Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

March 31, 2014

¨	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 1-13712

TECHE HOLDING COMPANY

(Exact name of registrant as specified in its charter)

Louisiana		72-1287456
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1120 Jefferson Terrace Boulevard New Iberia, Louisiana			70560
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code (337) 365-0366

N/A

Former name, former address and former fiscal year, if changed since last report.

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: April 30, 2014.

Class		2,110,282
$.01 par value common stock		Outstanding Shares

TECHE HOLDING COMPANY

QUARTERLY REPORT ON FORM 10-Q

INDEX

		Page
PART I .	FINANCIAL INFORMATION

Item 1.	Financial Statements

Consolidated Balance Sheets as of March 31, 2014 (unaudited) and September 30, 2013		3
Unaudited Consolidated Statements of Income for the three and six months ended March 31, 2014 and 2013		4
Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended March 31, 2014 and 2013		5
Unaudited Consolidated Statements of Cash Flows for the six months ended March 31, 2014 and 2013		6
Notes to Unaudited Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosure About Market Risk	36

Item 4	Controls and Procedures	36

PART II .	OTHER INFORMATION

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	37

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37

Item 3.	Defaults Upon Senior Securities	37

Item 4.	Mine Safety Disclosures	37

Item 5.	Other Information	37

Item 6.	Exhibits	37

Signatures

TECHE HOLDING COMPANY

CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

	March 31, 2014		September 30, 2013*
ASSETS		(unaudited)

Cash and due from banks	$	19,754	$	18,293
Interest-bearing deposits		10,823		16,039
Securities available-for-sale at fair value (amortized cost of $12,066 and $13,569)		12,726		14,447
Securities held-to-maturity—at amortized cost (estimated fair value of $60,187 and $68,498)		59,527		67,732
Loans receivable—net of allowance for loan losses of $7,562 and $7,868		697,876		676,535
Accrued interest receivable		2,057		2,091
Investment in Federal Home Loan Bank stock, at cost		5,618		5,068
Real estate owned, net		372		741
Prepaid expenses and other assets		4,059		4,394
Goodwill		3,647		3,647
Life insurance contracts		15,429		15,125
Premises and equipment, net		31,853		32,552

TOTAL ASSETS	$	863,741	$	856,664

LIABILITIES AND STOCKHOLDERS’ EQUITY

Deposits	$	654,040	$	650,791
Advances from Federal Home Loan Bank		108,634		108,997
Advance payments by borrowers for taxes and insurance		3,236		3,484
Accrued interest payable		310		353
Accounts payable and other liabilities		4,421		3,978

TOTAL LIABILITIES		770,641		767,603

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY:
Preferred stock, 5,000,000 shares authorized, none issued		-		-
Common stock, $.01 par value, 10,000,000 shares authorized; 4,874,447 and 4,813,831 shares issued, 2,109,504 and 2,048,888 outstanding		48		47
Additional paid-in capital		59,846		57,593
Retained earnings		90,154		88,228
Treasury stock, 2,764,943 and 2,764,943 shares - at cost		(57,377)		(57,377)
Accumulated other comprehensive income on available for sale securities		429		570

TOTAL STOCKHOLDERS’ EQUITY		93,100		89,061

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	863,741	$	856,664

See Notes to Unaudited Consolidated Financial Statements.

* derived from audited financial statements

TECHE HOLDING COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2014		2013		2014		2013

INTEREST INCOME
Interest and fees on loans	$	9,034	$	8,567	$	18,147	$	17,665
Interest and dividends on investments		230		313		472		657
Other interest income		117		122		237		251
TOTAL INTEREST INCOME		9,381		9,002		18,856		18,573
INTEREST EXPENSE:
Deposits		629		720		1,287		1,550
Advances from Federal Home Loan Bank		876		977		1,800		1,979
TOTAL INTEREST EXPENSE		1,505		1,697		3,087		3,529
NET INTEREST INCOME		7,876		7,305		15,769		15,044

PROVISION FOR LOAN LOSSES		-		250		-		400

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		7,876		7,055		15,769		14,644

NON-INTEREST INCOME:
Service charges and other		3,516		3,716		7,214		7,296
Gain on sale of loans		44		39		118		2,070
Gain on sale of equity securities		-		-		60		-
Other income		210		216		404		417
TOTAL NON-INTEREST INCOME		3,770		3,971		7,796		9,783

NON-INTEREST EXPENSE:
Compensation and employee benefits		4,844		4,916		9,757		9,992
Occupancy expense		1,767		1,663		3,519		3,315
Marketing and professional		1,673		819		2,310		1,736
FDIC premiums and assessments		124		135		235		270
Other operating expenses		1,164		1,172		2,201		2,144
TOTAL NON-INTEREST EXPENSE		9,572		8,705		18,022		17,457

INCOME BEFORE INCOME TAXES		2,074		2,321		5,543		6,970
INCOME TAXES		973		762		2,027		2,339
NET INCOME	$	1,101	$	1,559	$	3,516	$	4,631
BASIC EARNINGS PER COMMON SHARE	$	0.52	$	0.76	$	1.69	$	2.27
DILUTED EARNINGS PER COMMON SHARE	$	0.51	$	0.75	$	1.65	$	2.24

See Notes to Unaudited Consolidated Financial Statements.

TECHE HOLDING COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS)

	For Three Months				For Six Months
	Ended March 31,				Ended March 31,
	2014		2013		2014		2013

Net income	$	1,101	$	1,559	$	3,516	$	4,631
Reclassification of realized (gains) losses		-		-		(60)		-
Tax effect		-		-		21		-
Unrealized gains (losses)		(19)		(57)		(158)		(212)
Tax effect		(9)		(20)		(56)		(74)
Comprehensive income	$	1,091	$	1,522	$	3,375	$	4,493

See Notes to Unaudited Consolidated Financial Statements.

TECHE HOLDING COMPANY

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

	For the Six Months
	Ended March 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	3,516		$	4,631
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion of discount and amortization of premium on investments and mortgage-backed securities		5			19
Provision for loan losses		-			400
Provision for loss on real estate owned		-			36
(Gain)/Loss on sale of OREO		(4	)		34
Gain on securities		(60	)		-
Gain on sale of loans		(118	)		(2,070	)
Depreciation		897			793
Excess tax benefits from share-based payment arrangements		-			(61	)
Change in accounts payable and other liabilities		443			(1,888	)
Change in life insurance contracts		(304	)		(305	)
Amortization of intangible assets		2			4
Change in prepaid expenses and other assets		333			(447	)
Change in accrued interest receivable		34			259
Change in accrued interest payable		(43	)		(21	)
Stock-based compensation		339			65
Other items– net		138			(14	)
Net cash provided by operating activities		5,178			1,435

CASH FLOWS FROM INVESTING ACTIVITIES:
Principal repayments of mortgage-backed securities available for sale		1,590			3,001
Principal repayments of securities held to maturity		13,586			9,118
Purchase of securities held to maturity		(5,390	)		(17,477	)
Purchase of securities available for sale & equity securities		-			(100	)
Proceeds from sale of investment securities available for sale		195			-
Net loan originations		(26,780	)		(20,120	)
Purchase of loans		(298	)		-
Proceeds from sale of loans		5,473			51,635
(Purchases) redemption of FHLB Stock		(550	)		1,535
Proceeds from sale of OREO		519			638
Purchase of premises and equipment		(198	)		(2,573	)
Net cash (used) provided by investing activities		(11,853	)		25,657

CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits		3,249			42,733
Net (decrease) in FHLB advances		(363	)		(34,848	)
Net (decrease) in advance payments by borrowers for taxes and insurance		(248	)		(699	)
Dividends paid		(1,590	)		(1,493	)
Excess tax benefits from share-based payment arrangements		-			61
Proceeds from exercise of stock options		1,872			784
Purchase of common stock for treasury		-			(887	)
Net cash provided by financing activities		2,920			5,651

NET INCREASE IN CASH		(3,755	)		32,743
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		34,332			37,300
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	30,577		$	70,043

Supplemental schedule of noncash investing activities:
Accumulated other comprehensive income, net of income taxes	$	(141	)	$	(138	)
Transfer from loans to real estate owned		356			940
Loans originated to finance sale of real estate owned		210			106

See Notes to Unaudited Consolidated Financial Statements.

