SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-KSB
                                   (Mark One)

|X|   Annual report under Section 13 or 15(d) of the Securities Exchange Act of
      1934.

For the fiscal year ended December 31, 2004

                                       OR

|_|   Transition report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934.

                         Commission File No.: 000-49882
                                              ---------

                               MINDEN BANCORP, INC
                  --------------------------------------------
                 (Name of Small Business Issuer in Its Charter)

          United States                                      13-4203146
-------------------------------                       --------------------------
(State or Other Jurisdiction of                          (I.R.S. Employer
 Incorporation or Organization)                        Identification Number)

   415 Main Street, Minden, Louisiana                          71058
----------------------------------------              --------------------------
(Address of Principal Executive Offices)                     (Zip Code)

                                 (318) 377-0523
                ------------------------------------------------
                (Issuer's Telephone Number, Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:
                                 Not Applicable

         Securities registered under Section 12(g) of the Exchange Act:

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

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days.

      Yes |X|  No |_|

<PAGE>

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. |_|

Issuer's revenues for its most recent fiscal year: $5.9 million.

As of February 28, 2005,  the  aggregate  value of the 401,162  shares of Common
Stock of the Registrant  outstanding on such date held by non-affiliates,  which
excludes  142,966  shares held by all directors  and  executive  officers of the
Registrant (not including 5,136 shares held by the  Registrant's  Employee Stock
Ownership Plan "ESOP"), 52,371 shares held by the Registrant's ESOP, and 800,112
shares held by Minden Mutual Holding Company,  was approximately  $7.82 million.
This  figure  is based on the  closing  sale  price of  $19.50  per share of the
Registrant's Common Stock on February 28, 2005. Although directors and executive
officers  and the ESOP were assumed to be  "affiliates"  of the  Registrant  for
purposes of this calculation,  the classification is not to be interpreted as an
admission of such status.

Number of shares of Common Stock outstanding as of February 28, 2005:  1,396,611
Transitional Small Business Disclosure Format: Yes |_| No |X|

                       DOCUMENTS INCORPORATED BY REFERENCE

      List hereunder the following  documents  incorporated by reference and the
Part of the Form 10-KSB into which the document is incorporated.

(1) Portions of the Annual Report to Stockholders are incorporated into Part II,
Items 5 through 7 and Part III, Item 13 of this Form 10-KSB.

(2) Portions of the  definitive  proxy  statement for the 2005 Annual Meeting of
Stockholders  are  incorporated  into Part III,  Items 9 through 12 of this Form
10-KSB.

<PAGE>

                                     PART I

Item 1. Description of Business.
--------------------------------

General

      On December 11, 2001,  the Board of Directors of Minden  Building and Loan
Association,   a   Louisiana-chartered   building  and  loan   association  (the
"Association"),   adopted  a  plan  of  reorganization  pursuant  to  which  the
Association  converted  to stock form and became a wholly  owned  subsidiary  of
Minden Bancorp, Inc. (the "Company"). In connection with the reorganization, the
Company  became a majority  owned  (55%)  subsidiary  of Minden  Mutual  Holding
Company  (the  "MHC"),  a  federally  chartered  mutual  holding  company.   The
reorganization was consummated on July 2, 2002. The Company is a unitary savings
and loan holding company whose assets consist  primarily of the ownership of the
outstanding  capital stock of the Association,  investments of proceeds retained
from the  reorganization  and the Company's loan to the employee stock ownership
plan.

      The  management  of  the  Company,   the  MHC  and  the   Association  are
substantially identical and the Company neither owns nor leases any property but
instead uses the premises,  equipment and furniture of the Association  with the
payment  of  appropriate   rental  fees,  as  required  by  applicable  law  and
regulations.

      The Association is a Louisiana-chartered savings and loan association that
was originally organized in 1910. The Association's  business consists primarily
of  attracting  deposits  from the general  public and using those funds to make
loans.  The  Association  operates  out of its main  office  located  in Minden,
Louisiana.

Lending Activities

      General.  At December 31, 2004, the net loan portfolio of the  Association
totaled $62.6 million,  representing  approximately 58.4% of its total assets at
that date. The principal  lending activity of the Association is the origination
of  one-to-four  family  residential  loans.  At December 31, 2004,  one-to-four
family residential loans amounted to $37.71 million, or 59.24% of its total loan
portfolio,  before net items. As part of the implementation of the Association's
lending   strategy  of  diversifying  its  loan  portfolio  and  decreasing  its
dependence on single-family residential lending, the Association also offers the
following lending products:

      o     commercial real estate loans,  which amounted to 14.87% of the total
            loan  portfolio  at  December  31, 2004 as compared to 15.02% of the
            total loan portfolio at December 31, 2003;

      o     consumer loans,  which amounted to 8.75% of the total loan portfolio
            at  December  31,  2004 as  compared  to  6.32%  of the  total  loan
            portfolio at December 31, 2003;

      o     commercial  business  loans,  which  amounted to 14.82% of the total
            loan  portfolio  at  December  31, 2004 as compared to 14.29% of the
            total loan portfolio at December 31, 2003; and

<PAGE>

      o     construction  loans,  which  amounted  to  2.32% of the  total  loan
            portfolio at December  31,  2004,  as compared to 3.67% of the total
            loan portfolio at December 31, 2003.

      The types of loans  that the  Association  may  originate  are  subject to
federal  and state laws and  regulations.  Interest  rates  charged on loans are
affected  principally  by the  demand  for such  loans  and the  supply of money
available for lending purposes and the rates offered by its  competitors.  These
factors are, in turn, affected by general and economic conditions,  the monetary
policy  of  the  federal  government,   including  the  Federal  Reserve  Board,
legislative and tax policies, and governmental budgetary matters.

      A savings  institution  generally  may not make loans to one  borrower and
related  entities  in an amount  which  exceeds  the  greater  of (i) 15% of its
unimpaired  capital  and  surplus,  although  loans  in an  amount  equal  to an
additional  10% of  unimpaired  capital and surplus may be made to a borrower if
the loans are fully secured by readily marketable securities, and (ii) $500,000.
At  December  31,  2004,  the  Association's  regulatory  limit on  loans-to-one
borrower was approximately  $2.6 million and its five largest loans or groups of
loans-to-one borrower, including related entities, aggregated $2.4 million, $2.0
million,  $1.4 million,  $958,000 and $753,000.  Each of the Association's  five
largest loans or groups of loans was performing in accordance  with its terms at
December 31, 2004.

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

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                  -------------------------------------------------
                                                                          2004                        2003
                                                                  ---------------------       ---------------------
                                                                   Amount       Percent        Amount       Percent
                                                                  --------     --------       --------     --------
                                                                               (Dollars in Thousands)
<S>                                                               <C>             <C>         <C>             <C>
      Real estate loans:
         One-to-four family ..............................        $ 37,711        59.24%      $ 36,239        60.70%
         Commercial ......................................           9,468        14.87          8,966        15.02
         Construction ....................................           1,477         2.32          2,191         3.67
      Commercial business ................................           9,435        14.82          8,530        14.29
      Consumer:
         Loans secured by savings accounts ...............           1,759         2.76            995         1.66
         Other(1) ........................................           3,815         5.99          2,784         4.66
                                                                  --------     --------       --------     --------
         Total loans receivable ..........................        $ 63,665       100.00%      $ 59,705       100.00%
                                                                               ========                    ========

      Less:
         Undisbursed loans in process ....................            (188)                       (715)
         Deferred loan fees ..............................              --                          --
         Allowance for loan losses .......................            (877)                       (893)
                                                                  --------                    --------
            Total loans receivable, net ..................        $ 62,600                    $ 58,097
                                                                  ========                    ========
</TABLE>

----------
(1)   Includes automobile, boat, recreational vehicle, and unsecured loans.


                                      -2-
<PAGE>

      Origination  of Loans.  The  lending  activities  of the  Association  are
subject to the written  underwriting  standards and loan origination  procedures
established  by the board of directors and  management.  Loan  originations  are
obtained  through a variety of sources,  primarily  consisting of referrals from
real estate brokers and existing customers.  Written loan applications are taken
by one of the Association's loan officers.  The loan officer also supervises the
procurement of credit reports,  appraisals and other documentation involved with
a loan.  For real estate loans in excess of  $250,000,  the  Association's  loan
policy mandates that property  valuations be performed by an independent outside
appraiser approved by its board of directors. As a matter of practice,  however,
the Association  obtains  independent outside appraisals on substantially all of
its loans.  Under the lending policies of the Association,  a title opinion must
be obtained for each real estate loan.

      The  Association's  loan  approval  process  is  intended  to  assess  the
borrower's ability to repay the loan, the viability of the loan and the adequacy
of the value of the  property  that will  secure the loan.  Generally,  loans in
excess of $75,000 must be approved by the  Association's  loan  committee or the
board of directors. All loans are ratified by the board of directors.

      The  following  table shows total loans  originated  and repaid during the
periods indicated. No loans were sold during the periods presented.

                                                         Year Ended December 31,
                                                         -----------------------
                                                             2004        2003
                                                           -------     -------
                                                              (In Thousands)
      Loan originations:
         Real estate loans:
           One-to-four family ......................       $13,399     $16,045
           Commercial ..............................         4,754       4,674
           Construction ............................         4,403       2,938
         Commercial business .......................        12,598       9,506
         Consumer(1) ...............................         5,942       4,080
                                                           -------     -------
           Total loans originated ..................        41,096      37,243
                                                           -------     -------
      Deduct loan principal reductions .............        36,050      31,285
      Decrease due to other items, net(2) ..........           543         198
                                                           -------     -------
      Net increase in loan portfolio ...............       $ 4,503     $ 5,760
                                                           =======     =======

----------
(1)   Includes loans secured by deposits, automobiles loans and home equity
      loans.

(2)   Other items consist of loans in process and allowance for loan losses.

      Although  Louisiana laws and  regulations  permit savings  institutions to
originate  and purchase  loans  secured by real estate  located  throughout  the
United States, the Association  concentrates its lending activity to its primary
market area in Webster Parish,  Louisiana and the surrounding  area.  Subject to
its  loans-to-one  borrower  limitation,  the Association is permitted to invest
without  limitation in residential  mortgage loans and up to 400% of its capital
in loans secured by  non-residential  or commercial real estate. The Association
also may  invest in  secured  and  unsecured  consumer  loans in an  amount  not
exceeding 35% of total assets.  This 35%  limitation may be exceeded for certain
types of consumer  loans,  such as home equity and  property  improvement  loans


                                      -3-
<PAGE>

secured by residential real property. In addition, the Association may invest up
to 10% of its total  assets  in  secured  and  unsecured  loans for  commercial,
corporate,  business  or  agricultural  purposes.  At  December  31,  2004,  the
Association was within each of the above lending limits.

      Maturity  of  Loan  Portfolio.   The  following  table  presents   certain
information at December 31, 2004,  regarding the dollar amount of loans maturing
in the  Association's  portfolio based on their contractual terms to maturity or
scheduled  amortization,  but does not  include  potential  prepayments.  Demand
loans, loans having no stated schedule of repayments and no stated maturity, and
overdrafts are reported as becoming due within one year.

<TABLE>
<CAPTION>
                                                                                 At December 31, 2004
                                                     -------------------------------------------------------------------------------

                                                     One-to-four   Commercial                                Commercial       Total
                                                        Family    Real Estate   Construction    Consumer      Business        Loans
                                                     -----------  -----------   ------------    --------     ----------      -------
                                                                                      (In Thousands)
<S>                                                    <C>           <C>           <C>           <C>           <C>           <C>
Amounts due in:
   One year or less ............................       $ 1,771       $   771       $ 1,477       $ 2,046       $ 6,700       $12,765
   More than one year to five years ............         4,964         4,338            --         3,364         2,593        15,259
   More than five years ........................        30,976         4,359            --           164           142        35,641
                                                       -------       -------       -------       -------       -------       -------
      Total amount due .........................       $37,711       $ 9,468       $ 1,477       $ 5,574       $ 9,435       $63,665
                                                       =======       =======       =======       =======       =======       =======
</TABLE>

            The  following  table  sets  forth the  dollar  amount of all loans,
before net items, due after December 31, 2005 which have fixed interest rates or
which have floating or adjustable interest rates.

