its credit line with the Federal Home Loan Bank.

As a member, MBL Bank is required to purchase and maintain stock in the Federal Home Loan Bank of Dallas in an amount in accordance with the Federal Home Loan Bank’s capital plan and sufficient to ensure that the Federal Home Loan Bank remains in compliance with its minimum capital requirements. At December 31, 2013, MBL Bank had $111,000 in Federal Home Loan Bank stock, which was in compliance with this requirement.

Federal Reserve System. The Federal Reserve Board requires all depository institutions to maintain reserves against their transaction accounts (primarily NOW and Super NOW checking accounts) and non-personal time deposits. Because required reserves must be maintained in the form of vault cash or a noninterest-bearing account at a Federal Reserve Bank, the effect of this reserve requirement is to reduce an institution’s earning assets. At December 31, 2013, MBL Bank had met its reserve requirement.

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

Louisiana Regulation. MBL Bank also is subject to regulation and supervision by the Louisiana Office of Financial Institutions. MBL Bank is required to file periodic reports with and is subject to periodic examinations at least once every four years by the Louisiana Office of Financial Institutions. In addition, MBL Bank is required by Louisiana law and regulations to comply with certain reserve and capital requirements. At December 31, 2013, MBL Bank was in compliance with all applicable reserve and capital requirements.

Since MBL was a savings association throughout 2013, it was subject to Louisiana law and regulations which restrict the lending and investment authority of Louisiana-chartered savings institutions. Such laws and regulations restrict the amount a Louisiana-chartered building and loan association can lend to any one borrower to an amount which, in the aggregate, does not exceed the lesser of (i) 10% of the association’s savings deposits or (ii) the sum of the association’s paid-in capital, surplus, allowance for losses, and undivided profits. Federal regulations, however, impose more restrictive limitations on loans to one borrower. See “Business – Lending Activities.” Notwithstanding the foregoing, Louisiana and federal law permits any such association to lend to any one borrower an aggregate amount of at least $500,000.

In addition, Louisiana law restricts the ability of Louisiana-chartered building and loan associations to invest in, among other things, (i) commercial real estate loans (including commercial construction real estate loans) up to 40% of total assets; (ii) real estate investments for other than the association’s offices up to 10% of total assets; (iii) consumer loans, commercial paper and corporate debt securities up to 30% of total assets; (iv) commercial, corporate, business or agricultural loans up to 10% of total assets; (v) tangible movable property, or leases thereon, up to 10% of total assets; and (v) capital stock, obligations and other securities of service organizations up to 10% of total assets. Louisiana law also sets forth maximum loan-to-value ratios with respect to various types of loans. Applicable federal regulations impose more restrictive limitations in certain instances. See “Business - Lending Activities.”

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The investment authority of Louisiana-chartered building and loan associations is broader in many respects than that of federally chartered savings associations. However, state-chartered savings associations are generally prohibited from acquiring or retaining any equity investment, other than certain investments in service corporations, of a type or in an amount that is not permitted for a federally chartered savings association. This prohibition applies to equity investments in real estate (except those held through a service corporation or subsidiary of the association), investments in equity securities and any other investment or transaction that is in substance an equity investment, even if the transaction is nominally a loan or other permissible transaction. At December 31, 2013, MBL Bank was in compliance with such provisions.

Furthermore, state-chartered insured depository institutions may not engage as principal in any activity not permitted for a comparable chartered institution unless the Federal Deposit Insurance Corporation has determined that such activity would pose no significant risk to the affected deposit insurance fund and the institution is in compliance with the fully phased-in capital standards prescribed under federal regulations. When certain activities are permissible for a federal institution, the state-chartered depository institution may engage in the activity in a higher amount if the Federal Deposit Insurance Corporation has not determined that such activity would pose a significant risk of loss to the affected deposit insurance fund and the institution meets the fully phased-in capital requirements. This increased investment authority does not apply to investments in nonresidential real estate loans. At December 31, 2013, MBL Bank had no investments which were affected by the foregoing limitations.

Under Louisiana law, a Louisiana-chartered depository institution may establish or maintain a branch office anywhere in Louisiana with prior regulatory approval. In addition, an out-of-state depository institution or holding company may acquire a Louisiana-chartered depository institution or holding company if the Louisiana Office of Financial Institutions determines that the laws of such other state permit a Louisiana-chartered depository institution or holding company to acquire a depository institution or holding company in such other state. Any such acquisition would require the out-of-state entity to apply to the Louisiana Office of Financial Institutions.

Taxation

Federal Taxation

General. Minden Bancorp and MBL Bank are subject to federal income taxation in the same general manner as other corporations with some exceptions listed below. The following discussion of federal, state and local income taxation is only intended to summarize certain pertinent income tax matters and is not a comprehensive description of the applicable tax rules. Minden Bancorp’s tax returns have not been audited during the past five years.

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

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

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

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At December 31, 2013, the total federal pre-1988 reserve was approximately $1.5 million. The reserve reflects the cumulative effects of federal tax deductions by MBL Bank for which no federal income tax provisions have been made.

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

Net Operating Loss Carryovers. Net operating losses incurred in taxable years beginning before August 6, 1997 may be carried back to the three preceding taxable years and forward to the succeeding 15 taxable years. For net operating losses in years beginning after August 5, 1997, other than 2001 and 2002, such net operating losses can be carried back to the two preceding taxable years and forward to the succeeding 20 taxable years. Net operating losses arising in 2001 or 2002 may be carried back five years and may be carried forward 20 years. Special rules enacted in 2009 permit certain electing small business taxpayers to carryback a 2008 net operating loss for a period of three, four or five years to offset taxable income in those preceding taxable years. At December 31, 2013, Minden Bancorp had no net operating loss carryforwards respectively, for federal income tax purposes.

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

State and Local Taxation

Minden Bancorp is subject to the Louisiana Corporation Income Tax based on our Louisiana taxable income. The Corporation Income Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all Louisiana taxable income in excess of $200,000. For these purposes, “Louisiana taxable income” means net income which is earned by us within or derived from sources within the State of Louisiana, after adjustments permitted under Louisiana law, including a federal income tax deduction. It also excludes dividends received from MBL Bank. In addition, MBL Bank is subject to the Louisiana Shares Tax which is imposed on the assessed value of a company’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 company’s capitalized earnings.

Item 1A. Risk Factors.

Not applicable.

Item 1B. Unresolved Staff Comments.

Not applicable.

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Item 2. Properties

We currently conduct business from our main office and one branch office. The following table sets forth the net book value of the land and buildings and certain other information with respect to our offices at December 31, 2013.

Description/Address	Leased/Owned		Net Book Value of Property		Amount of Deposits
Main Office:			(In thousands)
100 MBL Bank Drive Minden, Louisiana 71055		Owned	$	2,951	$	244,010
Branch Office:
415 Main Street Minden, Louisiana 71055		Owned		1,522		1,464
Total			$	4,473	$	245,474

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 us.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

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

(a) Minden Bancorp’s common stock is quoted on the OTC Bulletin Board under the symbol “MDNB.”

The following table sets forth the high and low closing stock prices for Minden Bancorp common stock and cash dividends per share declared for the periods indicated.

	Stock Price Per Share				Cash Dividends
Quarter ended:	High		Low		Per Share
December 31, 2013	$	19.25	$	16.50	$	0.085
September 30, 2013		17.50		16.75		0.085
June 30, 2013		17.25		15.00		0.085
March 31, 2013		16.15		14.91		—
December 31, 2012		16.75		13.90		0.160
September 30, 2012		15.00		14.50		0.075
June 30, 2012		14.50		13.50		0.075
March 31, 2012		14.50		14.00		0.075

At December 31, 2013, Minden Bancorp had approximately 465 shareholders of record, not including those who hold shares in “street” name.

(b)          Not applicable.

(c)           Minden Bancorp’s repurchases of its common stock made during the quarter ended December 31, 2013 are set forth in the table below:

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							Maximum
					Total Number of		Number of Shares
			Average		Shares Purchased		That May Yet Be
	Total Number		Price		as Part of Publicity		Purchased Under
	of Shares		Paid per		Announced Plans		the Plans or
Period	Purchased		Share		or Programs		Programs (a)
Oct. 1, 2013 – Oct. 31, 2013		—		—		—		150,000
Nov. 1, 2013 – Nov. 30, 2013		22,500	$	17.30		22,500		127,500
Dec. 1, 2013 – Dec. 31, 2013		3,000		16.55		3,000		124,500
Total		25,500	$	17.21		25,500

____________________________
Notes to this table:

(a) On May 16, 2012, October 10, 2012 and February 12, 2013 the Board of Directors approved stock repurchase plans which provided for the repurchase of 70,000, 50,000 and 120,000 shares, respectively, of the Company’s issued and outstanding shares of common stock. A total of 93,812 shares had been purchased as of September 30, 2013. The Company terminated all earlier programs as of September 30, 2013 and approved a new stock repurchase plan which provides for the repurchase of up to 150,000 shares. Upon completion of the new repurchase program, the Company will have repurchased approximately 10% of its issued and outstanding shares of common stock.

Item 6. Selected Financial Data.

Set forth below is selected consolidated financial and other data of Minden Bancorp. The information at December 31, 2013 and 2012 and for the years ended December 31, 2013 and 2012 is derived in part from the audited financial statements that appear in this Annual Report on Form 10-K. The information at or for the year ended December 31, 2011 is derived from audited financial statements that do not appear in this Annual Report on Form 10-K.

	At December 31,
	2013		2012		2011
	(In thousands)
Selected Financial Data:
Total assets	$	288,880	$	276,491	$	264,598
Cash and cash equivalents		36,505		34,290		52,407
Investment securities:
Held to maturity		—		—		—
Available for sale		89,276		88,188		72,955
FHLB stock		111		109		240
FNBB stock		210		210		210
Loans receivable, net		156,204		146,481		131,454
Deposits		245,474		233,963		223,713
FHLB advances		—		—		—
Stockholders’ equity		41,646		40,325		39,030

	At or For the Year Ended December 31,
	2013			2012			2011
	(Dollars in thousands)
Selected Operating Data:
Total interest income	$	9,951		$	9,617		$	9,197
Total interest expense		1,281			1,282			1,509
Net interest income		8,670			8,335			7,688
Provision for loan losses		92			120			370
Net interest income after provision for loan losses		8,578			8,215			7,318
Total non-interest income		858			719			1,180
Total non-interest expense		4,402			4,381			4,529
Income before income taxes		5,034			4,553			3,969
Income taxes		1,620			1,518			1,350
Net income	$	3,414		$	3,035		$	2,619
Selected Operating Ratios (1)
Average yield on interest-earning assets		3.77	%		3.86	%		4.00	%
Average rate on interest-bearing liabilities		.63			.67			.86
Average interest rate spread(2)		3.14			3.19			3.14
Net interest margin(2)		3.29			3.35			3.34
Average interest-earning assets to average interest-bearing liabilities		130.31			130.51			130.26
Net interest income after provision for loan losses to non-interest expense		194.87			187.16			161.58
Total non-interest expense to average assets		1.61			1.68			1.88
Efficiency ratio(3)		46.20			48.39			51.07
Return on average assets		1.25			1.17			1.09
Return on average equity		8.39			7.71			7.38
Average equity to average assets		14.88			15.12			14.71

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	At or For the Year Ended December 31,
	2013			2012			2011
Asset Quality Ratios:(4)
Non-performing loans as a percent of loans receivable, net(4)		0.30	%		0.49	%		0.32	%
Non-performing assets as a percent of total assets(4)		0.16			0.26			0.17
Non-performing assets and troubled debt restructurings as a percent of total assets(4)		0.16			0.52			0.43
Allowance for loan losses as a percent of non-performing loans		347.05	%		223.54			381.46
Net charge-offs to average loans receivable		.03			.10			0.02
Capital Ratios:(5)
Tier 1 capital ratio		13.64	%		12.94	%		12.31	%
Tier 1 risk-based capital ratio		26.65	%		25.14	%		26.01	%
Total risk-based capital ratio		27.76	%		26.27	%		27.26	%
Other Data:
Banking offices		2			2			2

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

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

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

(4) Non-performing loans consist of all nonaccrual loans as well as loans past due as to principal or interest more than 90 days delinquent but still accruing. Non-performing assets consist of non-performing loans and real estate owned. Real estate owned consists of real estate acquired through foreclosure or real estate acquired by acceptance of a deed-in-lieu of foreclosure.

(5) Capital ratios are end of period ratios.

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

Overview

Effective February 5, 2014, Minden Bancorp is a Louisiana-chartered holding company which owns 100% of the capital stock of MBL Bank, a community oriented commercial bank headquartered in Minden, Louisiana. Our primary business consists of attracting deposits from the general public and using those funds to originate loans to our customers and invest in securities such as United States (“U.S.”) Government and agency securities, mortgage-backed securities and municipal obligations. At December 31, 2013, Minden Bancorp had total assets of $288.9 million, total deposits of $245.5 million and stockholders’ equity of $41.6 million.

