EXHIBIT 13







                              MINDEN BANCORP, INC.

                               2006 ANNUAL REPORT

                                 TO STOCKHOLDERS

<PAGE>

                                TABLE OF CONTENTS
                                -----------------

<TABLE>
                                                                                                  Page
<S>                                                                                                <C>
President's Letter to Stockholders..................................................................1

Business of Minden Bancorp, Inc.....................................................................2

Market Price of Minden Bancorp Common Shares and Related Stock Matters..............................3

Selected Consolidated Financial and Other Data......................................................4

Management's Discussion and Analysis of Financial Condition and Results of Operations ..............6

Report of Independent Registered Public Accounting Firm............................................18

Consolidated Balance Sheets........................................................................19

Consolidated Statements of Income..................................................................21

Consolidated Statements of Stockholders' Equity....................................................22

Consolidated Statements of Cash Flows..............................................................23

Notes to Consolidated Financial Statements.........................................................25

Directors and Executive Officers...................................................................40

Banking Locations and Stockholder Information......................................................41
</TABLE>

<PAGE>

                       PRESIDENT'S LETTER TO STOCKHOLDERS
                       ----------------------------------

            On behalf of your board of directors,  senior management, and all of
our staff,  it is our pleasure to deliver our fifth  annual  report that details
the Company's performance in 2006.

            In May of this year,  Minden will begin its 98th consecutive year of
providing  financial services to the city of Minden and neighboring  communities
in  northwestern  Louisiana.  The  completion  of  our  mutual  holding  company
reorganization  and stock  offering  in 2002 which  raised net  proceeds of $5.4
million  positioned  our bank to expand the services it offered and provide more
convenience.  In January 2006,  Minden acquired Woodard Walker Insurance Agency,
one of the area's leading  property and casualty  insurance  agencies.  In early
March 2007, the much  anticipated  move to our new main office became a reality.
This three acre site is now home to our 16,000  square foot main office  located
at 100 MBL Bank Drive. In early April 2007, Woodard Walker Insurance Agency will
move its  operations to 415 Main Street.  This location will not only be home to
the  agency,  but will house our first  branch as well.  This  addition  enables
Minden to offer nine drive through teller lanes,  seven inside teller  stations,
three 24-hour ATM cash machines,  and provide expertise in business and personal
insurance  lines.  The new office  provides the most  current,  convenient,  and
comfortable approach to banking in our communities.  Additionally, Minden's name
has changed to the more current and updated name of "MBL Bank".  Both  locations
will proudly carry the new name. With two full service offices in our community,
we are poised for solid growth.

            Our commitment to repurchase our stock remains strong. Currently, we
are in our third  repurchase  program  covering 29,000 shares,  having purchased
39,278  shares in our first  repurchase  program and 31,000 shares in the second
repurchase   program.   By  the  end  of  December  2006,  we  had   repurchased
approximately  10,611  shares in our third  program at an average cost of $21.09
per share. We will continue to evaluate strategies to enhance stockholder value.

            Our financial  performance continued to be strong in 2006. While net
income  decreased  slightly by $27,000 from a year earlier,  the $1.3 million in
net income  still stands out as one of our best years.  Challenges  presented by
the "inverted  yield curve",  a financial  term best defined by short term rates
paying  more than long term  rates,  were  managed  profitably.  The yield curve
pressure  and an increase in interest  and  operating  expenses  that offset the
growth in the loan portfolio were the reasons for the decrease.  Our assets grew
to $116.0  million,  a 4.2%  increase  from  total  assets of $111.3  million at
December 31,  2005,  due  primarily  to a $4.8 million  increase in our net loan
portfolio.

            2007  promises to be both an exciting and a  challenging  year.  Our
board, senior management, and staff are ready for the potential and opportunity.
We will  continue to build upon the  momentum to further  position  ourselves to
leverage   Minden's   strengths,   seize   new   opportunities   for   increased
profitability, and build upon our growing franchise value.

            Thank you for the trust you have placed in us.


                                       /s/ A. David Evans
                                       ------------------
                                       A. David Evans
                                       President and Chief Executive Officer


                                       1
<PAGE>

                        BUSINESS OF MINDEN BANCORP, INC.
                        --------------------------------

            Minden Bancorp, Inc., a federal corporation ("Minden Bancorp" or the
"Company),  is a unitary  savings and loan holding company which owns all of the
outstanding  shares  of  common  stock of MBL  Bank,  formerly  known as  Minden
Building   and   Loan   Association   ("Minden"   or   the   "Association"),   a
Louisiana-chartered building and loan association.

            Founded in 1910,  Minden is a community and customer  oriented stock
savings  association  that  conducts  business  out of its  main  office  and an
additional  full-service branch office, both located in Minden,  Louisiana.  The
Association's  business  consists  principally  of attracting  deposits from the
general public and using those funds to originate one-to-four-family residential
loans,  commercial  real estate loans,  commercial  business  loans and consumer
loans.  Minden's  profitability  depends  primarily on its net interest  income,
which is the difference between the income it receives on loans and other assets
and its cost of funds,  which  consists of the  interest  paid on  deposits  and
borrowings.  At  December  31,  2006,  the  Company  had total  assets of $116.0
million,  total  liabilities  of  $95.8  million,  including  deposits  of $75.5
million, and total stockholders' equity of $20.2 million.

            In December 2001, the Board of Directors of Minden adopted a Plan of
Reorganization  pursuant to which the  Association  converted  to stock form and
became  a  wholly  owned  subsidiary  of the  Company.  In  connection  with the
reorganization,  the Company became a majority owned (55%)  subsidiary of Minden
Mutual Holding Company.  The reorganization was consummated on July 2, 2002. The
activities  of the Company to date have been  limited  primarily  to holding the
stock of Minden.

            The Company is subject to regulation, supervision and examination by
the Office of Thrift Supervision of the U.S. Department of Treasury (the "OTS").
As a  Louisiana-chartered  institution,  Minden is  subject  to the  regulation,
supervision and examination by the Louisiana Office of Financial Institutions as
well as to the jurisdiction of the OTS as its primary federal  regulator and the
Federal Deposit  Insurance  Corporation  ("FDIC),  which administers the Deposit
Insurance Fund. The FDIC insures deposits in Minden up to applicable limits.


                                       2
<PAGE>

                         MARKET PRICE OF MINDEN BANCORP
                  COMMON SHARES AND RELATED STOCKHOLDER MATTERS
                  ---------------------------------------------

            Minden   Bancorp's   common   shares   have   been   listed  on  the
Over-the-Counter  Electronic Bulletin Board since July 2, 2002, under the symbol
"MDNB." Presented below are the high and low quarterly trading prices for Minden
Bancorp's  common  shares for the period from  January 1, 2005 to  December  31,
2006.  Such  prices  do not  include  retail  financial  markups,  markdowns  or
commissions and may not represent actual transactions.

                 2006                                         High      Low

    ------------------------------------------------------------------------
    Quarter ended:
       March 31, 2006                                        $21.85   $20.50
       June 30, 2006                                         $22.00   $21.02
       September 30, 2006                                    $22.20   $21.00
       December 31, 2006                                     $22.00   $21.00
    ------------------------------------------------------------------------

                 2005                                         High      Low

    ------------------------------------------------------------------------
    Quarter ended:
       March 31, 2005                                        $22.00   $19.00
       June 30, 2005                                         $20.50   $19.00
       September 30, 2005                                    $21.00   $20.05
       December 31, 2005                                     $21.00   $20.30
    -------------------------------------------------------------------------

As of February 28, 2007, Minden Bancorp had 1,376,666 common shares  outstanding
held of record by  approximately  220  stockholders.  The number of stockholders
does not reflect the number of persons or entities who may hold stock in nominee
or "street" name through  brokerage firms or others.  The Company paid dividends
$0.08 per share as of record date  January 26,  2006,  and $0.09 per share as of
record dates April 25, 2006,  July 25, 2006, and October 26, 2006 for a total of
$0.35 per share for the year ended  December 31, 2006.  Dividends  totaled $0.31
per share for the year ended December 31, 2005.


                                       3
<PAGE>

                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

   Selected  consolidated  financial  and  other  data  does not  purport  to be
complete and is  qualified  in its  entirety by  reference to the more  detailed
financial  information,  including the  Consolidated  Financial  Statements  and
related Notes, appearing elsewhere herein.

                                                      At December 31,
                                                      ---------------

                                                      2006       2005
                                                      ----       ----

                                                   (Dollars in Thousands)

         Selected Balance Sheet and Other Data:

         Total assets ...........................   $115,966   $111,294
         Cash and cash equivalents(1) ...........      2,445      4,032
         Investment securities available for sale     28,211     30,043
         Investment securities held to maturity .      1,108      1,324
         Loans receivable, net ..................     74,963     70,117
         Total deposits .........................     75,523     70,821
         FHLB advances ..........................     19,000     20,500
         Total stockholders' equity .............     20,160     19,018
         Number of full service offices .........          1          1

                                                  Year Ended December 31,
                                                  -----------------------

                                                      2006       2005
                                                      ----       ----

                                                        (In Thousands)

         Selected Operating Data:

         Total interest income ..................   $  7,423   $  6,437
         Total interest expense .................      3,229      2,143
                                                    --------   --------
         Net interest income ....................      4,194      4,294
         Provision for loan losses ..............         95         --
                                                    --------   --------
         Net interest income after
         provision for loan losses ..............      4,099      4,294
         Total other operating income ...........        848        321
         Total other operating expense ..........      2,944      2,575
                                                    --------   --------
         Income before income taxes .............      2,003      2,040
         Income tax expense .....................        668        678
                                                    --------   --------
         Net income .............................   $  1,335   $  1,362
                                                    ========   ========

                          (Footnotes on following page)



                                       4
<PAGE>

                                                        At or for the Year Ended
                                                              December 31,
                                                        ------------------------

                                                           2006       2005
                                                           ----       ----

Selected Operating Ratios(2):

Performance Ratios:
Return on average assets .............................      1.16%      1.21%
Return on average equity .............................      7.83       7.28
Equity to assets at end of period ....................     17.38      17.09
Interest rate spread(3) ..............................      3.22       3.70
Net interest margin(3) ...............................      3.90       4.18
Average interest-earning assets to
   average interest-bearing liabilities ..............    122.72     122.72
Net interest income after provision for loan losses to
   total other operating expenses ....................    139.23     166.14
Total other operating expenses to average total assets      2.56       2.30
Asset Quality Ratios:
Non-performing loans to total loans at end of
   of period(4) ......................................       0.3        0.4
Non-performing assets to
   total assets at end of period(4) ..................       0.2        0.2
Allowance for loan losses to total
   loans at end of period(4) .........................       1.2        1.2
Allowance for loan losses to total non-performing
   loans at end of period(4) .........................     359.0      321.9
Capital Ratios:(5)
Tangible capital ratio ...............................     15.91%     15.21%
Core capital ratio ...................................     15.91      15.21
Total capital ratio ..................................     29.18      29.46

----------------------
(1)   Consists of cash and short-term interest-bearing deposits.

(2)   With the  exception  of end of  period  ratios,  all  ratios  are based on
      average daily balances.

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

(4)   Non-performing  loans consist of non-accrual loans and accruing loans that
      are  contractually  past due 90 days or more,  and  non-performing  assets
      consist of non-performing loans and real estate acquired by foreclosure or
      deed-in-lieu thereof. MBL Bank had no real estate owned at either date.

(5)   Percentages relate to MBL Bank.