TECHE HOLDING COMPANY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - PRINCIPLES OF CONSOLIDATION

The consolidated financial statements as of March 31, 2014 and September 30, 2013 and for the three and six months ended March 31, 2014 and 2013, include the accounts of Teche Holding Company (the “Company”) and its subsidiary, Teche Federal Bank (the “Bank”). The Company’s business is conducted principally through the Bank. All significant inter-company accounts and transactions have been eliminated in consolidation.

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information necessary for a complete presentation of consolidated financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments, consisting of normal recurring accruals, which, in the opinion of management, are necessary for a fair presentation of the consolidated financial statements, have been included. The results of operations for the six months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the entire fiscal year or any other period. These financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2013.

NOTE 3 - INCOME PER SHARE

Basic and diluted net income per share is computed based on the weighted average number of shares outstanding during each period. Diluted net income per share reflects the potential dilution that could occur if stock options were exercised, resulting in the issuance of common stock that then shared in the net income of the Company.

Following is a summary of the information used in the computation of basic and diluted income per common share for the three and six months ended March 31, 2014 and 2013 (in thousands).

	Three Months Ended			Six Months Ended
	March 31,			March 31,
	2014	2013		2014	2013
Weighted average number of common shares outstanding - used in computation of basic income per common share	2,103		2,038	2,081	2,039
Effect of dilutive securities:
Stock options and grants	71		28	55	26
Weighted average number of common shares outstanding plus effect of dilutive securities - used in computation of diluted net income per common share	2,174		2,066	2,136	2,065

For the three and six months ended March 31, 2014 and 2013, net income for determining diluted earnings per share was equivalent to net income. Options to purchase shares that have been excluded from the determination of diluted earnings per share because they are antidilutive (the exercise price is higher than the current market price) amounted to 0 and 72,220 for the three and six months ended March 31, 2014 and 2013, respectively.

NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income for the Company consists of unrealized holding gains and losses on investments classified as available for sale, net of income taxes. For the six months ended March 31, 2014, there was a $39,000, net of tax, reclassification out of accumulated other comprehensive income for realized gains on the sale of investments. The reclassification out of accumulated other comprehensive income was reported within non-interest income on the Unaudited Consolidated Statements of Income. There were no reclassifications out of accumulated other comprehensive income for the three and six months ended March 31, 2013.

NOTE 5 – FAIR VALUE MEASUREMENTS

The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. Available for sale securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a nonrecurring basis, such as securities held-to-maturity, loans held for sale, loans held for investment and certain other assets. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting, other than temporary impairment accounting or impairments of individual assets.

This is a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1 - Observable inputs such as quoted prices in active markets;

Level 2 - Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3 - Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company evaluates fair value measurement inputs on an ongoing basis in order to determine if there is a change of sufficient significance to warrant a transfer between levels. For example, changes in market activity or the addition of new unobservable inputs could, in the Company’s judgment, cause a transfer to either a higher or lower level. For the three and six months ended March 31, 2014, there were no transfers between levels.

Following is a description of valuation methodologies used for assets recorded at fair value.

Investment Securities

Securities available for sale are valued at quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable securities. These are inputs used by a third-party pricing service used by the Company. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government-sponsored entities. Securities classified as Level 3 include asset-backed securities in less liquid markets. Securities held to maturity are valued using discounted cash flow models that use assumptions about prepayment speeds, coupon default rates, discount rates and timing and other assumptions that may affect the amounts of cash flows. The Company periodically updates its understanding of the inputs used and compares valuations to an additional third party source.

Loans

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with ASC 310-10-35. The fair value of impaired loans is estimated using one of several methods, including the collateral value if the impaired loan is collateral-dependent, which is typically derived from appraisals

that take into consideration prices in observed transactions involving similar assets and similar locations. Each appraisal is updated on an annual basis, either through a new appraisal or through an internal review process. Other methods used to determine fair value are enterprise value, liquidation value and discounted cash flows. The fair value of impaired loans that are not collateral-dependent would require a measure using a discounted cash flow analysis considered to be a Level 3 input. Fair value is re-assessed at least quarterly, or more frequently when circumstances occur that indicate a change in fair value. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At March 31, 2014, substantially all of the impaired loans were evaluated based on the fair value of the collateral less estimated costs to sell. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

Fair value is also used on a nonrecurring basis for nonfinancial assets and liabilities such as foreclosed assets, and other real estate owned measured at fair value for purposes of assessing impairment. A description of the valuation methodologies used for nonfinancial assets measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Other Real Estate Owned

Other Real Estate Owned (“OREO”), consisting of properties obtained through foreclosure or in satisfaction of loans, is reported at the lower of cost or fair value, determined on the basis of current appraisals, comparable sales, and other estimates of value obtained principally from independent sources, adjusted for estimated selling costs (Level 3). The fair value of OREO is based on a property’s appraised value adjusted at management’s discretion to reflect a further decline in the fair value of properties since the time the appraisal analysis was performed. The Company has experienced that appraisals quickly become outdated due to the volatile real estate environment. The inputs used to determine the fair value of OREO fall within Level 3. At the time of foreclosure, any excess of the loan balance over the fair value of the real estate held as collateral is treated as a charge against the allowance for loan losses. Gains or losses on sale and generally any subsequent adjustments to the value are recorded as a component of OREO expense.

The following tables present the fair value measurements of financial assets measured at fair value on a recurring and nonrecurring basis as of March 31, 2014 and September 30, 2013, respectively, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value.

			Fair Value Measurements using:
	Fair Value At March 31, 2014		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
(In thousands)
Assets valued on a recurring basis:
Mortgage-backed securities:
Government National Mortgage Assoc.	$	1,317	$	-	$	1,317	$	-
Federal Home Loan Mortgage Corp.		1,142		-		1,142		-
Federal National Mortgage Assoc.		8,718		-		8,718		-
		11,177		-		11,177		-

CMOs:
Government National Mortgage Assoc.		1,126		-		1,126		-
Marketable equity securities		423		423		-		-
Total recurring	$	12,726	$	423	$	12,303	$	-

Assets valued on a non-recurring basis:
Impaired loans		1,309		-		-		1,309
Other real estate owned		372		-		-		372
Total non-recurring	$	1,681	$	-	$	-	$	1,681

	Fair Value At September		Fair Value Hierarchy
	30, 2013		Level 1		Level 2		Level 3
(In thousands)
Assets valued on a recurring basis:
Mortgage-backed securities:
Government National Mortgage Assoc.	$	1,435	$	-	$	1,435	$	-
Federal Home Loan Mortgage Corp.		1,463		-		1,463		-
Federal National Mortgage Assoc.		9,692		-		9,692		-
		12,590		-		12,590		-

CMOs:
Government National Mortgage Assoc.		1,296		-		1,296		-
Marketable equity securities		561		561		-		-
Total recurring	$	14,447	$	561	$	13,886	$	-

Assets valued on a non-recurring basis:
Impaired loans		1,333		-		-		1,333
Other real estate owned		741		-		-		741
Total non-recurring	$	2,074	$	-	$	-	$	2,074

The following tables presents additional quantitative information about assets measured at fair value on a nonrecurring basis and for which the Company has utilized Level 3 inputs to determine fair value:

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable	Range (Weighted
	Estimate		Techniques	Input	Average)
(In thousands)
March 31, 2014:
Impaired Loans	$	1,309	Discounted expected cash flows	Interest rate and Repayment term	Weighted average discount rate 6.59% Maturity range 60-72 months

Other real estate owned	$	372	Property appraisals	Management discount for property type and recent market volatility	0%-34% discount

	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value		Valuation	Unobservable	Range (Weighted
	Estimate		Techniques	Input	Average)
(In thousands)
September 30, 2013:
Impaired Loans	$	1,333	Discounted expected cash flows	Interest rate and Repayment term	Weighted average discount rate 6.59%
					Maturity range 60-72 months

Other real estate owned	$	741	Property appraisals	Management discount for property type and recent market volatility	10%-33% discount

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. ASC 825 excludes certain financial instruments and all non-financial 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 Company in estimating fair value disclosures for financial instruments:

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

Investment Securities – See the discussion elsewhere in this Note 5 on the valuation of the fair value of investment securities. Investment securities’ fair value equal quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans - See the discussion in Note 5 on the valuation of fair value of impaired loans. The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers for the same remaining maturities. No adjustment has been made for illiquidity in the market for loans as there is no active market for many of the Company’s loans on which to reasonably base this estimate.