We are primarily engaged in attracting deposits from the general public through our two banking offices and using such deposits primarily to (i) originate loans secured by first liens on single-family (one-to four-units) residential and commercial real estate properties as well as to originate land and commercial business loans and (ii) invest in securities issued by the U.S. Government and agencies thereof, mortgage-backed securities and municipal securities. Minden Bancorp derives its income principally from interest earned on loans, mortgage-backed securities and investments and, to a lesser extent, from fees received in connection with the origination of loans and for other services. Minden Bancorp’s primary expenses are interest expense on deposits and general operating expenses. Funds for activities are provided primarily by deposits, repayments and prepayments of outstanding loans, investments and mortgage-backed securities and other sources.

MBL Bank is subject to regulation by the Louisiana Office of Financial Institutions, as its chartering authority, and by the Federal Deposit Insurance Corporation, which also insures MBL Bank’s deposits up to applicable legal limits.

Certain highlights of our operating strategy are:

· Emphasizing Commercial Real Estate, Commercial Business and Land Loans. At December 31, 2013, $62.0 million or 38.8% of our total loan portfolio consisted of commercial real estate and commercial business loans. In addition, at December 31, 2013 we had $20.8 million of land loans, most of which are secured by income producing properties such as timber or agricultural property. Commercial real estate and commercial business loans as well as land loans are attractive because they generally provide us with higher average yields than single-family residential mortgage loans and they typically have adjustable rates of interest and/or shorter terms to maturity than traditional single-family residential mortgage loans. We intend to continue to emphasizegrowth of our commercial real estate, commercial business and land lending in a manner consistent with our stringent loan underwriting policies and procedures. At December 31, 2013, we had four non-performing land loans, one commercial real estate loan and one non-performing commercial business loan with principal balances at such date of $54,000, $33,000 and $12,000, respectively.

· Increasing Core Deposits. We will continue our efforts to increase our core deposits in order to help reduce and control our cost of funds. As part of our emphasis on developing commercial banking relationships, we have emphasized the expansion of non-interest checking accounts which comprised $38.4 million or 15.7% of our total deposit portfolio at December 31, 2013. We offer a wide variety of deposits to our customers at competitive rates. We do not necessarily seek to match the highest rates paid by competitors.

· Expanding our Market Presence. We are taking steps to increase our market penetration in our existing market area by expanding the products and services we offer while continuing to emphasize customer service in an effort to capture more of each customer’s banking relationships. In addition to organic growth, we continue to evaluate market expansion opportunities. We have the ability to consider additional new offices, either on a de novo basis or through acquisitions, although we currently have no plans, agreements or understandings with respect to any acquisitions.

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· Emphasizing Business Banking Operations. We have increased our contacts with local businesses in an effort to increase our business banking relationships and as a continuation of our transformation to a full-service community bank. As a locally based bank, we believe that we offer a high level of customer service and an efficient loan application and approval process which is attractive to many local, small to medium sized businesses.

· New Product Lines. MBL Bank now offers credit cards (on an agency basis) and ACH originations. We continue to evaluate new product lines and services as a part of our ongoing efforts to offer a broader array of products and services to our customers. In particular, we continue to evaluate financial products which will increase our non-interest income.

· Continuing Residential Mortgage Lending. Historically, we were a traditional single-family residential mortgage lender, and we will continue to offer traditional single-family residential loan products. For the past several years, we have emphasized originating such loans with balloon payments after three to five years and/or with shorter amortization periods and terms. At December 31, 2013, our loans secured by single-family residential mortgages amounted to $57.2 million, or 35.7% of our total loan portfolio.

Our results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on our loan and securities portfolios and interest expense on deposits and borrowings. Our net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. Results of operations are also affected by our provisions for loan losses, fees and service charges and other non-interest income and non-interest expense. Non-interest expense principally consists of compensation and employee benefits, office occupancy and equipment expense, data processing, advertising and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial condition and results of operations.

Our net income amounted to $3.4 million and $3.0 million for the years ended December 31, 2013 and 2012, respectively. Some of the major factors and trends which have impacted our results in these periods include the following:

· Low Market Rates of Interest. In recent periods, our results have benefitted from the historically low market rates of interest that have prevailed. The federal funds rate has been at a range of 0% to 0.25% from 2009 through 2013. We expect the federal funds rate to remain at the current low level through at least mid-2014. The average rates that we pay on our interest-bearing deposits and other liabilities have continued to decline from 0.67% for the year ended December 31, 2012 to 0.63% during the year ended December 31, 2013. Because the average rates on our deposits and other liabilities tend to adjust to changes in market rates of interest more quickly than the average yields we earn on our loans and other interest-earning assets, our average interest rate spread (the difference between the average yield earned on interest-earning assets and the average cost paid on interest-bearing liabilities) decreased between 2012 and 2013 from 3.19% to 3.14%. We anticipate that the current low rate environment will continue to put downward pressure on short-term interest rates until the economic recovery is sustainable. However, when the interest rate environment begins to increase it will cause pricing pressure on our deposit accounts and may have a negative impact on our net income.

· Managing Other Expenses. Our other, or non-interest, expenses amounted to $4.4 million for both the years ended December 31, 2013 and 2012, respectively. We have been able to maintain the level of our non-interest expenses through implementation of stringent cost controls resulting in only modest increases in most of our areas of non-interest expense. Salary and employee benefits expense for the year ended December 31, 2013 increased $76,000 over the year ended December 31, 2012. The increase was primarily the result of an increase in the number of employees, salary increases, as well as the new stock benefit plans implemented.

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Critical Accounting Policies

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

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

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

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

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

35

Other than Temporary Impairment of Securities. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether or not we intend to sell or expect that it is more likely than not that we will be required to sell the security prior to an anticipated recovery in fair value. Once a decline in value for a debt security is determined to be other-than-temporary, the other-than-temporary impairment is separated into (a) the amount of total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of other-than-temporary impairment related to all other factors. The amount of the total other-than-temporary impairment related to credit loss is recognized in earnings. The amount of other-than-temporary impairment related to other factors is recognized in other comprehensive income (loss).

Financial Condition

Changes in Financial Condition at December 31, 2013 Compared to December 31, 2012

Total assets increased $12.4 million or 4.5% to $288.9 million at December 31, 2013 compared to $276.5 million at December 31, 2012. This increase primarily reflected a $2.2 million or 6.5% increase in cash and cash equivalents, a $1.1 million or 1.2% increase in investment securities and a $9.7 million or 6.6% increase in net loans. The Company continued its efforts to expand its loan portfolio during 2013. For the year ended December 31, 2013, we originated a total of $105.7 million of loans, including $24.0 million of single-family residential loans, $28.3 million of commercial real estate loans, $20.4 million of commercial business loans and $9.3 million of non-real estate consumer loans, partially offset by $89.3 million of loan repayments. MBL Bank remains committed to continuing its emphasis on developing and growing new and existing loan relationships with both retail and commercial customers within its primary market area.

Total liabilities increased $11.1 million or 4.7% to $247.2 million at December 31, 2013 compared to $236.2 million at December 31, 2012. This increase was primarily due to a $11.5 million or 4.9% increase in deposits offset by a $444,000 decrease in other liabilities.

Stockholders’ equity increased $1.3 million or 3.3% to $41.6 million as of December 31, 2013 as compared to $40.3 million at December 31, 2012. The increase was in part due to net income of $3.4 million and the exercise of stock options of $254,000 for the year ended December 31, 2013. Stockholders’ equity was reduced by other comprehensive loss of $1.4 million, dividends paid of $606,000 and the purchase of treasury stock for $511,000.

Non-performing assets and troubled debt restructurings, which consist of nonaccruing loans, accruing loans 90 days or more delinquent, troubled debt restructurings, and real estate owned (which includes real estate acquired through, or in lieu of, foreclosure), decreased by $951,000to $473,000 or 0.2% of total assets at December 31, 2013 from $1.4 million or 0.5% of total assets at December 31, 2012. This decrease was due in part to a $50,000 decrease in nonaccrual loans and a decrease of $195,000 in accruing loans 90 days or more past due. In addition, at December 31, 2012 we also had one $706,000 non-residential real estate loan deemed a troubled restructuring. Such loan was paid in full in January 2013 with no loss to the Company. At December 31, 2013, the $473,000 of non-performing assets consisted of $116,000 of accruing loans 90 days or more delinquent and $357,000 of nonaccrual loans. At December 31, 2013, the $357,000 of nonaccrual loans consisted of single-family residential mortgage loans totaling $192,000, commercial real estate and land loans totaling $45,000, commercial business loans of $12,000 and consumer loans totaling $108,000. Management continues to aggressively pursue the collection and resolution of all delinquent loans.

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MBL Bank strives to maintain current valuations of the collateral supporting its impaired loans as well as other real estate owned. In most cases, we utilize third-party appraisals to determine the estimated fair value of the underlying collateral when measuring for impairment. As part of our valuation analysis, management considers the timing and reliability of the original appraisal, the original loan-to-value, our overall exposure and current market conditions. As part of our analysis, discounts may be applied to any collateral valuations that were performed more than one year prior to the reporting date.

At both December 31, 2013 and December 31, 2012, the allowance for loan losses amounted to $1.6 million. At December 31, 2013, the allowance for loan losses amounted to 347.1% of non-performing loans and 1.0% of total loans receivable, as compared to 223.5% and 1.1%, respectively, at December 31, 2012.

Although management uses the best information available to make determinations with respect to the provisions for loan losses, additional provisions for loan losses may be required to be established in the future should economic or other conditions change substantially. In addition, the Louisiana Office of Financial Institutions and the Federal Deposit Insurance Corporation, as an integral part of their examination process, periodically review our allowance for loan losses. Such agencies may require us to recognize additions to such allowance based on their judgments about information available to them at the time of their examination.

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Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following table shows for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the interest rate spread. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.

				2013							2012
	Yield/Rate at December 31, 2013			Average Balance		Interest		Average Yield/ Rate(1)			Average Balance		Interest		Average Yield/ Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable		5.49	%	$	152,177	$	8,577		5.64	%	$	139,157	$	8,365		6.01	%
Investment securities		1.49			92,477		1,331		1.44			82,769		1,189		1.43
Other interest-earning assets		0.10			19,028		43		0.23			27,123		63		0.24
Total interest-earning assets		3.66	%		263,682		9,951		3.77	%		249,049		9,617		3.86	%
Non-interest-earning assets					10,026							11,348
Total assets					273,708							260,397
Interest-bearing liabilities:
Savings, NOW and money market accounts		0.27	%		108,631		303		0.28	%		102,369		253		0.25	%
Certificates of deposit		1.05			93,714		978		1.04			88,458		1,029		1.16
Total deposits		0.61			202,345		1,281		0.63			190,827		1,282		0.67
FHLB advances and other borrowings		—			—		—		—			—		—		—
Total interest-bearing liabilities		0.61	%		202,345		1,281		0.63	%		190,827		1,282		0.67	%
Non-interest-bearing liabilities					30,657							30,196
Total liabilities					233,002							221,023
Stockholders’ equity(1)					40,706							39,374
Total liabilities and shareholders’ equity(1)				$	273,708						$	260,397
Net interest-earning assets				$	61,337						$	58,222
Net interest income; average interest rate spread		3.05	%			$	8,670		3.14	%			$	8,335		3.19	%
Net interest margin(2)									3.29	%						3.35	%
Average interest-earning assets to      average interest-bearing      liabilities									130.31	%						130.51	%

(1) Includes retained earnings and other comprehensive income (loss).

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

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

	Year Ended December 31, 2013 Compared to 2012									Year Ended December 31, 2012 Compared to 2011
	Increase (Decrease) Due to									Increase (Decrease) Due to
	Rate			Volume			Total Increase (Decrease)			Rate			Volume			Total Increase (Decrease)
	(In thousands)
Interest income:
Loans receivable	$	(570	)	$	782		$	212		$	(229	)	$	614		$	385
Investment securities		8			134			142			(236	)		313			77
Other interest-earning assets		(2	)		(18	)		(20	)		(1	)		(23	)		(24	)
Total interest income		(564	)		898			334			(466	)		904			438
Interest expense:
Savings, NOW and money market accounts		35			15			50			(61	)		27			(34	)
Certificates of deposit		(112	)		61			(51	)		(277	)		84			(193	)
Total deposits		(77	)		76			(1	)		(338	)		111			(227	)
FHLB advances and other borrowings		—			—			—			—			—			—
Total interest expense		(77	)		76			(1	)		(338	)		111			(227	)
Increase (decrease) in net interest income	$	(487	)	$	822		$	335		$	(128	)	$	793		$	665

Results of Operations

Comparison of Results of Operations for the Years Ended December 31, 2013 and 2012

General. We recorded net income of $3.4 million for the year ended December 31, 2013 compared to net income of $3.0 million in 2012.