                                       5
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                  ---------------------------------------------

General

      The Company's  profitability depends primarily on its net interest income,
which is the difference between interest and dividend income on interest-earning
assets,  principally loans, investment securities and interest-earning  deposits
in other  institutions,  and interest expense on  interest-bearing  deposits and
borrowings from the Federal Home Loan Bank of Dallas. The Company's net interest
income is  dependent  upon the  relative  levels of yields  earned on  interest-
earning  assets and rates paid on  interest-bearing  liabilities.  The Company's
profitability  also depends,  to a lesser extent, on other operating income, the
amount of the provision for loan losses, other operating expenses and income tax
expense.  The Company had net income of $1.3 million in 2006 and $1.4 million in
2005.

      The Company's primary asset is MBL Bank, formerly known as Minden Building
and Loan Association.  Historically, MBL Bank's business has consisted primarily
of originating single-family real estate loans secured by property in its market
area. Typically,  single-family loans involve a lower degree of risk and carry a
lower yield than commercial real estate,  construction,  commercial business and
consumer  loans.  MBL  Bank's  loans are  primarily  funded by  certificates  of
deposit,  which typically have a higher interest rate than passbook accounts and
other core deposit  accounts.  The  combination of these factors has resulted in
relatively  low interest rate spreads and returns on equity.  Although in recent
years MBL Bank has significantly increased the amount of commercial real estate,
consumer  and  commercial   business  loans   originated,   MBL  Bank  presently
anticipates that its business will continue to primarily  consist of originating
single-family real estate loans funded by deposits.

      The  Company's  operations  and  profitability  are  subject to changes in
interest  rates,  applicable  statutes  and  regulations  and  general  economic
conditions, as well as other factors beyond its control.

Forward-Looking Statements Are Subject to Change

      We make  certain  statements  in this  document  as to what we expect  may
happen in the future.  These  statements  usually  contain the words  "believe,"
"estimate," "project," "expect,"  "anticipate," "intend" or similar expressions.
Because  these  statements  look to the  future,  they are based on our  current
expectations  and beliefs.  Actual results or events may differ  materially from
those reflected in the forward-looking  statements. You should be aware that our
current  expectations  and beliefs as to future  events are subject to change at
any time, and we can give you no assurances that the future events will actually
occur.


                                       6
<PAGE>

Exposure to Changes in Interest Rates

      MBL Bank's ability to, in large part, maintain net interest income depends
upon its  ability to earn a higher  yield on  interest-earning  assets  than the
rates it pays on deposits and  borrowings.  MBL Bank's  interest-earning  assets
consist primarily of long-term residential mortgage loans which have fixed rates
of  interest.  Consequently,  MBL Bank's  ability to maintain a positive  spread
between the  interest  earned on assets and the  interest  paid on deposits  and
borrowings  can be adversely  affected  when market  rates of interest  rise and
interest-bearing  liabilities reprice more quickly than assets. In addition, MBL
Bank may be particularly  susceptible to the risk of rising interest rates since
long-term, fixed-rate mortgage loans continue to make up the dominant portion of
its interest-earning assets.

      Quantitative  Analysis.  The  Office  of  Thrift  Supervision  provides  a
quarterly  report on the  potential  impact of interest  rate  changes  upon the
market value of portfolio equity.  Management reviews the quarterly reports from
the Office of Thrift  Supervision  which show the  impact of  changing  interest
rates on net portfolio value ("NPV"). NPV is defined as the net present value of
the  expected  future  cash flows of an  entity's  assets and  liabilities  and,
therefore,  theoretically  represents  the market value of MBL Bank's net worth.
Increases in the value of assets will increase the NPV whereas  decreases in the
value of assets will  decrease  the NPV.  Conversely,  increases in the value of
liabilities will decrease the NPV whereas  decreases in the value of liabilities
will increase the NPV. The changes in the values of assets and  liabilities  due
to changes in interest  rates  reflect the interest  rate  sensitivity  of those
assets and liabilities as their values are derived from the  characteristics  of
the asset or liability  (i.e.,  fixed rate,  adjustable  rate, caps, and floors)
relative to the interest rate  environment.  For example,  in a rising  interest
rate environment,  the fair value of a fixed-rate asset will decline whereas the
fair  value  of  an   adjustable-rate   asset,   depending   on  its   repricing
characteristics,  may not decline. In a declining interest rate environment, the
converse may be true.

      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
model assumes estimated loan prepayment rates and reinvestment  rates similar to
MBL Bank's historical experience.  The following sets forth MBL Bank's NPV as of
December 31, 2006.


                                       7
<PAGE>

<TABLE>
<CAPTION>
                                           Net Portfolio Value
---------------------------------------------------------------------------------------------------------

                                                  Estimated
                                                Net Portfolio
      Change in              Estimated           Value as a                               Change as a
    Interest Rates         Net Portfolio         Percentage             Amount             Percentage
    (basis points)             Value              of Assets            of Change           of Assets
----------------------  -------------------  -------------------  -------------------  ------------------
<S>      <C>                <C>                     <C>                <C>                    <C>
                                         (Dollars in Thousands)

         300                $ 18,961                16.47%             $(4,283)               (18)%
         200                  20,609                17.63               (2,636)               (11)
         100                  22,076                18.63               (1,169)                (5)
          --                  23,245                19.39                   --                 --
        (100)                 24,049                19.90                  805                  3
        (200)                 24,838                20.39                1,593                  7
</TABLE>

      As of December 31, 2006,  MBL Bank's NPV was $23.2  million,  or 19.39% of
the market  value of assets.  Following  a 200 basis point  assumed  increase in
interest  rates,  MBL Bank's "post shock" NPV was estimated to be $20.6 million,
or 17.6% of the market value of assets,  reflecting a decrease of 11% in the NPV
ratio.

      Certain  shortcomings  are inherent in the  methodology  used in the above
interest rate risk  measurements.  Modeling changes in NPV require 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 NPV table  presented  assumes that the  composition  of MBL Bank's  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 table provides an indication of the
MBL Bank's  interest  rate risk  exposure at a  particular  point in time,  such
measurements  are not  intended to and do not provide a precise  forecast of the
effect of changes in market interest rates on MBL Bank's 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. MBL Bank's  fixed-rate loans generally
are profitable if interest rates are stable or declining  since these loans have
yields that exceed its cost of funds. If interest rates increase,  however,  MBL
Bank would have to pay more on its  deposits  and new  borrowings,  which  would
adversely  affect its interest  rate spread.  In order to counter the  potential
effects  of  dramatic  increases  in  market  rates  of  interest,  MBL Bank has
underwritten its mortgage loans to allow for their sale in the secondary market,
implemented  a strategy to  diversify  its loan  portfolio by  originating  more
commercial real estate,  commercial  business,  consumer and construction loans,
invested in  securities  with short terms or  adjustable  rates and attempted to
increase  the  amount of core  deposits  (deposits  other than  certificates  of
deposits).


                                       8
<PAGE>

      For the year ending December 31, 2006, MBL Bank originated $6.7 million in
commercial  real  estate  loans  compared  to $7.6  million  for the year ending
December 31, 2005.  Originations  of consumer loans increased to $8.7 million in
fiscal  year  2006 from  $7.1  million  in fiscal  year  2005.  Originations  of
commercial  business  loans  decreased  to $13.1  million  for the  year  ending
December  31, 2006  compared to $19.1  million for the year ending  December 31,
2005.  Originations of construction loans increased to $9.6 million for the year
ending  December  31, 2006 from $6.8  million for the year ending  December  31,
2005.  MBL Bank's  commercial  real estate,  consumer,  commercial  business and
construction  loans  typically have shorter terms and higher interest rates than
its single-family residential mortgage loans.

      MBL Bank's  adjustable-rate  securities at December 31, 2006  consisted of
$17.8 million of  mortgage-backed  securities  and $10.1  million  invested in a
mutual fund that invests in adjustable-rate  mortgage-backed securities compared
to $20.1 million of mortgage-backed  securities and $9.6 million invested in the
mutual fund at December 31, 2005.

      Core deposits  amounted to $24.4  million,  or 32.3% of total  deposits at
December 31, 2006,  compared to $27.1 million,  or 38.2%,  at December 31, 2005.
MBL Bank's  transaction  accounts  generally  have lower interest rates than its
certificates  of deposit and are  considered a more stable  source of funds than
certificates  of deposit.  Due to the rise in interest rates in 2006,  customers
preferred   certificates   of  deposit.   Consequently,   like  many   financial
institutions, MBL Bank found it difficult to increase its core deposits.

Changes in Financial Condition

      Assets. The Company's total assets increased by $4.7 million,  or 4.2%, to
$116.0  million at December  31, 2006 from $111.3  million at December 31, 2005.
The increase was primarily due to a $4.8 million,  or 6.9%,  increase in the net
loan  portfolio  due  primarily  to  a  $3.3  million,   or  79.7%  increase  in
construction  loans,  a $1.8  million,  or 4.7% increase in  one-to-four  family
residential  loans,  a $614,000,  or 4.9%,  increase in  commercial  real estate
loans, a $676,000,  or 6.8%,  increase in commercial  business loans, and a $1.3
million  increase  or  18.5% in  consumer  loans.  In  addition,  the  Company's
securities  available for sale portfolio  decreased by $1.8 million, or 6.1%, to
$28.2 million at December 31, 2006.

      Single-family loans accounted for 50.8% of MBL Bank's total loan portfolio
at December 31, 2006. MBL Bank's  one-to-four family residential loans increased
to $40.6 million at December 31, 2006. Although single-family  residential loans
are MBL Bank's primary lending product,  originations of commercial real estate,
commercial business,  consumer and construction loans increased significantly in
2006 due to its  increased  emphasis on these  types of loans and the  favorable
interest rate environment for its lending products. Commercial real estate loans
accounted  for 16.5% of MBL Bank's  total loan  portfolio  at December  31, 2006
compared to 17.4% at December 31, 2005.  Consumer loans increased to10.2% of its
total loan  portfolio at December 31, 2006 compared to 9.5% at December 31, 2005
and construction loans increased to 9.3% of the total loan portfolio at December
31, 2006 compared to 5.7% at December 31, 2005.  Commercial business real estate
loans  accounted  for 13.3% of MBL Bank's  total loan  portfolio at December 31,
2006 compared to 13.8% at December 31, 2005. The net loan portfolio  amounted to
$75.0 million, or 64.6% of total assets at December 31, 2006,

                                       9
<PAGE>

compared to 70.1 million,  or 63.0%,  of total assets at December 31, 2005.  MBL
Bank expects continued growth in its loan portfolio in 2007.

      Non-performing  assets totaled  $251,000 and $260,000 at December 31, 2006
and 2005,  respectively,  or .2% and .2% of its total  assets at such  dates and
consisted solely of non-performing  loans. The  non-performing  loans consist of
non-accrual loans and accruing loans that are contractually  past due 90 days or
more. The $9,000  decrease in  non-performing  loans was primarily the result of
the increase from $201,000 to $215,000  accruing loans which were  delinquent 90
days, and a decrease to $36,000 in non-accruing  loans. MBL Bank's allowance for
loan losses amounted to $901,000, or 1.1% of the total loan portfolio and 359.0%
of total  non-performing  loans at December 31,  2006.  The  allowance  for loan
losses totaled  $837,000,  or 1.2% of MBL Bank's total loan portfolio and 321.9%
of its total non-performing loans at December 31, 2005.