Federal Home Loan Bank Stock - Federal Home Loan Bank (FHLB) stock is recorded at cost and is periodically reviewed for impairment. No ready market exists for the FHLB stock. It has no quoted market value and is carried at cost. Cost approximates fair market value based upon the redemption requirements of the FHLB, and this investment is not considered impaired at March 31, 2014. The FHLB of Dallas is still redeeming stock.

Bank Owned Life Insurance- The carrying amounts of bank owned life insurance contracts approximate fair value.

Accrued Interest - The carrying amounts of accrued interest receivable and payable approximate fair value.

Deposits - The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

Advances from Federal Home Loan Bank - The fair value of advances is estimated using rates currently available for advances of similar remaining maturities.

Commitments - The fair value of commitments to extend credit was not significant.

The estimated fair values of the Company’s financial instruments were as follows at March 31, 2014 and September 30, 2013:

					Fair Value Measurements at March 31, 2014
	Carrying		Estimated Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
(In thousands) Financial assets:
Cash and cash equivalents	$	30,577	$	30,577	$	30,577	$	-	$	-
Investment securities		72,253		72,913		423		72,490		-
FHLB stock		5,618		5,618		-		5,618		-
Accrued interest receivable		2,057		2,057		-		2,057		-
Life Insurance contracts		15,429		15,429		-		15,429		-
Loans receivable, net		697,876		698,974		-		-		698,974

Financial liabilities:
Deposits		654,040		654,584		110,964		543,620		-
Advance from Federal Home Loan Bank		108,634		113,356		-		113,356		-
Accrued interest payable		310		310		-		310		-

					Fair Value Measurements at September 30, 2013
	Carrying		Estimated Fair		Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Amount		Value		(Level 1)		(Level 2)		(Level 3)
(In thousands) Financial assets:
Cash and cash equivalents	$	34,332	$	34,332	$	34,332	$	-	$	-
Investment securities		82,179		82,945		561		82,384		-
FHLB stock		5,068		5,068		-		5,068		-
Accrued interest receivable		2,091		2,091		-		2,091		-
Life Insurance contracts		15,125		15,125		-		15,125		-
Loans receivable, net		676,535		680,901		-		-		680,901

Financial liabilities:
Deposits		650,791		652,019		100,822		551,197		-
Advance from Federal Home Loan Bank		108,997		113,774		-		113,774		-
Accrued interest payable		353		353		-		353		-

NOTE 6 – SECURITIES

The amortized cost and estimated fair values of securities available-for-sale were as follows:

	March 31, 2014
			Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
(In thousands)
Mortgage-backed securities:
Government National Mortgage Assoc.	$	1,268	$	49	$	-	$	1,317
Federal Home Loan Mortgage Corp.		1,087		55		-		1,142
Federal National Mortgage Assoc.		8,362		356		-		8,718
		10,717		460		-		11,177

CMOs:
Government National Mortgage Assoc.		1,050		76		-		1,126
Marketable equity securities		299		124		-		423
Total	$	12,066	$	660	$	-	$	12,726

	September 30, 2013
			Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
(In thousands)
Mortgage-backed securities:
Government National Mortgage Assoc.	$	1,383	$	52	$	-	$	1,435
Federal Home Loan Mortgage Corp.		1,405		58		-		1,463
Federal National Mortgage Assoc.		9,231		461		-		9,692
		12,019		571		-		12,590

CMOs:
Government National Mortgage Assoc.		1,175		121		-		1,296
Marketable equity securities		375		186		-		561
Total	$	13,569	$	878	$	-	$	14,447

The amortized cost and estimated fair values of securities held-to-maturity were as follows:

	March 31, 2014
			Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
(In thousands)
Investment securities:
Time deposits other banks	$	46,453	$	-	$	-	$	46,453
Mortgage-backed securities:
Federal National Mortgage Assoc.		10,459		486		-		10,945
Federal Home Loan Mortgage Corp.		2,133		147		-		2,280
CMOs:
Federal Home Loan Mortgage Corp.		41		1		-		42
Federal National Mortgage Assoc.		441		26		-		467
Total	$	59,527	$	660	$	-	$	60,187

	September 30, 2013
			Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
(In thousands)
Investment securities:
Time deposits other banks	$	52,995	$	-	$	-		$	52,995
Mortgage-backed securities:
Federal National Mortgage Assoc.		11,650		578		(1	)		12,227
Federal Home Loan Mortgage Corp.		2,528		155		-			2,683
CMOs:
Federal Home Loan Mortgage Corp.		43		1		-			44
Federal National Mortgage Assoc.		516		33		-			549
Total	$	67,732	$	767	$	(1	)	$	68,498

The Company had 298 investments at March 31, 2014, none of which had unrealized losses.

Details concerning securities with unrealized losses as of September 30, 2013 are as follows:

	Security with losses under 12 months				Securities with losses over 12 months					Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held-to-Maturity
Mortgaged-backed securities:
Federal National Mortgage Association	$	-	$	-	$	110	$	(1	)	$	110	$	(1	)
Total	$	-	$	-	$	110	$	(1	)	$	110	$	(1	)

The Company had 330 investments at September 30, 2013 of which one had immaterial unrealized losses.

The amortized cost and estimated fair value of available-for-sale securities by contractual maturity at March 31, 2014, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands)	Amortized Cost		Fair Value
Due within one year	$	-	$	-
Due after one year but within five years		-		-
Total		-		-

Mortgage-backed securities		11,767		12,303
Equity securities		299		423
Total	$	12,066	$	12,726

The amortized cost and estimated fair value of held-to-maturity securities by contractual maturity at March 31, 2014, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

(In thousands)	Amortized Cost		Fair Value
Due within one year	$	25,305	$	25,305
Due after one year but within five years		21,148		21,148
Total		46,453		46,453

Mortgage-backed securities		13,074		13,734
Total	$	59,527	$	60,187

There were no other than temporary impairment losses in the equity securities portfolio for the six months ended March 31, 2014 or the six months ended March 31, 2013. Management will continue to monitor the equity securities portfolio and make an impairment adjustment if deemed necessary based upon the prospects for recovery and the duration and severity of any future unrealized losses.

NOTE 7 - LOANS

Loans Receivable

Loans receivable are summarized as follows:

	At Mar 31 '14		% Total			At Sept 30 '13		% Total
(In thousands)
Commercial real estate loans	$	138,871		19.6	%	$	133,649		19.4	%
Commercial non-real estate loans		33,458		4.7	%		30,685		4.5	%
Commercial-construction loans		9,392		1.3	%		8,593		1.3	%
Commercial-land		10,171		1.5	%		10,349		1.5	%
Residential-construction loans		6,932		1.0	%		5,112		0.7	%
Residential-real estate loans		416,915		58.9	%		409,693		59.7	%
Consumer-Mobile home loans		46,594		6.6	%		43,198		6.3	%
Consumer-other		45,136		6.4	%		45,171		6.6	%
Total Loans		707,469		100.00	%		686,450		100.00	%
Less:
Allowance for loan losses		7,562					7,868
Deferred loan fees		2,031					2,047
Total Net Loans	$	697,876				$	676,535

Residential real estate loans increased $7.2 million between September 30, 2013 and March 31, 2014 due to increased loan originations. Commercial real estate loans increased $5.2 million due to increased loan originations. At March 31, 2014 approximately $306.0 million of loans receivable were pledged as collateral securing advances from the FHLB.