<TABLE>
<CAPTION>
                                                                   Fixed-Rates    Floating or Adjustable Rates        Total
                                                                   -----------    ----------------------------        -----
                                                                                       (In Thousands)
<S>                                                                   <C>                   <C>                      <C>
Real estate loans:
   One-to-four family ...................................             $35,876               $    64                  $35,940
   Commercial ...........................................               5,127                 3,570                    8,697
   Construction .........................................                  --                    --                       --
Commercial business .....................................                 999                 1,736                    2,735
Consumer loans ..........................................               3,427                   101                    3,528
                                                                      -------               -------                  -------
      Total loans .......................................             $45,429               $ 5,471                  $50,900
                                                                      =======               =======                  =======
</TABLE>

      Scheduled  contractual  maturities of loans do not necessarily reflect the
actual expected term of the loan  portfolio.  The average life of mortgage loans
is  substantially   less  than  their  average   contractual  terms  because  of
prepayments.  The average life of mortgage  loans tends to increase when current
mortgage  loan  rates are  higher  than rates on  existing  mortgage  loans and,
conversely,  decrease  when  rates on  current  mortgage  loans are  lower  than
existing  mortgage  loan  rates  (due  to  refinancing  of  adjustable-rate  and
fixed-rate loans at lower rates).  Under the latter  circumstance,  the weighted
average  yield on loans  decreases  as  higher  yielding  loans  are  repaid  or
refinanced at lower rates.


                                      -4-
<PAGE>

      One-to-Four  Family  Residential  Real Estate Loans.  The primary  lending
activity of the  Association  has been and  continues to be the  origination  of
loans secured by single-family  residences. At December 31, 2004, $37.7 million,
or  59.24%,  of its  total  loan  portfolio,  before  net  items,  consisted  of
one-to-four family residential loans.

      The loan-to-value  ratio,  maturity and other provisions of the loans made
by the  Association  generally have reflected the policy of making less than the
maximum loan permissible under applicable regulations,  in accordance with sound
lending practices,  market conditions and underwriting  standards established by
the Association. The Association's current lending policy on one- to-four family
residential loans generally limits the maximum loan-to-value ratio to 90% of the
appraised  value of the  property.  These loans are amortized on a monthly basis
with principal and interest due each month and generally  include  "due-on-sale"
clauses.

      Substantially  all of the  Association's  one-to-four  family  residential
loans have fixed rates of interest.  Fixed-rate  loans generally have maturities
ranging from 15 to 30 years and are fully  amortizing with monthly loan payments
sufficient to repay the total amount of the loan with interest by the end of the
loan term. Although it has been the Association's  practice to retain all of the
one- to-four  family  residential  loans,  its  fixed-rate  loans  generally are
originated  under terms,  conditions and  documentation  which permit them to be
sold to U.S.  Government-sponsored  agencies, such as the Freddie Mac, and other
investors in the secondary mortgage market. At December 31, 2004, $37.6 million,
or 99.79%, of the Association's  one-to-four family  residential  mortgage loans
were fixed-rate loans.

      Of the $37.7 million of one-to-four  family  residential loans held by the
Association at December 31, 2004,  $709, 000 consisted of second mortgage loans.
These loans are secured by the underlying  equity in the  borrower's  residence.
The Association holds the first mortgage on virtually all of the properties that
secure  its  second  mortgage  loans.  The  amount of the  Association's  second
mortgage loans generally cannot exceed the lesser of an aggregate  loan-to-value
ratio  combining  the first and the second lien of 90% or $100,000.  These loans
are typically  three-to-five  year balloon loans with fixed rates and contain an
on-demand  clause  that allows the  Association  to call the loan in full at any
time.

      Commercial  Real Estate  Loans.  The  Association  began to emphasize  the
origination  of commercial  real estate loans in 2001 as part of its strategy to
diversify  its loan  portfolio.  In order to implement  its lending  strategy of
serving  commercial  real estate  customers,  the  Association  hired in 2001 an
experienced   senior  loan  officer  and  established   prudent  procedures  for
originating commercial real estate loans. Commercial real estate loans generally
have interest rates that are higher than interest  rates on  one-to-four  family
residential  loans  because  they usually  involve a higher  degree of risk than
loans secured by residential property. The Association's  commercial real estate
loans consist  primarily of loans secured by land,  storefront retail and office
buildings,  churches  and  schools.   Substantially  all  of  the  Association's
commercial  real estate  loans were  secured by  properties  located  within its
market area.  At December 31, 2004,  the  Association's  commercial  real


                                      -5-
<PAGE>

estate loans  amount to $9.47  million,  or 14.87% of its total loan  portfolio,
before  net  items,  compared  to $8.97  million,  or 15.02%  of its total  loan
portfolio at December 31, 2003.

      The   Association's   commercial   real   estate   loans  have  a  maximum
loan-to-value  ratio of 80%. The terms of each  commercial  real estate loan are
negotiated  on  a  case-by-case  basis,   although  these  loans  are  generally
structured  as  three-to-five  year  balloon  loans with  either  fixed rates or
variable  rates tied to the Wall Street Journal prime rate with a 10- to 15-year
amortization  schedule.  In determining whether to make a commercial real estate
loan, the Association  considers the net operating  income of the property,  the
borrower's  expertise,  credit  history and  profitability  and the value of the
underlying  property.  In most cases the Association obtains personal guarantees
from the borrowers.  The Association has generally  required that the properties
securing these  commercial  real estate loans have debt service  coverage ratios
(the ratio of  earnings  before  debt  service  to debt  service)  of 1.2x.  The
Association  requires  written  appraisals  prepared by a certified  independent
appraiser of all properties  securing  commercial real estate loans greater than
$250,000. At December 31, 2004, the average individual loan balance of the loans
in the Association's commercial real estate portfolio was approximately $121,000
and its largest commercial real estate loan at such date was $958,000. This loan
was current at December 31, 2004.

      The land loans in the Association's  commercial real estate loan portfolio
are secured primarily by income producing properties,  such as land utilized for
growing  timber.  A small  percentage of the land loans are for  development  of
residential  property.  The Association's land loans typically are three-to-five
year balloon loans.  At December 31, 2004, the  Association had $2.70 million in
land loans (which  amount is included in the 9.47 million  aggregate  balance of
commercial real estate loans)which loans had an average balance of $39,000.  The
Association's largest land loan at December 31, 2004 amounted to $375,000, which
loan was current at December 31, 2004.

      Commercial real estate lending is generally considered to involve a higher
degree  of risk  than  one-to-four  family  residential  lending.  Such  lending
typically  involves  large loan balances  concentrated  in a single  borrower or
groups of related borrowers for rental or business properties.  In addition, the
payment experience on loans secured by income-producing  properties is typically
dependent  on the success of the  operation  of the related  project and thus is
typically  affected by adverse  conditions  in the real estate market and in the
economy.  The Association  generally  attempts to mitigate the risks  associated
with its  commercial  real  estate  lending  by,  among  other  things,  lending
primarily to established  businesses in its market area with existing  operating
performance which can be analyzed,  requiring conservative debt coverage ratios,
obtaining   personal   guarantees  from  the  principals  of  the  borrower  and
periodically monitoring the operation and physical condition of the collateral.

      Commercial Business Loans. The Association  originates commercial business
loans  primarily  to small  business  owners in its market area for  purposes of
working  capital or equipment  financing.  These loans are typically  secured by
equipment,  machinery,  commercial real estate,  and other corporate assets. The
commercial  business loans are usually  one-to-five year loans with either


                                      -6-
<PAGE>

fixed rates or variable  rates of interest tied to the prime rate.  During 2004,
the  Association  continued to expand its activities in the commercial  business
lending market with originations totaling $12.6 million compared to $9.5 million
in 2003.  At December 31, 2004,  the  Association's  commercial  business  loans
amounted to $9.4 million,  or 14.82%,  of its total loan  portfolio  compared to
$8.5 million, or 14.29% of its loan portfolio at December 31, 2003.

      Commercial  business  loans  generally are considered to involve a greater
risk than single- family residential mortgage loans. The Association attempts to
minimize its risk exposure by limiting  these loans to proven  businesses and by
obtaining personal guarantees from the principals of the borrower.

      Consumer  Loans.  The  Association  is authorized to make loans for a wide
variety of personal or consumer purposes.  The Association  originates  consumer
loans in order to  accommodate  its customers  and because such loans  generally
have shorter terms and higher  interest rates than  residential  mortgage loans.
The  consumer  loans  offered by the  Association  consist  of loans  secured by
deposit accounts with the Association,  automobile loans,  recreational  vehicle
loans,  boat  loans  and  other  miscellaneous  loans.  As part  of its  lending
strategy,  the Association  began to emphasize the origination of consumer loans
in 2001. At December 31, 2004, $5.6 million, or 8.75% of the Association's total
loan portfolio consisted of consumer loans compared to $3.8 million, or 6.32% of
its total loan portfolio, before net items, at December 31, 2003.

      The  Association   offers  loans  secured  by  deposit   accounts  in  the
Association, which loans amounted to $1.8 million, or 2.76% of the Association's
total loan  portfolio,  before net items,  at December 31, 2004.  Such loans are
originated  for up to 90% of the  account  balance,  with a hold  placed  on the
account restricting the withdrawal of the account balance. These loans typically
are payable on demand with a maturity date of one year.

      The Association also offers loans for  automobiles,  primarily used, boats
and recreational vehicles, unsecured and other. Such loans have terms of no more
than 54 months and a maximum  loan-to-value  ratio of 75%. At December 31, 2004,
the Association's  automobile,  boat and recreational  vehicle loans amounted to
$3.0 million, or 4.65% of its total loan portfolio, before net items.

      Consumer loans generally have shorter terms and higher interest rates than
residential  mortgage  loans,  but  generally  entail  greater  credit risk than
residential  mortgage  loans,  particularly  those loans  secured by assets that
depreciate rapidly,  such as automobiles,  boats and recreational  vehicles.  In
such cases, repossessed collateral for a defaulted consumer loan may not provide
an adequate  source of  repayment  for the  outstanding  loan and the  remaining
deficiency often does not warrant further substantial collection efforts against
the borrower.  In  particular,  amounts  realizable  on the sale of  repossessed
automobiles  may be  significantly  reduced  based  upon  the  condition  of the
automobiles and the fluctuating demand for used automobiles.


                                      -7-
<PAGE>

      Construction   Loans.  The  Association  also  originates  loans  for  the
construction  of one-to- four family  residences.  At December  31,  2004,  $1.5
million, or 2.32% of the Association's  total loan portfolio,  before net items,
consisted of residential and commercial  construction  loans. The  Association's
construction loans are typically made for the construction of pre-sold homes and
typically are six-month  fixed-rate  loans which require the payment of interest
only during the construction phase.

      Before making a commitment to fund a construction  loan,  the  Association
requires an independent appraisal of the property.  The Association also reviews
and inspects each property  before  disbursement of funds during the term of the
construction  loan. The borrower is required to fund the difference  between the
loan  amount  and the  estimated  cost of  completion  prior to the  Association
disbursing  any funds.  Loan proceeds are disbursed  after each stage of work is
completed.

      Construction  lending  generally  involves  a higher  degree  of risk than
one-to-four  family permanent  mortgage lending because of the greater potential
for disagreements  between borrowers and builders and the failure of builders to
pay  subcontractors.  Additional  risk  often  exists  because  of the  inherent
difficulty in estimating both a property's value upon completion of construction
and  the  estimated  construction  costs.  If the  estimate  of the  value  upon
completion  proves to be inaccurate,  the  Association  may be confronted with a
property whose value is insufficient to assure full repayment.