Net interest income increased $335,000 or 4.0% to $8.7 million for the year ended December 31, 2013 compared to 2012, primarily due to a $334,000 increase in interest income combined with a $1,000 decrease in interest expense. The increase in interest income reflected the continued growth of our loan and investment portfolios offset by the re-pricing downward of such portfolios as a result of the decline in interest rates and yields. The decrease in interest expense is a reflection of the continued re-pricing downward of our deposit liabilities resulting from the decline in interest rates. Total non-interest income increased $139,000 or 19.3% for the year ended December 31, 2013, compared to 2012. The increase primarily reflected an increase in customer service fees and other operating income. Non-interest expenses increased by $21,000 or 0.5% for the year ended December 31, 2013. Salaries and benefits and computer department expenses increased by $76,000 and $19,000, respectively, partially offset by decreases in professional fees and supervisory examinations and other general and administrative expenses of $33,000 and $32,000, respectively. The provision for loan losses was $92,000 and $120,000 for the years ended December 31, 2013 and 2012, respectively.

Net Interest Income. Net interest income is determined by our interest rate spread (i.e., the difference between the yields earned on our interest-earning assets and the rates paid on our interest-bearing liabilities) and the relative amounts of interest-earning assets and interest-bearing liabilities. Net interest income increased $335,000 or 4.0% to $8.7 million for the year ended December 31, 2013 compared to 2012. This increase was primarily due to the decrease in the rates paid on interest-bearing deposits combined with a $212,000 increase in interest earned on loans receivable and an increase of $122,000 in interest income on investment securities and other interest-earning assets due to increases in the average balances of loans and investments. The decline in interest expense was primarily the result of the decline in the average cost of interest-bearing liabilities which more than offset the $11.5 million increase in the average balance of interest-bearing deposits as we funded our asset growth through deposits rather than borrowings.

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Interest Income. Interest income increased $334,000 or 3.5% to $10.0 million for the year ended December 31, 2013 compared to 2012. The increase was primarily due to a $212,000 or 2.5% increase in interest earned on loans and a $122,000 increase in interest earned on investment securities and other interest-earning assets. The increase in interest income on loans was primarily due to a $13.0 million or 9.4% increase in the average balance of loans outstanding as we continued our growth strategy, which increase more than offset the 37 basis point decline in the average yield reflecting the decline in market rates of interest and the repricing downward of adjustable-rate loans. The increase in interest earned on investment securities reflected a $9.7 million or 11.7% increase in the average balance.

Interest Expense. Interest expense decreased $1,000 or 0.1% to $1.3 million for the year ended December 31, 2013 compared to 2012. This was due to an increase of $50,000 or 19.8% in interest expense on interest-bearing deposits and savings and a decrease of $51,000 or 5.0% in interest expense on certificates of deposit. The decrease in interest expense on certificates of deposit was primarily due to a 12 basis point or 10.3% decrease in the average rate paid, which was partially offset by a $5.3 million or 5.9% increase in the average balance outstanding.

Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations, to maintain the allowance for loan losses at a level which will cover known and inherent losses in the loan portfolio, based upon an assessment of prior loss experience, the volume and type of lending conducted, industry standards, past due loans, economic conditions in our market area and other factors related to the collectibility of the loan portfolio. The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect a borrower’s ability to repay, estimated value of the underlying collateral and prevailing economic conditions. The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The provision for loan losses amounted to $92,000 and $120,000 for the year ended December 31, 2013 and December 31, 2012, respectively.

A loan is considered impaired when, based on current information or events, it is probable that we will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement. When a loan is impaired, the measurement of such impairment is based upon the fair value of the collateral of the loan. If the fair value of the collateral is less than the recorded investment in the loan, we will recognize the impairment by creating a valuation allowance with a corresponding charge against earnings.

Non-Interest Income. Total non-interest income increased $139,000 or 19.3% from $719, for the year ended December 31, 2012 to $858,000 for fiscal 2013. The increase primary reflected an increase in customer service fees and other operating income.

Non-Interest Expenses. Our non-interest expenses amounted to $4.4 million for the years ended December 31, 2013 and 2012. Non-interest expenses increased by $21,000 or 0.5% for the year ended December 31, 2013. Salaries and benefits and computer department expenses increased by $76,000 and $19,000, respectively, partially offset by decreases in professional fees and supervisory examinations and other general and administrative expenses of $33,000 and $32,000, respectively.

Income Tax Expense. We incurred income tax expense of $1.6 million for the year ended December 31, 2013 as compared to $1.5 million for the year ended December 31, 2012 due to the increase in income before income taxes for 2013. Our effective tax rates for 2013 and 2012 were 32.0% and 33.0%, respectively.

Exposure to Changes in Interest Rates

Our ability to maintain net interest income depends upon our ability to earn a higher yield on interest-earning assets than the rates we pay on deposits and borrowings. The Company’s interest-earning assets consist primarily of longer term residential and commercial real estate mortgage loans and investment securities available for sale which have fixed rates of interest. Consequently, our ability to maintain a positive spread between the interest earned on assets and the interest paid on deposits and borrowings can be adversely affected when market rates of interest rise.

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Although longer term, fixed-rate mortgage loans made up a significant portion of our interest-earning assets at December 31, 2013, we maintained a significant portfolio of securities available-for-sale during the past few years. We continue to increase the number of our loans structured to include balloon payments due in three to five years or with shorter terms in order to better position us for a rising rate environment. At December 31, 2013 and 2012, securities available-for-sale amounted to $89.3 million and $88.2 million, respectively, or 30.9% and 31.9%, respectively, of total assets at such dates. In addition, at December 31, 2013, 83.1% of our loan portfolio was comprised of loans with either balloon payments due in five years or less or with terms of five years or less. Pursuing this strategy will allow our interest-earning assets to reprice more rapidly in a rising interest rate environment.

Quantitative Analysis. MBL Bank obtains a quarterly report on the potential impact of interest rate changes upon the market value of portfolio equity. Management reviews the quarterly reports which show the impact of changing interest rates on net portfolio value. Net portfolio value is the difference between incoming and outgoing discounted cash flows from assets, liabilities, and off-balance sheet contracts.

Net Portfolio Value. Our interest rate sensitivity is monitored by management through the use of a model which internally generates estimates of the change in our net portfolio value (“NPV”) over a range of interest rate scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts. The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario. The following table sets forth our NPV as of December 31, 2013:

Change in Interest Rates in Basis Points (Rate Shock)	Net Portfolio Value								NPV as % of Portfolio Value of Assets
	Amount		$ Change			% Change			NPV Ratio			Change
	(Dollars in thousands)
300	$	39,578	$	(789	)		1.95	%		13.69	%		(27	)BP
200		40,258		(109	)		(0.27	)		13.92			(4	)
100		40,713		346			0.86			14.08			12
Static		40,367		—			—			13.96			—
(100)		42,134		1,767			4.38			14.57			61

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

Qualitative Analysis. Our ability to maintain a positive “spread” between the interest earned on assets and the interest paid on deposits and borrowings is affected by changes in interest rates. Our fixed-rate loans generally are profitable if interest rates are stable or declining since these loans have yields that exceed our cost of funds. If interest rates increase, however, we would have to pay more on our deposits and new borrowings, if any, which would adversely affect our interest rate spread. In order to counter the potential effects of dramatic increases in market rates of interest, we have for the past several years frequently structured our mortgage loans to provide for balloon payments of the principal due after three or five years as well as pursued the origination of loans with shorter terms such as commercial business loans and land loans. In addition, commencing in 2010 we began originating for sale those single-family loans with terms of 15 years or greater. As a result, we are not as susceptible to rising interest rates as we would be if our interest-earning assets were primarily comprised of long-term fixed-rate mortgage loans. Interest rate floors limit our interest rate risk by limiting potential decreases in the interest yield on an adjustable-rate loan to a certain level. As a result, we receive a minimum yield even if rates decline farther and the interest rate on the particular loan would otherwise adjust to a lower amount. Conversely, interest rate ceilings limit the amount by which the yield on an adjustable-rate loan may increase to no more than six percentage points over the rate at the time of origination. Finally, we intend to continue to emphasize the origination on shorter term consumer loans and commercial business loans which generally have terms of five years or less and/or bear adjustable rates.

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Liquidity and Capital Resources

We maintain levels of liquid assets deemed adequate by management. We adjust our liquidity levels to fund deposit outflows, repay our borrowings and to fund loan commitments. We also adjust liquidity as appropriate to meet asset and liability management objectives.

Our primary sources of funds are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, loan sales and earnings and funds provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. We set the interest rates on our deposits to maintain a desired level of total deposits. In addition, we invest excess funds in short-term interest-earning accounts and other assets, which provide liquidity to meet lending requirements. Our deposit accounts with the Federal Home Loan Bank of Dallas amounted to $3.2 million and $3.6 million at December 31, 2013 and 2012, respectively.

A significant portion of our liquidity consists of securities classified as available-for-sale and cash and cash equivalents. Our primary sources of cash are net income, principal repayments on loans and mortgage-backed securities and increases in deposit accounts. If we require funds beyond our ability to generate them internally, we have borrowing agreements with the Federal Home Loan Bank of Dallas which provide an additional source of funds. At December 31, 2013, we did not have any advances from the Federal Home Loan Bank of Dallas and had $68.6 million in borrowing capacity.

At December 31, 2013, we had outstanding commitments to originate loans totaling $4.2 million. At December 31, 2013, certificates of deposit scheduled to mature in less than one year totaled $69.7 million. Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case. In addition, the cost of such deposits could be significantly higher upon renewal, in a rising interest rate environment. We intend to utilize our high levels of liquidity to fund our lending activities. If additional funds are required to fund lending activities, we intend to sell our securities classified as available-for-sale as needed.

MBL Bank is required to maintain regulatory capital sufficient to meet tangible, core and total risk-based capital ratios of at least 1.5%, 4.0% and 8.0%, respectively. At December 31, 2013, MBL Bank exceeded each of its capital requirements with ratios of 13.6%, 13.6% and 27.8%, respectively, and was deemed “well-capitalized” for regulatory capital purposes.

Payments Due Under Contractual Obligations

The following table summarizes our contractual cash obligations, consisting solely of certificates of deposit, at December 31, 2013.

	Total at		Payments Due By Period
	December 31, 2013		To 1 Year		1-3 Years		4-5 Years		After 5 Years
	(In thousands)
Certificates of deposit	$	92,860	$	69,748	$	23,112	$	—	$	—
Total contractual obligations	$	92,860	$	69,748	$	23,112	$	—	$	—

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Off-Balance Sheet Arrangements

In the normal course of operations, we engage in a variety of financial transactions that, in accordance with accounting principles generally accepted in the United States of America, are not recorded in our financial statements. These transactions involve, to varying degrees, elements of credit, interest rate, and liquidity risk. Such transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments, lines of credit and letters of credit.

The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans in process at December 31, 2013.

	Total Amounts Committed at		Amount of Commitment Expiration - Per Period
	December 31, 2013		To 1 Year		1-3 Years		4-5 Years		After 5 Years
	(In thousands)
Letters of credit	$	129	$	110	$	19	$	—	$	—
Unused lines of credit		21,879		16,487		5,392		—		—
Undisbursed portion of loans in process		2,119		2,119		—		—		—
Commitments to originate loans		4,235		4,235		—		—		—
Total commitments	$	28,362	$	22,951	$	5,411	$	—	$	—

Recent Accounting Pronouncements

Accounting Standards Updates

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement. ASU 2011-04 amends the fair value measurement and disclosure requirements in order to gain consistency between the generally accepted accounting principles in the United States and the IFRS. The effective date for ASU 2011-04 is for the first interim and annual period beginning after December 15, 2011. The adoption of ASU 2011-04 did not have a material impact on the Company’s results of operations, financial position or disclosures.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income. ASU 2011-05 requires entities to present the total of comprehensive income, the components of net income and the components of other comprehensive income in a single continuous statement of comprehensive income or in two separate consecutive statements. The effective date for ASU 2011-05 is for annual and interim periods beginning after December 15, 2011. The adoption of ASU 2011-05 is reflected in the financial statements and presents a change in the Company’s consolidated statement of changes in shareholder’s equity.