      Investment  securities  totaled  $29.3  million at December  31,  2006,  a
decrease of $2.1 million,  or 6.5%,  from the balance at December 31, 2005.  The
decline in investment  securities was primarily a result of principal repayments
and a decline in  purchases  of  mortgage-backed  investment  securities  due to
funding of the growth in the loan portfolio.

      Cash and cash  equivalents,  which  include  interest-earning  deposits in
other  institutions,  amounted  to $2.4  million,  or 2.1% of total  assets,  at
December  31,  2006,  compared  to $4.0  million,  or 3.6% of total  assets,  at
December 31, 2005.

      Stockholders'  Equity. The Company's total stockholders'  equity increased
by $1.1 million or 6.0%,  in 2006 and amounted to $20.2  million,  or 17.4%,  of
total assets at December 31, 2006.  The increase was due primarily to net income
of $1.3  million  partially  offset  by a  decrease  of  $107,000  to  fund  the
repurchase of shares of the Company's  common stock,  $202,000 to pay dividends,
and a $30,000 decrease in its other comprehensive income due to a decline in the
market value of investments  held for sale. As of December 31, 2006, the Company
had  repurchased  80,889  shares  pursuant  to three  repurchase  programs at an
average cost of $20.27 per share.

Average Balances, Net Interest Income, Yields Earned and Rates Paid

      The  table  below  sets  forth,  for the  periods  indicated,  information
regarding  (i) the total  dollar  amount of interest  income of the Company from
interest-earning  assets and the resultant average yields; (ii) the total dollar
amount of interest  expense on  interest-bearing  liabilities  and the resultant
average rate; (iii) net interest income;  (iv) the interest rate spread; and (v)
the net interest  margin.  Information is based on average daily balances during
the indicated periods.


                                       10
<PAGE>

<TABLE>
<CAPTION>
                                                                            Year Ended December 31,

                                                           ------------------------------------------------------------------------

                                                                        2006                                    2005
                                                           ----------------------------------    ----------------------------------

                                              Yield/Cost
                                                  at
                                               December     Average                 Average       Average                 Average
                                               31, 2006     Balance     Interest   Yield/Rate     Balance     Interest   Yield/Rate
                                              ----------   ---------    ---------  ----------    ---------    ---------  ----------
                                                                                    (Dollars in Thousands)
<S>                                                 <C>    <C>          <C>              <C>     <C>          <C>             <C>
Interest-earning assets:
Loans receivable, net(1) ...................        7.83%  $  74,114    $   5,867        7.92%   $  67,480    $   5,103       7.56%
Investment securities(2) ...................        4.91      32,514        1,510        4.64       33,479        1,255       3.75
Interest-earning deposits ..................        5.19         926           46        4.97        1,809           79       4.37
                                                           ---------    ---------                 --------    ---------
   Total interest-earning assets ...........        7.00     107,554        7,423        6.90      102,768        6,437       6.26
                                                                        ---------    --------     ---------   ---------  ---------
Non-interest-earning assets ................                   7,491                                 9,204
                                                           ---------                             ---------
   Total assets ............................               $ 115,045                             $ 111,972
                                                           =========                             =========

Interest-bearing liabilities:
Deposits ...................................        3.22   $  66,741        2,196        3.29    $  61,948        1,439       2.32
Borrowings .................................        5.44      20,903        1,033        4.94       21,793          704       3.23
                                                           ---------    ---------                 --------    ---------
   Total interest-bearing liabilities ......        3.70      87,644        3,229        3.68       83,741        2,143       2.56
                                                                        ---------    --------     --------    ---------  ---------
Non-interest-bearing liabilities ...........                   8,268                                 9,364
                                                           ---------                             ---------
   Total liabilities .......................                  95,912                                93,105
Total stockholders' equity(3) ..............                  19,133                                18,867
                                                           ---------                             ---------
Total liabilities and stockholders'  equity                $ 115,045                             $ 111,972
                                                           =========                             =========
Net interest income; interest rate spread(4)                            $   4,194        3.22%                $   4,294       3.70%
                                                                        =========    ========                 =========  =========
Net interest margin(5) .....................                                             3.90%                                4.18%
                                                                                     ========                            =========
Average interest-earning assets to average
   interest-bearing liabilities ............                  122.72%                               122.72%
                                                           =========                             =========
</TABLE>

--------------------------------------------------------------------------------

(1)   Includes nonaccruing loans.

(2)   Includes dividends from Federal Home Loan Mortgage Corporation and Federal
      Home Loan Bank stock.

(3)   Includes retained earnings and accumulated other comprehensive income.

(4)   Interest   rate   spread    represents   the   difference    between   the
      weighted-average yield on interest-earning assets and the weighted-average
      rate on interest-bearing liabilities.

(5)   Net  interest  margin  is net  interest  income  divided  by  net  average
      interest-earning assets.

      Rate/Volume  Analysis.  The following  table describes the extent to which
changes in interest rates and changes in volume of  interest-related  assets and
liabilities  have affected the Company's  interest  income and interest  expense
during the periods indicated.  For each category of interest-earning  assets and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume  (change in volume  multiplied  by prior year rate),  (ii)
changes in rate (change in rate  multiplied by current year  volume),  and (iii)
total change in rate and volume. 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.


                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                           Year Ended December 31,
                                        ---------------------------------------------------------------

                                                2006 vs. 2005                    2005 vs. 2004
                                        ------------------------------   ------------------------------

                                             Increase                        Increase
                                            (Decrease)                      (Decrease)
                                              Due To                          Due To
                                        ------------------               -----------------
                                                               Total                            Total
                                                             Increase                         Increase
                                         Rate      Volume   (Decrease)    Rate      Volume   (Decrease)
                                        -------    -------  ----------   -------    -------  ----------

                                                                (In Thousands)
<S>                                     <C>        <C>        <C>        <C>        <C>        <C>
Interest-earning assets:

  Loans receivable, net .............   $   262    $   502    $   764    $   196    $   560    $   756
  Investment securities .............       291        (36)       255        221       (175)        46
  Interest-earning deposits .........         6        (39)       (33)       (36)        61         25
                                        -------    -------    -------    -------    -------    -------
    Total ...........................       559        427        986        381        446        827
                                        -------    -------    -------    -------    -------    -------

Interest-bearing liabilities:
  Deposits ..........................       646        111        757        248       (139)       109
  Borrowings ........................       358        (29)       329        384         67        451
                                        -------    -------    -------    -------    -------    -------
    Total ...........................     1,004         82      1,086        632        (72)       560
                                        -------    -------    -------    -------    -------    -------
  Increase (decrease) in net interest
    income ..........................   $  (445)   $   345    $  (100)   $  (251)   $   518    $   267
                                        =======    =======    =======    =======    =======    =======
</TABLE>

Comparison of Operating Results for the Years Ended December 31, 2006 and 2005

      General.  Net income  amounted to $1.3 million for the year ended December
31, 2006; a decrease of $27,000,  or 2.0% from net income  recorded for the year
ended  December 31, 2005.  The decrease in earnings  resulted  primarily  from a
decrease in net interest  income of $195,000 after provision for loan losses and
a $369,000 increase in other operating expenses which were partially offset by a
$527,000  increase in other operating  income,  and a $10,000 decrease in income
tax expense.

      Net Interest  Income.  Total interest and dividend income amounted to $7.4
million for the year ended December 31, 2006; an increase of $986,000, or 15.3%,
over the year ended December 31, 2005. Interest income on loans, including fees,
totaled  $5.9  million  for the year ended  December  31,  2006,  an increase of
$764,000,  or 15.0%,  over the year ended  December 31, 2005.  This increase was
primarily  due to a $6.6  million,  or 9.8%,  increase  in the  weighted-average
balance of loans  outstanding and, to a lesser degree, a 36 basis point increase
to 7.92% in the weighted  average  yield from 2005 to 2006.  Interest  income on
investment  securities  increased by $255,000,  or 20.3%,  primarily due a to 89
basis point increase in the  weighted-average  yield year to year offset in part
by a $965,000,  or 2.9%, decrease in the  weighted-average  balance outstanding.
Income from  interest-earning  deposits,  which consists of overnight  funds and
interest-bearing  demand accounts,  decreased by $33,000,  or 41.8% for the year
ended December 31, 2006 compared to the year ended December 31, 2005.

      Interest  expense  totaled  $3.2  million for the year ended  December 31,
2006, an increase of $1.1 million,  or 50.7%,  from the amount  recorded for the
year ended  December  31,  2005.  Interest  expense  on  deposits  increased  by
$757,000, or 52.6%, due primarily to a 97 basis point


                                       12
<PAGE>

increase  in the  weighted  average  cost of  deposits  from year to year and an
increase of $4.8 million, or 7.8%, in the  weighted-average  balance of deposits
outstanding.  Interest expense on borrowings increased by $329,000, or 46.7%, as
a  result  of a 171  basis  point  increase  in  the  weighted-average  cost  of
borrowings  year to year offset in part by a $0.9 million,  or 41%,  increase in
the weighted average balance outstanding.

      As a result of the  foregoing  changes in  interest  income  and  interest
expense, net interest income decreased by $100,000,  or 2.3%, to a total of $4.2
million for the year ended  December 31, 2006,  compared to $4.3 million for the
year ended  December 31, 2005.  The interest  rate spread  decreased by 48 basis
points to 3.22% in fiscal  2006 from  3.70% in  fiscal  2005.  The net  interest
margin was 3.90% for the year ended  December 31, 2006 compared to 4.18% for the
year ended December 31, 2005 due to the  compression in the interest rate spread
resulting  from  the  current  interest  rate  environment.  The  ratio  of  net
interest-earning assets to interest-bearing  liabilities was 122.72% in 2006 and
2005.

      Provision for Losses on Loans.  MBL Bank records a provision for losses on
loans to  earnings  to bring  the  total  allowance  for loan  losses to a level
considered  to the best of  management's  knowledge  to  reflect  all  known and
inherent  losses in the loan  portfolio  at each  reporting  date.  The level of
allowance  for loan  losses  is based on  management's  periodic  review  of the
collectibility of 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.  Based on the above criteria for determining the  collectibility  of
loans and on the management of MBL Bank's  estimate as to the known and inherent
losses in its loan portfolio that are probable and reasonably  estimable at each
reporting period, it recorded no additional provisions for loan losses for 2005.
In 2006 the  provision  for loan losses was $95,000 due to  continued  growth of
certain  segments of the loan  portfolio  which are deemed  generally  to entail
inherently  greater risk of loss.  There can be no assurances that the allowance
for loan losses will be sufficient to absorb losses on  nonperforming  assets or
that the allowance will be sufficient to cover losses on nonperforming assets in
the future.

      Other Operating  Income.  Other operating  income totaled $848,000 for the
year ended  December  31,  2006,  as compared to $321,000  recorded for the year
ended  December 31, 2005.  The  $527,000 or 164.2%  increase in other  operating
income was mainly  due to a  $130,000  increase  in  customer  service  fees,  a
$104,000  increase in gain on sale of assets,  and a $293,000  increase in other
income which  included the income of Woodard Walker  Insurance  Agency which the
Company acquired in January 2006.