      Loan  Origination and Other Fees. In addition to interest earned on loans,
the  Association  generally  receives  loan  origination  fees or  "points"  for
originating  loans.  Loan points are a percentage of the principal amount of the
mortgage loan and are charged to the borrower in connection with the origination
of the loan.

Asset Quality

      General. The Association's  collection procedures provide that when a loan
is 15 days past due, a late  charge  notice is sent to the  borrower  requesting
payment.  If the delinquency  continues at 30 days, personal contact efforts are
attempted,  either in person or by telephone. If a loan becomes 60 days past due
and no progress has been made in resolving the delinquency,  a collection letter
from  legal  counsel is sent and  personal  contact  is  attempted.  When a loan
continues in a delinquent  status for 90 days or more, and a repayment  schedule
has not been  made or kept by the  borrower,  generally  a notice  of  intent to
foreclose is sent to the borrower. If the delinquency is not cured,  foreclosure
proceedings are initiated. In most cases, deficiencies are cured promptly. While
the  Association  generally  prefers  to work with  borrowers  to  resolve  such
problems,  the  Association  will  institute  foreclosure  or  other  collection
proceedings when necessary to minimize any potential loss.

      Loans are  placed on  non-accrual  status  when  management  believes  the
probability  of  collection  of interest is  doubtful.  When a loan is placed on
non-accrual  status,  previously  accrued but unpaid  interest is deducted  from
interest income. The Association generally  discontinues the


                                      -8-
<PAGE>

accrual  of  interest  income  when  the  loan  becomes  90 days  past due as to
principal  or interest  unless the credit is well  secured  and the  Association
believes it will fully collect.

      Real estate and other assets  acquired by the  Association  as a result of
foreclosure  or by deed- in-lieu of  foreclosure  are  classified as real estate
owned until sold. The Association did not have any real estate owned at December
31, 2004 and 2003.

      Delinquent  Loans. The following table sets forth  information  concerning
delinquent  loans at December 31, 2004, in dollar amounts and as a percentage of
the  Association's  total loan portfolio.  The amounts  presented  represent the
total  outstanding  principal  balances  of the related  loans,  rather than the
actual payment amounts which are past due.

<TABLE>
<CAPTION>
                                                                      December 31, 2004
                                              -------------------------------------------------------------------
                                                    30-59                   60-89               90 or More Days
                                                 Days Overdue            Days Overdue                Overdue
                                              ------------------     ------------------       -------------------
                                                         Percent                Percent                  Percent
                                                        of Total               of Total                  of Total
                                              Amount      Loans      Amount      Loans        Amount      Loans
                                              ------    --------     ------    --------       ------     --------
                                                                   (Dollars in Thousands)
<S>                                            <C>         <C>        <C>         <C>          <C>         <C>
Real estate loans:
   One-to-four family .................        $498        0.78%      $ 56        0.09%        $624         .98%
   Commercial and Land ................          34        0.00         --          --           45         .07
   Construction .......................          --          --         --          --           --          --
Commercial business ...................          61        0.10         --          --           49         .08
Consumer loans ........................         151        0.24         40         .06           50         .08
                                               ----        ----       ----        ----         ----        ----
   Total loans ........................        $744        1.12%      $ 96        0.15%        $768        1.21%
                                               ----        ====       ====        ====         ====        ====
</TABLE>

Non-Performing Assets. The following table presents information with respect to
the Association's nonperforming assets at the dates indicated.

<TABLE>
<CAPTION>
                                                                            At December 31,
                                                                          -------------------
                                                                          2004           2003
                                                                          ----           ----
                                                                         (Dollars in Thousands)
<S>                                                                       <C>            <C>
      Nonaccruing loans:
         Real estate loans:
            One-to-four family ..................................         $129           $ 30
            Commercial ..........................................           45             21
            Construction ........................................           --             --
         Commercial business ....................................           --             --
         Consumer loans .........................................           --              7
                                                                          ----           ----
            Total nonaccruing loans .............................          174             58
      Accruing loans delinquent 90 days or more(1) ..............          594            284
      Real estate owned .........................................           --             --
                                                                          ----           ----
            Total nonperforming assets(2) .......................          768            342
      Troubled debt restructurings ..............................           12             14
                                                                          ----           ----
</TABLE>


                                      -9-
<PAGE>

<TABLE>
<S>                                                                       <C>            <C>
      Troubled debt restructurings and total
         nonperforming assets ...................................         $780           $356
                                                                          ====           ====
      Total nonperforming assets and troubled debt
           restructurings as a percentage of total assets .......         0.73%          0.35%
                                                                          ====           ====
</TABLE>

----------
(1)   This figure includes properties that are in bankruptcy.

(2)   Nonperforming assets consist of nonperforming loans and real estate owned.

(3)   This figure includes a residential loan with a balance of approximately
      $243,000 that was brought current in February of 2005.

      If the $174,000 of nonaccruing  loans of the  Association had been current
in accordance with their terms during 2004, the gross income on such loans would
have been  approximately  $6,300.  There were  $58,000 in  nonaccruing  loans at
December 31, 2003.

      Classified Assets.  Federal banking  regulations require that each insured
savings  institution  classify its assets on a regular  basis.  In addition,  in
connection with  examinations of insured  institutions,  federal  examiners have
authority to identify  problem assets and, if appropriate,  classify them. There
are three  classifications  for problem  assets:  "substandard,"  "doubtful" and
"loss."  Substandard  assets  have  one  or  more  defined  weaknesses  and  are
characterized  by the distinct  possibility  that the insured  institution  will
sustain some loss if the  deficiencies  are not corrected.  Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that the
weaknesses  make  collection  or  liquidation  in full on the basis of currently
existing  facts,  conditions  and  values  questionable,  and  there is a higher
possibility of loss. An asset classified loss is considered uncollectible and of
such  little  value  that  continuance  as an  asset of the  institution  is not
warranted.   Another  category   designated   "special  mention"  also  must  be
established  and maintained for assets which do not currently  expose an insured
institution  to a  sufficient  degree  of  risk  to  warrant  classification  as
substandard,  doubtful or loss.  Assets  classified as  substandard  or doubtful
require the institution to establish  general  allowances for loan losses. If an
asset or portion  thereof is classified as loss,  the insured  institution  must
either  establish  specific  allowances for loan losses in the amount of 100% of
the portion of the asset  classified  loss, or charge-off  such amount.  General
loss  allowances   established  to  cover  possible  losses  related  to  assets
classified   substandard   or  doubtful  may  be  included  in   determining  an
institution's  regulatory capital,  while specific valuation allowances for loan
losses do not qualify as regulatory capital. Federal examiners may disagree with
an insured institution's classifications and amounts reserved.

      The Association's total classified assets at December 31, 2004 amounted to
$788,000, all of which was classified as substandard, substantially all of which
consist of nonperforming  assets and troubled debt  restructurings.  The largest
classified  asset  at  December  31,  2004  was a  mortgage  loan  secured  by a
residential property with a balance of approximately  $243,000,  which is also a
non-  performing  loan. As of December 31, 2004, the Association had no property
in real estate owned.  The  Association's  classified  assets as of December 31,
2004  included  all of its  nonperforming  assets  plus  $20,000  of  delinquent
interest.

      Allowance  for Loan  Losses.  At  December  31,  2004,  the  Association's
allowance  for loan  losses  amounted  to  $877,000,  or 1.38% of its total loan
portfolio,  before net items.  The  allowance


                                      -10-
<PAGE>

for loan losses is maintained at a level  believed,  to the best of management's
knowledge,  to cover all known and inherent  losses in the  portfolio  which are
both probable and  reasonable to estimate at each  reporting  date. The level of
allowance  for loan  losses  is based on  management's  periodic  review  of the
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
conditions.  The Association is primarily  engaged in originating  single-family
residential  loans.  Due to the  Association's  implementation  of a strategy to
diversify its loan portfolio into  commercial and consumer loans, it reallocated
its  allowance  for loan  losses  in 2003.  The  management  of the  Association
considers the  deficiencies of all classified loans in determining the amount of
allowance for loan losses required at each reporting date.  Management  analyzes
the probability of the correction of the substandard  loans'  weaknesses and the
extent of any known or inherent  losses that the  Association  might  sustain on
them. It determined  that no additional  provision was necessary for those loans
as of the reporting dates.

      While  management  believes that it  determines  the size of the allowance
based on the best information  available at the time, the allowance will need to
be  adjusted  as  circumstances  change  and  assumptions  are  updated.  Future
adjustments to the allowance could significantly affect net income.

      The following  table sets forth  information  concerning the allocation of
the  Association's  allowance  for loan losses by loan  categories  at the dates
indicated.

<TABLE>
<CAPTION>
                                                                             December 31,
                                                          ---------------------------------------------------
                                                                  2004                           2003
                                                          ----------------------       ----------------------
                                                                     Percent of                   Percent of
                                                                      Loans in                     Loans in
                                                                        Each                         Each
                                                                     Category to                  Category to
                                                          Amount     Total Loans       Amount     Total Loans
                                                          ------     -----------       ------     -----------
                                                                        (Dollars in Thousands)
<S>                                                        <C>          <C>             <C>          <C>
      Allocated:
      Real estate loans:
         One-to-four family ......................         $130          59.24%         $130          60.70%
         Commercial ..............................          229          14.87           200          15.02
         Construction ............................           18           2.32            50           3.67
      Commercial business ........................          400          14.82           400          14.29
      Consumer loans .............................          100           8.75           100           6.32
      Unallocated ................................           --             --            13             --
                                                           ----         ------          ----         ------
           Total .................................         $877         100.00%         $893         100.00%
                                                           ====         ======          ====         ======
</TABLE>


                                      -11-
<PAGE>

      The following table sets forth an analysis of the Association's  allowance
for loan losses and other ratios at or for the dates indicated.

<TABLE>
<CAPTION>
                                                                   Year Ended December 31,
                                                                  ------------------------
                                                                   2004              2003
                                                                  -------          -------
                                                                    (Dollars in Thousands)
<S>                                                               <C>              <C>
      Total loans outstanding ....................                $63,665          $59,705
      Average loans outstanding, net .............                 60,684           56,690
      Balance of allowance at beginning of
          period .................................                    893              907
      Charge-offs:
      Real estate loans:
         One-to-four family ......................                     --                4
         Commercial ..............................                     --               --
         Construction ............................                     --               --
      Commercial business ........................                     --               --
      Consumer loans .............................                     20               11
                                                                  -------          -------
           Total charge-offs .....................                     20               15
                                                                  -------          -------
      Recoveries:
      Real estate loans:
         One-to-four family ......................                     --               --
         Commercial ..............................                     --               --
         Construction ............................                     --               --
      Commercial business ........................                     --               --
      Consumer loans .............................                      4                1
                                                                  -------          -------
           Total recoveries ......................                      4                1
                                                                  -------          -------
      Net charge-offs ............................                     16               14
      Provision for losses on loans ..............                     --               --
                                                                  -------          -------
      Balance at end of period ...................                $   877          $   893
                                                                  =======          =======
      Allowance for loan losses as a
         percent of total loans outstanding ......                   1.38%            1.50%
                                                                  =======          =======
      Allowance for loan losses as a
         percent of total nonperforming
         loans(1) ................................                 114.19%          261.11%
      Ratio of net charge-offs to
         average loans outstanding, net ..........                    .03%             .02%
                                                                  =======          =======
</TABLE>

----------
(1)   Total  nonperforming loans consist of total nonaccruing loans and accruing
      loans delinquent 90 days or more.

Investment Securities

      The  Association  has authority to invest in various types of  securities,
including mortgage-backed securities,  U.S. Treasury obligations,  securities of
various federal agencies and of state and municipal governments, certificates of
deposit at federally  insured banks and savings  institutions,  certain bankers'
acceptances  and  federal  funds.  The  Association's   investment  strategy  is
established by the board of directors.