In September 2011, the FASB issued ASU No. 2011-09, Compensation Retirement Benefits -- Multi-employer Plans. ASU 2011-09 requires entities to provide additional separate disclosures for multi-employer pension plans and multi-employer other post-retirement benefit plans. This update is intended to provide users with more detailed information about an employer’s involvement in multi-employer pension plans. The effective date for ASU 2011-09 is for annual periods for fiscal years ending after December 15, 2011. The adoption of this accounting standard did not have an impact on the Company’s results of operations, financial position or disclosures.

In December 2011, the FASB issued ASU No. 2011-11, Balance Sheet, Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The effective date for ASU 2011-11 is for annual reporting periods beginning on or after January 1, 2013, and interim periods with those annual periods. The adoption of ASU 2011-11 is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

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In June 2012, the FASB issued Exposure Draft 2012-200, Financial Instruments (Topic 825), Disclosures about Liquidity Risk and Interest Rate Risk. The proposed ASU would require financial institutions to include liquidity risk tabular disclosure of the carrying amounts of classes of financial assets and liabilities segregated by their expected maturities, including off-balance sheet financial commitments and obligations. In addition, interest rate risk disclosures would provide information about the exposure of the entities financial assets and liabilities to fluctuations in market interest rates. The proposed ASU does not include a proposed effective date.

In February 2013, the FASB issued ASU No. 2013-02, Comprehensive Income, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. The Company has adopted this ASU beginning January 1, 2013. The adoption of this ASU has not had nor is it expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In February 2013, the FASB issued ASU No. 2013-04, Liabilities, Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. ASU 2013-04 requires an entity to measure obligations resulting from joint and several liability arrangements from which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, at the sum of the amount the reporting entity agreed to pay on the basis of its arrangement amount its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In July 2013, the FASB issued ASU No. 2013-10, Derivatives and Hedging (Topic 815), Inclusion of the Fed Funds Swap Rate (or Overnight Index Swap Rate “OIS”) as a Benchmark Interest Rate for Hedge Accounting Purposes. ASU 2013-10 permits the Fed Funds Effective Swap Rate or OIS to be used as a U.S. benchmark interest rate for hedge accounting purposes. Before the amendments in ASU 2013-10, only the U.S. Treasury obligations rate (UST) of the U.S. government and the London Interbank Offered Rate (LIBOR) are considered benchmark interest rates for hedge accounting purposes. As a result of the financial crisis in 2008, the exposure to and the demand for hedging the Fed Funds rate have increased significantly. That demand has been driven by an increased focus by banks on their sources of funding (including an increased focus on overnight interbank borrowings or surplus balances held at the Federal Reserve), the greater (and sometimes volatile) spread between LIBOR and OIS, and new regulatory measures to curb systemic risks (such as increased collateralization of derivatives). Considering the increased importance of OIS, the objective of ASU 2013-10 is to provide for the inclusion of the OIS as a U.S. benchmark interest rate for hedge accounting purposes, in addition to UST and LIBOR. The amendments apply to all entities that elect to apply hedge accounting of the benchmark interest rate under Top 815. The amendments of ASU 2013-10 are effective prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The adoption of this ASU has not had nor is it expected to have a material impact on the Company’s results of operations, financial position or disclosures.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740). Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. Topic 740, Income Taxes, does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss (NOL) carryforward, a similar tax loss, or a tax credit carryforward exists. ASU 2013-11 applies to all entities that have unrecognized tax benefits when an NOL carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for an NOL carryforward, a similar tax loss, or a tax credit carryforward except under certain circumstances. The amendments of ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this ASU is not expected to have a material impact on the Company’s results of operations, financial position or disclosures.

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Impact of Inflation and Changing Prices

The consolidated financial statements and related financial data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial companies, virtually all of our assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than does the effect of inflation.

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

See “Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Exposure to Changes in Interest Rates.”

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Item 8. Financial Statements and Supplementary Data.

March 11, 2014

The Board of Directors

Minden Bancorp, Inc. and Subsidiary

Minden, Louisiana

Report of Independent Registered Public Accounting Firm

We have audited the accompanying consolidated balance sheets of Minden Bancorp, Inc. and Subsidiary as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Minden Bancorp, Inc. and Subsidiary as of December 31, 2013 and 2012, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Shreveport, Louisiana

 

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MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2013 AND 2012

(in thousands, except shares and per share)

A S S E T S	2013		2012
Cash and noninterest-bearing deposits		4,742		6,499
Interest-bearing demand deposits		30,763		26,791
Federal funds sold		1,000		1,000
Total cash and cash equivalents		36,505		34,290
Securities available-for-sale, at estimated market value		89,276		88,188
First National Banker’s Bank stock, at cost		210		210
Federal Home Loan Bank stock, at cost		111		109
Loans, net of allowance for loan losses of $1,645- 2013 and $1,605-2012		156,204		146,481
Accrued interest receivable		819		822
Premises and equipment, net		4,971		5,243
Prepaid and other assets		784		1,148
Total assets		288,880		276,491

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

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LIABILITIES AND STOCKHOLDERS’ EQUITY	2013			2012
Liabilities:
Deposits:
Noninterest-bearing		38,437			41,461
Interest-bearing		207,037			192,502
Total deposits		245,474			233,963
Accrued interest payable		213			212
Other liabilities		1,547			1,991
Total liabilities		247,234			236,166
Stockholders' equity:
Preferred stock-$.01 par value; authorized 10,000,000
shares; none issued-no rights/preferences set by
board		—			—
Common stock-$.01 par value; authorized 40,000,000
shares; 2,471,802 shares-2013 and 2,445,315 shares-
2012 issued and 2,352,490 shares-2013 and 2,355,831
shares-2012 outstanding		25			24
Additional paid-in capital		30,511			30,219
Retained earnings		14,485			11,677
Accumulated other comprehensive income (loss)		(604	)		803
Unearned common stock held by Recognition
Retention Plan (RRP) (37,690 shares-2013 and
47,736 shares-2012)		(422	)		(539	)
Unallocated common stock held by ESOP (47,406
shares-2013 and 50,195 shares-2012)		(495	)		(516	)
Treasury stock-at cost (119,312 shares-2013 and
89,484 shares-2012)		(1,854	)		(1,343	)
Total stockholders' equity		41,646			40,325
(substantially restricted)
Total liabilities and stockholders' equity		288,880			276,491

48

MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(in thousands, except per share)

	2013		2012
Interest income:
Loans, including fees		8,577		8,365
Investments:
Securities		350		299
Mortgage-backed securities		978		886
Other		46		67
Total interest income		9,951		9,617
Interest expense:
Interest-bearing demand deposits and savings		303		253
Certificates of deposit		978		1,029
Total interest expense		1,281		1,282
Net interest income		8,670		8,335
Provision for loan losses		92		120
Net interest income after provision for loan losses		8,578		8,215
Noninterest income:
Customer service fees		811		689
Gain (loss) on sale of assets-net		5		(1	)
Other operating income		42		31
Total noninterest income		858		719
Noninterest expenses:
Salaries and benefits		2,629		2,553
Office occupancy expense		739		740
Professional fees and supervisory examinations		297		330
FDIC insurance premium		132		140
Computer department expenses		182		163
Other general and administrative expenses		423		455
Total noninterest expenses		4,402		4,381
Income before income taxes		5,034		4,553
Income tax expense		1,620		1,518
Net income		3,414		3,035
Earnings per share (EPS)-basic		1.49		1.32
Diluted EPS		1.41		1.23

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

49

MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(in thousands)

	2013			2012
Consolidated net income		3,414			3,035
Other comprehensive income  before income tax:
Unrealized gains on securities
available for sale:
Unrealized holding gains (losses)		(2,132	)		620
		(2,132	)		620
Income tax:
Unrealized gains (losses) on securities
available for sale		(725	)		211
		(725	)		211
Other comprehensive income (loss)		(1,407	)		409
Comprehensive income		2,007			3,444

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

50

MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(in thousands, except per share)

	Common Stock		Additional Paid in Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Unearned RRP			Unallocated ESOP			Treasury Stock			Total
Balance January 1, 2012		24		29,940		9,560			394			(319	)		(569	)		—			39,030
Net income		—		—		3,035			—			—			—			—			3,035
Other comprehensive income		—		—		—			409			—			—			—			409
Exercise of stock options		—		241		—			—			—			—			—			241
Dividends (0.385 per share)		—		—		(918	)		—			—			—			—			(918	)
Amortization of awards under RRP-net of      release of RRP/SOP/ESOP		—		38		—			—			115			—			—			153
Unearned RRP/ESOP		—		—		—			—			—			53			—			53
Purchase of shares for RRP		—		—		—			—			(335	)		—			—			(335	)
Purchase of treasury stock		—		—		—			—			—			—			(1,343	)		(1,343	)
Balance December 31, 2012		24		30,219		11,677			803			(539	)		(516	)		(1,343	)		40,325
Net income		—		—		3,414			—			—			—			—			3,414
Other comprehensive loss		—		—		—			(1,407	)		—			—			—			(1,407	)
Exercise of stock options		1		253		—			—			—			—			—			254
Dividends (.255 per share)		—		—		(606	)		—			—			—			—			(606	)
Amortization of awards under RRP-net of      release of RRP/SOP		—		39		—			—			117			—			—			156
Unearned ESOP		—		—		—			—			—			21			—			21
Purchase of treasury stock		—		—		—			—			—			—			(511	)		(511	)
Balance December 31, 2013		25		30,511		14,485			(604	)		(422	)		(495	)		(1,854	)		41,646

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

51

MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(in thousands)

	2013			2012
Cash flows from operating activities:
Net income		3,414			3,035
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation		272			264
Provision for loan losses		92			120
Deferred income taxes		—			(5	)
RRP and other expenses		174			206
Net amortization of securities		1,322			1,152
(Gain) loss on sale of assets		(5	)		1
(Increase) decrease in prepaid expenses and
accrued income		470			(60	)
Increase in interest payable and other liabilities		179			136
Net cash provided by operating activities		5,918			4,849
Cash flows from investing activities:
Activity in available for sale securities:
Sales, maturities and pay-downs		29,672			24,221
Purchases		(34,211	)		(39,986	)
Net (increase) in loans		(9,836	)		(15,155	)
Purchases of premises and equipment-net		—			(89	)
Proceeds from sale of other assets		25			148
Net cash (used) by investing activities		(14,350	)		(30,861	)
Cash flows from financing activities:
Net increase in deposits		11,511			10,250
Dividends paid		(606	)		(918	)
Proceeds from stock options exercised		253			241
Purchase of shares for RRP		—			(335	)
Purchase of treasury stock		(511	)		(1,343	)
Net cash provided by financing activities		10,647			7,895
Net increase (decrease) in cash and cash equivalents		2,215			(18,117	)
Cash and cash equivalents at January 1		34,290			52,407
Cash and cash equivalents at December 31		36,505			34,290

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

52

MINDEN BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

(in thousands)

	2013			2012
Supplemental disclosures:
Interest paid on deposits and borrowed funds		1,285			1,350
Income taxes paid		1,560			1,579
Noncash investing and financing activities:
Transfer of loans to real estate owned and
other repossessed assets		26			168
Increase (decrease) in unrealized gain on securities
available for sale		(2,132	)		620

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

53

MINDEN BANCORP, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

1. Summary of Significant Accounting Policies

Minden Bancorp, Inc. is a holding company (the “Company”) established in 2010 as the successor to Minden Bancorp, Inc., a Federal corporation established in 2001 as described below. MBL Bank (the “Bank”) is the wholly-owned subsidiary of the Company. The Company's significant assets and business activity are its investment in the Bank. All intercompany transactions have been eliminated in consolidation of Minden Bancorp, Inc. and MBL Bank. The Bank accepts customer demand, savings, and time deposits and provides residential mortgages, commercial mortgages, and consumer and business loans to customers. The Bank is subject to the regulations of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities. The Company was a savings and loan holding company prior to February 5, 2014, at which time it became a bank holding company as a result of the conversion of the Bank to a state-chartered commercial bank. See Note 22 for information on the Company’s change in status from a savings and loan holding company to a bank holding company.

On December 11, 2001, the Board of Directors of Minden Building and Loan Association, a Louisiana chartered building and loan association, which changed its name to MBL Bank in 2007, adopted a plan of reorganization pursuant to which the Bank converted to stock form and became the wholly-owned subsidiary of Minden Bancorp, Inc., a federally chartered corporation (“old Minden”). In connection with the reorganization, the Company became a majority owned (58.6%) subsidiary of Minden Mutual Holding Company. On January 4, 2011, the “second-step” conversion of the Bank from the mutual holding company structure to the stock holding company structure pursuant to a Plan of Conversion and Reorganization adopted in September 2010 was completed. Upon completion of the conversion and reorganization, the Company, a newly formed Louisiana corporation, became the holding company for the Bank and owns all of the issued and outstanding shares of the Bank’s common stock. In connection with the conversion and reorganization, 1,394,316 shares of common stock, par value $0.01 per share, of the Company were sold in subscription and community offerings to certain depositors of the Bank and other investors for $10.00 per share, or $13.9 million in the aggregate, and 984,889 shares of common stock were issued in exchange for the outstanding shares of common stock of old Minden held by the “public” shareholders of old Minden (all shareholders except Minden Mutual Holding Company). Each share of common stock of old Minden was converted into the right to receive 1.7427 shares of common stock of new Minden Bancorp in the conversion and reorganization. Total shares outstanding of common stock of the Company immediately after the conversion and reorganization were 2,379,205. In addition, the Company’s employee stock ownership plan purchased in the offering 55,772 shares of common stock of the Company with proceeds of a loan from the Company. SeeNote 19 for more information.