      Other Operating  Expenses.  Other operating  expenses totaled $2.9 million
for the year ended  December 31, 2006, an increase of $369,000,  or 14.3%,  over
the total recorded for the year ended  December 31, 2005. The increase  resulted
primarily from a $70,000, or 4.7%, increase in salaries and benefits, a $29,000,
or 16.8%, increase in professional fees and supervisory exams and a $279,000, or
57.8%,  increase in other general and administration  expenses.  The increase in
salaries and benefits was primarily  attributable to increases in salaries,  the
fair value of shares of Company  common  stock  held by the  Company's  employee
stock ownership plan released to participants' accounts, and the number of staff
members. The increase in professional fees and supervisory  examinations was due
to increased regulatory


                                       13
<PAGE>

compliance and asset growth. Other general and administrative  expenses included
the expenses of the insurance agency.

      Income  Taxes.  Income tax  expense  totaled  $668,000  for the year ended
December  31, 2006,  a decrease of $10,000,  or 1.5%,  from the $678,000 for the
year ended  December 31,  2005.  MBL Bank's  effective  tax rates were 33.4% and
33.2% for the years ended December 31, 2006 and 2005, respectively.

Off-Balance-Sheet Obligations

      MBL Bank is a party to financial instruments with  off-balance-sheet  risk
in the normal course of business to meet the financing  needs of its  customers.
These financial instruments involve, to varying degrees, elements of credit risk
in excess of the amount  recognized in the balance sheet. MBL Bank's exposure to
credit loss in the event of  non-performance by the other party to the financial
instrument for commitments to extend credit and letters of credit is represented
by the contractual  notional amount of those  instruments.  The Company uses the
same credit policies in making  commitments  and  conditional  obligations as it
does for on-balance-sheet instruments.

      Commitments to extend credit, including loan commitments,  lines of credit
and letters of credit do not necessarily represent future cash requirements,  in
that these commitments often expire without being drawn upon.

      MBL Bank has not used,  and has no  intention  of using,  any  significant
off-balance sheet financing  arrangements for liquidity  purposes.  In addition,
MBL  Bank  has  not  had,  and  has  no  intention  to  have,  any   significant
transactions,  arrangements  or other  relationships  with  any  unconsolidated,
limited purpose  entities that could  materially  affect MBL Bank's liquidity or
capital resources. MBL Bank has not traded in and has no intention of trading in
derivatives or commodity contracts.

Critical Accounting Estimates

      Various elements of the Company's  accounting  policies,  by their nature,
are inherently subject to estimation techniques, valuation assumptions and other
subjective assessments.  The estimates with respect to the methodologies used to
determine  the  allowance  for  loan  losses  are the  Company's  most  critical
accounting estimates.  Critical accounting estimates are significantly  affected
by  management  judgment  and  uncertainties  and  there  is a  likelihood  that
materially  different amounts would be reported under different,  but reasonably
plausible, conditions or assumptions.

      The Company has identified the evaluation of the allowance for loan losses
as a critical  accounting  estimate  where  amounts  are  sensitive  to material
variation.  The allowance  for loan losses is  considered a critical  accounting
estimate because there is a large degree of judgment in (i) assigning individual
loans to specific risk levels (pass, special mention, substandard,  doubtful and
loss),  (ii)  valuing  the  underlying  collateral  securing  the  loans,  (iii)
determining the appropriate reserve factor to be applied to specific risk levels
for criticized and classified loans


                                       14
<PAGE>

(special mention,  substandard,  doubtful and loss) and (iv) determining reserve
factors to be applied to pass  loans  based upon loan type.  To the extent  that
loans change risk levels,  collateral  values change or reserve  factors change,
the Company may need to adjust its  provision for loan losses which would impact
earnings.

      Management believes the allowance for loan losses at December 31, 2006 was
at a level to cover the known and  inherent  losses in the  portfolio  that were
both probable and reasonable to estimate.  In the future,  management may adjust
the level of its  allowance  for loan  losses as economic  and other  conditions
dictate.  Management  reviews  the  allowance  for loan  losses  not  less  than
quarterly.

      Management has discussed the  development  and selection of these critical
accounting  estimates with the Audit Committee of the Board of Directors and the
Audit  Committee  has reviewed the Company's  disclosure  relating to it in this
Management's Discussion and Analysis.

Liquidity and Capital Resources

      The  Company   maintains  levels  of  liquid  assets  deemed  adequate  by
management.  Its liquidity  ratio averaged 17.95% for the quarter ended December
31, 2006. MBL Bank adjusts its liquidity levels to fund deposit outflows,  repay
its borrowings and to fund loan commitments.  The Company also adjusts liquidity
as appropriate to meet asset and liability management objectives.

      MBL  Bank's  primary  sources  of funds  are  deposits,  amortization  and
prepayment  of loans and  mortgage-backed  securities,  maturities of investment
securities  and other  short-term  investments,  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.  MBL Bank sets the interest rates on its
deposits to maintain a desired level of total  deposits.  In addition,  MBL Bank
invests excess funds in short-term  interest-earning  accounts and other assets,
which  provide  liquidity  to meet  lending  requirements.  MBL  Bank's  deposit
accounts  with the Federal  Home Loan Bank of Dallas  amounted  to $314,000  and
$863,000 at December 31, 2006 and 2005, respectively.

      A  significant  portion of MBL Bank's  liquidity  consists  of  securities
classified  as  available  for sale and cash and cash  equivalents.  MBL  Bank's
primary  sources  of cash are net  income,  principal  repayments  on loans  and
mortgage-backed  securities  and  increases  in  deposit  accounts.  If MBL Bank
requires  funds  beyond  its  ability to  generate  them  internally,  borrowing
agreements  exist with the  Federal  Home Loan Bank of Dallas  which  provide an
additional  source of funds. At December 31, 2006, MBL Bank had $19.0 million in
advances from the Federal Home Loan Bank of Dallas.

      At December 31, 2006, MBL Bank had outstanding  loan  commitments of $12.6
million to originate  loans,  including loans in process.  At December 31, 2006,
certificates of deposit scheduled to mature in less than one year, totaled $47.0
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


                                       15
<PAGE>

significantly  higher upon renewal,  in a rising interest rate environment.  MBL
Bank  intends  to  utilize  its high  levels of  liquidity  to fund its  lending
activities.  If additional  funds are required to fund lending  activities,  MBL
Bank intends to sell its securities classified as available for sale as needed.

      MBL Bank is required to maintain  regulatory  capital  sufficient  to meet
tangible,  core and risk-based  capital ratios of at least 1.5%,  3.0% and 8.0%,
respectively.  At  December  31,  2006,  MBL Bank  exceeded  each of its capital
requirements with ratios of 15.91%, 15.91% and 29.18%, respectively.

Impact of Inflation and Changing Prices

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

Recent Accounting Standards

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") SFAS No. 123R, "Share-Based
Payments,"  the  provisions  of which became  effective for the  corporation  in
fiscal 2006. This Statement  eliminates the option to use APB No. 25's intrinsic
value method of  accounting  that was provided in  Statement  123 as  originally
issued.  Statement  123R  requires  companies to recognize  the cost of employee
services  received in  exchange  for awards of equity  instruments  based on the
grant-date  fair  value of  those  awards.  While  the  fair-value-based  method
prescribed by Statement 123R is similar to the fair-value-based method disclosed
under  the  provisions  of  Statement  123 in  most  respects,  there  are  some
differences.  The Company began using the Black Scholes  option  pricing  method
beginning in fiscal 2006 and recorded an expense of $40,900.

      In March 2006, the FASB issued SFAS No. 156,  "Accounting for Servicing of
Financial  Assets" ("SFAS 156").  SFAS 156 amends SFAS No. 140,  "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities."
SFAS 156  permits,  but does not  require,  and  entity  to  choose  either  the
amortization  method or the fair value  measurement  method for  measuring  each
class of separately recognized servicing assets and servicing liabilities.  SFAS
156 is effective for fiscal years  beginning after September 15, 2006 and is not
expected  to have a  material  impact on the  Company's  consolidated  financial
statements.

      In July 2006,  the FASB  issued FIN 48,  "Accounting  for  Uncertainty  in
Income Taxes:  an  interpretation  of FASB  Statement No. 109,  "Accounting  for
Income Taxes".  FIN 48 clarifies the accounting for  uncertainty in income taxes
recognized in an entity's financial statements in


                                       16
<PAGE>

accordance  with  Statement  of SFAS No. 109. FIN 48  prescribes  a  recognition
threshold and measurement  attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. FIN
48  also  provides  guidance  on  derecognition,  classification,  interest  and
penalties,  accounting in interim periods,  disclosure and transition. FIN 48 is
effective for fiscal years  beginning  after  December 15, 2006. The adoption of
FIN  48  is  not  expected  to  have  a  significant  effect  on  the  Company's
consolidated financial statements.

      In September 2006, the FASB Issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157") which is effective for fiscal years  beginning  after  November 15,
2007 and for interim  periods within those years.  This  statement  defines fair
value,  establishes a framework for measuring fair value and expands the related
disclosure  requirements.  The  adoption  of SFAS 157 is not  expected to have a
material impact on the Company's consolidated financial statements.

      In September  2006, the FASB Issued SFAS No. 158,  "Employers'  Accounting
for Defined Benefit Pension and Other Postretirement  Plans-an amendment of FASB
Statements  No. 87, 88, 106,  and 132(R)  ("SFAS  158")".  SFAS 158  requires an
employer  to  recognize  the over  funded  or under  funded  status of a defined
benefit  postretirement  plan (other than a multi-employer  plan) as an asset or
liability in its  statement of  financial  position and to recognize  changes in
that funded status in the year in which the changes occur through  comprehensive
income.  This  Statement  also  improves  financial  reporting  by  requiring an
employer to measure the funded  status of a plan as of the date of its  year-end
statement  of financial  position,  with limited  exceptions.  An employer  with
publicly traded equity securities is required to initially  recognize the funded
status of a defined  benefit  postretirement  plan and to provide  the  required
disclosures as of the end of the fiscal year ending after December 15, 2006. The
adoption  of SFAS  158 is not  expected  to  have a  significant  effect  on the
Company's consolidated financial statements.

      In September 2006, the SEC staff issued Staff Accounting  Bulletin ("SAB")
No. 108  "Considering the Effects of Prior Year  Misstatements  when Quantifying
Misstatements  in  Current  Year  Financial  Statements".  SAB 108 was issued to
provide  consistency  among  registrants  in  the  quantification  of  financial
statement   misstatements.   SAB  108  established  an  approach  that  requires
quantification of financial statement  misstatements based on the effects of the
misstatement  on each of the  company's  financial  statements  and the  related
disclosures.  SAB 108 allows  registrants to initially apply the approach either
by (1) retroactively adjusting prior financial statements as if the approach had
always been used or (2) recording the  cumulative  effect of initially  applying
the approach as adjustments to the carrying  values of assets and liabilities as
of January 1, 2006 with the related  offset  recorded to the opening  balance of
retained  earnings.  Use of the  "cumulative  effect"  transition  requires full
disclosure as to the nature and amount of each individual error being corrected.
The  adoption  of SAB  108 by the  Company  in  December  2006  did  not  have a
significant effect on the Company's consolidated financial statements.

                                       17
<PAGE>

The Board of Directors
Minden Bancorp, Inc. and Subsidiaries
Minden, Louisiana

            Report of Independent Registered Public Accounting Firm
            -------------------------------------------------------

We have audited the accompanying  consolidated balance sheets of Minden Bancorp,
Inc.  and  Subsidiaries  as of  December  31,  2006 and  2005,  and the  related
consolidated statements of 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  Subsidiaries  as of  December  31,  2006 and 2005,  and the
consolidated  results  of its  operations  and its cash flows for the years then
ended in conformity with United States generally accepted accounting principles.