                                      -12-
<PAGE>

      The following table sets forth information  relating to the amortized cost
and fair value of the Association's mortgage-backed and investment securities.

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                   ------------------------------------------------------------
                                                                              2004                              2003
                                                                   --------------------------       ---------------------------
                                                                   Amortized                        Amortized
                                                                     Cost          Fair Value          Cost          Fair Value
                                                                   ---------       ----------       ----------       ----------
                                                                                            (In Thousands)
<S>                                                                 <C>              <C>              <C>              <C>
      Held to maturity:
         U.S. Government and agencies ....................          $    --          $    --          $    --          $    --
         Mortgage-backed securities ......................            1,087            1,113            1,328            1,376
         Certificates of deposit .........................            1,010            1,010               --               --
      Available for sale:
         U. S. Government and agencies ...................              498              515              497              532
         Mutual fund .....................................            8,697            8,611            6,317            6,283
         Mortgage-backed securities ......................           23,893           23,876           27,181           27,049
         FHLMC stock .....................................               12              940               16              927
         Municipal bonds .................................              230              232               --               --
                                                                    -------          -------          -------          -------
       Total .............................................          $35,427          $36,297          $35,339          $36,167
                                                                    =======          =======          =======          =======
</TABLE>

      The   following   table  sets  forth  the  amount  of  the   Association's
mortgage-backed  and  investment  securities  which  mature  during  each of the
periods  indicated and the weighted  average yields for each range of maturities
at December 31, 2004.  The amounts  reflect the fair value of the  Association's
securities at December 31, 2004.

<TABLE>
<CAPTION>
                                                                               Contractually Maturing
                                             ---------------------------------------------------------------------------------------

                                                       Weighted          Weighted            Weighted             Weighted
                                             Under 1    Average   1-5     Average     6-10    Average    Over 10   Average
                                               Year     Yield     Years    Yield      Years    Yield      Years     Yield      Total
                                             -------   --------   -----  --------     -----  --------     -----   --------     -----
                                                                            (Dollars in Thousands)
<S>                                          <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>
U.S. Government and agencies ............    $    --      --%    $   515    5.07%    $    --      --%    $    --    3.54%    $   515
Mortgage-backed securities ..............         29    5.38       1,400    5.71          88    4.23      23,472      --      24,989
Municipal bonds .........................         --      --          --      --         232    3.35          --      --         232
Certificate of deposit ..................        110    2.09         900    3.13          --      --          --      --       1,010
                                             -------    ----     -------    ----     -------    ----     -------    ----     -------
     Total ..............................    $   139    2.78%    $ 2,815    4.77%    $   320    3.59%    $23,472    3.54%    $26,746
                                             =======    ====     =======    ====     =======    ====     =======    ====     =======
</TABLE>

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

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


                                      -13-
<PAGE>

      The  mortgage-backed  securities of the Association  consist of Ginnie Mae
securities,  Freddie Mac securities and Fannie Mae  securities.  Ginnie Mae is a
government  agency within the Department of Housing and Urban  Development which
is intended to help finance  government-assisted  housing  programs.  Ginnie Mae
securities are backed by loans insured by the Federal Housing Administration, or
guaranteed by the Veterans  Administration.  The timely payment of principal and
interest on Ginnie Mae  securities is guaranteed by Ginnie Mae and backed by the
full  faith  and  credit  of the  U.S.  Government.  Freddie  Mac  is a  private
corporation  chartered by the U.S. Government.  Freddie Mac issues participation
certificates  backed  principally by conventional  mortgage  loans.  Freddie Mac
guarantees the timely  payment of interest and the ultimate  return of principal
on participation certificates.  Fannie Mae is a private corporation chartered by
the U.S.  Congress  with a mandate to establish a secondary  market for mortgage
loans.  Fannie Mae  guarantees  the timely  payment of principal and interest on
Fannie Mae  securities.  Freddie Mac and Fannie Mae securities are not backed by
the full faith and credit of the U.S.  Government,  but because  Freddie Mac and
Fannie  Mae are U.S.  Government-sponsored  enterprises,  these  securities  are
considered  to be among the highest  quality  investments  with  minimal  credit
risks.

      In addition to investments in various types of mortgage-backed  securities
issued by Ginnie Mae, Fannie Mae and Freddie Mac, the  Association  also invests
in a mutual fund that invests primarily in adjustable-rate  mortgage-backed  and
mortgage-related  securities  issued  by  those  same  entities  as  well  as in
securities  of that type issued by private  companies.  As of December 31, 2004,
the Association had a $8.7 million investment in this mutual fund.

      Mortgage-backed  securities  generally  yield  less than the  loans  which
underlie  such  securities   because  of  their  payment  guarantees  or  credit
enhancements  which offer  nominal  credit risk.  In  addition,  mortgage-backed
securities  are more liquid than  individual  mortgage  loans and may be used to
collateralize   borrowings  or  other   obligations  of  the  Association.   The
Association has also invested a maximum of $100,000 each in various certificates
of deposits with maturities of up to five years. The interest is paid monthly to
the Association. The Association invested in a municipal bond with a maturity of
2011. The interest is paid annually to the Association.

Sources of Funds

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

      Deposits.  Deposits are  attracted  by the  Association  principally  from
Webster Parish. Deposit account terms vary, with the principal differences being
the minimum balance required,  the time periods the funds must remain on deposit
and the interest rate.


                                      -14-
<PAGE>

      The Association  obtains  deposits  primarily from residents of Louisiana.
The Association has not solicited  deposits from outside  Louisiana or paid fees
to brokers to solicit funds for deposit.

      Interest rates paid, maturity terms, service fees and withdrawal penalties
are established on a periodic basis.  Management  determines the rates and terms
based on rates  paid by  competitors,  the need for funds or  liquidity,  growth
goals and federal  regulations.  The Association attempts to control the flow of
deposits by pricing its accounts.

      The  following   table  shows  the   distribution  of  and  certain  other
information  relating  to the  Association's  deposits  by type as of the  dates
indicated.

<TABLE>
<CAPTION>
                                                                               December 31,
                                                             -----------------------------------------------------
                                                                      2004                           2003
                                                             -----------------------       -----------------------
                                                                          Percent of                    Percent of
                                                             Amount        Deposits        Amount        Deposits
                                                             ------       ----------       ------       ----------
                                                                           (Dollars in Thousands)
<S>                                                          <C>             <C>           <C>             <C>
      Transaction accounts:
         Demand deposits ............................        $11,006         15.58%        $ 8,981         13.18%
         Savings deposits ...........................         14,022         19.84          12,268         18.01
                                                             -------        ------         -------        ------
           Total transaction accounts ...............         25,028         35.42          21,249         31.19
                                                             -------        ------         -------        ------
      Certificate accounts:
         0.00% - 1.99% ..............................          4,642          6.57           9,437         13.85
         2.00% - 2.99% ..............................         37,178         52.61          32,425         47.60
         3.00% - 3.99% ..............................          3,817          5.40           4,757          6.98
         4.00% - 4.99% ..............................             --            --             253           .37
                                                             -------        ------         -------        ------
           Total certificate accounts ...............         45,637         64.58          46,872         68.81
                                                             -------        ------         -------        ------
           Total deposits ...........................        $70,665        100.00%        $68,121        100.00%
                                                             =======        ======         =======        ======
</TABLE>

      The following  table sets forth the deposit  activities of the Association
during the periods indicated.

<TABLE>
<CAPTION>
                                                                               Year Ended December 31,
                                                                            ----------------------------
                                                                              2004                2003
                                                                            ---------          ---------
                                                                                    (In Thousands)
<S>                                                                         <C>                <C>
      Total deposits at beginning of period ..................              $  68,121          $  56,856
      Deposits ...............................................                213,218            167,954
      Withdrawals ............................................               (212,014)          (158,120)
                                                                            ---------          ---------
      Net deposits ...........................................                  1,204              9,834
      Interest credited ......................................                  1,340              1,431
                                                                            ---------          ---------
         Total deposits at end of period .....................              $  70,665          $  68,121
                                                                            =========          =========
</TABLE>

      The following  table shows the interest rate and maturity  information for
the Association's certificates of deposit at December 31, 2004.


                                      -15-
<PAGE>

<TABLE>
<CAPTION>
                                                                  Maturity Date
                           ------------------------------------------------------------------------------------
Interest Rate              One Year or Less   Over 1-2 Years      Over 2-3 Years     Over 3 Years        Total
-------------              ----------------   --------------      --------------     ------------       -------
                                                                  (In Thousands)
<S>                             <C>                <C>                <C>               <C>             <C>
0.00% - 1.99%                   $ 4,642            $    --            $    --           $    --         $ 4,642
2.00% - 2.99%                    33,615              3,476                 87                --          37,178
3.00% - 3.99%                     1,985              1,832                 --                --           3,817
                                -------            -------            -------           -------         -------
  Total                         $40,242            $ 5,308            $    87           $    --         $45,637
                                =======            =======            =======           =======         =======
</TABLE>

      As of December 31, 2004, the aggregate amount of outstanding  certificates
of deposit at the Association in amounts greater than or equal to $100,000,  was
approximately $12.4 million.  The following table presents the maturity of these
time certificates of deposit at such dates.

                                                                December 31,
                                                                    2004
                                                               --------------

                                                               (In Thousands)

3 months or less ...........................................       $ 1,763
Over 3 months through 6 months .............................         5,093
Over 6 months through 12 months ............................         3,995
Over 12 months .............................................         1,559
                                                                   -------
                                                                   $12,410
                                                                   =======

      Borrowings. The Association may obtain advances from the Federal Home Loan
Bank of Dallas upon the  security  of the common  stock it owns in that bank and
certain  of  its  residential  mortgage  loans  and  mortgage-backed  and  other
investment  securities,  provided certain standards related to  creditworthiness
have been met. These advances are made pursuant to several credit programs, each
of which has its own interest  rate and range of  maturities.  Federal Home Loan
Bank advances are generally  available to meet seasonal and other withdrawals of
deposit accounts and to permit increased lending.

      As of December 31, 2004, the  Association was permitted to borrow up to an
aggregate total of $56.7 million from the Federal Home Loan Bank of Dallas.  The
Association  had $17.2  million  and $13.5  million  of  Federal  Home Loan Bank
advances  outstanding at December 31, 2004 and December 31, 2003,  respectively.
The  Association  has not utilized other types of borrowings  such as securities
sold under agreements to repurchase.


                                      -16-
<PAGE>

      The following  table shows certain  information  regarding the  short-term
borrowings of the Association at or for the dates indicated:

<TABLE>
<CAPTION>
                                                                      At or for the Year Ended
                                                                             December 31,
                                                                      ------------------------
                                                                        2004             2003
                                                                      -------          -------
                                                                        (Dollars in Thousands)
<S>                                                                   <C>              <C>
Federal Home Loan Bank advances:
      Average balance outstanding ..............................      $17,016          $ 7,862
      Maximum amount outstanding at any
        month-end during the period ............................       19,050           13,500
      Balance outstanding at end of period .....................       17,200           13,500
      Average interest rate during the period ..................         1.46%            1.44%
      Weighted average interest rate at end of period ..........         2.01%            1.17%
</TABLE>


                                      -17-
<PAGE>

No Subsidiaries

      At December 31, 2004, the Association had no subsidiaries.

Total Employees

      The Association had 17 full-time  employees and two part-time employees at
December 31,  2004.  None of these  employees  are  represented  by a collective
bargaining  agent,  and the  Association  believes that it enjoys good relations
with its personnel.

Market Area

      The  Association  has one office  located in Minden,  Louisiana,  which is
located  approximately 31 miles from Shreveport,  Louisiana.  The  Association's
primary market area consists of Webster Parish,  Louisiana and is  predominantly
rural.  The  economy  in  the  Association's   primary  market  area  is  fairly
diversified,  with  services,  wholesale  and retail  trade,  manufacturing  and
government  constituting  the basis of the  economy.  The  largest  employer  in
Webster Parish is a manufacturer of concrete modular facilities.