Basis of Presentation. In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements. The effects of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of December 31, 2013. In preparing these financial statements, the Company evaluated subsequent events through the date these financial statements were issued.

54

1. Summary of Significant Accounting Policies (Continued)

Use of Estimates. In preparing financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP), management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, and the valuation of foreclosed real estate, deferred tax assets and fair value of financial instruments.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses on loans, deferred tax assets, fair value of financial instruments, and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowances for losses on credits and foreclosed real estate, management obtains independent appraisals for significant properties. While management uses available information to recognize losses on credits, future additions to the allowances may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Bank’s allowances for losses on loans. Such agencies may require the Bank to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the allowances for credit losses on loans may change materially in the future.

Significant Group Concentrations of Credit Risk. Most of the Bank's activities are with customers located within Webster Parish, Louisiana. Note 2 to the financial statements summarizes the types of investment securities in which the Bank makes investments, and Note 3 summarizes the types of loans included in the Bank's loan portfolio. The Bank does not have any significant concentrations to any one industry or customer.

Cash and Cash Equivalents. For purposes of the statements of cash flows, cash and cash equivalents include cash and balances due from banks, federal funds sold and interest-bearing deposits at other banks, all of which mature within ninety days.

Investment Securities. Management determines the appropriate classification of securities at the time of purchase. If management has the positive intent and ability to hold investments in bonds, notes, and debentures until maturity, they are classified as held to maturity and carried at cost, adjusted for amortization of premiums and accretion of discounts which are recognized in interest income using the effective interest method over the period to maturity. Securities to be held for indefinite periods of time yet not intended to be held to maturity or on a long-term basis are classified as securities available for sale and carried at fair value. Unrealized gains and losses on securities available for sale which have been reported as direct increases or decreases in stockholders' equity, net of related deferred tax effects, are accounted for as other comprehensive income. The cumulative changes in unrealized gains and losses on such securities are accounted for in accumulated other comprehensive income as part of stockholders' equity. Gains and losses on the sale of securities available for sale are determined using the specific-identification method. Other-than-temporary impairments of debt securities is based upon the guidance as follows: (a) if a company does not have the intent to sell a debt security prior to recovery and (b) it is more likely than not that it will not have to sell the debt security prior to recovery, the security would not be considered other-than-temporarily impaired unless there is a credit loss. When an entity does not intend to sell the security, and it is more likely than not the entity will not have to sell the security before recovery of its cost basis, it will recognize the credit component of an other-than-temporary impairment of a debt security in earnings and the remaining portion in other comprehensive income. For held-to-maturity debt securities, the amount of an other-than-temporary impairment recorded in other comprehensive income for the noncredit portion of a previous other-than-temporary impairment should be amortized prospectively over the remaining life of the security on the basis of the timing of future estimated cash flows of the security.

55

1. Summary of Significant Accounting Policies (Continued)

Mortgage-Backed Securities. Mortgage-backed securities represent participating interests in pools of long-term first mortgage loans originated and serviced by issuers of the securities. Mortgage-backed securities are carried at unpaid principal balances, adjusted for unamortized premiums and unearned discounts. Premiums and discounts are amortized using the interest method over the remaining period to contractual maturity. Management intends and has the ability to hold such securities to maturity that are classified held to maturity. The cost of securities called is determined using the specific identification method.

Purchase premiums and discounts are recognized in interest income using the interest method over the terms of the securities. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Loans. The Bank grants mortgage, business and consumer loans to customers. A substantial portion of the loan portfolio is represented by mortgage loans secured by properties throughout Webster Parish, Louisiana and the surrounding parishes. The ability of the Bank's debtors to honor their contracts is dependent upon the real estate and general economic conditions in this area.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for charge-offs, the allowance for loan losses, and any deferred fees for costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

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

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

Allowance for Loan Losses. The allowance for loan losses is established as a provision for loan losses charged to earnings. Loan losses not associated with a related valuation reserve are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for loan losses is evaluated on a regular basis by management and is based upon an amount management believes will cover known and inherent losses in the loan portfolio based upon 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 economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

56

1. Summary of Significant Accounting Policies (Continued)

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

The FASB issued Accounting Standards Update No. 2010-20, “Disclosures about the Credit Quality of Financing Receivables and Allowance for Credit Losses,” which requires financial institutions to provide a greater level of disaggregated information about the credit quality of loans and the allowance for loan losses. This standard also requires financial institutions to disclose additional information related to credit quality indications and information about past due loans.

The FASB also issued Accounting Standards Update No. 2011-02, Receivables (Topic 310) A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring. ASU 2011-02 clarifies whether loan modifications constitute troubled debt restructuring. In evaluating whether a restructuring constitutes a troubled debt restructuring, a creditor must separately conclude that both of the following exist: (a) the restructuring constitutes a concession and (b) the debtor is experiencing financial difficulties. See Note 3 for detailed information.

Credit Related Financial Instruments. In the ordinary course of business, the Bank has entered into commitments to extend credit, including commitments under commercial letters of credit and standby letters of credit. Such financial instruments are recorded when they are funded.

Other Real Estate Owned. Other real estate owned represents properties acquired through foreclosure or acceptance of a deed in lieu of foreclosure on loans on which the borrowers have defaulted as to payment of principal and interest. These properties are carried at the lower of cost of acquisition or the asset's fair value, less estimated selling costs. Reductions in the balance at the date of acquisition are charged to the allowance for loan losses. Any subsequent write-downs to reflect current fair value are charged to noninterest expense. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets.

57

1. Summary of Significant Accounting Policies (Continued)

Premises and Equipment. Premises and equipment are stated at cost less accumulated depreciation. The Bank records depreciation on property and equipment using accelerated and straight-line methods with lives ranging from 5 to 15 years on furniture, fixtures and equipment and to 40 years on the buildings.

Income Taxes. The Company files a consolidated federal income tax return with its subsidiary. Income taxes and benefits are generally allocated based on the subsidiary's contribution to the total federal tax liability. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities. Current recognition is given to changes in tax rates and laws.

Advertising Costs. Advertising costs are expensed as incurred. Such costs (in thousands) amounted to approximately $28 and $43 for the years ended December 31, 2013 and 2012, respectively, and are included in other operating expense.

Stock Compensation. The cost of employee services received in exchange for stock options and stock grants (RRP) is measured using the fair value of the award on the grant date and is recognized over the service period, which is usually the vesting period.

Treasury Stock. Common stock shares repurchased are recorded as treasury stock at cost.

Earnings Per Share. Basic earnings per share represents income available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted earnings per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. Potential common shares that may be issued by the Company related solely to outstanding stock options and are determined using the treasury stock method.

Treasury shares are not deemed outstanding for earnings per share calculations.

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

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income. ASU 2011-05 requires entities to present the total comprehensive income, and the components of net income and the components of other comprehensive income in a single continuous statement of comprehensive income or in two separate consecutive statements. The effective date for ASU 2011-05 was for annual and interim periods beginning after December 15, 2011. The Company has adopted ASU 2011-05 with the inclusion of the Consolidated Statements of Other Comprehensive Income in the financial statements.

Reclassification. Certain prior year amounts have been reclassified to conform to current year financial statement presentation.

58

2. Investment Securities

There were no securities held-to-maturity at December 31, 2013 and 2012.

Securities available-for-sale (in thousands) consists of the following:

	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Municipals		10,303		2		622		9,683
Agency Bonds		10,039		65		—		10,104
CMO		7,477		24		99		7,402
FNMA Pools		37,490		247		340		37,397
FHLMC Pools		21,670		125		275		21,520
GNMA Pools		3,212		4		46		3,170
		90,191		467		1,382		89,276

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Municipals		6,029		50		43		6,036
Agency Bonds		18,694		203		—		18,897
CMO		10,619		7		137		10,489
FNMA Pools		36,553		750		1		37,302
FHLMC Pools		13,195		371		—		13,566
GNMA Pools		1,882		16		—		1,898
		86,972		1,397		181		88,188

The amortized cost and estimated fair value (in thousands) of investment securities at December 31, 2013, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized		Fair
	Cost		Value
One year or less		8,039		8,104
After 1 year thru 5 years		62,686		62,698
After 5 years thru 10 years		12,257		11,776
After 10 years		7,209		6,698
		90,191		89,276

At December 31, 2013, investment securities with a financial statement carrying amount (in thousands) of $76,548 were pledged to secure public and private deposits. There were no investment securities sold during 2012. A gain of (in thousands) $1 was recognized on sale of investments in 2013. Sales, maturities and calls are detailed on the statements of cash flows.

59

2. Investment Securities (Continued)

Information pertaining to securities with gross unrealized losses (in thousands) at December 31, 2013 and 2012, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	Less than 12 Months				12 Months or Greater				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2013:
Municipals		7,522		529		1,258		93		8,780		622
CMO		1,631		26		3,202		73		4,833		99
Mortgage Pools		30,266		630		1,739		31		32,005		661
		39,419		1,185		6,199		197		45,618		1,382
December 31, 2012:
Municipals		2,628		43		—		—		2,628		43
CMO		9,024		137		—		—		9,024		137
Mortgage Pools		1,771		1		—		—		1,771		1
		13,423		181		—		—		13,423		181

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

The majority of these securities are guaranteed directly by the U.S. Government or other U.S. Government agencies. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are deemed to be other-than-temporary.

3. Loans and Allowance for Loan Losses

The composition of the Company’s loan portfolio (in thousands) at December 31, 2013 and 2012 consisted of the following:

	2013		2012
Loans secured by real estate:
Secured by 1-4 family residential properties		61,403		61,185
Secured by nonfarm, nonresidential properties		66,282		59,868
Commercial and industrial loans		17,207		15,960
Consumer loans (including overdrafts of
$148 and $43)		7,606		8,845

60

3. Loans and Allowance for Loan Losses (Continued)

	2013			2012
Loans secured by deposits		7,470			4,592
Unfunded construction loan commitments		(2,119	)		(2,364	)
Total		157,849			148,086
Less: Allowance for loan losses		(1,645	)		(1,605	)
Loans, net		156,204			146,481

Changes in the allowance for loan losses (in thousands) are summarized as follows:

	2013			2012
Balance, beginning of period		1,605			1,625
Provision for loan losses		92			120
Recoveries		12			47
Loans charged off		(64	)		(187	)
Balance, end of period		1,645			1,605

The following tables detail the balance in the allowance for loan losses (in thousands) by portfolio segment at December 31, 2013 and 2012:

	Balance						Provision			Balance
	January 1,		Charge-				for Loan			December
	2013		offs		Recoveries		Losses			31, 2013
Loans secured by real estate:
Secured by 1-4 family residential
properties		638		—		1		1			640
Secured by nonfarm, nonresidential
properties		620		—		—		74			694
Commercial and industrial loans		168		22		—		34			180
Consumer loans		179		42		11		(19	)		129
Loans secured by deposits		—		—		—		2			2
Total		1,605		64		12		92			1,645

	Balance				Provision		Balance
	January 1,		Charge-				for Loan			December
	2012		offs		Recoveries		Losses			31, 2012
Loans secured by real estate:
Secured by 1-4 family residential
properties		322		142		—		458			638
Secured by nonfarm, nonresidential
properties		692		—		—		(72	)		620
Commercial and industrial loans		233		—		—		(65	)		168
Consumer loans		378		45		47		(201	)		179
Other loans		—		—		—		—			—
Total		1,625		187		47		120			1,605

61

3. Loans and Allowance for Loan Losses (Continued)

	December 31, 2013
	Allowance for Loan Losses
	Disaggregated by Impairment Method
	Individually		Collectively		Total
Loans secured by real estate:
Secured by 1-4 family residential properties		15		625		640
Secured by nonfarm, nonresidential properties		—		694		694
Commercial and industrial loans		—		180		180
Consumer loans		—		129		129
Loans secured by deposits		—		2		2
		15		1,630		1,645

	December 31, 2012
	Allowance for Loan Losses
	Disaggregated by Impairment Method
	Individually		Collectively		Total
Loans secured by real estate:
Secured by 1-4 family residential properties		20		618		638
Secured by nonfarm, nonresidential properties		—		620		620
Commercial and industrial loans		—		168		168
Consumer loans		14		165		179
Other loans		—		—		—
		34		1,571		1,605

The following tables summarize information (dollars in thousands) relative to loan modifications determined to be troubled debt restructurings. As of December 31, 2013 and 2012, all the troubled debt restructurings are included in impaired loans.