As discussed in Note 16 to the consolidated  financial  statements,  the Company
has adopted  Financial  Accounting  Standards Board Statement No. 123(R),  Share
Based Payments, in 2006.

/s/ Heard, McElroy & Vestal, LLP
--------------------------------
Heard, McElroy & Vestal, LLP
Shreveport, Louisiana
March 26, 2007


                                       18
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                           CONSOLIDATED BALANCE SHEETS
                           ---------------------------

                           DECEMBER 31, 2006 AND 2005
                           --------------------------

<TABLE>
<CAPTION>
                A S S E T S                                                    2006       2005
                -----------                                                    ----       ----
                                                                    (in thousands except per share data)
<S>                                                                        <C>        <C>
Cash and noninterest-bearing deposits                                      $  2,131   $  1,494
Interest-bearing demand deposits                                                314        863
Federal funds sold                                                               --      1,675
                                                                           --------   --------
            Total cash and cash equivalents                                   2,445      4,032

Investment securities:
    Securities held-to-maturity (estimated market value of
       $1,106 in 2006 and $1,323 in 2005)                                     1,108      1,324
    Securities available-for-sale, at estimated market value                 28,211     30,043

First National Banker's Bank stock, at cost                                     210        210
Federal Home Loan Bank stock, at cost                                         1,216      1,160
Loans, net of allowance for loan losses of $901 in
    2006 and $837 in 2005                                                    74,963     70,117
Accrued interest receivable                                                     628        558
Premises and equipment, net                                                   6,343      3,312
Other assets                                                                    842        538
                                                                           --------   --------

Total assets                                                               $115,966   $111,294
                                                                           ========   ========
</TABLE>

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


                                       19
<PAGE>

<TABLE>
<CAPTION>
    LIABILITIES AND STOCKHOLDERS' EQUITY                                2006         2005
    ------------------------------------                                ----         ----
<S>                                                                <C>          <C>
Liabilities:
-----------
    Deposits:
       Noninterest-bearing                                         $   7,346    $   7,005
       Interest-bearing                                               68,177       63,816
                                                                   ---------    ---------
            Total deposits                                            75,523       70,821
    Accrued dividends on savings                                         480          269
    Deferred federal income taxes                                        404          420
    Federal Home Loan Bank advances                                   19,000       20,500
    Other liabilities                                                    399          266
                                                                   ---------    ---------
            Total liabilities                                         95,806       92,276

Stockholders' equity:
--------------------
    Preferred stock-$.01 par value; authorized 1,000,000 shares;
       none issued-no rights/preferences set by board                     --           --
    Common stock-$.01 par value; authorized 4,000,000 shares;
       1,454,750 shares issued and 1,376,666 shares-2006 and
       1,378,761 shares-2005 outstanding                                  15           15
    Additional paid-in capital                                        16,364       16,710
    Retained earnings                                                  5,419        4,284
    Accumulated other comprehensive income                               282          312
                                                                   ---------    ---------
                                                                      22,080       21,321
    Unearned common stock held by Management Recognition
       and Retention Plan (18,850 shares-2005)                            --         (398)
    Unallocated common stock held by ESOP (34,042
       shares-2006 and 39,278 shares-2005 unreleased)                   (319)        (368)
    Treasury stock-at cost (78,084 shares-2006 and 75,989-2005)       (1,601)      (1,537)
                                                                   ---------    ---------
            Total stockholders' equity                                20,160       19,018
                                                                   ---------    ---------

Total liabilities and stockholders' equity                         $ 115,966    $ 111,294
                                                                   =========    =========
</TABLE>


                                       20
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------

                     YEARS ENDED DECEMBER 31, 2006 AND 2005
                     --------------------------------------

<TABLE>
<CAPTION>
                                                                           2006            2005
                                                                           ----            ----
                                                                   (in thousands except share data)
<S>                                                                    <C>             <C>
Interest and dividend income:
----------------------------
    Loans, including fees                                              $  5,867        $  5,103
    Investments-taxable:
       Securities                                                           485             346
       Mortgage-backed securities                                           944             850
    Dividends-FHLMC/FHLB                                                     81              59
    Other (federal funds/interest-bearing demand)                            46              79
                                                                       --------        --------
            Total interest and dividend income                            7,423           6,437

Interest expense:
----------------
    Interest-bearing demand deposits                                        110              50
    Savings                                                                 178             207
    Certificates of deposit                                               1,908           1,182
    Interest on borrowed funds                                            1,033             704
                                                                       --------        --------
            Total interest expense                                        3,229           2,143
                                                                       --------        --------

            Net interest income                                           4,194           4,294
    Provision for loan losses-Note 3                                         95              --
                                                                       --------        --------
            Net interest income after provision for loan losses           4,099           4,294

Other operating income:
----------------------
    Customer service fees                                                   397             267
    Gain (loss) on sale of assets                                           103              (1)
    Other income                                                            348              55
                                                                       --------        --------
            Total other operating income                                    848             321

Other operating expenses:
------------------------
    Salaries and benefits                                                 1,547           1,477
    Office occupancy expense                                                424             432
    Professional fees and supervisory examinations                          202             173
    OFI insurance premium                                                     9              10
    Other general and administrative expenses                               762             483
                                                                       --------        --------
            Total other operating expenses                                2,944           2,575
                                                                       --------        --------

Income before income taxes                                                2,003           2,040
--------------------------

Income tax expense                                                          668             678
------------------                                                     --------        --------

Net income                                                             $  1,335        $  1,362
----------                                                             ========        ========

Earnings per share (EPS)                                               $   1.01        $   1.03
------------------
Diluted EPS                                                            $    .95        $    .97
-----------
</TABLE>

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

                                       21
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                        CONSOLIDATED STATEMENTS OF EQUITY
                        ---------------------------------

                     YEARS ENDED DECEMBER 31, 2006 AND 2005
                     --------------------------------------

<TABLE>
<CAPTION>
                                                                                            Accumulated
                                                             Additional                        Other
                                                 Common        Paid-In        Retained      Comprehensive
                                                 Stock         Capital        Earnings          Income          Total
                                               ----------    ----------       --------      -------------       -----
                                                                           (in thousands)
<S>                                            <C>            <C>            <C>            <C>               <C>
Balance December 31, 2004                      $       15     $   16,690     $    3,106     $          556    $   20,367
-------------------------

Net income                                             --             --          1,362                 --         1,362
Change in net unrealized gain
    on securities available for
    sale, net of taxes and reclassification
    adjustment                                                                     (244)              (244)         (244)
                                                                             ----------
       Total comprehensive income                                                 1,118
                                                                             ==========

Dividends (.31 per share)                              --             --           (184)                --          (184)
Release 3,668 shares of stock (MRRP)                   --            (65)            --                 --           (65)
Release ESOP shares                                    --             38             --                 --            38
Purchase of shares (ESOP)                              --             (6)            --                 --            (6)
Amortization of awards under Management
    Recognition and Retention Plan (MRRP)              --             53             --                 --            53
                                               ----------     ----------     ----------     --------------    ----------

Balance December 31, 2005                      $       15     $   16,710     $    4,284     $          312    $   21,321
-------------------------

Net income                                             --             --          1,335                 --         1,335
Change in net unrealized gain
    on securities available for
    sale, net of taxes and reclassification
    adjustment                                                                      (30)               (30)          (30)
                                                                             ----------
       Total comprehensive income                                                 1,305
                                                                             ==========

Dividends (.35 per share)                              --             --           (202)                --          (202)
Transfer                                               --             (2)             2                 --            --
Reclass of unearned compensation upon
    adoption of SFAS 123R                              --           (397)            --                 --          (397)
Amortization of awards under Management
    Recognition and Retention Plan (MRRP)              --             53             --                 --            53
                                               ----------     ----------     ----------     --------------    ----------

Balance December 31, 2006                      $       15     $   16,364     $    5,419     $          282    $   22,080
-------------------------                      ==========     ==========     ==========     ==============    ==========
</TABLE>

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

                                       22
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                     YEARS ENDED DECEMBER 31, 2006 AND 2005
                     --------------------------------------

<TABLE>
<CAPTION>
                                                                                       2006        2005
                                                                                       ----        ----
                                                                                      (in thousands)
<S>                                                                                 <C>         <C>
Cash flows from operating activities:
------------------------------------
   Net income                                                                       $ 1,335     $ 1,362
   Adjustments to reconcile net income to net cash
      provided by operating activities:
        Depreciation and amortization                                                   184         162
        Provision for loan losses                                                        95          --
        Deferred income taxes                                                           (16)        (36)
        MRRP and other expenses                                                          93          91
        Stock dividends                                                                 (56)        (39)
        Net amortization of securities                                                   44          68
        (Gain) loss on sale of assets                                                  (103)          1
        (Increase) in prepaid expenses and accrued income                               (65)        (28)
        Increase in dividends payable and other liabilities                             303         182
                                                                                    -------     -------
           Net cash provided by operating activities                                  1,814       1,763

Cash flows from investing activities:
------------------------------------
   Activity in available for sale securities:
      Maturities, prepayments and calls                                               6,319       9,427
      Purchases                                                                      (4,532)     (5,725)
   Activity in held to maturity securities:
      Maturities, prepayments and calls                                                 216         763
      Purchases                                                                          --        (105)
   Net (increase) in loans                                                           (4,941)     (7,517)
   Purchases of premises and equipment                                               (3,197)       (395)
   Purchase of insurance expiration list                                               (331)         --
   Proceeds from sale of FHLB stock and other                                           103          --
   Other                                                                                 26          38
                                                                                    -------     -------
           Net cash (used) by investing activities                                   (6,337)     (3,514)

Cash flows from financing activities:
-------------------------------------
   Net increase in deposits                                                           4,702         156
   Net increase in advances from FHLB                                                (1,500)      3,300
   Treasury stock purchased                                                             (64)       (428)
   Dividends paid                                                                      (202)       (184)
                                                                                    -------     -------
           Net cash provided by financing activities                                  2,936       2,844
                                                                                    -------     -------

Net increase (decrease) in cash and cash equivalents                                 (1,587)      1,093
----------------------------------------------------

Cash and cash equivalents at January 1                                                4,032       2,939
--------------------------------------                                              -------     -------

Cash and cash equivalents at December 31                                            $ 2,445     $ 4,032
----------------------------------------                                            =======     =======
</TABLE>

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

                                       23
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

                     YEARS ENDED DECEMBER 31, 2006 AND 2005
                     --------------------------------------

                                                        2006        2005
                                                        ----        ----
                                                        (in thousands)

Supplemental disclosures:
   Interest paid on deposits and borrowed funds      $ 3,018     $ 2,061
   Income taxes paid                                     649         608

      Noncash investing and financing activities:
        Transfer of loans to real estate owned       $    --     $    --
                                                     =======     =======

        Increase (decrease) in unrealized gain on
           securities available for sale             $   (45)    $  (371)
                                                     =======     =======

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

                                       24
<PAGE>

                      MINDEN BANCORP, INC. AND SUBSIDIARIES
                      -------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 2006 AND 2005
                           --------------------------

1.    Summary of Significant Accounting Policies
      ------------------------------------------

      Minden Building and Loan  Association (the  "Association")  is a Louisiana
      chartered   building  and  loan  association   (refer  to  Note  18).  The
      Association  accepts  customer  demand,  savings,  and time  deposits  and
      provides residential mortgages,  consumer and business loans to consumers.
      The Association is subject to the regulations of certain federal and state
      agencies  and  undergoes   periodic   examinations  by  those   regulatory
      authorities. The Association formed Minden Service, Inc. as a wholly-owned
      subsidiary. Minden Service, Inc.'s sole purpose is to hold real estate for
      the  Association  to use for further  expansion.  The  Association  is the
      wholly-owned subsidiary of Minden Bancorp, Inc. (the "Company").  In 2006,
      the Company purchased Woodard Walker Insurance (WWI) agency (refer to Note
      15).  The  Company's  significant  assets and  business  activity  are its
      investments in the Association and WWI. All intercompany transactions have
      been eliminated in consolidation of Minden Bancorp,  Inc., Minden Building
      and Loan  Association,  Minden Service,  Inc. and Woodard Walker Insurance
      Agency.