CREDIT QUALITY OF LOANS AND ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses were as follows:

	Three Months Ended March 31,						Six Months Ended March 31,
(in 000’s)	2014			2013			2014			2013
Beginning ALLL	$	7,709		$	8,234		$	7,868		$	8,559
Provision for Loan Losses		-			250			-			400
Net Charge-offs		(147	)		(349	)		(306	)		(824	)
Ending ALLL	$	7,562		$	8,135		$	7,562		$	8,135

The amount of nonaccrual loans at March 31, 2014 and September 30, 2013 was $3.2 million and $2.4 million, respectively. The Company had total impaired loans of approximately $7.3 million and $7.6 million at March 31, 2014 and September 30, 2013, respectively. Specific reserves allocated to impaired loans totaled $138,000 at both March 31, 2014 and September 30, 2013.

Allowance for Loan Losses and Recorded Investment in Loans as of March 31, 2014 and September 30, 2013 and for the three and six months ended March 31, 2014 and March 31, 2013.

The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of probable losses that have been incurred within the existing portfolio of loans. The allowance is the amount, in the judgment of management, necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The methodology is based on the Bank’s historical loss experience by type of credit and internal risk grade, specific homogeneous risk pools and specific loss allocations, with adjustments for current events and conditions. The Company’s process for determining the appropriate level of the allowance for loan losses is designed to account for credit deterioration as it occurs. The provision for loan losses reflects loan quality trends, potential problem loans, and criticized loans and net charge-offs, among other factors. The provision for loan losses also reflects the totality of actions taken on all loans for a particular period. In other words, the amount of the provision reflects not only the necessary increases in the allowance for loan losses related to newly identified criticized loans, but it also reflects actions taken related to other loans including, among other things, any necessary increases or decreases in required allowances for specific loans or loan class.

The table below provides an allocation of the allowance for possible loan losses by loan type; however, allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories:

	Quarter Ended March 31, 2014
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:
Beginning Balance	$	1,959	$	141	$	398	$	80	$	3,863	$	268	$	527	$	473	$	7,709
Charge-offs		-		-		-		-		106		-		50		27		183
Recoveries		-		-		-		-		24		-		2		10		36
Provision		-		-		-		-		-		-		-		-		-
Ending balance	$	1,959	$	141	$	398	$	80	$	3,781	$	268	$	479	$	456	$	7,562

	Quarter Ended March 31, 2013
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:

Beginning Balance	$	2,045	$	141	$	368	$	80	$	4,171	$	265	$	586	$	578	$	8,234
Charge-offs		-		-		21		-		206		-		131		24		382
Recoveries		15		-		-		-		8		-		8		2		33
Provision		-		-		52		-		83		-		115		-		250
Ending balance	$	2,060	$	141	$	399	$	80	$	4,056	$	265	$	578	$	556	$	8,135

	Six Months Ended March 31, 2014
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:

Beginning Balance	$	1,959	$	141	$	398	$	80	$	3,931	$	268	$	560	$	531	$	7,868
Charge-offs		-		-		-		-		178		-		87		86		351
Recoveries		-		-		-		-		28		-		6		11		45
Provision		-		-		-		-		-		-		-		-		-
Ending balance	$	1,959	$	141	$	398	$	80	$	3,781	$	268	$	479	$	456	$	7,562

	Six Months Ended March 31, 2013
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:

Beginning Balance	$	2,045	$	141	$	437	$	80	$	4,390	$	265	$	609	$	592	$	8,559
Charge-offs		-		-		141		-		506		-		188		39		874
Recoveries		15		-		-		-		22		-		10		3		50
Provision		-		-		103		-		150		-		147		-		400
Ending balance	$	2,060	$	141	$	399	$	80	$	4,056	$	265	$	578	$	556	$	8,135

	As of March 31, 2014
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:

Ending balance allocation:
Individually evaluated for impairment	$	138	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	138

Collectively evaluated for impairment	$	1,821	$	141	$	398	$	80	$	3,781	$	268	$	479	$	456	$	7,424

Loans: Ending Balance Collectively evaluated for impairment	$	133,503	$	9,392	$	10,171	$	6,932	$	416,387	$	32,089	$	46,594	$	45,136	$	700,204

Ending Balance individually evaluated for impairment	$	5,368	$	-	$	-	$	-	$	528	$	1,369	$	-	$	-	$	7,265

	As of September 30, 2013
	Real Estate
(In thousands)	Commercial-real estate		Commercial-construction		Commercial-Land		Residential-construction		Residential-real estate		Commercial-non real estate		Consumer-Mobile Homes		Consumer-Other		Total
Allowance for loan losses:

Ending balance allocation:
Individually evaluated for impairment	$	138	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	138

Collectively evaluated for impairment	$	1,821	$	141	$	398	$	80	$	3,931	$	268	$	560	$	531	$	7,730

Loans: Ending Balance Collectively evaluated for impairment	$	128,091	$	8,593	$	10,349	$	5,112	$	409,096	$	29,283	$	43,198	$	45,171	$	678,893

Ending Balance individually evaluated for impairment	$	5,558	$	-	$	-	$	-	$	597	$	1,402	$	-	$	-	$	7,557

Credit Quality Indicators

As of March 31, 2014

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade

Prime – Credits secured by cash (accounts held in the Bank), stocks, bonds (companies with debt ratings of “A” or better), U.S. Government securities with advance rates within bank policy and cash value of insurance policies (with sound AM Best rating).

Excellent – Borrowers that demonstrate exceptional credit fundamentals, including stable and predictable profit margins, cash flows, strong liquidity, conservative balance sheet and significant historical cash flow coverage of existing and pro-forma debt service coverage. Credits rated Excellent will have a strong primary source of repayment usually consisting of strong historical cash flows along with strong secondary and tertiary repayment sources. Subsequent repayment sources could consist of financially strong guarantors, low loan to value ratios on collateral with a strong secondary market or resale source. Companies fitting the profile of minimal risk will have low leverage, a defined management succession plan and a broad product mix.

Average – Borrowers that fit this classification would most likely be a typical middle market businesses or a high net worth individual. Loans would typically be secured and may have some reliance on inventory. Cash flow is adequate to service debt but may be susceptible to some deterioration due to cyclical, seasonal or economic events. Management is experienced but is concentrated in a few key people. Credits fitting this classification would typically have at least one very strong repayment source and a good secondary repayment source. Company product mix may lack diversity. The majority of loans fall within this classification. Annual financial statements on the borrower and guarantor(s) should be obtained.

Satisfactory – These loans display an acceptable degree of risk in the short-term. Unfavorable characteristics may exist however; these are offset by the positive trends. Some unpredictability in earnings and cash flow may exist. Leverage may be higher than typical in the industry and liquidity less than desirable. Management, while competent, may not be experienced and lack depth. Secondary and tertiary sources of repayment may be limited. Companies in a start-up situation typically fit this classification. Other characteristics of this classification would be companies with volatility in earnings and/or increasing leverage.

Watch List – Assets considered on a “Watch List” are technically not classified in the usual sense of the term and are considered “Pass” assets. Assets in this category do not trigger a need for additional valuation allowances. The purpose of this list is to identify assets that warrant increased monitoring for minor exceptions or problems, which could worsen in the near future if left unattended.

Special Mention – A Special Mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected these potential weaknesses may result in the deterioration of the repayment prospects for the asset or in the Bank’s credit position at some future date. Special Mention assets are not adversely classified and do not expose the Bank to sufficient risk to warrant adverse classification.

Substandard - Assets classified Substandard have a well-defined weakness or weaknesses. A Substandard asset is inadequately protected by the current net worth or paying capacity of the obligor or pledged collateral, if any. It is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Weaknesses are to be based upon objective evidence.

Doubtful - Assets classified Doubtful have all of the weaknesses inherent in those classified Substandard. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of the currently existing facts, conditions and values.