Troubled Debt Restructurings

	December 31, 2013
			Pre-Modification		Post-Modification
	Number of		Outstanding		Outstanding
	Contracts		Recorded Investment		Recorded Investment
1-4 family residential		8		192		192
Nonfarm, nonresidential		3		45		45
Total real estate loans		11		237		237
Commercial and industrial		1		12		12
Consumer loans		13		108		108
Total loans		25		357		357

There have been no subsequent defaults of troubled debt restructurings.

62

3. Loans and Allowance for Loan Losses (Continued)

	December 31, 2012
			Pre-Modification		Post-Modification
	Number of		Outstanding		Outstanding
	Contracts		Recorded Investment		Recorded Investment
1-4 family residential		8		237		237
Nonfarm, nonresidential		4		779		779
Total real estate loans		12		1,016		1,016
Commercial and industrial		1		15		15
Consumer loans		13		81		81
Total loans		26		1,112		1,112

Restructured loans (loans which had been renegotiated at below-market interest rates or for which other concessions were granted, but are accruing interest) were $0 and $706,000 at December 31, 2013 and 2012, respectively. The restructured loans at December 31, 2012 were paid in full in January 2013 with no loss to the Company.

The following tables detail loans individually and collectively evaluated for impairment (in thousands) at December 31, 2013 and 2012:

	December 31, 2013
	Loans Evaluated for Impairment
	Individually		Collectively		Total
Loans secured by real estate:
Secured by 1-4 family residential properties		268		59,412		59,680
Secured by nonfarm, nonresidential properties		78		65,808		65,886
Commercial and industrial loans		12		17,195		17,207
Consumer loans		116		7,490		7,606
Loans secured by deposits		—		7,470		7,470
Total		474		157,375		157,849

	December 3l, 2012
	Loans Evaluated for Impairment
	Individually		Collectively		Total
Loans secured by real estate:
Secured by 1-4 family residential properties		408		59,205		59,613
Secured by nonfarm, nonresidential properties		803		58,273		59,076
Commercial and industrial loans		39		15,921		15,960
Consumer loans		133		8,712		8,845
Loans secured by deposits		—		4,592		4,592
Total		1,383		146,703		148,086

63

3. Loans and Allowance for Loan Losses (Continued)

	Impaired Loans
	For the Year Ended December 31, 2013
			Unpaid				Interest
	Recorded		Principal		Related		Income
	Investment		Balance		Allowance		Recognized
With no related allowance recorded:
Secured by 1-4 family residential properties		229		229		—		—
Secured by nonfarm, nonresidential properties		78		78		—		—
Commercial and industrial loans		12		12		—		—
Consumer loans		113		113		—		6
Loans secured by deposits		—		—		—		—
		432		432		—		6
With an allowance recorded:
Secured by 1-4 family residential properties		39		39		15		—
Secured by nonfarm, nonresidential properties		—		—		—		—
Commercial and industrial loans		—		—		—		—
Consumer loans		3		3		—		—
Loans secured by deposits		—		—		—		—
		42		42		15		—
Total:
Secured by 1-4 family residential properties		268		268		15		—
Secured by nonfarm, nonresidential properties		78		78		—		—
Commercial and industrial loans		12		12		—		—
Consumer loans		116		116		—		6
Loans secured by deposits		—		—		—		—
		474		474		15		6

	Impaired Loans
	For the Year Ended December 31, 2012
			Unpaid				Interest
	Recorded		Principal		Related		Income
	Investment		Balance		Allowance		Recognized
With no related allowance recorded:
Secured by 1-4 family residential properties		363		363		—		14
Secured by nonfarm, nonresidential properties		803		803		—		54
Commercial and industrial loans		39		39		—		—
Consumer loans		111		111		—		9
Loans secured by deposits		—		—		—		—
		1,316		1,316		—		77
With an allowance recorded:
Secured by 1-4 family residential properties		45		45		20		—
Secured by nonfarm, nonresidential properties		—		—		—		—
Commercial and industrial loans		—		—		—		—
Consumer loans		22		22		14		—
Loans secured by deposits		—		—		—		—
		67		67		34		—
Total:
Secured by 1-4 family residential properties		408		408		20		14
Secured by nonfarm, nonresidential properties		803		803		—		54
Commercial and industrial loans		39		39		—		—
Consumer loans		133		133		14		9
Loans secured by deposits		—		—		—		—
		1,383		1,383		34		77

The average recorded investment on the impaired loans for the year 2013 and 2012 was $706,000 and $1.3 million respectively.

64

3. Loans and Allowance for Loan Losses (Continued)

Total non-accrual loans (in thousands) at December 31, 2013 and December 31, 2012 were $357 and $407, respectively. Additional interest income (in thousands) of approximately $34 and $33 would have been recognized for the period ended December 31, 2013 and December 31, 2012, respectively, had the loans not been on non-accrual.

Credit Indicators

Loans are categorized into risk categories based on relevant information about the ability of borrowers to service their debt, such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The following definitions are utilized for risk ratings, which are consistent with the definitions used in supervisory guidance:

Special Mention – Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard – Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful – Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.

The table below illustrates the carrying amount (in thousands) of loans by credit quality indicator:

	December 31, 2013
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
Loans secured by real estate:
Secured by 1-4 family resident-
ial properties		58,757		540		383		—		—		59,680
Secured by nonfarm, nonresident-
ial properties		65,215		584		87		—		—		65,886
Commercial and industrial loans		17,195		—		12		—		—		17,207
Consumer loans		7,427		62		117		—		—		7,606
Loans secured by deposits		7,470		—		—		—		—		7,470
Total		156,064		1,186		599		—		—		157,849

65

3. Loans and Allowance for Loan Losses (Continued)

	December 31, 2012
			Special
	Pass		Mention		Substandard		Doubtful		Loss		Total
Loans secured by real estate:
Secured by 1-4 family residential
properties		58,734		493		386		—		—		59,613
Secured by nonfarm, nonresident-
ial properties		57,456		1,523		97		—		—		59,076
Commercial and industrial loans		15,921		—		39		—		—		15,960
Consumer loans		8,601		126		118		—		—		8,845
Loans secured by deposits		4,589		3		—		—		—		4,592
Total		145,301		2,145		640		—		—		148,086

A summary of current, past due and nonaccrual loans (in thousands) was as follows:

	December 31, 2013
			Past Due
	Past Due		Over 90 Days
	30-89		and		Non-		Total				Total
	Days		Accruing		Accruing		Past Due		Current		Loans
Loans secured by real estate:
Secured by 1-4 family residential
properties		1,121		76		192		1,389		58,291		59,680
Secured by nonfarm, nonresidential
properties		5		32		45		82		65,804		65,886
Commercial and industrial loans		165		—		12		177		17,030		17,207
Consumer loans		107		8		108		223		7,383		7,606
Loans secured by deposits		65		—		—		65		7,405		7,470
Total		1,463		116		357		1,936		155,913		157,849

	December 31, 2012
			Past Due
	Past Due		Over 90 Days
	30-89		and		Non-		Total		Total
	Days		Accruing		Accruing		Past Due		Current		Loans
Loans secured by real estate:
Secured by 1-4 family resident-
ial properties		3,443		172		237		3,852		55,761		59,613
Secured by nonfarm, nonresident-
ial properties		1,162		23		74		1,259		57,817		59,076
Commercial and industrial loans		1,188		24		15		1,227		14,733		15,960
Consumer loans		224		92		81		397		8,448		8,845
Loans secured by deposits		187		—		—		187		4,405		4,592
Total		6,204		311		407		6,922		141,164		148,086

The Company charges a flat rate for the origination or assumption of a loan. These fees are designed to offset direct loan origination costs and the net amount, if material, is deferred and amortized, as required by accounting standards.

The Company’s lending activity is concentrated within Webster Parish, Louisiana. The Company’s lending activities include one-to-four-family dwelling units, commercial real estate, commercial business and consumer loans. The Company requires collateral sufficient in value to cover the principal amount of the loan. Such collateral is evidenced by mortgages on property held and readily accessible to the Bank.

66

4. Accrued Interest Receivable

Accrued interest receivable (in thousands) at December 31, 2013 and 2012, consists of the following:

	2013		2012
Loans		501		528
Mortgage-backed securities		177		162
Investment securities and other		141		132
Total accrued interest receivable		819		822

5. Premises and Equipment

Premises and equipment (in thousands) are summarized as follows:

	2013			2012
Land and buildings		5,806			5,806
Furniture, fixtures and equipment		1,392			1,421
Total		7,198			7,227
Less-accumulated depreciation		(2,227	)		(1,984	)
Net premises and equipment		4,971			5,243

Depreciation expense was (in thousands) $272 and $264 for the years ended December 31, 2013 and 2012, respectively.

6. Prepaid and other Assets

Prepaid and other assets (in thousands) consist of the following:

	2013		2012
Cash value of life insurance		623		611
Prepaid expenses		52		470
Other		109		67
		784		1,148

7. Deposits

Deposits (in thousands) as of December 31, 2013 and 2012 are summarized as follows:

	2013		2012
Demand deposit accounts (including official
checks of $861 in 2013 and $765 in 2012)		136,825		128,330
Savings		15,789		15,446
Certificates of deposit:
0.00% – 0.99%		55,763		38,266
1.00% – 1.99%		37,097		51,015
2.00% – 2.99%		—		906
Total certificates of deposit		92,860		90,187
Total deposits		245,474		233,963

67

7. Deposits (Continued)

Scheduled maturities of certificates of deposit (in thousands) at December 31, 2013 are as follows:

	2014		2015		2016		Total
0.00% – 0.99%		53,490		2,273		—		55,763
1.00% – 1.99%		16,258		11,433		9,406		37,097
		69,748		13,706		9,406		92,860

Included in deposits (in thousands) at December 31, 2013 and 2012 are $51,594 and $47,527, respectively, of certificates of deposit (CD) in denominations of $100,000 or more.

Effective January 1, 2013, deposits held in noninterest-bearing transaction accounts are aggregated with any interest-bearing deposits the owner may hold in the same ownership category, and the combined total insured up to at least $250,000 by the FDIC.

8. Federal Income Taxes

Federal income tax expense (in thousands, except %) applicable to net income for the periods ended December 31, 2013 and 2012 was as follows:

	2013			2012
	(in thousands)
Federal income taxes:
Current		1,685			1,523
Deferred		(65	)		(5	)
Income tax expense		1,620			1,518

The reconciliation of the effective income tax rate to the federal statutory rate is as follows for the years ended December 31:

	2013		2012
Statutory federal income tax rate		34%		34%
Other-primarily tax exempt income		2%		2%
Effective income tax rate		32%		33%

Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of our deferred tax liability are as follows at December 31, 2013 and 2012:

	2013			2012
	(in thousands)
Deferred tax assets (liabilities):
Allowance for loan losses and credit losses		113			105
Deferred compensation/stock options/incentive plans		120			123
Basis difference in premises and equipment		(441	)		(436	)
Basis difference on investments		311			(413	)
Net deferred tax liability		103			(621	)

68

8. Federal Income Taxes (Continued)

In computing federal taxes on income under provisions of the Internal Revenue Code in years past, earnings appropriated by savings associations to general reserves were deductible in arriving at taxable income if certain conditions were met. Retained earnings appropriated to federal insurance reserve at December 31, 2013 and 2012, includes appropriations of net income (in thousands) of prior years of $1,456, for which no provision for federal income taxes has been made. If this portion of the reserve is used for any purpose other than to absorb losses, a tax liability will be imposed upon the Company at the then current federal income tax rate.

The Company, as required under GAAP, reviewed its various tax positions taken or expected to be taken in its tax return and has determined it does not have unrecognized tax benefits. The Company does not expect that position to change significantly over the next twelve months. The Company will recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. As of December 31, 2013, the Company has not accrued interest or penalties related to uncertain tax positions.

The Company files a U.S. federal income tax return. The Company’s federal income tax returns for the tax years 2011 and beyond remain subject to examination by the IRS. No significant state income taxes are applicable to the Company.

9. Federal Home Loan Bank Advances

Federal Home Loan Bank (FHLB) advances represent short-term, fixed-rate borrowings from the Federal Home Loan Bank of Dallas. The Bank has borrowed advances for periods from overnight to four and one-half months. Interest rates paid on the advances vary by term and are set by the Federal Home Loan Bank. There were no advances outstanding at December 31, 2013 and 2012.