      The population of Webster  Parish in 2000 was  approximately  42,000.  The
population growth rate for Webster Parish has been slightly negative since 1990.
The  projected  population  growth  rate is less  than the  projected  rates for
Louisiana and the United States.  Average household income for Webster Parish is
below Louisiana and national averages.  The annual unemployment rate for Webster
Parish was 6.7% for 2004 as compared to the  overall  unemployment  rate for the
United States as of 2004 of 5.1%.

Competition

      The Association faces significant  competition both in attracting deposits
and in  making  loans.  Its  most  direct  competition  for  deposits  has  come
historically from commercial banks, credit unions and other savings institutions
located in its primary market area, including many large financial  institutions
which have greater  financial  and  marketing  resources  available to them.  In
addition,  the Association  faces  significant  competition for investors' funds
from short-term  money market  securities,  mutual funds and other corporate and
government  securities.  The Association does not rely upon any individual group
or entity for a material portion of its deposits. The ability of the Association
to attract and retain  deposits  depends on its ability to  generally  provide a
rate of return,  liquidity  and risk  comparable  to that  offered by  competing
investment opportunities.

      The Association's competition for real estate loans comes principally from
mortgage banking  companies,  commercial banks,  other savings  institutions and
credit unions. The Association competes for loan originations  primarily through
the interest  rates and loan fees it charges,  and the efficiency and quality of
services it provides borrowers. Factors which affect competition include general
and local economic  conditions,  current  interest rate levels and volatility in
the mortgage


                                      -18-
<PAGE>

markets.  Competition  may increase as a result of the  continuing  reduction of
restrictions on the interstate operations of financial institutions.

                                   REGULATION

      The  following  discussion  of  certain  laws and  regulations  which  are
applicable to the Company,  the Association and the MHC, as well as descriptions
of laws and regulations  contained  elsewhere herein,  summarizes the aspects of
such laws and  regulations  which are deemed to be material to the Company,  the
Association  and the MHC.  However,  the summary does not purport to be complete
and  is  qualified  in  its  entirety  by  reference  to  applicable   laws  and
regulations.

Minden Bancorp, Inc.

      Holding  Company  Acquisitions.  The Company is a savings and loan holding
company  within the meaning of the Home Owners'  Loan Act, as amended  ("HOLA"),
and is registered with the Office of Thrift  Supervision.  Federal law generally
prohibits a savings and loan  holding  company,  without  prior Office of Thrift
Supervision  approval,  from  acquiring  the  ownership  or control of any other
savings   institution  or  savings  and  loan  holding   company,   or  all,  or
substantially  all, of the assets or more than 5% of the voting shares  thereof.
These provisions also prohibit, among other things, any director or officer of a
savings and loan holding  company,  or any  individual who owns or controls more
than 25% of the voting shares of such holding company, from acquiring control of
any savings  institution  not a  subsidiary  of such  savings  and loan  holding
company, unless the acquisition is approved by the Office of Thrift Supervision.

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

      Holding Company Activities.  The Company operates as a unitary savings and
loan  holding  company.  Under  prior law, a unitary  savings  and loan  holding
company was not generally  restricted as to the types of business  activities in
which it may engage,  provided it continued to be a qualified thrift lender. See
" - Minden  Building and Loan  Association - Qualified  Thrift Lender Test." The
Gramm-Leach-Bliley  Act of 1999,  however,  restricts  unitary  savings and loan
holding  companies  not existing or applied for before May 4, 1999 to activities
permissible  for  financial  holding  companies  under  the law or for  multiple
savings  and loan  holding  companies.  The  Company  does not  qualify  for the
grandfather-clause  exemption and is limited to the activities  permissible  for
financial  holding companies or multiple savings and loan holding  companies.  A
financial holding company may engage in activities that are financial in nature,
incidental to financial  activities or complementary to a financial activity.  A
multiple  savings and loan holding  company is generally  limited to  activities
permissible for bank holding companies under Section 4(c)(8) of the Bank


                                      -19-
<PAGE>

Holding  Company  Act,  subject  to the prior  approval  of the Office of Thrift
Supervision,  and certain activities  authorized by Office of Thrift Supervision
regulation.

      Although  savings and loan holding  companies  are not subject to specific
capital  requirements  or specific  restrictions  on the payment of dividends or
other capital distributions,  federal regulations do prescribe such restrictions
on subsidiary  savings  institutions,  as described  below. The Association must
notify the Office of Thrift Supervision 30 days before declaring any dividend to
the  Company.  In addition,  the  financial  impact of a holding  company on its
subsidiary  institution  is a matter that is  evaluated  by the Office of Thrift
Supervision  and the agency has  authority to order  cessation of  activities or
divestiture of subsidiaries  deemed to pose a threat to the safety and soundness
of the  institution.  See "-  Minden  Building  and Loan  Association  - Capital
Distributions."

      Restrictions  on  Transactions  With  Affiliates.  Transactions  between a
savings  institution  and its  "affiliates"  are  subject  to  quantitative  and
qualitative  restrictions  under Sections 23A and 23B of the Federal Reserve Act
and  Office  of  Thrift  Supervision   regulations.   Affiliates  of  a  savings
institution include,  among other entities,  the savings  institution's  holding
company and companies  that are  controlled by or under common  control with the
savings institution.

      In general,  the extent to which a savings institution or its subsidiaries
may engage in certain  "covered  transactions"  with affiliates is limited to an
amount equal to 10% of the  institution's  capital and  surplus,  in the case of
covered  transactions  with any one affiliate,  and to an amount equal to 20% of
such  capital  and  surplus,  in the  case  of  covered  transactions  with  all
affiliates.  In addition,  a savings institution and its subsidiaries may engage
in covered  transactions and certain other  transactions only on terms and under
circumstances  that are  substantially the same, or at least as favorable to the
savings  institution  or its  subsidiary,  as those  prevailing  at the time for
comparable transactions with nonaffiliated companies. A "covered transaction" is
defined to include a loan or extension of credit to an affiliate;  a purchase of
investment  securities  issued by an  affiliate;  a purchase  of assets  from an
affiliate,  with certain  exceptions;  the acceptance of securities issued by an
affiliate as collateral  for a loan or extension of credit to any party;  or the
issuance  of a  guarantee,  acceptance  or  letter  of  credit  on  behalf of an
affiliate.

      In addition, a savings institution may not:

      o     make a loan or  extension  of  credit  to an  affiliate  unless  the
            affiliate is engaged only in activities permissible for bank holding
            companies;

      o     purchase or invest in securities  of an affiliate  other than shares
            of a subsidiary;

      o     purchase a low-quality asset from an affiliate; or

      o     engage  in  covered  transactions  and  certain  other  transactions
            between a savings  institution or its  subsidiaries and an affiliate
            except on terms and  conditions  that are  consistent  with safe and
            sound banking practices.


                                      -20-
<PAGE>

With  certain  exceptions,  each  loan  or  extension  of  credit  by a  savings
institution  to an affiliate  must be secured by collateral  with a market value
ranging from 100% to 130% (depending on the type of collateral) of the amount of
the loan or extension of credit.

      Office of Thrift  Supervision  regulations  generally exclude all non-bank
and non-savings institution  subsidiaries of savings institutions from treatment
as affiliates, except to the extent that the Office of Thrift Supervision or the
Federal Reserve Board decides to treat such  subsidiaries as affiliates.  Office
of Thrift  Supervision  regulations also provide that certain classes of savings
institutions  may be  required  to give the Office of Thrift  Supervision  prior
notice of affiliate transactions.

      Waivers of Dividends by Minden Mutual  Holding  Company.  Office of Thrift
Supervision  regulations  require  the  MHC  to  notify  the  Office  of  Thrift
Supervision of any proposed waiver of its receipt of dividends from the Company.
The  Office  of  Thrift  Supervision   reviews  dividend  waiver  notices  on  a
case-by-case basis, and, in general,  does not object to any such waiver if: (i)
the mutual holding  company's board of directors  determines that such waiver is
consistent with such directors' fiduciary duties to the mutual holding company's
members; (ii) for as long as the savings association subsidiary is controlled by
the mutual holding company,  the dollar amount of dividends waived by the mutual
holding company are considered as a restriction to the retained  earnings of the
savings association,  which restriction, if material, is disclosed in the public
financial  statements  of the  savings  association  as a note to the  financial
statements;  (iii) the  amount of any  dividend  waived  by the  mutual  holding
company is available for  declaration as a dividend solely to the mutual holding
company, and, in accordance with Statement of Financial Accounting Standards No.
5, where the savings association determines that the payment of such dividend to
the mutual holding company is probable, an appropriate dollar amount is recorded
as a  liability;  and (iv) the amount of any waived  dividend is  considered  as
having been paid by the savings  association in evaluating any proposed dividend
under Office of Thrift Supervision capital distribution regulations. The MHC has
requested and received the non-objection of the Office of Thrift  Supervision to
its request to waive receipt of dividends from the Company.  The MHC anticipates
that it will continue to waive  dividends  paid by the Company.  Under Office of
Thrift Supervision regulations, public stockholders would not be diluted because
of any dividends waived by the MHC (and waived dividends would not be considered
in determining an appropriate  exchange  ratio) in the event the MHC converts to
stock form.

      Federal Securities Laws. The Company's common stock is registered with the
SEC under the Securities Act of 1933 (the "Securities Act") and Section 12(g) of
the Securities Exchange Act of 1934 (the "Exchange Act"). The Company is subject
to the proxy and tender offer rules, insider trading reporting  requirements and
restrictions, and certain other requirements under the Exchange Act. Pursuant to
Office of Thrift  Supervision  regulations and the plan of stock  issuance,  the
Company  agreed to  maintain  such  registration  for a minimum  of three  years
following the completion of the reorganization in July 2002.


                                      -21-
<PAGE>

      The  registration  under the Securities Act of the Company's  common stock
does not cover the resale of such shares.  Shares of common  stock  purchased by
persons who are not the Company's  affiliates may be sold without  registration.
Shares  purchased  by the  Company's  affiliates  will be  subject to the resale
restrictions  of Rule 144 under the  Securities  Act. If the  Company  meets the
current public  information  requirements  of Rule 144 under the Securities Act,
each of the Company's  affiliates who complies with the other conditions of Rule
144 would be able to sell in the public market,  without registration,  a number
of shares not to exceed, in any three-month period, the greater of (a) 1% of the
Company's outstanding shares or (b) the average weekly volume of trading in such
shares during the preceding four calendar weeks.

Sarbanes-Oxley Act of 2002.

      On July 30, 2002, the President signed into law the  Sarbanes-Oxley Act of
2002  implementing   legislative  reforms  intended  to  address  corporate  and
accounting fraud. In addition to the establishment of a new accounting oversight
board which is empowered to enforce  auditing,  quality control and independence
standards,  the  Sarbanes-Oxley  Act  restricts  provision of both  auditing and
consulting  services by accounting  firms. To ensure auditor  independence,  any
non-audit services being provided to an audit client require pre-approval by the
company's  audit  committee  members.  In addition,  the audit  partners must be
rotated.  The  Sarbanes-Oxley  Act requires chief  executive  officers and chief
financial officers, or their equivalent,  to certify to the accuracy of periodic
reports  filed with the SEC,  subject to civil and  criminal  penalties  if they
knowingly or  willfully  violate this  certification  requirement.  In addition,
under the  Sarbanes-Oxley  Act,  attorneys are required to report  evidence of a
material  violation of the  securities  laws or a breach of fiduciary  duty by a
company to its chief executive officer or its chief legal officer,  and, if such
officer does not  appropriately  respond,  to report such  evidence to the audit
committee  or other  similar  committee  of the board of  directors or the board
itself.