Loss - Assets classified as Loss are considered uncollectible, or of such little value that the continuance of the loan or other asset on the books of the Bank is not warranted. Some recovery of funds could be possible in the future, but the amount and probability of this recovery are not determinable, thus leaving little justification for the assets to remain on the books.

A Loss classification does not mean that an asset has no recovery or salvage value, but simply that it is not practical or desirable to defer writing off or reserving all or a portion of a basically worthless asset, even though partial recovery may be effected in the future.

Commercial Loans

Our underwriting philosophy is centered primarily on the borrower’s ability to generate adequate cash flow to service the debt in accordance with the terms and conditions of the loan agreement. Understanding the borrowers’ businesses along with their level of experience and the background of the principals is also a part of our lending philosophy. Generally, our loans are secured by collateral and we assess the market value of the collateral and the strength it brings to the loan. We generally require personal guarantees of the borrower’s principals and assess the financial strength and liquidity of each guarantor as part of our process.

Common risks to each class of commercial loans include risks that are not specific to the individual transactions such as general economic conditions within our markets. There are risks associated with each individual transaction such as a change in marital status, disability or death of the borrower and the loss of value of our collateral due to market conditions.

In addition to these common risks, additional risks are inherent in certain types of commercial loans.

Commercial Construction and Land Development:

Commercial construction and land development loans are dependent upon the supply and demand for commercial real estate in the markets we serve as well as the demand for newly constructed residential homes and lots. A continuing decrease in demand could result in significant decreases in the underlying collateral values and make repayment of the outstanding loans more difficult for our borrowers.

Commercial Mortgage and C&I Loans:

The repayment of commercial mortgage and C&I loans is primarily dependent upon the ability of our borrowers to produce cash flow consistent with original projections analyzed during the credit underwriting process. While our loans are generally secured by collateral with limitations on maximum loan to value, there is the risk that liquidation of the collateral will not fully satisfy the loan balance.

Non-owner occupied nonresidential and multifamily properties:

Loans secured by non-residential properties such as office buildings, and loans secured by multifamily housing are dependent upon the ability of the property to produce enough cash flow sufficient to service the debt. These types of properties are generally susceptible to high unemployment or generally weak economic conditions which can result in high vacancy rates.

Non-commercial loans

Most of our non-commercial loans are centrally underwritten. When assessing credit risk, we analyze certain factors relating to credit performance such as payment history, credit utilization, length of credit history. Since most of our non-commercial loans are secured, we evaluate the likely market value of the collateral. Common risks that are not specific to individual loan transactions include economic conditions within or markets, particularly unemployment rates and potential declines in real estate values. Personal events such as disability, death or a change in marital status also add risk to non-commercial loans.

In addition to these common risks, additional risks are inherent in certain types of non-commercial loans.

Revolving Mortgages:

Revolving loans such as HELOCs may be secured by first and junior liens on residential real estate making such loans susceptible to deterioration in residential real estate values. Additional risks include lien perfection deficiencies. Further, open end lines of credit have the inherent risk that the borrower may draw on the lines in excess of their collateral value particularly in a deteriorating real estate market.

Consumer Loans:

Consumer loans include loans secured by personal property such as automobiles, mobile homes, and other title recreational vehicles such as boats, RV’s and motorcycles. Consumer loans also may include unsecured loans. The value of the underlying collateral within this group of loans is especially volatile due to the potential rapid depreciation in values.

Residential Construction and Permanent Mortgages:

Residential mortgages are typically secured by 1-4 family residential property and residential lots. Declines in market value can result in residential mortgages with balances in excess of the value of the property securing the loan. Residential construction loans can experience delays in construction and cost overruns that can exceed the borrower’s financial ability to complete the home leading to unmarketable collateral.

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade at March 31, 2014

(In thousands)	Commercial-Land		Commercial- Construction		Commercial-Non-Real Estate		Commercial-Real Estate		Total		% Total

Prime	$	-	$	-	$	2,641	$	-	$	2,641		1.4	%
Excellent		-		-		15		4		19		0.0
Average		752		-		610		3,470		4,832		2.5
Satisfactory		8,675		9,037		28,434		116,668		162,814		84.9
Watch		744		-		389		11,782		12,915		6.7
Special Mention		-		355		-		3,759		4,114		2.1
Substandard		-		-		1,369		3,188		4,557		2.4
Doubtful		-		-		-		-		-		0.0
Loss		-		-		-		-		-		0.0
Total	$	10,171	$	9,392	$	33,458	$	138,871	$	191,892		100.00	%

Commercial Credit Exposure

Credit Risk Profile by Internally Assigned Grade at September 30, 2013

(In thousands)	Commercial-Land		Commercial- Construction		Commercial-Non-Real Estate		Commercial-Real Estate		Total		% Total

Prime	$	-	$	-	$	3,074	$	-	$	3,074		1.7	%
Excellent		-		-		16		9		25		0.0
Average		624		-		638		3,851		5,113		2.8
Satisfactory		9,119		8,233		25,213		110,415		152,980		83.4
Watch		606		-		342		12,478		13,426		7.3
Special Mention		-		360		-		1,781		2,141		1.2
Substandard		-		-		1,402		5,115		6,517		3.6
Doubtful		-		-		-		-		-		0.0
Loss		-		-		-		-		-		0.0
Total	$	10,349	$	8,593	$	30,685	$	133,649	$	183,276		100.0	%

Consumer Credit Exposure Credit Risk Profile

By Creditworthiness Category at March 31, 2014

	Residential- Real Estate Construction		Residential- Real Estate		Total
(In thousands)
Grade:
Pass	$	6,932	$	411,807	$	418,739
Special Mention		-		808		808
Substandard		-		4,300		4,300
Loss		-		-		-
Total	$	6,932	$	416,915	$	423,847

Consumer Credit Exposure Credit Risk Profile

By Creditworthiness Category at September 30, 2013

	Residential- Real Estate Construction		Residential- Real Estate		Total
(In thousands)
Grade:
Pass	$	5,112	$	405,863	$	410,975
Special Mention		-		316		316
Substandard		-		3,514		3,514
Loss		-		-		-
Total	$	5,112	$	409,693	$	414,805

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity at March 31, 2014


	Consumer- Mobile Homes		Consumer- Other Loans		Total
(In thousands)
Performing	$	46,287	$	45,051	$	91,338
Nonperforming		307		85		392
Total	$	46,594	$	45,136	$	91,730

Consumer Credit Exposure

Credit Risk Profile Based on Payment Activity at September 30, 2013


	Consumer- Mobile Homes		Consumer- Other Loans		Total
(In thousands)
Performing	$	42,952	$	44,905	$	87,857
Nonperforming		246		266		512
Total	$	43,198	$	45,171	$	88,369

Age Analysis of Past Due Loans

As of March 31, 2014

	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
(In thousands)
Commercial real estate loans	$	1,145	$	-	$	1,145	$	137,726	$	138,871	$	-
Commercial non-real estate loans		19		10		29		33,429		33,458		-
Commercial-construction loans		-		-		-		9,392		9,392		-
Commercial-land		-		-		-		10,171		10,171		-
Residential-construction loans		172		-		172		6,760		6,932		-
Residential-real estate loans		3,215		2,665		5,880		411,035		416,915		177
Consumer-Mobile home loans		600		307		907		45,687		46,594		-
Consumer-other		347		90		437		44,699		45,136		-
Total	$	5,498	$	3,072	$	8,570	$	698,899	$	707,469	$	177

Age Analysis of Past Due Loans

As of September 30, 2013

	30-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Current		Total Loans		Recorded Investment > 90 days and Accruing
(In thousands)
Commercial real estate loans	$	783	$	-	$	783	$	132,866	$	133,649	$	-
Commercial non-real estate loans		50		-		50		30,635		30,685		-
Commercial-construction loans		-		-		-		8,593		8,593		-
Commercial-land		-		-		-		10,349		10,349		-
Residential-construction loans		-		-		-		5,112		5,112		-
Residential-real estate loans		5,582		1,678		7,260		402,433		409,693		353
Consumer-Mobile home loans		1,073		246		1,319		41,879		43,198		-
Consumer-other		262		206		468		44,703		45,171		-
Total	$	7,750	$	2,130	$	9,880	$	676,570	$	686,450	$	353