The Bank has an available line of credit with the FHLB of $68.6 million at December 31, 2013 with $68.6 million available for use.

10. Pension/ESOP Plan

In 2001, the Bank adopted a 401(k) retirement plan covering all employees based upon a year of service. The Bank contributes up to a 6% match of the employees' contribution based upon Board approval. Plan contributions (in thousands) for 2013 and 2012 were $93 and $85, respectively.

The Company established an ESOP and loaned the ESOP $524 (in thousands) in July 2002 to purchase 52,371 pre-second-step conversion shares of common stock, which amounted to 3.8% of the outstanding shares at such date. The loan matured and was paid off on June 30, 2012. Additionally the ESOP was extended a loan in 2011in connection with the second-step conversion in the amount of (in thousands) $558, to purchase 55,772 shares of common stock. The remaining balance (in thousands) due of $495 at $38 (in thousands) per year including interest is payable over approximately eighteen years. The Bank made contributions to the ESOP to enable it to make the note payments (in thousands) of $38 and $71 during the years ended December 31, 2013 and 2012, respectively, which is included in salaries and benefits on the income statement. As the note on the second loan is paid, the shares will be released and allocated to the participants of the ESOP. The market value of the unreleased ESOP shares (47,406) at December 31, 2013 was approximately $839 (in thousands).

69

11. Retained Earnings and Regulatory Capital

The Bank is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below, in thousands) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2013, that the Bank met all capital adequacy requirements to which it is subject.

As of December 31, 2013, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as adequately capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table (amounts in thousands). The Bank's actual capital amounts (in thousands) and ratios are also presented in the table. There are no conditions or events since that notification that management believes have changed the institution's category.

					To Be Well
					Capitalized Under
			For Capital		Prompt Corrective
	Actual		Adequacy Purposes:		Action Provisions:
	Amount	Ratio	Amount	Ratio	Amount	Ratio
As of December 31, 2013
Total capital (to Risk
Weighted Assets)	41,052	27.76%	>11,832	>8.0%	>14,790	>10.0%
Core (Tier I) Capital (to
Risk Weighted Assets)	39,407	26.65%	N/A	N/A	>8,874	>6.0%
Core (Tier I) Capital (to
Total Assets)	39,407	13.64%	>11,555	>4.0%	>14,444	>5.0%
Tangible Capital
(to Total Assets)	39,407	13.64%	>4,333	>1.5%	N/A	N/A
As of December 31, 2012
Total capital (to Risk
Weighted Assets)	37,370	26.27%	>11,380	>8.0%	>14,226	>10.0%
Core (Tier I) Capital (to
Risk Weighted Assets)	35,765	25.14%	N/A	N/A	>8,535	>6.0%
Core (Tier I) Capital (to
Total Assets)	35,765	12.94%	>11,058	>4.0%	>13,822	>5.0%
Tangible Capital
(to Total Assets)	35,765	12.94%	>4,147	>1.5%	N/A	N/A

70

11. Retained Earnings and Regulatory Capital (Continued)

Capital for the Company is not significantly different than the amounts reflected above for the Bank. The following is a reconciliation of the Bank’s equity under GAAP to regulatory capital at the dates indicated (in thousands):

	2013		2012
GAAP equity		38,803		36,568
Accumulated other comprehensive
unrealized (gains) losses		604		(803	)
Tier 1 Capital		39,407		35,765
Allowance for loan losses/other		1,645		1,605
Total capital		41,052		37,370

12. Fair Value of Financial Instruments

The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. FASB Accounting Standards Codification Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

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

Cash and cash equivalents: The carrying amounts of cash and short-term instruments approximate fair values.

Interest-bearing deposits in banks: The carrying amounts of interest-bearing deposits approximate their fair values.

Securities: Fair values for securities, excluding Federal Home Loan Bank stock and First National Bankers Bank (“FNBB”) stock, are based on quoted market prices. The carrying value of Federal Home Loan Bank stock approximates fair value based on the redemption provisions of the Federal Home Loan Bank. The carrying value of FNBB stock is based on the purchase price which approximates fair value.

Loans receivable: For variable-rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (e.g., one-to-four family residential), and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for other loans (e.g., commercial real estate and investment property mortgage loans, commercial and industrial loans) are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for nonperforming loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.

71

12. Fair Value of Financial Instruments (Continued)

Deposit liabilities: The fair values disclosed for demand deposits (e.g., interest and noninterest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-term borrowings: The carrying amounts of Federal Home Loan Bank advances maturing within ninety days approximate their fair values.

Accrued interest: The carrying amounts of accrued interest approximate fair value.

Off-balance-sheet instruments: Fair values for off-balance-sheet, credit-related financial instruments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing. Fair values for off-balance sheet commitments to extend credit approximate their carrying value.

From time to time, certain assets may be recorded at fair value on a non-recurring basis, typically as a result of the application of lower of cost or fair value accounting or a write-down occurring during the period. The only item recorded at fair value on a non-recurring basis is foreclosed real estate, which is recorded at the lower of cost or fair value less estimated costs to sell. Fair value is determined by reference to appraisals (performed either by the Bank or by independent appraisers) on the subject property, using market prices of similar real estate assets (level 2 measurements). The Bank held no foreclosed real estate at December 31, 2013 or December 31, 2012.

The estimated fair values (in thousands), and related carrying or notional amounts, of the Company’s financial instruments are as follows:

	2013				2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents		36,505		36,505		34,290		34,290
Securities available for sale		89,276		89,276		88,188		88,188
FNBB & FHLB stock		321		321		319		319
Loans, net		156,204		155,720		146,481		146,027
Accrued interest receivable		819		819		822		822
Financial liabilities:
Deposits		245,474		245,695		233,963		234,174
Accrued interest payable		213		213		212		212
Off-balance sheet credit related to
financial instruments:
Commitments to extend credit		28,362		28,362		30,930		30,930

72

12. Fair Value of Financial Instruments (Continued)

Off-balance sheet derivative financial instruments: None

The Company adopted FASB Accounting Standards Topic 820, “Fair Value Measurements” (Topic 820), as of January 1, 2008. Topic 820 requires disclosures that stratify balance sheet amounts measured at fair value based on the inputs used to derive fair value measurements. These strata included:

· Level 1 valuations, where the valuation is based on quoted market prices for identical assets or liabilities traded in active markets (which include exchanges and over-the-counter markets with sufficient volume),

· Level 2 valuations, where the valuation is based on quoted market prices for similar instruments traded in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market, and

· Level 3 valuations, where the valuation is generated from model-based techniques that use significant assumptions not observable in the market, but observable based on the Company’s-specific data. These unobservable assumptions reflect the Company’s own estimates for assumptions that market participants would use in pricing the asset or liability. Valuation techniques typically include option pricing models, discounted cash flow models and similar techniques, but may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability.

Fair values of assets and liabilities (in thousands) measured on a recurring basis at December 31, 2013 and 2012 are as follows:

	Level 1		Level 2		Level 3		Fair Value
December 31, 2013:
Securities available for sale		—		89,276		—		89,276
December 31, 2012:
Securities available for sale		—		88,188		—		88,188

13. Segment Reporting

The Company, due to its size (both assets and employees), has only one reportable segment. The Company reports its lending activities (mortgages, consumer and commercial) as one segment. It does not operate as multiple segments nor does it manage or report as other than one segment.

The Company does not have a single external customer from which it derives 10% or more of its revenue. Refer to Note 3 for the one geographical area it operates in.

14. Stock Based Benefit Plans

In 2003 and 2011 the Company established recognition and retention plan and trust agreements (“the 2003 RRP” and “the 2011 RRP”), which are stock-based incentive plans. Shares subject to awards under the agreements vest at the rate of 20% per year.

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14. Stock Based Benefit Plans (Continued)

The Company authorized 45,634 (26,186 pre-second-step conversion) shares of the Company’s common stock to be awarded under the 2003 RRP plan and purchased the shares in the open market to fund the 2003 RRP plan. As of December 31, 2013, 3,785 shares had not vested. Shares vested and issued during the years ended December 31, 2013 and 2012 were 2,282 and 2,281, respectively. No further grants may be made under the 2003 RRP plan.

The Company authorized 49,534 shares of the Company’s common stock to be awarded under the 2011 RRP agreement and purchased the shares in the open market to fund the 2011 RRP plan at a cost of $686,000. As of December 31, 2013, 42,637 shares had been awarded under the 2011 RRP agreement. As of December 31, 2013, 33,906 shares had not vested. Shares vested and issued during the years ended December 31, 2013 and 2012 were 7,864 and 7,764, respectively.

Expense for the 2003 RRP and 2011 RRP is being amortized over a 60-month period and is based on the market value of the Company’s stock as of the date of the awards which was $11.96 with respect to the2008 awards and $6.31 and $12.00 for the 2009 and 2011 awards, respectively. All awards prior to 2008 have been fully amortized. Total compensation under the 2003 RRP and 2011 RRP agreements for the years ended December 31, 2013 and 2012 was $116,000 and $115,000, respectively, and is included in salaries and benefits.

The Company established the 2003 Stock Option Plan (“the 2003 Option Plan”) and the 2011 Stock Option Plan (“the 2011 Option Plan”) under which 114,084 (65,464 pre-second-step conversion) and 123,836 shares of Company stock, respectively, are reserved for the grant of stock options to directors, officers and employees. The Plans provide for vesting of options granted to participants at 20% per year and the options expire in ten years. The exercise price of the options is equal to the fair market value of the common stock on the grant date. As of December 31, 2013, options covering 120,853 shares were outstanding and had an average exercise price of $11.52. Options totaling 48,466 shares were vested and exercisable at December 31, 2013 with an average exercise price of $10.04. No further options can be granted under the 2003 Options Plan.

The fair value of each outstanding option is estimated on the date of the grant using the Black-Scholes option-pricing formula with the following weighted average assumptions; 1% dividend yield, 10 years expected life, 30.07% expected volatility and 3.53% risk free interest. The majority of the 2003 Option Plan options (86,934) were granted in May 2003 and have fully vested. The value of 4,888 shares granted in 2008 was considered immaterial and the value of 20,867 shares issued in 2009 had an approximate value of $50,000 under the Black-Scholes option-pricing formula. Option Plan shares granted at December 31, 2013 (95,098) had an approximate value of $180,000 under the Black-Scholes option-pricing formula.

The expected volatility is based on historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based upon the Company’s history and expectation of dividend payouts.

The Company's Stock Benefits Administration Committee of the Board of Directors oversees the RRP and Option Plans.

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15. Supplemental Retirement Benefit Agreement

The Bank has entered into supplemental retirement benefit agreements (the “Agreements”) with three key executives. The Agreements provide for monthly retirement benefits in the amount of $5,000 per month for ten to fifteen years from the date they retire for the executive group as a whole. As of December 31, 2013 and 2012, a liability (in thousands) of $330 and $337, respectively, was accrued in accordance for the Agreements. Total expense for the supplement retirement benefit agreement for the years ended December 31, 2013 and 2012 was (in thousands) $15 and $15, respectively.

16. Earnings Per Share (EPS)

EPS is calculated based on average weighted common shares outstanding less ESOP and RRP shares not released and less treasury stock. The number of shares used in the EPS computation at December 31, 2013 was 2,285,178 and at December 31, 2012 was 2,306,413.

17. Related Party Transactions

In the ordinary course of business, MBL Bank makes loans to directors, executive officers, principal shareholders, and other entities in which these individuals have 10% or more beneficial ownership.

Annual activity consisted of the following:

	2013			2012
	(in thousands)
Balance-beginning of period		2,804			1,940
New loans		8,551			3,590
Unused lines of credit		640			367
Principal repayments		(8,833	)		(3,093	)
Balance-end of period		3,162			2,804

Deposits (in thousands) from related parties held by MBL Bank at December 31, 2013 and 2012 amounted to $2,872and $2,695, respectively.

18. Commitments and Contingencies

In the ordinary course of business, the Bank has outstanding commitments on which management does not anticipate losses. They include, among other things, commitments to extend credit and letters of credit undertaken in the normal course of business. As of December 31, 2013 and 2012, the Bank had $28.4 million and $30.9 million, respectively, of loan commitments and lines of credit outstanding, including loans in process. Loan commitments totaled $4.2 millionwith $3.3 million being variable rate and $947,000 being fixed rate. Rates on the fixed rate commitments range from 5.50% to 7.255%. The variable rate commitments range from MBL Prime to MBL Prime + 1%.