      Longer prison terms were  legislated for corporate  executives who violate
federal  securities  laws, the period during which certain types of suits can be
brought against a company or its officers has been extended,  and bonuses issued
to top executives prior to restatement of a company's  financial  statements are
now subject to disgorgement if such restatement was due to corporate misconduct.
Executives  are also  prohibited  from insider  trading during  retirement  plan
"blackout" periods, and loans to company executives are restricted. In addition,
a provision  directs that civil  penalties  levied by the SEC as a result of any
judicial or administrative action under the Sarbanes-Oxley Act be deposited to a
fund for the benefit of harmed  investors.  The Federal  Accounts  for  Investor
Restitution  (FAIR)  provision  also  requires  the SEC to  develop  methods  of
improving  collection  rates.  The  legislation  accelerates  the time frame for
disclosures  by public  companies  for any material  changes in their  financial
condition or  operations  and certain  other  events.  Directors  and  executive
officers  must also  provide  information  for most  changes in  ownership  in a
company's securities within two business days of the change.


                                      -22-
<PAGE>

      The  Sarbanes-Oxley  Act also  increases  the  oversight  of, and codifies
certain  requirements  relating to audit  committees of public companies and how
they interact with the company's  "registered  public  accounting  firm" (RPAF).
Audit  Committee  members  must be  independent  and are barred  from  accepting
consulting,  advisory or other  compensatory  fees from the issuer. In addition,
companies  must  disclose  whether  at least one  member of the  committee  is a
"financial  expert,"  as such term is defined by the SEC,  and if not,  why not.
Under the Sarbanes-Oxley  Act, a RPAF is prohibited from performing  statutorily
mandated audit services for a company if such company's chief executive officer,
chief financial  officer,  comptroller,  chief accounting  officer or any person
serving in equivalent  positions has been employed by such firm and participated
in the audit of such company  during the  one-year  period  preceding  the audit
initiation date. The  Sarbanes-Oxley  Act also prohibits any officer or director
of a company or any other person  acting under their  direction  from taking any
action to fraudulently influence,  coerce, manipulate or mislead any independent
public or certified  accountant engaged in the audit of the company's  financial
statements  for the purpose of rendering  the financial  statement's  materially
misleading.  The  Sarbanes-Oxley  Act also will require inclusion of an internal
control   report  and   assessment   by  management  in  the  annual  report  to
shareholders.  The  Sarbanes-Oxley  Act  requires the RPAF that issues the audit
report to  attest to and  report on  management's  assessment  of the  company's
internal  controls.  In addition,  the  Sarbanes-Oxley  Act  requires  that each
financial  report required to be prepared in accordance  with, or reconciled to,
generally  accepted  accounting  principles  and filed with the SEC  reflect all
material correcting adjustments that are identified by a RPAF in accordance with
generally  accepted  accounting  principles and the rules and regulations of the
SEC.

Minden Building and Loan Association

      General. As part of the reorganization,  the Association  converted from a
Louisiana-    chartered    mutual   building   and   loan   association   to   a
Louisiana-chartered stock building and loan association. The Louisiana Office of
Financial Institutions is the Association's  chartering authority and the Office
of Thrift Supervision is its primary federal regulator.  The Louisiana Office of
Financial  Institutions  and the  Office of Thrift  Supervision  have  extensive
authority over the operations of  Louisiana-chartered  savings institutions.  As
part of this authority, Louisiana-chartered savings institutions are required to
file periodic  reports with the Louisiana  Office of Financial  Institutions and
the Office of Thrift Supervision and are subject to periodic examinations by the
Louisiana Office of Financial Institutions, the Office of Thrift Supervision and
the Federal Deposit  Insurance  Corporation  ("FDIC "). The Association  also is
subject to regulation by the FDIC and to requirements established by the Federal
Reserve Board. The investment and lending authority of savings  institutions are
prescribed by federal laws and regulations, and such institutions are prohibited
from engaging in any activities not permitted by such laws and regulations. Such
regulation  and  supervision  is  primarily   intended  for  the  protection  of
depositors and the Savings Association Insurance Fund ("SAIF").

      The Office of Thrift Supervision's  enforcement authority over all savings
institutions  and their holding  companies  includes,  among other  things,  the
ability to assess  civil money  penalties,  to issue cease and desist or removal
orders and to initiate injunctive actions. In general, these


                                      -23-
<PAGE>

enforcement  actions may be initiated for violations of laws and regulations and
unsafe or unsound  practices.  Other  actions or inactions may provide the basis
for enforcement action,  including misleading or untimely reports filed with the
Office of Thrift Supervision.

      Insurance of Accounts.  The deposits of the Association are insured to the
maximum extent permitted by the SAIF, which is administered by the FDIC, and are
backed by the full faith and credit of the U.S. Government. As insurer, the FDIC
is  authorized  to  conduct  examinations  of,  and  to  require  reporting  by,
FDIC-insured  institutions.  It also may prohibit any  FDIC-insured  institution
from engaging in any activity the FDIC determines by regulation or order to pose
a serious  threat  to the FDIC.  The FDIC  also has the  authority  to  initiate
enforcement  actions  against savings  institutions,  after giving the Office of
Thrift Supervision an opportunity to take such action.

      SAIF-insured  institutions  are  assigned to one of three  capital  groups
which  are  based  solely  on  the  level  of  an  institution's   capital-"well
capitalized,"  "adequately  capitalized," and "undercapitalized."  These capital
levels are  defined in the same  manner as under the  prompt  corrective  action
system discussed below. These three groups are then divided into three subgroups
which  reflect  varying  levels of  supervisory  concern,  from those  which are
considered  to be healthy to those  which are  considered  to be of  substantial
supervisory  concern.  Assessment rates for insured  institutions are determined
semi-annually  by the FDIC and  currently  range from zero basis  points for the
healthiest institutions to 27 basis points for the riskiest.

      In addition to the  assessment  for deposit  insurance,  institutions  are
required  to make  payments on bonds  issued in the late 1980s by the  Financing
Corporation, a federal agency established to recapitalize the predecessor to the
SAIF.  Since  January  1,  2000,  there  has been  equal  sharing  of  Financing
Corporation payments between members of both insurance funds.

      The FDIC may  terminate  the deposit  insurance of any insured  depository
institution,  including the  Association,  if it determines after a hearing that
the institution has engaged or is engaging in unsafe or unsound practices, is in
an unsafe or unsound  condition  to continue  operations,  or has  violated  any
applicable law, regulation,  order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance  temporarily  during the hearing
process for the permanent  termination of insurance,  if the  institution has no
tangible  capital.  If insurance of accounts is terminated,  the accounts at the
institution at the time of the termination,  less subsequent withdrawals,  shall
continue to be insured for a period of six months to two years, as determined by
the FDIC. Management is aware of no existing circumstances which would result in
termination of the Association's deposit insurance.

      Regulatory Capital  Requirements.  Federally insured savings  institutions
are required to maintain  minimum  levels of regulatory  capital.  The Office of
Thrift Supervision has established  capital standards  applicable to all savings
institutions.  These standards  generally must be as stringent as the comparable
capital requirements imposed on national banks. The Office of Thrift Supervision
also is authorized to impose capital  requirements  in excess of these standards
on individual institutions on a case-by-case basis.


                                      -24-
<PAGE>

      Current Office of Thrift  Supervision  capital  standards  require savings
institutions to satisfy three different capital requirements:

      o     "tangible" capital equal to at least 1.5% of adjusted total assets,

      o     "core" capital equal to at least 3.0% of adjusted total assets, and

      o     "total" capital (a combination of core and "supplementary"  capital)
            equal to at least 8.0% of "risk-weighted" assets.

      Core capital generally consists of common  stockholders' equity (including
retained  earnings).  Tangible  capital  generally  equals  core  capital  minus
intangible  assets,  with  only  a  limited  exception  for  purchased  mortgage
servicing rights. The Association had no intangible assets at December 31, 2004.
Both core and  tangible  capital  are  further  reduced by an amount  equal to a
savings  institution's  debt and equity  investments in subsidiaries  engaged in
activities not permissible to national banks (other than subsidiaries engaged in
activities  undertaken as agent for customers or in mortgage banking  activities
and  subsidiary  depository  institutions  or their  holding  companies).  These
adjustments do not affect the Association's regulatory capital.

      In determining  compliance  with the  risk-based  capital  requirement,  a
savings  institution  is allowed to include both core capital and  supplementary
capital in its total capital,  provided that the amount of supplementary capital
included does not exceed the savings  institution's core capital.  Supplementary
capital generally consists of general allowances for loan losses up to a maximum
of  1.25% of  risk-weighted  assets,  together  with  certain  other  items.  In
determining the required amount of risk-based capital,  total assets,  including
certain  off-balance  sheet items,  are multiplied by a risk weight based on the
risks  inherent in the type of assets.  The risk weights  range from 0% for cash
and securities issued by the U.S.  Government or  unconditionally  backed by the
full  faith and  credit of the U.S.  Government  to 100% for loans  (other  than
qualifying residential loans weighted at 80%) and repossessed assets.

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

      At December  31, 2004,  the  Association  exceeded  all of its  regulatory
capital requirements, with tangible, core and total risk-based capital ratios of
14.65%, 14.65% and 30.29%, respectively.

      Any  savings  institution  that fails any of the capital  requirements  is
subject to possible  enforcement  actions by the Office of Thrift Supervision or
the FDIC.  Such actions  could include a capital  directive,  a cease and desist
order,  civil  money  penalties,   the  establishment  of  restrictions  on  the
institution's  operations,  termination  of federal  deposit  insurance  and the
appointment  of a conservator  or receiver.  The Office of Thrift  Supervision's
capital regulation provides that such


                                      -25-
<PAGE>

actions, through enforcement proceedings or otherwise, could require one or more
of a variety of corrective actions.

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

<TABLE>
<CAPTION>
                                                      Total                        Tier 1                      Tier 1
      Capital Category                         Risk-Based Capital            Risk-Based Capital           Leverage Capital
---------------------------------              ------------------            ------------------           ----------------
<S>                                                <C>                           <C>                         <C>
Well capitalized                                    10% or more                   6% or more                  5% or more

Adequately capitalized                              8% or more                    4% or more                  4% or more

Undercapitalized                                   Less than 8%                  Less than 4%                Less than 4%

Significantly undercapitalized                     Less than 6%                  Less than 3%                Less than 3%
</TABLE>

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

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

      At  December  31,  2004,  the  Association  was deemed a well  capitalized
institution for purposes of the above  regulations and as such is not subject to
the above mentioned restrictions.

      Safety and Soundness Guidelines.  The Office of Thrift Supervision and the
other  federal  banking  agencies  have  established  guidelines  for safety and
soundness,   addressing  operational  and  managerial  standards,   as  well  as
compensation matters for insured financial institutions. Institutions failing to
meet  these  standards  are  required  to  submit   compliance  plans  to  their
appropriate federal  regulators.  The Office of Thrift Supervision and the other
agencies have also established  guidelines  regarding asset quality and earnings
standards  for insured  institutions.  The  Association  believes  that it is in
compliance with these guidelines and standards.


                                      -26-
<PAGE>

      Liquidity.  All savings institutions are required to maintain a sufficient
amount of liquid assets to ensure their safe and sound operation.

      Capital  Distributions.  Office of Thrift  Supervision  regulations govern
capital  distributions  by savings  institutions,  which include cash dividends,
stock  repurchases  and other  transactions  charged to the capital account of a
savings  institution to make capital  distributions.  A savings institution must
file an  application  for Office of Thrift  Supervision  approval of the capital
distribution  if either (1) the total capital  distributions  for the applicable
calendar  year exceed the sum of the  institution's  net income for that year to
date plus the institution's retained net income for the preceding two years, (2)
the  institution  would not be at least  adequately  capitalized  following  the
distribution,  (3)  the  distribution  would  violate  any  applicable  statute,
regulation,  agreement or Office of Thrift Supervision-imposed condition, or (4)
the  institution is not eligible for expedited  treatment of its filings.  If an
application  is not  required  to be  filed,  savings  institutions  which are a
subsidiary of a holding  company (as well as certain other  institutions)  still
must file a notice with the Office of Thrift Supervision at least 30 days before
the board of directors  declares a dividend or approves a capital  distribution.
The Association paid a dividend of $2.0 million to Minden Mutual Holding Company
in 2004 after receipt of non-objection from the Office of Thrift Supervision.