      On December 11, 2001, the Board of Directors of the Association, adopted a
      plan of reorganization  pursuant to which the Association would convert to
      stock  form and  became  a  wholly-owned  subsidiary  of the  Company.  In
      connection  with the  reorganization,  the Company became a majority owned
      subsidiary  of Minden  Mutual  Holding  Company.  The  reorganization  was
      consummated on July 2, 2002.

      Use of Estimates.  In preparing  financial  statements in conformity  with
      accounting  principles generally accepted in the United States of America,
      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
      trading activities.

      Significant Group Concentrations of Credit Risk. Most of the Association'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  Association  makes  investments,  and  Note  3
      summarizes  the  types  of  loans  included  in  the  Association's   loan
      portfolio. The Association 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.

      Interest-Bearing  Deposits  in Banks.  Interest-bearing  deposits in banks
      mature within one year and are carried at cost.

      Securities. Securities that management has the positive intent and ability
      to hold to maturity are  classified  as "held to maturity" and recorded at
      amortized cost.  Securities not classified as held to maturity or trading,
      including equity  securities with readily  determinable  fair values,  are
      classified  as  "available  for sale" and  recorded  at fair  value,  with
      unrealized  gains and losses  excluded from earnings and reported in other
      comprehensive income.


                                       25
<PAGE>

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. 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 Association  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 Association'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.  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.

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

       The  allowance  for  loan  losses  is  evaluated  on a  regular  basis by
       management  and  is  based  upon  management's  periodic  review  of  the
       collectibility of the loans in light of historical experience, the nature
       and volume of the loan portfolio,  adverse situations that may affect 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 become available.


                                       26
<PAGE>

1.    Summary of Significant Accounting Policies (Continued)
      ------------------------------------------

      A loan is  considered  impaired  when,  based on current  information  and
      events,  it is probable that the Association 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 Association does not separately
      identify   individual   consumer  and  residential  loans  for  impairment
      disclosures.

      Credit Related Financial Instruments.  In the ordinary course of business,
      the Association 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.

      Foreclosed  Assets.  Assets acquired  through,  or deeded in lieu of, loan
      foreclosure are held for sale and are initially  recorded at fair value at
      the date of foreclosure,  less estimated cost to sell or cost.  Subsequent
      to foreclosure,  valuations are  periodically  performed by management and
      the assets are carried at the lower of carrying  amount or fair value less
      cost to sell.  Revenue and  expenses  from  operations  and changes in the
      valuation allowance are included in net expenses from foreclosed assets.

      Premises and  Equipment.  Premises and  equipment  are stated at cost less
      accumulated depreciation. The Association 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 its building.

      Income Taxes.  Deferred  income tax assets and  liabilities are determined
      using the liability (or balance sheet) method.  Under this method, the net
      deferred tax asset or liability is determined  based on the tax effects of
      the  temporary  differences  between the book and tax bases of the various
      balance  sheet  assets and  liabilities  and give current  recognition  to
      changes in tax rates and laws.

      Advertising Costs.  Advertising costs are expensed as incurred. Such costs
      (in thousands)  amounted to  approximately  $46 and $54 for 2006 and 2005,
      respectively, and are included in other operating expense.

      Reclassifications.  Certain amounts  previously  reported in the Company's
      financial   statements  have  been  reclassified  to  conform  to  current
      classifications,  with no  effect on  previously  reported  net  income or
      equity.


                                       27
<PAGE>

1.    Summary of Significant Accounting Policies (Continued)
      ------------------------------------------

      Earnings Per Share (ESP). EPS is calculated  based upon 1,323,522  average
      weighted  common  shares  outstanding  stock less ESOP shares not released
      less treasury stock at December 31, 2006, and 1,324,753  average  weighted
      shares  outstanding  stock less ESOP shares not  released,  less  treasury
      stock at December 31, 2005.

      Comprehensive   Income.   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.

      During 2006, the FASB issued the following statements: No. 157, Fair Value
      Measurement and No. 158, Employers' Accounting for Defined Benefit Pension
      and Other  Postretirement  Plans.  Also,  the FASB  issued  several  Staff
      Positions  (FSPs);   however,   none  of  those  were  applicable  to  the
      Association  and other FSP FAS 123,  which is detailed  in Note 16.  These
      statements are not expected to have a material impact on the Association's
      financial statements.

2.    Investment Securities
      ---------------------

      Securities  held-to-maturity  consist of the following  (in  thousands) at
      December 31, 2006 and 2005:

<TABLE>
<CAPTION>
                                                        2006
                                 --------------------------------------------------
                                                Gross         Gross       Estimated
                                 Amortized    Unrealized    Unrealized     Market
                                   Cost         Gains         Losses        Value
                                 ---------    ----------    ----------    ---------
<S>                              <C>          <C>           <C>           <C>
      GNMA                              46            --            --           46
      FNMA                             247             1             3          245
      FHLMC                             15            --            --           15
      Certificates of deposit          800            --            --          800
                                 ---------    ----------    ----------    ---------
                                 $   1,108    $        1    $        3    $   1,106
                                 =========    ==========    ==========    =========

<CAPTION>

                                                       2005
                                 --------------------------------------------------
                                                Gross         Gross       Estimated
                                 Amortized    Unrealized    Unrealized     Market
                                   Cost         Gains         Losses        Value
                                 ---------    ----------    ----------    ---------
<S>                              <C>          <C>           <C>           <C>
      GNMA                              58            --            --           58
      FNMA                             348             1             2          347
      FHLMC                             18            --            --           18
      Certificates of deposit          900            --            --          900
                                 ---------    ----------    ----------    ---------
                                 $   1,324    $        1    $        2    $   1,323
                                 =========    ==========    ==========    =========
</TABLE>


                                       28
<PAGE>

2.    Investment Securities (Continued)
      ---------------------

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

<TABLE>
<CAPTION>
                                                       2006
                                 --------------------------------------------------
                                                Gross         Gross       Estimated
                                 Amortized    Unrealized    Unrealized      Fair
                                   Cost         Gains         Losses        Value
                                 ---------    ----------    ----------    ---------
<S>                              <C>          <C>           <C>           <C>
      Shay Asset Fund-ARM        $  10,067    $       --    $      229    $   9,838
      FHLMC Voting stock                11           732            --          743
      Municipals                       230            --             2          228
      FNMA ARM pools                 9,235            21            59        9,197
      FHLMC ARM pools                5,495            29            29        5,495
      GNMA ARM pools                 2,745            --            35        2,710
                                 ---------    ----------    ----------    ---------
                                 $  27,783    $      782    $      354    $  28,211
                                 =========    ==========    ==========    =========

<CAPTION>

                                                       2005
                                 --------------------------------------------------
                                                Gross         Gross       Estimated
                                 Amortized    Unrealized    Unrealized      Fair
                                   Cost         Gains         Losses        Value
                                 ---------    ----------    ----------    ---------
<S>                              <C>          <C>           <C>           <C>
      Shay Asset Fund-ARM        $   9,617    $       --    $      209    $   9,408
      FHLMC Voting stock                12           811            --          823
      Agencies                          --            --            --           --
      Municipals                       230            --             3          227
      FNMA ARM pools                10,699            17            84       10,632
      FHLMC ARM pools                5,687            25            33        5,679
      GNMA ARM pools                 3,325            --            51        3,274
                                 ---------    ----------    ----------    ---------
                                 $  29,570    $      853    $      380    $  30,043
                                 =========    ==========    ==========    =========
</TABLE>

      The amortized cost and estimated market value (in thousands) of investment
      securities at December 31, 2006, 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.

<TABLE>
<CAPTION>
                                        Available for Sale             Held to Maturity
                                     --------------------------    --------------------------
                                      Amortized        Fair         Amortized        Fair
                                        Cost           Value          Cost           Value
                                     -----------    -----------    -----------    -----------
<S>                                  <C>            <C>            <C>            <C>
      One year or less               $    10,067    $     9,838    $       200    $       200
      After 1 year thru 5 years              737            729            617            617
      After 5 years thru 10 years            553            544             94             94
      After 10 years                      16,426         17,100            197            195
                                     -----------    -----------    -----------    -----------
                                     $    27,783    $    28,211    $     1,108    $     1,106
                                     ===========    ===========    ===========    ===========
</TABLE>

      At  December  31,  2006,  investment  securities  (in  thousands)  with  a
      financial  statement  carrying  amount of $4,320  were  pledged  to secure
      public deposits.  No gain or loss was recognized on investments in 2006 or
      2005. Maturities and calls are detailed on the statement of cash flows.


                                       29
<PAGE>

2.    Investment Securities (Continued)
      ---------------------

      Information  pertaining  to  securities  with gross  unrealized  losses at
      December 31, 2006 and 2005,  aggregated by investment  category and length
      of  time  that  individual  securities  have  been  in a  continuous  loss
      position, follows:

<TABLE>
<CAPTION>
                                    Less than 12 Months          12 Months or Greater              Total
                                    -------------------          --------------------     -----------------------
                                                  Gross                        Gross                     Gross
                                     Fair       Unrealized      Fair         Unrealized      Fair      Unrealized
                                     Value        Losses         Value         Losses        Value        Losses
                                  -----------     -------     -----------     -------     -----------  -----------
<S>                                     <C>           <C>           <C>          <C>           <C>        <C>
      December 31, 2006:
        Federal agencies                1,821         (10)          9,422        (113)         11,243     (123)
        Shay Asset Fund-
         ARM                               --          --           9,838        (229)          9,838     (229)
        State and municipal
         governments                       --          --             228          (2)            228       (2)
                                  -----------     -------     -----------     -------     -----------     ----
                                        1,821         (10)         19,488        (344)         21,309     (354)
                                  ===========     =======     ===========     =======     ===========     ====

      December 31, 2005:
        Federal agencies                5,192         (44)          9,246        (124)         14,438     (168)
        Shay Asset Fund-
         ARM                               --          --           9,408        (209)          9,408     (209)
        State and municipal
         governments                      227          (3)             --          --             227       (3)
                                  -----------     -------     -----------     -------     -----------     ----
                                        5,419         (47)         18,654        (333)         24,073     (380)
                                  ===========     =======     ===========     =======     ===========     ====
</TABLE>

      Management  evaluates  securities for  other-than-temporary  impairment at
      least on a quarterly  basis,  and more  frequently when economic or market
      concerns warrant such evaluation. Consideration is given to (1) the length
      of time and the  extent to which the fair  value has been less than  cost,
      (2) the financial condition and near-term prospects of the issuer, and (3)
      the intent and ability of the Bank 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  by  either  the U.S.
      Government  or  other   governments.   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.  The Company also has a significant  investment in a
      mutual fund that  invests in  short-term  adjustable-rate  mortgage-backed
      securities.  Management  believes  that the  estimated  fair  value of the
      mutual  fund is also  primarily  dependent  upon the  movement  in  market
      interest  rates.  Although the investment in the mutual fund is classified
      as available for sale,  the Company has the intent and ability to hold the
      mutual fund until the fair value  increases and does not intend to sell it
      at a loss.  Based on the above,  management  believes that the  unrealized
      losses are  temporary.  The  determination  of whether a decline in market
      value is temporary is  necessarily  a matter of subjective  judgment.  The
      timing  and  amount  of any  realized  losses  reported  in the  Company's
      financial  statements  could vary if conclusions  other than those made by
      management were to determine  whether an  other-than-temporary  impairment
      exists.