When entered into, these commitments represent off-balance sheet risk to the Bank, with the contractual notional amount representing the Bank's exposure to credit loss in the event of nonperformance by the other party to the instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. They generally have fixed expiration dates and require payment of a fee. Since many commitments are expected to expire without being drawn upon, the total commitments do not necessarily represent future cash requirements. The Bank evaluates each customer's creditworthiness on a case-by-case basis, and obtains an amount of collateral it deems sufficient.

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19. Plan of Conversion

On September 14, 2010, the old Minden Bancorp, Inc. (“old Minden”) announced that old Minden, the Bank and Minden Mutual Holding Company had adopted a Plan of Conversion and Reorganization (the “Plan of Conversion”). On January 4, 2011 the conversion was completed resulting in the old Minden’s and the Bank’s reorganization from the two-tier mutual holding company structure to the stock holding company structure. Pursuant to the Plan of Conversion, (i) Minden Mutual Holding Company converted to stock form and then merged with and into old Minden, with old Minden being the surviving entity, (ii) old Minden merged with and into the Company with the Company being the survivor thereof, (iii) the shares of common stock of old Minden held by persons other than Minden Mutual Holding Company were converted into shares of common stock of the Company pursuant to an exchange ratio designed to preserve the percentage ownership interests of such persons, (iv) shares of common stock of old Minden held by Minden Mutual Holding Company were canceled, (v) shares of the common stock of the Bank held by old Minden are owned by the Company with the result that the Bank became the wholly owned subsidiary of the Company, and (vi) the Company offered and sold shares of its common stock to depositors of the Bank and others in the manner and subject to the priorities set forth in the Plan of Conversion.

In connection with the conversion, shares of old Minden’s common stock previously owned by Minden Mutual Holding Company were canceled and new shares of common stock, representing the approximate 58.6% ownership interest of Minden Mutual Holding Company, were offered for sale by the Company. Concurrent with the completion of the offering, old Minden’s existing public shareholders received a specified number of shares of the Company’s common stock for each share of old Minden’s common stock they owned at the date, based on an exchange ratio to ensure that they would own approximately the same percentage of the Company’s common stock as they owned of old Minden’s common stock immediately prior to the conversion.

At the time of the conversion, liquidation accounts were established for the benefit of certain depositors of the Bank by the Company and the Bank in an amount equal to the percentage ownership in old Minden owned by Minden Mutual Holding Company multiplied by old Minden’s stockholders’ equity as reflected in the latest statement of financial condition used in the final offering prospectus for the conversion plus the value of the net assets of Minden Mutual Holding Company as reflected in the latest statement of financial condition of Minden Mutual Holding Company prior to the effective date of the conversion. Neither the Company nor the Bank may declare or pay a cash dividend if the effect thereof would cause its equity to be reduced below either the amount required for the liquidation account or the regulatory capital requirements imposed by the Office of Thrift Supervision, now the FDIC, as a result of the implementation of the Dodd-Frank Act.

The transactions contemplated by the Plan of Conversion were subject to and approved by old Minden’s shareholders, depositors of the Bank, the Office of Thrift Supervision and the Louisiana Office of Financial Institutions. Upon completion of the conversion, conversion costs of approximately $920,000 were netted against the offering proceeds.

See Note 22 for information about the Company’s change in status from a savings and loan holding company to a bank holding company.

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20. Stock Repurchase Plans

On May 16, 2012, October 10, 2012 and February 12, 2013, the Board of Directors approved stock repurchase plans which provided for the repurchase of 70,000, 50,000 and 120,000 shares, respectively, of the Company’s issued and outstanding shares of common stock. A total of 93,812 shares had been repurchased under such plans as of September 30, 2013. The Company terminated all earlier programs as of September 30, 2013 and approved a new stock repurchase plan which provides for the repurchase of up to 150,000shares. Upon completion of the new repurchase program, the Company will have repurchased approximately 10% of its issued and outstanding shares of common stock.

The shares for the stock repurchase plans may be purchased in the open market or in privately negotiated transactions from time to time depending upon the market conditions and other factors. As of December 31, 2013, 119,312 shares had been repurchased under the above described plans at a cost of $1.9 million.

21. Condensed Financial Statements of Parent Company

Financial information pertaining to Minden Bancorp, Inc. is as follows (in thousands):

Balance Sheets	2013			2012
Assets
Cash		2,868			3,732
Investment in subsidiaries		38,803			36,568
Other assets		3			48
Total assets		41,674			40,348
Liabilities and Stockholders’ Equity
Other liabilities		28			23
Stockholders’ equity-net		41,646			40,325
Total liabilities and stockholders’ equity		41,674			40,348
Income Statements
Income		16			18
Expenses		126			146
		(110	)		(126	)
Equity in earnings of subsidiary		3,487			3,120
Income before income taxes		3,377			2,992
Income tax expense (benefit)		(37	)		(43	)
Net income		3,414			3,035

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21. Condensed Financial Statements of Parent Company (Continued)

Cash Flow Statements	2013			2012
Cash flows from operating activities:
Net income		3,414			3,035
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in income of subsidiaries		(3,487	)		(3,120	)
Other		72			68
Net cash used by operating activities		(1	)		(17	)
Cash flows from financing activities:
Dividends paid		(606	)		(918	)
Exercise of stock options		254			—
Investment – MBL Bank		—			—
Purchase of treasury stock		(511	)		(1,343	)
Other		—			(93	)
Net cash used by financing activities		(863	)		(2,354	)
Net decrease in cash and cash equivalents		(864	)		(2,371	)
Cash and cash equivalents at beginning of period		3,732			6,103
Cash and cash equivalents at end of period		2,868			3,732

22. Subsequent Event

On February 5, 2014, MBL Bank, the wholly-owned subsidiary of Minden Bancorp, Inc., converted to a Louisiana-chartered commercial bank from a Louisiana-chartered building and loan association. Such conversion was approved by the Louisiana Office of Financial Institutions. As a result of such conversion, Minden Bancorp, Inc. has become a bank holding company rather than a savings and loan holding company. The change to a bank holding company was approved by Federal Reserve Bank of Dallas under delegated authority. As a bank holding company with less than 1,200 shareholders of record, Minden Bancorp, Inc. filed on February 7, 2014, a Form 15 with the Securities and Exchange Commission to suspend its duty to file reports under Section 13 and 15(d) of the Securities Exchange Act of 1934 and to de-register its common stock under Section 12 of the Securities Exchange Act of 1934. The de-registration is expected to become effective 90 days after the Form 15 was filed.

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

Not Applicable.

Item 9A. Controls and Procedures.

(a)          Our management evaluated, with the participation of our President and Chief Executive Officer and our Treasurer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2013. Based on such evaluation, our President and Chief Executive Officer and our Treasurer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.

(b)          Management’s Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Securities Exchange Act of 1934 Rule 13a-15(f). The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements and related footnote disclosures in accordance with generally accepted accounting principles that can be relied upon by external users, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

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

Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of December 31, 2013.

This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.

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

Item 9B. Other Information.

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required herein is incorporated by reference from the sections captioned “Information with Respect to Nominees for Director, Continuing Directors and Executive Officers” and “Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management – Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Definitive Proxy Statement for the Annual Meeting of Shareholders to be held on May 13, 2014, which will be filed with the Securities and Exchange Commission on or about April 11, 2014(“Definitive Proxy Statement”).

The Company has adopted a Code of Conduct and Ethics that applies to its principal executive officer and principal financial officer, as well as other officers and employees of the Company and the Bank. A copy of the Code of Conduct and Ethics is available on the Company’s website at www.mblbank.com.

Item 11. Executive Compensation.

The information required herein is incorporated by reference from the section captioned “Management Compensation” in the Company’s Definitive Proxy Statement.

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

Security Ownership of Certain Beneficial Owners and Management. Information regarding security ownership of certain beneficial owners and management is incorporated by reference to “Beneficial Ownership of Common Stock by Certain Beneficial Owners and Management” in the Company’s Definitive Proxy Statement.

Equity Compensation Plan Information. The following table sets forth certain information for all equity compensation plans and individual compensation arrangements (whether with employees or non-employees; such as directors) in effect as of December 31, 2013. The amounts reflected have been adjusted to apply the exchange ratio as a result of the second-step conversion.

Plan Category	Number of Shares to be Issued Upon the Exercise of Outstanding Options, Warrants and Rights			Weighted Average Exercise Price of Outstanding Options		Number of Shares Available for Future Issuance (Excluding Shares reflected in First Column)
Equity compensation plans approved by security holders		120,853	(1)	$	11.52		16,228
Equity compensation plans not approved by security holders		—		$	—		—

_________________

(1) Includes 72,389 shares subject to restricted stock awards which were not vested as of December 31, 2013.

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

The information required herein is incorporated by reference from the sections captioned “Management Compensation – Related Party Transactions” and “Information with Respect to Nominees for Director, Continuing Directors and Executive Officers” in the Company’s Definitive Proxy Statement.

Item 14. Principal Accounting Fees and Services.

The information required herein is incorporated by reference from the section captioned “Ratification of Appointment of Independent Registered Public Accounting Firm (Proposal Four) – Audit Fees” in the Company’s Definitive Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a)(1) The following financial statements are incorporated by reference from Item 8 hereof:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statement of Comprehensive Income

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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

(3)          Exhibits

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

No.	Description	Location
3.1	Articles of Incorporation of Minden Bancorp, Inc.	(1)
3.2	Bylaws of Minden Bancorp, Inc.	(1)
4.0	Form of Stock Certificate of Minden Bancorp, Inc.	(1)
10.1	Minden Bancorp, Inc. Amended and Restated 2003 Stock Option Plan	(1)*
10.2	Minden Bancorp, Inc. Amended and Restated 2003 Recognition and Retention Plan and Trust Agreement	(1)*
10.3	Amended and Restated Employment Agreement between MBL Bank and Jack E. Byrd, Jr.	(2)*
10.4	Supplemental Executive Retirement Agreement between MBL Bank and A. David Evans	(1)*
10.5	Supplemental Executive Retirement Agreement between MBL Bank and Michael P. Burton	(1)*
10.6	Supplemental Executive Retirement Agreement between MBL Bank and Becky T. Harrell	(1)*
10.7	Minden Bancorp, Inc. 2011 Stock Option Plan	(3)*
10.8	Minden Bancorp, Inc. 2011 Recognition and Retention Plan  and Trust Agreement	(4)*
10.9	Employment Agreement between Minden Bancorp, Inc. and Jack E. Byrd, Jr.	(5)*

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No.	Description	Location
31.1	Rule 13(a)-14(a) Certification of the Chief Executive Officer	Filed herewith
31.2	Rule 13(a)-14(a) Certification of the Chief Financial Officer	Filed herewith
32.0	Section 1350 Certification	Filed herewith

____________________

* Denotes a management contract or compensatory plan or arrangement.

(1) Incorporated by reference from the like-numbered exhibit included in Minden Bancorp, Inc.’s registration statement on Form S-1, filed September 17, 2010, as amended (SEC File No. 333-169458).

(2) Incorporated by reference from Exhibit 10.1 of Minden Bancorp’s Current Report on Form 8-K, dated January 10, 2012 and filed with the Securities and Exchange Commission on January 13, 2012.

(3) Incorporated by reference from Appendix A of Minden Bancorp’s definitive proxy statement (Commission File No. 000-54234) filed with the Securities and Exchange Commission on May 27, 2011.

(4) Incorporated by reference from Appendix B of Minden Bancorp’s definitive proxy statement (Commission File No. 000-54234) filed with the Securities and Exchange Commission on May 27, 2011.

(5) Incorporated by reference from Exhibit 10.2 of Minden Bancorp’s Current Report on Form 8-K, dated January 10, 2012, filed with the Securities and Exchange Commission on January 13, 2012.

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

No.	Description
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document.*

______________________

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

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

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

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	MINDEN BANCORP, INC.
March 31, 2014	By:	/s/ Jack E. Byrd, Jr.
		Jack E. Byrd, Jr.
		Chairman, President and Chief Executive
		Officer

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

Name	Title	Date
/s/ Jack E. Byrd, Jr. Jack E. Byrd, Jr.	Chairman, President and Chief Executive Officer (principal executive officer)	March 31, 2014
/s/ Becky T. Harrell Becky T. Harrell	Treasurer and Chief Financial Officer (principal financial and accounting officer)	March 31, 2014
/s/ Russell A. Adams Russell A. Adams	Director	March 31, 2014
/s/ John P. Collins John P. Collins	Director	March 31, 2014
/s/ A. David Evans A. David Evans	Director	March 31, 2014
/s/ Michael S. Harper Michael S. Harper	Director	March 31, 2014
/s/ F. Dare Lott, Jr. F. Dare Lott, Jr.	Director	March 31, 2014
/s/ Michael W. Wise Michael W. Wise	Director	March 31, 2014
/s/ R. E. Woodard, III R. E. Woodard, III	Director	March 31, 2014

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