Impaired Loans

As of and for the six months ended March 31, 2014

							Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(In thousands)
With no related allowance recorded:
Commercial real estate loans	$	4,411	$	4,411	$	-	$	4,471	$	123
Commercial non-real estate		1,369		1,369		-		1,381		39
Commercial-construction loans		-		-		-		-		-
Commercial-land		-		-		-		-		-
Residential-real estate loans		528		643		-		530		17
Subtotal:		6,308		6,423		-		6,382		179
With an allowance recorded:
Commercial real estate loans		957		957		138		970		16
Commercial non-real estate		-		-		-		-		-
Commercial-construction loans		-		-		-		-		-
Commercial-land		-		-		-		-		-
Residential-real estate loans		-		-		-		-		-
Subtotal:		957		957		138		970		16
Totals:
Commercial		6,737		6,737		138		6,822		178
Residential		528		643		-		530		17
Total	$	7,265	$	7,380	$	138	$	7,352	$	195

Impaired Loans

As of and for the year ended September 30, 2013

							Year to Date
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
(In thousands)
With no related allowance recorded:
Commercial real estate loans	$	4,580	$	4,639	$	-	$	3,872	$	190
Commercial non-real estate		1,402		1,402		-		791		53
Commercial-construction loans		-		-		-		-		-
Commercial-land		-		-		-		2,069		-
Residential-real estate loans		597		873		-		584		34
Subtotal:		6,579		6,914		-		7,316		277
With an allowance recorded:
Commercial real estate loans		978		979		138		722		33
Commercial non-real estate		-		-		-		-		-
Commercial-construction loans		-		-		-		-		-
Commercial-land		-		-		-		-		-
Residential-real estate loans		-		-		-		-		-
Subtotal:		978		979		138		722		33
Totals:
Commercial		6,960		7,020		138		7,454		276
Residential		597		873		-		584		34
Total	$	7,557	$	7,893	$	138	$	8,038	$	310

Troubled debt restructured loans (“TDRs”) which are included in the impaired loan totals, were $3.1 million with all still accruing at March 31, 2014 and $3.2 million with all still accruing at September 30, 2013. The Company has not committed to lend additional funds to the customers with outstanding loans that are classified as a TDR. As of September 30, 2013, no loans that were modified as troubled debt restructurings within the previous twelve months defaulted after their restructure.

Modifications

As of March 31, 2014

There were no new troubled debt restructurings during the six month period ended March 31, 2014.

As of March 31, 2014, no loans that were modified as TDRs within the previous twelve months defaulted after their restructure.

Modifications

As of March 31, 2013

There were no new TDRs during the six month period ended March 31, 2013.

As of March 31, 2013, no loans that were modified as TDRs within the previous twelve months defaulted after their restructure.

Loans on Nonaccrual Status

At March 31, 2014 and September 30, 2013

(in thousands)	March 31, 2014		September 30, 2013

Commercial real estate loans	$	-	$	-
Commercial non-real estate loans		10		-
Commercial-construction loans		-		-
Commercial-land		-		-
Residential-construction loans		-		-
Residential-real estate loans		2,767		1,973
Consumer-Mobile home loans		308		246
Consumer-other		90		206
Total	$	3,175	$	2,425

Nonaccrual loans at March 31, 2014 increased by $0.8 million primarily due to the increase in delinquent residential-real estate loans.

NOTE 8 - Merger with IBERIABANK Corporation

On January 12, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with IBERIABANK Corporation (“IBKC”), the parent company of IBERIABANK. Under the Merger Agreement, subject to the receipt of shareholder and regulatory approval and the satisfaction of certain other conditions, the Company will merge with and into IBKC (the “Merger”) after which Teche Federal Bank is expected to merge with and into IBERIABANK. As a result of the Merger, each share of Company common stock will be exchanged for 1.162 shares of IBKC common stock, subject to adjustment as set forth in the Merger Agreement.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The Private Securities Litigation Reform Act of 1995 contains safe harbor provisions regarding forward-looking statements. When used in this discussion, the words “believe”, “anticipates”, “contemplates”, “expects”, and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Those risks and uncertainties include financial market volatility, changes in interest rates, risk associated with the effect of opening new branches, the ability to control costs and expenses, potential changes in regulation which could result in increased expenses and general economic conditions. The Company undertakes no obligation to publicly release the results of any revisions to those forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrences of unanticipated events. The Company is a “smaller reporting company” as defined by Item 10 of Regulation S-K and its financial statements were prepared in accordance with instructions applicable for such companies.

The Company’s consolidated results of operations are primarily dependent on the Bank’s net interest income, or the difference between the interest income earned on its loan, mortgage-backed securities and investment securities portfolios, and the interest expense paid on its savings deposits and other borrowings. Net interest income is affected not only by the difference between the yields earned on interest-earning assets and the costs incurred on interest-bearing liabilities, but also by the relative amounts of such interest-earning assets and interest-bearing liabilities.

Other components of net income include: provisions for loan losses; non-interest income (primarily, service charges on deposit accounts and other fees, net rental income, and gains and losses on investment activities); non-interest expenses (primarily, compensation and employee benefits, federal insurance premiums, office occupancy expense, marketing expense and expenses associated with foreclosed real estate) and income taxes.

Earnings of the Company also are significantly affected by economic and competitive conditions, particularly changes in interest rates, government policies and regulations of regulatory authorities. References to the “Bank” herein, unless the context requires otherwise, refer to the Company on a consolidated basis.

COMPARISON OF FINANCIAL CONDITION

The Company’s total assets at March 31, 2014 amounted to $863.7 million, an increase of $7.0 million or 0.8% as compared to $856.7 million at September 30, 2013. The increase was primarily due to increases in commercial, consumer, and mortgage loans offset somewhat by decreases in cash balances and security balances.

Securities available-for-sale totaled $12.7 million and securities held to maturity totaled $59.5 million at March 31, 2014, which, combined, represented a decrease of $9.9 million or 12.1% as compared to September 30, 2013. The decrease was primarily due to a decrease in certificates of deposits at other banks and the normal principal repayments on the existing portfolio.

Loans receivable, net of allowance for loan losses, totaled $697.9 million at March 31, 2014, which represented an increase of $21.3 million or 3.2% compared to September 30, 2013. The increase was primarily due to increases in all loan categories with residential real estate loans having the most growth at $6.5 million.

FHLB stock increased $0.6 million due to stock purchases.

Total deposits, after interest credited, at March 31, 2014 were $654.0 million, which represented an increase of $3.2 million or 0.5% as compared to September 30, 2013. The increase was due to an increase in interest bearing checking, non-interest bearing checking, and savings offset by decreases in money market and time deposit accounts. The weighted average remaining maturity on our time deposit portfolio is approximately 17 months.

Advances decreased $0.4 million or 0.3% as compared to the amount at September 30, 2013. The decrease was due to normal principal payments on existing advances.

Stockholders’ equity was $93.1 million at March 31, 2014 and $89.1 million at September 30, 2013. The increase was due primarily to net income and stock option exercises less dividend payments of $1.6 million.

COMPARISON OF EARNINGS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2014 AND 2013

Net Income. The Company had net income of $1.1 million or $0.51 per diluted share, and $3.5 million or $1.65 per diluted share, for the three and six months ended March 31, 2014, respectively as compared to net income of $1.6 million or $0.75 per diluted share, and $4.6 million or $2.24 per diluted share, for the three and six month periods ended March 31, 2013, respectively. The changes affecting net income are discussed in the following paragraphs by category.