                                       30
<PAGE>

3.    Loans and Allowance for Loan Losses
      -----------------------------------

      The composition of the  Association's  loan portfolio at December 31, 2006
      and 2005, is as follows (in thousands):

                                                          2006         2005
                                                          ----         ----

      First mortgage conventional loans:
        Secured by one-to-four-family residences      $ 40,576     $ 38,746
      Commercial real estate                            13,184       12,570
      Commercial business                               10,609        9,933
      Consumer loans (including overdrafts of
        $50 and $25)                                     6,731        5,431
      Consumer loans secured by deposits                 1,409        1,439
      Construction loans                                 7,393        4,113
                                                      --------     --------
            Total                                       79,902       72,232
      Less-allowance for loan losses                      (901)        (837)
      ----
            unfunded construction loan commitments      (4,038)      (1,278)
                                                      --------     --------
            Loans, net                                $ 74,963     $ 70,117
                                                      ========     ========

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

                                                          2006         2005
                                                          ----         ----

      Balance, January 1                              $    837     $    877
      Provision for loan losses                             95           --
      Loans charged off-net of recoveries                  (31)         (40)
                                                      --------     --------
      Balance, December 31                            $    901     $    837
                                                      ========     ========

      The Association 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
      SFAS 91.

      The Association's  lending activity is concentrated within Webster Parish,
      Louisiana.  The  majority of loans  extended in this  lending area are for
      one-to-four-family  dwelling units;  however, the Association is expanding
      its lending activities to commercial real estate,  commercial business and
      consumer loans. See above for detail. The Association  requires collateral
      sufficient  in value to cover  the  principal  amount  of the  loan.  Such
      collateral  is  evidenced  primarily  by  mortgages  on property  held and
      readily accessible to the Association.

4.    Accrued Interest Receivable
      ---------------------------

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

                                                          2006         2005
                                                          ----         ----

      Loans                                           $    503     $    452
      Mortgage-backed securities                           115          101
      Investment securities and other                       10            5
                                                      --------     --------
             Total accrued interest receivable        $    628     $    558
                                                      ========     ========


                                       31
<PAGE>

5.    Premises and Equipment
      ----------------------

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

      Land and buildings                              $  6,599     $  3,416
      Furniture, fixtures and equipment                    650          648
                                                      --------     --------
             Total                                       7,249        4,064
      Less-accumulated depreciation                       (906)        (752)
      ----                                            --------     --------
             Net premises and equipment               $  6,343     $  3,312
                                                      ========     ========

      Included  in  land  and  buildings  is $923  (in  thousands)  of land  and
      construction cost related to the Homer Road property.  The Association has
      built a new main office  there which was  completed  and opened  March 19,
      2007. The total cost of the project was approximately $4.0 million.

6.    Deposits
      --------

      Deposits as of December 31 are summarized as follows (in thousands):

                                                          2006         2005
                                                          ----         ----
      Demand deposit accounts (including official
        checks of $746 in 2006 and $955 in 2005)      $ 13,766     $ 14,244
      Passbook savings                                  10,657       12,812
      Certificates of deposit:
        1.00% B 1.99%                                       --           --
        2.00% B 2.99%                                       78        9,725
        3.00% B 3.99%                                    6,061       26,139
        4.00% B 4.99%                                   33,840        7,901
        5.00% B 5.99%                                   11,121           --
                                                      --------     --------
        Total certificates of deposit                   51,100       43,765
                                                      --------     --------
               Total deposits                         $ 75,523     $ 70,821
                                                      ========     ========

      Scheduled  maturities of  certificates of deposit at December 31, 2006 are
      as follows (in thousands):

                                   2007       2008        2009       Total
                                   ----       ----        ----       -----

      1.00% B 1.99%             $    --     $   --     $    --     $    --
      2.00% B 2.99%                  78         --          --          78
      3.00% B 3.99%               6,003         58          --       6,061
      4.00% B 4.99%              29,854      3,750         236      33,840
      5.00% B 5.99%              11,017        104          --      11,121
                                -------     ------     -------     -------
                                $46,952     $3,912     $   236     $51,100
                                =======     ======     =======     =======

      Included  (in  thousands)  in deposits  at December  31, 2006 and 2005 are
      $17,573  and  $11,809,   respectively,   of  certificates  of  deposit  in
      denominations of $100 (in thousands) or more.

7.    Federal Income Taxes
      --------------------

      Federal  income tax expense  applicable  to net income for the years ended
      December 31, 2006 and 2005 was as follows (in thousands):

                                                          2006         2005
                                                          ----         ----

      Current                                         $    684     $    714
      Deferred                                             (16)         (36)
                                                      --------     --------
                                                      $    668     $    678
                                                      ========     ========


                                       32
<PAGE>

7.    Federal Income Taxes (Continued)
      --------------------

      Total income tax expense  differed  from the amounts  computed by applying
      the U.S.  federal income tax rate of 34% in 2006 and 2005 to income before
      taxes as a result of the following:


                                                          2006         2005
                                                          ----         ----

      Expected income tax expense                           34%          34%
      Nontaxable income-FHLB stock dividend               (1.0)         (.7)
      Difference between financial and tax additions
         to allowance for loan losses                      1.1          (.6)
      Nondeductible expenses and other                     (.8)          .5
                                                      --------     --------
              Effective tax rates                         33.3%        33.2%
                                                      ========     ========

      The   components  of  net  deferred  tax  liability  are  as  follows  (in
      thousands):

                                                          2006         2005
                                                          ----         ----
      Deferred tax liabilities:
         Net unrealized gain on available for
           sale securities                            $    145     $    161
         Federal Home Loan Bank stock                      117           98
         Depreciation                                      110          131
         Compensation/other                                 32           30
                                                      --------     --------
              Deferred tax liability                  $    404     $    420
                                                      ========     ========

      In  computing  federal  taxes on income under  provisions  of the Internal
      Revenue  Code in years  past,  earnings  appropriated  by savings and loan
      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, 2006 and 2005 (in  thousands),
      includes  appropriations of net income of prior years of $1,296, 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 Association at the then current federal
      income tax rate.

8.    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 Association has
      borrowed  funds 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.  Total  advances  outstanding at December 31, 2006
      and 2005 (in thousands) amount to $19,000 and $20,500,  respectively.  The
      advances bear interest at rates of 5.19% as of December 31, 2006 and 3.26%
      as of December 31, 2005.

      The Association has an available line of credit with the FHLB of Dallas of
      $46 million at December 31, 2006 with $27 million available for use.

9.    Pension/ESOP Plan
      -----------------

      In 2001, the Association adopted a 401(k) retirement plan and discontinued
      its "SEP" plan,  covering all employees based upon a year of service.  The
      plan  provides for a 2% employer  contribution  (based upon  compensation)
      with a match  of the  employees  contribution  up to 6% based  upon  Board
      approval. Plan contributions (in thousands) for 2006 and 2005 were $39 and
      $44, respectively.


                                       33
<PAGE>

9.    Pension/ESOP Plan (Continued)
      -----------------------------

      The Company established an ESOP and loaned (in thousands) the ESOP $524 to
      purchase  52,371  shares of common  stock,  which  amounted to 3.8% of the
      outstanding  shares at December 31, 2005.  The  remaining  balance due (in
      thousands)  of $319 is payable over nine years at (in  thousands)  $66 per
      year including  interest.  The quarterly payments (in thousands) are $16.5
      and  annually   aggregate  $66  (in  thousands).   The  Association   made
      contributions to ESOP to enable it to make the note payment (in thousands)
      of $66 and $66 in 2006  and  2005,  respectively,  which  is  included  in
      salaries and benefits on the income  statement.  As the note is paid,  the
      shares will be released and allocated to the  participants of the ESOP. As
      of December 31, 2006, 18,329 of those shares had been released. The market
      value (in  thousands) of the  unreleased  ESOP shares at December 31, 2006
      was $742.

10.   Retained Earnings and Regulatory Capital
      ----------------------------------------

      The  Association  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 Association's  financial  statements.  Under
      capital  adequacy  guidelines  and the  regulatory  framework  for  prompt
      corrective  action,  the Association must meet specific capital guidelines
      that  involve   quantitative   measures  of  the   Association's   assets,
      liabilities,  and  certain  off-balance-sheet  items as  calculated  under
      regulatory  accounting  practices.  The Association'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 Association to maintain  minimum amounts and ratios (set forth
      in the  table  below)  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,  2006,  that the  Association  meets  all  capital  adequacy
      requirements to which it is subject.

      As of December 31, 2006, the most recent  notification  from the Office of
      Thrift  Supervision  categorized the Association as well capitalized under
      the regulatory  framework for prompt corrective  action. To be categorized
      as adequately  capitalized  the  Association  must maintain  minimum total
      risk-based,  Tier I risk-based, and Tier I leverage ratios as set forth in
      the table.  The  Association's  actual capital amounts 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.

<TABLE>
<CAPTION>
                                                                                                 To Be Well
                                                                                          Capitalized Under
                                                                         For Capital      Prompt Corrective
                                       Actual             Adequacy Purposes:     Action Provisions:
                                     ----------           ------------------     ------------------
                                       Amount       Ratio       Amount       Ratio      Amount       Ratio
                                       ------       -----       ------       -----      ------       -----
<S>                                   <C>           <C>       <C>             <C>     <C>            <C>
      As of December 31, 2006
         Total capital (to Risk-
            Weighted Assets)          $19,234       29.18%    $>=5,273      >=8.0%    $>=6,591     >=10.0%
         Core (Tier I) Capital (to
            Risk Weighted Assets)      18,182       27.58%     >=2,636      >=4.0%     >=3,955      >=6.0%
         Core (Tier I) Capital (to
            Total Assets)              18,182       15.91%     >=3,428      >=3.0%     >=5,714      >=5.0%
         Tangible Capital
            (to Total Assets)          18,182       15.91%     >=1,714      >=1.5%         N/A         N/A
</TABLE>

                                       34
<PAGE>

11.   Related Party Transactions
      --------------------------

      At December 31, 2006 and 2005, certain officers,  directors,  or companies
      in which they have 10% or more  beneficial  ownership were indebted to the
      Association in the approximate  aggregate amounts (in thousands) of $2,348
      and $1,729,  respectively.  During the year ended December 31, 2006, total
      principal  additions  (in  thousands)  were  $1,807  and  total  principal
      payments were $1,188. Such parties held deposits in the Association in the
      approximate  amounts (in  thousands)  of $2,833 and $2,559 at December 31,
      2006 and 2005, respectively.

12.   Commitments and Contingencies
      -----------------------------

      In the  ordinary  course of  business,  the  Association  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, 2006 and
      2005  (in   thousands),   the   Association   had  $12,643  and   $13,867,
      respectively,  of  loan  commitments  and  lines  of  credit  outstanding,
      including loans in process.