      Community Reinvestment Act and the Fair Lending Laws. Savings institutions
have a responsibility  under the Community  Reinvestment Act of 1977 ("CRA") and
related  regulations of the Office of Thrift Supervision to help meet the credit
needs of their communities, including low- and moderate-income neighborhoods. In
addition,  the Equal Credit  Opportunity Act and the Fair Housing Act (together,
the "Fair Lending Laws") prohibit lenders from  discriminating  in their lending
practices  on the  basis of  characteristics  specified  in those  statutes.  An
institution's  failure to comply with the provisions of CRA could, at a minimum,
result in regulatory restrictions on its activities.  Failure to comply with the
Fair Lending Laws could  result in  enforcement  actions by the Office of Thrift
Supervision,  as well as other federal regulatory agencies and the Department of
Justice.

      Qualified  Thrift Lender Test.  All savings  institutions  are required to
meet a qualified  thrift lender,  or QTL, test to avoid certain  restrictions on
their operations.  A savings  institution can comply with the QTL test by either
qualifying  as a  domestic  building  and loan  association  as  defined  in the
Internal  Revenue  Code or meeting the second prong of the QTL test set forth in
the HOLA, as described  below. A savings  institution that does not meet the QTL
test  must  either  convert  to a bank  charter  or  comply  with the  following
restrictions on its operations:

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

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


                                      -27-
<PAGE>

      o     the  institution  shall not be eligible  to obtain any new  advances
            from its  FHLB,  other  than  special  liquidity  advances  with the
            approval of the Office of Thrift Supervision; and

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

Upon the expiration of three years from the date the savings  institution ceases
to be a QTL,  it must  cease any  activity  and not retain  any  investment  not
permissible  for a national  bank and  immediately  repay any  outstanding  FHLB
advances (subject to safety and soundness considerations).

      Currently,  the prong of the QTL test  that is not  based on the  Internal
Revenue  Code  requires  that 65% of an  institution's  "portfolio  assets"  (as
defined)  consist of certain  housing and  consumer-related  assets on a monthly
average basis in nine out of every 12 months.  Assets that qualify without limit
for inclusion as part of the 65% requirement include:

      o     loans  made to  purchase,  refinance,  construct,  improve or repair
            domestic residential housing;

      o     home equity loans;

      o     most mortgage-backed securities;

      o     stock issued by one of the 12 FHLBs; and

      o     direct or indirect obligations of the FDIC.

In addition,  the following assets, among others, may be included in meeting the
test subject to an overall limit of 20% of the savings  institution's  portfolio
assets: 50% of residential  mortgage loans originated and sold within 90 days of
origination;  100% of consumer loans (limited to 10% of total portfolio assets);
and stock issued by Freddie Mac or Fannie Mae. Portfolio assets consist of total
assets minus the sum of (1) goodwill and other intangible  assets,  (2) property
used by the savings  institution to conduct its business,  and (3) liquid assets
up to 20% of the institution's total assets. At December 31, 2004, the qualified
thrift investments of the Association were approximately 74.75% of its portfolio
assets.

      Federal Home Loan Bank System.  The Association is a member of the FHLB of
Dallas,  which is one of 12 regional FHLBs that  administers  the home financing
credit  function  of  savings  institutions.  Each FHLB  serves as a reserve  or
central bank for its members within its assigned region.  It is funded primarily
from  proceeds  derived from the sale of  consolidated  obligations  of the FHLB
System.  It makes loans to members (i.e.,  advances) in accordance with policies
and  procedures  established  by the Board of Directors of the FHLB. At December
31, 2004, the Association had $17.2 million of FHLB advances.


                                      -28-
<PAGE>

      As a member, the Association is required to purchase and maintain stock in
the FHLB of  Dallas in an amount  equal to at least 1% of its  aggregate  unpaid
residential mortgage loans or similar obligations at the beginning of each year.
At December 31, 2004, the Association had $1.02 million in FHLB stock, which was
in compliance with this requirement.

      The FHLBs are  required to provide  funds for the  resolution  of troubled
savings  institutions  and to contribute to affordable  housing programs through
direct loans or interest subsidies on advances targeted for community investment
and  low-  and  moderate-income  housing  projects.   These  contributions  have
adversely  affected the level of FHLB dividends paid in the past and could do so
in the  future.  These  contributions  also could have an adverse  effect on the
value of FHLB stock in the future.

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

      Louisiana  Regulation.   As  a   Louisiana-chartered   building  and  loan
association,  the  Association  also is subject to regulation and supervision by
the Louisiana Office of Financial  Institutions.  The Association is required to
file periodic reports with and is subject to periodic examinations at least once
every four years by the Louisiana Office of Financial Institutions. In addition,
the  Association  is required by Louisiana  law and  regulations  to comply with
certain reserve and capital requirements.  At December 31, 2004, the Association
was in compliance with all applicable reserve and capital requirements.

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

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


                                      -29-
<PAGE>

      The  investment  authority  of   Louisiana-chartered   building  and  loan
associations  is  broader  in many  respects  than that of  federally  chartered
savings associations. However, state-chartered savings associations, such as the
Association,  are generally  prohibited  from  acquiring or retaining any equity
investment, other than certain investments in service corporations, of a type or
in  an  amount  that  is  not  permitted  for  a  federally   chartered  savings
association.  This  prohibition  applies to equity  investments  in real  estate
(except  those  held  through  a  service   corporation  or  subsidiary  of  the
Association),  investments  in equity  securities  and any other  investment  or
transaction that is in substance an equity  investment,  even if the transaction
is nominally a loan or other permissible transaction.  At December 31, 2004, the
Association was in compliance with such provisions.

      Furthermore,  state-chartered  savings  associations  may  not  engage  as
principal in any activity not permitted for federal associations unless the FDIC
has determined that such activity would pose no significant risk to the affected
deposit  insurance  fund and the  association  is in  compliance  with the fully
phased-in capital standards prescribed under federal  regulations.  When certain
activities are permissible for a federal association,  the state association may
engage in the activity in a higher  amount if the FDIC has not  determined  that
such  activity  would pose a  significant  risk of loss to the affected  deposit
insurance  fund  and  the  association   meets  the  fully   phased-in   capital
requirements.  This increased investment authority does not apply to investments
in  nonresidential  real estate loans. At December 31, 2004, the Association had
no investments which were affected by the foregoing limitations.

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

Minden Mutual Holding Company

      The MHC is a federal mutual holding  company within the meaning of Section
10(o) of the HOLA. As such, the MHC is registered  with and subject to Office of
Thrift  Supervision  examination  and  supervision as well as certain  reporting
requirements.  In addition,  the Office of Thrift  Supervision  has  enforcement
authority  over the MHC and its  non-savings  bank  subsidiaries,  if any. Among
other  things,  this  authority  permits  the  Office of Thrift  Supervision  to
restrict or prohibit  activities that are determined to be a serious risk to the
financial safety,  soundness or stability of a subsidiary  savings bank. The MHC
is subject to the same  activities  limitations to which the Company is subject.
See " - Minden Bancorp, Inc."


                                      -30-
<PAGE>

                                    TAXATION

Federal Taxation

      General.  The Company and the Association are subject to the corporate tax
provisions  of the Internal  Revenue  Code,  and the  Association  is subject to
certain additional provisions which apply to thrift and other types of financial
institutions.  The following  discussion of federal taxation is intended only to
summarize  certain pertinent federal income tax matters relevant to the taxation
of the Company and the Association and is not a comprehensive  discussion of the
tax rules applicable to the Company and the Association.

      Fiscal Year. The Association  currently reports its income and expenses on
the accrual  method of  accounting  and uses a tax year  ending  December 31 for
filing its federal income tax returns.

      Bad Debt Reserves.  In August 1997,  legislation was enacted that repealed
the reserve  method of accounting  (including  the  percentage of taxable income
method) previously used by many savings institutions to calculate their bad debt
reserve for federal income tax purposes.  Savings institutions with $500 million
or less in assets may,  however,  continue  to use the  experience  method.  The
Association  must recapture that portion of its reserve which exceeds the amount
that could have been taken under the experience  method for post-1987 tax years.
At  December  31,  2004,  the  Association  did not have any post-  1987  excess
reserves.  The legislation also requires savings institutions to account for bad
debts for federal income tax purposes on the same basis as commercial  banks for
tax years beginning  after December 31, 1995.  This change in accounting  method
and  recapture  of excess bad debt  reserves is  adequately  provided for in the
Association's deferred tax liability.

      At December 31, 2004, the federal  income tax reserves of the  Association
included $1.3 million for which no federal income tax has been provided. Because
of these federal income tax reserves,  the retained  earnings of the Association
are substantially restricted.

      Distributions.  If the Association  were to distribute cash or property to
its stockholders, and the distribution was treated as being from its accumulated
bad  debt  reserves,  the  distribution  would  cause  the  Association  to have
additional  taxable income. A distribution is from accumulated bad debt reserves
if (a) the reserves  exceed the amount that would have been  accumulated  on the
basis of actual loss  experience,  and (b) the  distribution is a "non-qualified
distribution."  A  distribution   with  respect  to  stock  is  a  non-qualified
distribution to the extent that, for federal income tax purposes,

      o     it is in redemption of shares,

      o     it is pursuant to a liquidation of the institution, or

      o     in the case of a current distribution,  together with all other such
            distributions  during the taxable year, it exceeds the institution's
            current and post-1951 accumulated earnings and profits.


                                      -31-
<PAGE>

The amount of additional taxable income created by a non-qualified  distribution
is an amount  that when  reduced by the tax  attributable  to it is equal to the
amount of the distribution.

      Minimum Tax. The Internal Revenue Code imposes an alternative  minimum tax
at a rate of 20%. The  alternative  minimum tax  generally  applies to a base of
regular  taxable  income plus  certain  tax  preferences  ("alternative  minimum
taxable  income" or "AMTI")  and is payable to the extent such AMTI is in excess
of an exemption amount. Tax preference items include the following:

      o     depreciation, and

      o     75% of the excess (if any) of

            (1)   adjusted  current  earnings as defined in the Internal Revenue
                  Code, over

            (2)   AMTI determined without regard to this preference and prior to
                  reduction by net operating losses.

      Capital Gains and Corporate  Dividends-Received  Deduction.  Corporate net
capital gains are taxed at a maximum rate of 34%.  Corporations which own 20% or
more of the stock of a corporation distributing a dividend may deduct 80% of the
dividends  received.  Corporations  which  own less  than 20% of the  stock of a
corporation  distributing  a dividend may deduct 70% of the dividends  received.
However,  a  corporation  that  receives  dividends  from a  member  of the same
affiliated group of corporations may deduct 100% of the dividends received.

      Other Matters.  Federal  legislation is introduced  from time to time that
would  limit the  ability of  individuals  to deduct  interest  paid on mortgage
loans.  Individuals  are currently not permitted to deduct  interest on consumer
loans.  Significant  increases  in tax  rates  or  further  restrictions  on the
deductibility of mortgage interest could adversely affect the Association.

      The Association's federal income tax returns for the tax years ended 2004,
2003 and 2002 are open  under the  statute  of  limitations  and are  subject to
review by the IRS. The Association has not been audited by the Internal  Revenue
Service during the last five years.

State Taxation

      The Company is subject to the  Louisiana  Corporation  Income Tax based on
the Company's  Louisiana taxable income.  The Corporation  Income Tax applies at
graduated rates from 4% upon the first $25,000 of Louisiana taxable income to 8%
on all  Louisiana  taxable  income in excess of  $200,000.  For these  purposes,
"Louisiana  taxable  income"  means net  income  which is earned by the  Company
within or derived from sources within the State of Louisiana,  after adjustments
permitted  under  Louisiana law,  including a federal  income tax deduction.  In
addition,  the  Association  is  subject  to the  Louisiana  Shares Tax which is
imposed on the assessed value of a company's stock. The formula for deriving the
assessed value is to calculate 15% of the sum of:


                                      -32-
<PAGE>

      (a)   20% of the company's capitalized earnings, plus

      (b)   80% of the company's taxable stockholders' equity, minus

      (c)   50% of the company's real and personal property assessment.