Total Interest Income. Total interest income increased $0.4 million or 4.2% and increased $0.3 million or 1.5% for the three and six months ended March 31, 2014, respectively, as compared to the same periods ended March 31, 2013. The average yield on loans decreased to 5.13% and 5.19%, respectively, for the three and six months ended March 31, 2014, from 5.34% and 5.40%, respectively, for the same periods in 2013. Loan yields have trended downward because of the low interest rate environment.

Total Interest Expense. Total interest expense decreased $0.2 million or 11.3% and $0.4 million or 12.5%, for the three and six-month periods ended March 31, 2014, respectively as compared to the same periods in the prior fiscal year. The decrease was due mainly to the average cost of deposits decreasing to 0.46% and 0.47% for the three and six months ended March 31, 2014, respectively, compared to 0.53% and 0.58%, for the same periods in 2013, respectively. Interest rates have steadily decreased affecting the Bank’s pricing of deposits.

Net Interest Income. Net interest income increased $0.6 million or 7.8% and $0.7 million or 4.8% for the three and six-month periods ended March 31, 2014, respectively as compared to the same periods ended March 31, 2013. The increase in net interest income was primarily due to a decrease in rates on interest bearing liabilities and FHLB borrowings.

Provision for Loan Losses. Management recorded no provision for the fiscal year to date as compared to a provision of $400 thousand for the first half of fiscal 2013, due primarily to management’s assessment of the loan portfolio for probable losses. The ratio of the allowance for loan losses to total loans at March 31, 2014 was 1.07% compared to 1.15% at September 30, 2013 and 1.26% at March 31, 2013.

The calculation that supports the adequacy of the ALLL includes management’s best estimates that are applied to known portfolio elements. The Bank employs a 9-point grading system to track as accurately as possible the inherent quality of the loan portfolio. The application of a nine point system is used on all accounts in the commercial loan portfolio. Values of “1” or “2” are considered to be substantially risk free. Average and acceptable risk loans are assigned point values of “3” and “4”, Loans with some document deficiencies or that are of modest financial strength are assigned a rating of “5”. Point values of 6, 7, 8, and 9 are assigned to loans classified as special mention, substandard, doubtful, and loss, respectively. Consumer loans are only assigned risk ratings of “6” or worse, based on payment history. In addition, management considers other trends such as local economic conditions, the risk rating of the loan portfolios as discussed above, amounts and trends in non-performing assets and concentration factors.

Management regularly estimates the likely level of losses to determine whether the allowance for loan losses is adequate to absorb probable losses in the existing portfolio. Based on these estimates, an amount is charged or credited to the provision for loan losses and credited or charged to the allowance for loan losses in order to adjust the allowance to a level determined to be adequate to absorb probable losses. There have been no significant changes in the Company's estimation methods during the current period.

Management’s judgment as to the level of the allowance for loan losses involves the consideration of current economic conditions and their potential effects on specific borrowers, an evaluation of the existing relationships among loans, known and inherent risks in the loan portfolio and the present level of the allowance, results of

examination of the loan portfolio by regulatory agencies and management’s internal review of the loan portfolio. In determining the collectability of impaired loans, management also considers the fair value of any underlying collateral. In addition, management considers changes in loan concentrations, the level of and trends in non-performing loans during the period, the Bank’s historical loss experience and historical charge-off percentages for state and national banks for similar types of loans in determining the appropriate amount of the allowance for loan losses. Because certain types of loans have higher credit risk, greater concentrations of such loans may result in an increase to the allowance. For this reason, management segregates the loan portfolio by type of loan and number of days past due. Non-performing loans as a percent of total loans plus real estate owned were 0.47% at March 31, 2014, compared to 0.38% at September 30, 2013 and 0.81% at March 31, 2013.

Non-Interest Income. Total non-interest income decreased $0.2 million and $2.0 million for the three and six month periods ended March 31, 2014, respectively as compared to the same periods in 2013. The decrease from a year ago was attributable to a $2.0 million before tax gain on the sale of $46.3 million in mortgage loans realized during the prior year. There was no similar sale during the first six months of fiscal year 2014.

Non-Interest Expense. Total non-interest expense increased $0.9 million and $0.6 million, respectively, during the three and six months ended March 31, 2014, as compared to the same periods in 2013. The increases were due to additional occupancy, legal and marketing expenses.

Income Tax Expense. Income tax expense increased by $0.2 million for the three months and decreased by $0.3 million for the six months ended March 31, 2014, respectively as compared to the same periods in 2013. The income tax expense increased for the three month period due to the non-deductible legal expense related to the IBERIABANK merger. The decrease in tax expense for the six month period was due to income before taxes being lower. The Company’s effective tax rate was 46.91% and 36.57% for the three and six months ended March 31, 2014 respectively as compared to 32.82% and 33.56% for the comparable 2013 periods.

Average Balance Sheet. The following table sets forth certain information relating to the Company's average balance sheet and reflects the average yield on assets and average cost of liabilities for the periods indicated. Such yields and costs are derived by dividing income or expenses by the average balance of assets or liabilities, respectively, for the periods presented. Average balances are derived from daily average balances.

	Three Months Ended March 31,
	2014							2013
	Average Balance		Interest		Average Yield/Cost			Average Balance		Interest		Average Yield/Cost
	(Dollars in Thousands)
Assets
Interest-Earning Assets
Securities (1)(7)	$	32,319	$	230		2.85	%	$	42,465	$	313		2.95	%
Loans Receivable (2) (3)(7)		704,196		9,034		5.13	%		641,192		8,567		5.34	%
Other Interest-Earning Assets (4)		59,288		117		0.79	%		88,591		122		0.55	%
Total Interest-Earning Assets		795,803	$	9,381		4.72	%		772,248	$	9,002		4.66	%
Non-Interest Earning Assets		79,039							75,367
Total Assets	$	874,842						$	847,615
Liabilities and Stockholders’ Equity
Interest-Bearing Liabilities
NOW Accounts	$	154,230	$	45		0.12	%	$	138,875	$	63		0.18	%
Statement & Regular Savings Accounts		201,368		51		0.10	%		207,972		118		0.23	%
Money Funds Accounts		45,674		5		0.04	%		52,370		14		0.11	%
Certificates of Deposit		145,090		528		1.46	%		139,672		525		1.50	%
Total Deposits		546,362		629		0.46	%		538,889		720		0.53	%
FHLB Advances		120,715		876		2.90	%		114,063		977		3.43	%
Total Interest-Bearing Liabilities		667,077	$	1,505		0.90	%		652,952	$	1,697		1.04	%
Non-Interest-Bearing Liabilities		113,478							107,981

Total Liabilities		780,555							760,933
Stockholders’ Equity		94,287							86,682
Total Liabilities and Stockholders’ Equity	$	874,842						$	847,615
Net Interest Income/Interest Rate Spread (5)			$	7,876		3.81	%			$	7,305		3.62	%
Net Interest Margin (6)						3.96	%						3.78	%
Interest-Earning Assets/
Interest-Bearing Liabilities						119.30	%						118.27	%

	Six Months Ended March 31,
	2014							2013
	Average Balance		Interest		Average Yield/Cost			Aveage Balance		Interest		Average Yield/Cost
	(Dollars in Thousands)
Assets
Interest-Earning Assets
Securities (1)(7)	$	33,031	$	472		2.86	%	$	44,852	$	657		2.93	%
Loans Receivable (2) (3)(7)		699,899		18,147		5.19	%		654,336		17,665		5.40	%
Other Interest-Earning Assets (4)		59,852		237		0.79	%		76,270		251		0.66	%
Total Interest-Earning Assets		792,782	$	18,856		4.76	%		775,458	$	18,573		4.79	%
Non-Interest Earning Assets		78,100							73,926
Total Assets	$	870,882						$	849,384
Liabilities and Stockholders’ Equity
Interest-Bearing Liabilities
NOW Accounts	$	151,309	$	89		0.12	%	$	133,627	$	133		0.20	%
Statement & Regular Savings Accounts		200,993		104		0.10	%		205,550		286		0. 28	%
Money Funds Accounts		47,675		13		0. 05	%		53,416		34		0. 13	%
Certificates of Deposit		147,596		1,081		1.46	%		140,524		1,097		1.56	%
Total Deposits		547,573		1,287		0.47	%		533,117		1,550		0.58	%
FHLB Advances		117,191		1,800		3.07	%		123,052		1,979		3.22	%
Total Interest-Bearing Liabilities		664,764	$	3,087		0.93	%		656,169	$	3,529		1.08	%
Non-Interest-Bearing Liabilities		112,963							106,521