      When entered into, these commitments  represent  off-balance sheet risk to
      the  Association,  with the contractual  notional amount  representing the
      Association'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 Association evaluates
      each customer's  creditworthiness  on a case-by-case basis, and obtains an
      amount of collateral it deems sufficient.

13.   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  Association'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.   SFAS  107  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 Association.

      The following  methods and  assumptions  were used by the  Association  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  maturing within ninety days approximate  their
      fair values.

      Securities:  Fair values for securities,  excluding Federal Home Loan Bank
      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.


                                       35
<PAGE>

13.   Fair Value of Financial Instruments   (Continued)
      -----------------------------------

      Loans receivable: For variable-rate loans that reprice 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.

      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.

                  The estimated  fair values,  and related  carrying or notional
                  amounts,  of  the  Company's  financial   instruments  are  as
                  follows:

<TABLE>
<CAPTION>
                                                             December 31,
                                            ------------------------------------------------
                                                     2006                      2005
                                            ----------------------    ----------------------
                                            Carrying       Fair       Carrying       Fair
                                             Amount        Value       Amount        Value
                                             ------        -----       ------        -----
                                                            (in thousands)
<S>                                         <C>          <C>          <C>          <C>
      Financial assets:
         Cash and cash equivalents          $   2,445    $   2,445    $   4,032    $   4,032
         Securities available for sale         28,211       28,211       30,043       30,043
         Securities held to maturity            1,108        1,106        1,324        1,323
         FNBB & FHLB stock                      1,426        1,426        1,370        1,370
         Loans, net                            74,963       75,013       70,117       69,627
         Accrued interest receivable              628          628          558          558

      Financial liabilities:
         Deposits                              75,523       75,523       70,821       70,821
         Accrued interest payable                 480          480          269          269
         Federal Home Loan Bank advances       19,000       19,000       20,500       20,500
</TABLE>


                                       36
<PAGE>

13.   Fair Value of Financial Instruments (Continued)
      -----------------------------------

<TABLE>
<CAPTION>
                                                                       December 31,
                                                      -----------------------------------------------
                                                               2006                      2005
                                                      ---------------------      --------------------
                                                       Carrying       Fair       Carrying       Fair
                                                        Amount        Value       Amount        Value
                                                        ------        -----       ------        -----
                                                                       (in thousands)
<S>                                                       <C>          <C>          <C>          <C>
      Off-balance sheet credit related to financial
        instruments:
            Commitments to extend credit                 12,643       12,643       13,867       13,867
</TABLE>

      Off-balance sheet derivative financial instruments: N/A

14.   Segment Reporting
      -----------------

      The  Company,  due to its size (both assets and  employees),  has only one
      reportable  segment.   The  Association  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.

15.   Other Assets
      ------------

      Other assets consist of the following (in thousands):

                                                          2006         2005
                                                          ----         ----

      Cash value of life insurance                    $    400     $    359
      Prepaid expenses                                     133          179
      Insurance agency expiration list, less
        amortization of $22                                309           --
                                                      --------     --------
                                                      $    842     $    538
                                                      ========     ========

      The Company  finalized the purchase of an insurance  agency in early 2006.
      The  purchase  price was $370 being paid $300 in cash and $70 being placed
      (in  thousands) in an escrow  account and being earned and paid out over a
      five year term based upon earning  targets.  This is  considered a related
      party  transaction  as a director  owned  approximately  20% of the agency
      purchased. The Company allocated $322 (in thousands) of the purchase price
      to  the  expiration   list  and  is  amortizing  it  over  fifteen  years.
      Amortization (in thousands) during 2006 was $22.

16.   Stock Based Benefit Plans
      -------------------------

      The Company  established the 2003 Recognition and Retention Plan and Trust
      Agreement  ("RRP"),  which is a stock-based  incentive  plan.  The RRP was
      approved by the  shareholders at the Company's annual meeting held May 15,
      2003.

      The Company  authorized  26,186 shares of the Company's common stock to be
      awarded under the RRP. The Company had purchased 26,186 shares in the open
      market to fund the RRP as of December 31, 2004.  Shares  subject to awards
      under the RRP shares  vest at 20% per year under the plan.  As of December
      31,  2006,  awards  covering  18,854  shares  had been made and as of 2005
      awards covering 18,354 shares had been made.  During 2006 and 2005,  3,668
      shares vested and were issued. As a result, expense for this


                                       37
<PAGE>

16.   Stock Based Benefit Plans (Continued)
      -------------------------

      plan is being  amortized  over a  60-month  period  and is based  upon the
      market  value of the  Company's  stock as of the grant  date of the awards
      which was $15.375 with respect to all of the currently outstanding awards.
      Compensation (in thousands) under the RRP for the years ended December 31,
      2006 and 2005 was $53 each year and was included in salaries and benefits.

      The Company  established  the 2003 Stock Option Plan (the  "Option  Plan")
      under which 65,464  shares of Company  stock are reserved for the grant of
      stock  options to  directors,  officers  and  employees.  The Option  Plan
      provides for vesting to  participants  at 20% per year. 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 which was $15.375 with
      respect to all the currently outstanding options.  Options covering 51,885
      shares were  outstanding as of December 31, 2006. The Company issued 2,000
      options in 2005 that vest over a five year  period.  Forty  percent of the
      (29,931)  options were  exercisable as of December 31, 2006 an increase of
      9,977 shares over 2005.

      The Company's  Compensation  Committee of the Board of Directors  oversees
      the RRP and the Option Plan.

      On January 1, 2006, the Company  adopted SFAS No. 123(R)  (revised  2004),
      "Share-Based Payment." Statement 123(R) replaces SFAS No. 123, "Accounting
      for Stock-Based  Compensation" and supersedes  Accounting Principles Board
      (APB) Opinion No. 25,  Accounting for Stock Issued to Employees.  SFAS No.
      123(R)  established   accounting  and  disclosure   requirements  using  a
      fair-value   based  method  of   accounting   for   stock-based   employee
      compensation  plans.  Prior to January 1, 2006, the Company  accounted for
      stock  options  using APB Opinion No. 25 and included  disclosures  of pro
      forma net income and earnings per share, as if the fair value-based method
      of accounting  defined in SFAS No. 123 had been used. The Company  elected
      the modified  prospective  transition  method for adopting SFAS No. 123(R)
      effective January 1, 2006. Under SFAS No. 123(R), all forms of share-based
      payments to employees,  including  stock options,  are treated the same as
      other forms of  compensation by recognizing the related cost in the income
      statement.  The provisions  apply to all awards granted after the required
      effective  date  including  existing  awards  not  vested,  or  which  are
      modified, repurchased, or canceled after that date.

      As of January 1,  2006,  the  Company  began to  expense  these  grants as
      required  by SFAS  No.  123(R).  Stock-based  employee  compensation  cost
      pertaining to stock options is reflected in net income with the fair value
      of  each  option  being  estimated  as of the  date  of  grant  using  the
      Black-Scholes option valuation model. The Black-Scholes model incorporates
      variable  assumptions,  which include: the expected  volatility,  which is
      based on the historical  volatility of the Company's traded stock and peer
      group  comparisons;  the expected  term  calculated  using the  simplified
      method  permitted  by SAB No. 107,  "Share-based  payments,"  the expected
      dividend  yield based on historical  patterns and peer group  performance;
      and the risk free rate, based on the U.S. Treasury yield curve at the time
      of the  grant  corresponding  to  the  expected  term.  The  Company  used
      historical  data to estimate  option  exercise and  employee  terminations
      within  the  valuation  model.  The impact of  adopting  FAS 123R is a net
      charge to net income of $40,900  in 2006  based upon the  current  options
      outstanding.  The fair value of  Company  options at the date of grant was
      estimated using the Black-Scholes option-pricing model with assumptions as
      follows:  volatility,  30.07%,  risk free interest rate,  3.53%,  dividend
      yield, 1.0% and weighted-average expected life of the options, 10 years.



                                       38
<PAGE>

17.   Supplemental Retirement Benefit Plan
      ------------------------------------

      The  Association has  established a supplemental  retirement  benefit plan
      (Plan) for certain (three) key  executives.  The Plan provides for monthly
      retirement  benefits  in the amount of $5,000 per month for ten years from
      the date they retire for the  executive  group as a whole.  As of December
      31, 2006 and 2005, a liability of $46,930 and $17,217,  respectively,  was
      accrued for the Plan.

18.   Subsequent Event
      ----------------

      The Association,  after receiving regulatory approval, changed its name to
      MBL Bank  effective  March 19,  2007.  MBL Bank also moved to its new main
      location  at 100 MBL Bank Drive off Homer Road  (refer to Note 5) on March
      19, 2007.


                                       39
<PAGE>

                        DIRECTORS AND EXECUTIVE OFFICERS

<TABLE>
<CAPTION>
                                    Directors
                                    ---------
<S>                                             <C>
A. David Evans                                  Russell A. Adams
President and Chief Executive Officer           Retired

John B. Benton, Jr.                             Jack E. Byrd Jr.
Retired                                         Senior Financial Advisor

John P. Collins                                 Michael S. Harper
Owner, A. J. Price Tire - Two locations         Owner, Harper Motors, Inc.
                                                Owner, Julian Foy Motors, Inc.
                                                Owner, Harper Foy Motors, LLC

A. Loye Jones                                   F. Dare Lott, Jr.
Owner, Loye's Pharmacy, Inc.                    Owner, Minden Animal Clinic
                                                Owner, PetCare Animal Hospital

Michael W. Wise                                 R. E. Woodard, III
CPA, Jamieson Wise and Martin                   CFP, Lincoln Financial Group

                               Executive Officers
                               ------------------

A. David Evans                                 Becky T. Harrell
President and Chief Executive Officer          Chief Financial Officer and Treasurer

Michael P. Burton
Senior Vice President and Secretary
</TABLE>


                                       40
<PAGE>

                  BANKING LOCATIONS AND STOCKHOLDER INFORMATION

                                Banking Locations
                                -----------------

      Minden  Bancorp,  Inc. is a federally  chartered  thrift  holding  company
conducting business through its wholly owned subsidiary, MBL Bank. MBL Bank is a
Louisiana-chartered,  SAIF-insured stock building and loan association operating
through its two offices in Minden, Louisiana.

                                   Main Office
                                   -----------

                               100 MBL Bank Drive
                             Minden, Louisiana 71055

                                  Branch Office
                                  -------------

                                 415 Main Street
                             Minden, Louisiana 71055

                                 Annual Meeting
                                 --------------

      The Annual Meeting of Stockholders of Minden Bancorp, Inc. will be held on
May 8, 2006, at 8:15 a.m.,  Central Time, in the main office of MBL Bank located
at 100 MBL Bank Drive, Minden, Louisiana.

                            Transfer Agent/Registrar
                            ------------------------

                         Registrar and Transfer Company
                                10 Commerce Drive
                           Cranford, New Jersey 07016
                                 (908) 272-8511

                              Stockholder Requests
                              --------------------

      Requests for annual  reports,  quarterly  reports and related  stockholder
literature  should be directed to Becky T. Harrell,  Chief Financial Officer and
Treasurer, Minden Bancorp, Inc., 100 MBL Bank Drive, Minden, Louisiana 71055.

      Stockholders  needing  assistance  with stock  records,  transfers or lost
certificates,  please contact Minden  Bancorp's  transfer  agent,  Registrar and
Transfer Company.


                                       41