Total Liabilities		777,727							762,690
Stockholders’ Equity		93,155							86,694
Total Liabilities and Stockholders’ Equity	$	870,882						$	849,384
Net Interest Income/Interest Rate Spread (5)			$	15,769		3.83	%			$	15,044		3.71	%
Net Interest Margin (6)						3.98	%						3.88	%
Interest-Earning Assets/
Interest-Bearing Liabilities						119.26	%						118.18	%

(1)	Includes securities and Federal Home Loan Bank (FHLB) stock.
(2)	Amount is net of deferred loan fees, loan discounts and premiums and loans-in-process and includes non-accruing loans.
(3)	Interest income includes loan fees of approximately $331,000 in 2014 and $314,000 in 2013.
(4)	Amount includes certificates of deposit and other interest-bearing deposits.
(5)	Interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(6)	Net interest margin represents net interest income divided by average interest-earning assets.
(7)	Tax exempt securities and loans are shown at their contractual yields and are not shown at a tax equivalent yield.

LIQUIDITY AND CAPITAL RESOURCES

Risk-based capital regulations adopted by the Board of Governors of the FRB and the FDIC require bank holding companies and banks, respectively, to achieve and maintain specified ratios of capital to risk-weighted assets. The risk-based capital rules are designed to measure Tier 1 Capital and Total Capital in relation to the credit risk of both on –and off-balance sheet items. Under the guidelines, one of four risk weights is applied to the different on-balance sheet items. Off-balance sheet items, such as loan commitments, are also subject to risk-weighting after conversion to balance sheet equivalent amounts. All bank holding companies and banks must maintain a minimum total capital to total risk-weighted assets ratio of 8.00%, at least half of which must be in the form of core, Tier 1, capital (consisting of common equity, retained earnings, and a limited amount of qualifying perpetual preferred stock and trust preferred securities, net of goodwill and other intangible assets and accumulated other comprehensive income). These guidelines also specify that bank holding companies that are experiencing internal growth or making acquisitions will be expected to maintain strong capital positions substantially above the minimum supervisory levels. At March 31, 2014, the Company was in compliance with all of these requirements.

Under current Office of Financial Institutions regulations, the Bank is required to maintain certain levels of capital. At March 31, 2014 the Bank was in compliance with its regulatory capital requirements as follows:

(000’s)

	Required Minimum Ratio	Required to be Well Capitalized	Bank	Company

Tier 1 risk-based capital	4.00%	6.00%	13.50%	14.77%
Total risk-based capital	8.00%	10.00%	14.75%	16.02%
Leverage Ratio	4.00%	5.00%	9.30%	10.18%

For the Bank to be well capitalized under current risk-based capital standards, it is required to have Tier I capital of at least 6% and total risk-based capital of 10%. Based on these standards, the Bank is categorized as well capitalized at March 31, 2014. Management believes that under current regulations, the Bank will continue to meet its minimum capital requirements in the foreseeable future. Events beyond the control of the Bank, such as increased interest rates or a downturn in the economy in areas in which the Bank operates could adversely affect future earnings and as a result, the ability of the Bank to meet its future minimum capital requirements.

The Bank’s liquidity is a measure of its ability to fund loans, pay withdrawals of deposits, and other cash outflows in an efficient, cost effective manner. The Bank’s primary sources of funds are deposits, scheduled amortization and prepayments on loan and mortgage-backed securities, and advances from the FHLB. As of March 31, 2014, FHLB borrowed funds totaled $108.6 million. FHLB advances are collateralized by a blanket-floating lien on the Company’s residential real estate first mortgage loans. Additional borrowing capacity of approximately $197.4 million is available from the FHLB based on current collateral levels. The Bank, if the need arises, may also access a line of credit in the amount of $62.3 million provided by two banks to supplement its supply of lendable funds and to meet deposit withdrawal requirements. Loan repayments, maturing investments and mortgage-backed securities prepayments are greatly influenced by general interest rates and economic conditions.

The Bank is required to maintain sufficient liquidity for its safe and sound operation. The Bank believes that it maintains sufficient liquidity to operate the Bank in a safe and sound manner.

ADDITIONAL KEY RATIOS

	At or For the				At or For the
	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2014(1)		2013(1)		2014(1)		2013(1)

Return on average assets		0.50%		0.75%		0.81%		1.09%
Return on average equity		4.67%		7.19%		7.55%		10.68%
Average interest rate spread		3.81%		3.62%		3.83%		3.71%
Nonperforming assets to total assets		0.43%		0.68%		0.43%		0.68%
Nonperforming loans to total loans		0.47%		0.81%		0.47%		0.81%
Average net interest margin		3.96%		3.78%		3.98%		3.88%

(1)	Annualized where appropriate.

INTEREST RATE SENSITIVITY

At March 31, 2014 the Company was in a slightly liability sensitive position. Generally, a liability sensitive position will be detrimental to earnings in a rising interest rate environment and will enhance earnings in a falling interest rate environment. Conversely, an asset sensitive position will result in enhanced earnings in a rising interest rate environment and declining earnings in a falling interest rate environment because larger volumes of assets than liabilities will reprice.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide the information required by this item.

ITEM 4. CONTROLS AND PROCEDURES

(a)

Evaluation of disclosure controls and procedures. Based on their evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)), the Company’s principal executive officer and principal financial officer have concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q such disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files and submits pursuant to the rules and forms of the SEC is accumulated and communicated to the Company’s management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

(b)	During the quarter under report, there was no change in the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 3, 2014, a putative shareholder class action lawsuit captioned John Solak v. Teche Holding Company, IBERIABANK Corporation, et al., Case No. 123884, was filed in the 16th Judicial District Court for the Parish of Iberia of the State of Louisiana against IBERIABANK Corporation, Teche and members of Teche’s board of directors. That suit subsequently was amended to assert, among other things, that the Teche directors breached their fiduciary duties and/or violated Louisiana state law and that IBERIABANK Corporation and Teche conspired with the directors in those alleged breaches of fiduciary duty.

All defendants filed exceptions to the suit seeking dismissal. Teche and IBERIABANK Corporation filed exceptions of no cause of action and no right of action. The directors filed an exception of no right of action. On April 15, 2014, the district court ruled in favor of defendants, finding that plaintiff had no individual right of action and dismissing all claims against Teche and IBERIABANK Corporation. The court granted plaintiff seven days within which he could amend the suit to state a derivative claim and on April 22, 2014 the plaintiff filed an amended complaint against the individual directors of Teche and naming Teche as a nominal defendant. The plaintiff seeks to enjoin the merger. Teche and the individual directors intend to vigorously defend against the lawsuit.

With the exception of this matter, neither the Company nor the Bank was engaged in any legal proceeding of a material nature at March 31, 2014. From time to time, the Company is a party to legal proceedings in the ordinary course of business wherein it enforces its security interest in loans.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There were no stock repurchases during the quarter ended March 31, 2014.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

ITEM 6. EXHIBITS

31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.**
101.SCH	XBRL Taxonomy Extension Schema Document.**
101.CAL	XBRL Taxonomy Calculation Linkbase Document.**
101.LAB	XBRL Taxonomy Label Linkbase Document.**
101.PRE	XBRL Taxonomy Presentation Linkbase Document.**
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.**

**	submitted electronically herewith

SIGNATURES

Pursuant to the requirements 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.

	TECHE HOLDING COMPANY
Date: May 15, 2014	By:	/s/ Patrick O. Little
		Patrick O. Little President and Chief Executive Officer (Principal Executive Officer)