Various  items may also be subtracted  in  calculating  a company's  capitalized
earnings.  The Company paid $168,000 in Louisiana  Shares Tax for the year ended
December 31, 2004.


                                      -33-
<PAGE>

Item 2. Description of Property.
--------------------------------

Properties

      At December 31, 2004,  the  Association  conducted  its business  from its
headquarters office located in Minden, Louisiana.

      The  following  table  sets  forth  certain  information  relating  to the
Association's offices at December 31, 2004.

<TABLE>
<CAPTION>
                                                      Lease              Net Book Value of
                                   Owned or         Expiration              Property at                  Deposits at
   Location                         Leased             Date              December 31, 2004            December 31, 2004
   ---------------------          ----------       ------------        ---------------------        ---------------------
                                                                                         (In Thousands)
<S>                                 <C>                 <C>                   <C>                        <C>
   415 Main Street (1)              Owned               NA                    $2,096                     $70,665
   Minden, Louisiana
</TABLE>

      (1) Includes the adjacent parking lot.

      During 2004, the  Association  acquired  property on Homer Road in Minden,
Louisiana for further expansion purposes at a cost of approximately $750,000.

Item 3. Legal Proceedings.

      The  Company and the  Association  are not  involved in any pending  legal
proceedings other than nonmaterial  legal proceedings  occurring in the ordinary
course of business which, in the opinion of management, will not have a material
adverse  affect  on  the  consolidated   financial  conditions  and  results  of
operations of the Company.

Item 4. Submission of Matters to a Vote of Security Holders.

      Not applicable

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters.

      The  information  required herein is incorporated by reference from page 3
of the Company's 2004 Annual Report to  Stockholders  filed as Exhibit 13 hereto
("2004 Annual Report").  Information for equity- based compensation arrangements
is incorporated by reference from Item 10 hereof.


                                      -34-
<PAGE>

            The  following  table  contains   information  about  the  Company's
purchases of its equity securities pursuant to its stock repurchase plans during
the quarter ended December 31, 2004.

<TABLE>
<CAPTION>
                                                                             Total Number of        Maximum Number of
                                                                            Shares Purchased         Remaining Shares
                                          Total Number                        as Part of a             that May Be
          Period                           of Shares       Average Price        Publicly           Purchased Under the
                                           Purchased      Paid per Share     Announced Plan                Plan
----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>               <C>                <C>                     <C>
October 1 - October 31, 2004                    --                --                 --                  33,439

November 1 - November 30, 2004                  --                --                 --                  33,439

December 1 - December 31, 2004              18,000            $21.05             18,000                  15,439
                                            ------            ------             ------

Total                                       18,000            $21.05             18,000                  15,439
                                            ======            ======             ======
</TABLE>

      On September  16, 2004 the Company  announced  that its Board of Directors
authorized  the  second  stock  repurchase  plan for up to 31,000  shares of the
Company's outstanding common shares. At that time, it had 2,439 shares remaining
to be repurchased  on its first  repurchase  program  announced on September 23,
2003.  Since the  announcement the shares remaining in the first repurchase plan
were  repurchased  in  December  2004.  Since  the  announcement  of the  second
repurchase  plan through  December 31, 2004,  the Company has  purchased  15,561
shares in  connection  with such plan at an  average  price per share of $21.05.
There is no expiration period for the second stock repurchase plan.

Item 6. Management's Discussion and Analysis or Plan of Operation.
------------------------------------------------------------------

      The information  required herein is incorporated by reference from pages 6
to 17 of the 2004 Annual Report.

Item 7. Financial Statements.
-----------------------------

      The information required herein is incorporated by reference from pages 18
to 40 of the 2004 Annual Report.


                                      -35-
<PAGE>

Item 8. Changes in and Disagreements With Accountants on Accounting and
-----------------------------------------------------------------------
Financial Disclosure.
---------------------

      Not applicable

Item 8 A. Controls and Procedures.
----------------------------------

      Our management  evaluated,  with the  participation of our Chief Executive
Officer  and  Chief  Financial  Officer,  the  effectiveness  of our  disclosure
controls and  procedures  (as defined in Rule  13a-15(e) or 15d-15(e)  under the
Securities  Exchange Act of 1934) as of the end of December  31, 2004.  Based on
such evaluation,  our Chief Executive  Officer and Chief Financial  Officer have
concluded  that our  disclosure  controls and  procedures are designed to ensure
that  information  required to be disclosed by us in the reports that we file or
submit  under  the  Securities  Exchange  Act of  1934 is  recorded,  processed,
summarized and reported within the time periods specified in the SEC's rules and
regulations and are operating in an effective manner.

      No change in the Company's  internal control over financial  reporting (as
defined in Rules  13a-15(f) or 15d-15(f)  under the  Securities  Exchange Act of
1934, as amended)  occurred  during the quarter ended December 31, 2004 that has
materially affected or is affected or is reasonably likely to materially affect,
the Company's internal control over financial reporting.

Item 8 B. Other Information.
----------------------------

      There is no  information  to be  reported on Form 8-K that has not already
been reported pursuant thereto.

                                    PART III

Item 9. Directors and Executive Officers of the Registrant; Promoters and
-------------------------------------------------------------------------
Control Persons; Compliance with Section 16(a) of the Exchange Act.
-------------------------------------------------------------------

      The information  required herein is incorporated by reference to "Election
of Directors," "Nominees for Directors," "Directors whose Terms are Continuing,"
"Executive  Officers  Who Are Not  Directors,"  and  "Section 16 (a)  Beneficial
Ownership  Compliance" in the definitive  proxy statement of the Company for the
Annual  Meeting of  Stockholders  which as of the date  hereof is expected to be
held on May 10,  2005,  which will be filed with the SEC prior to April 29, 2005
("Proxy Statement").

      The Company has adopted a Conflict of Interest  Policy that applies to its
principal  executive officer and principal  financial officer,  as well as other
officers,  employees and directors of the Company and the Association. A copy of
the Conflict of Interest Policy is available upon request. The request should be
submitted in writing to Mr. Michael P. Burton,  Secretary,  Minden Bancorp Inc.,
415 Main Street, Minden, LA 71058.


                                      -36-
<PAGE>

Item 10. Executive Compensation.
--------------------------------

      The   information   required   herein  is  incorporated  by  reference  to
"Management  Compensation"  in the  Proxy  Statement.  The  report  of the Audit
Committee  included  in the  Proxy  Statement  should  not be  deemed  filed  or
incorporated  by  reference  into this filing or any other filing by the Company
under the  Securities  Exchange Act of 1934 or Securities  Act of 1933 except to
the extent the Company  specifically  incorporates said report herein or therein
by reference thereto.

Item 11. Security Ownership of Certain Beneficial Owners and Management and
---------------------------------------------------------------------------
Related Stockholder Matters.
----------------------------

      The   information   required   herein  is  incorporated  by  reference  to
"Beneficial   Ownership  of  Common  Stock  by  Certain  Beneficial  Owners  and
Management" in the Proxy Statement.

      The  following  table  provides  information  as of December 31, 2004 with
respect  to shares  of  Common  Stock  that may be  issued  under the  Company's
existing equity  compensation plans which include the 2003 Stock Option Plan and
the 2003 Recognition and Retention Plan and Trust Agreement  (collectively,  the
"Plans"). Each of the Plans has been approved by the Company's stockholders.

<TABLE>
<CAPTION>
                                                                                      Number of securities
                              Number of securities                                  remaining available for
                               to be issued upon            Weighted-average         future issuance under
                                  exercise of              exercise price of          equity compensation
                              outstanding options,            outstanding              plans (excluding
                                    warrants                    options,            securities reflected in
                                   and rights             warrants and rights             column (a))
     Plan Category                     (a)                         (b)                         (c)
------------------------     ---------------------       ----------------------     ------------------------
<S>                                 <C>                           <C>                            <C>
Equity compensation
plans approved by
security holders                    68,239(1)                    $15.375(1)                      23,411(2)
Equity compensation
plans not approved by
security holders(4)                      0                            NA                              0
                                    ------                                                       ------

      Total                         68,239                       $15.375                         23,411
                                    ======                       =======                         ======
</TABLE>

----------
(1) Included in such number are 18,354  shares  which are subject to  restricted
stock grants.  The weighted  average  exercise price excludes  restricted  stock
grants.

(2) Included in such number are 7,832 shares  available for grant under the 2003
Recognition and Retention Plan and Trust Agreement.

Item 12. Certain Relationships and Related Transactions.
--------------------------------------------------------

      The   information   required   herein  is  incorporated  by  reference  to
"Management  Compensation-  Transactions  with Certain  Related  Persons" in the
Proxy Statement.


                                      -37-
<PAGE>

Item 13. Exhibits.
------------------

      (a) (1)The  following  documents  are filed as part of this report and are
incorporated herein by reference from the Company's 2004 Annual Report:

            Report of Independent Certified Public Accountants.

            Consolidated  Statements  of Financial  Condition as of December 31,
            2004 and 2003.

            Consolidated Statements of Earnings for the Years Ended December 31,
            2004 and 2003.

            Consolidated  Statements of Shareholders'  Equity for the Year Ended
            December 31, 2004 and 2003.

            Consolidated  Statements  of Cash Flows for the Year Ended  December
            31, 2004 and 2003.

            Notes to Consolidated Financial Statements.

            (2)The following  exhibits are filed as part of the Form 10-KSB, and
            this list includes the Exhibit Index:

      No.           Exhibits
    ------      ----------------------------------------------------------------
     3.1        Federal Stock Charter of Minden Bancorp, Inc.*

     3.2        Bylaws of Minden Bancorp, Inc.*

     4.0        Form of Stock Certificate of Minden Bancorp, Inc.*

     10.1       2003 Stock Option Plan** (1)

     10.2       2003 Recognition and Retention Plan and Trust Agreement**(1)

     10.3       Supplemental Executive Retirement Plan (1)

     10.4       Employment Agreement with A. David Evans (1)

     13.0       Annual Report to Stockholders

     21.0       List of Subsidiaries

                (See "Item I. Business - No Subsidiaries" in this Form 10-KSB)

     23.0       Consent of Heard, McElroy, and Vestal LLP

     31.1       Certification pursuant to Rule 13a-14 of the Securities Exchange
                Act of 1934, as amended, as adopted pursuant to Section 302 of
                the Sarbanes- Oxley Act of 2002.

     31.2       Certification pursuant to Rule 13a-14 of the Securities Exchange
                Act of 1934, as amended, as adopted pursuant to Section 302 of
                the Sarbanes- Oxley Act of 2002.

     32.1       Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     32.2       Certification pursuant to 18 U.S.C. Section 1350, as adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

----------

*     Incorporated herein by reference from the Company's Registration Statement
      on Form SB-2 filed with the SEC on March 21, 2002 (Registration No.
      333-84706).


                                      -38-
<PAGE>

**    Incorporated by reference from the Company's definitive proxy statement
      filed by the Company with the SEC on April 22, 2003.

(1)   Consists of management contract compensatory plan.

(b)   Reports filed on Form 8-K.

Item 14. Principal Accountant Fees and Services
-----------------------------------------------

      The information required herein is incorporated by reference to
"Ratification of Appointment of Auditors" in the Proxy Statement.


                                      -39-
<PAGE>

                                   SIGNATURES

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

                                     MINDEN BANCORP, INC.


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

                                     Date: March 30, 2005

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

                 Name                          Title                    Date
      --------------------------      -----------------------     --------------

      /s/ A. David Evans              Director, President and     March 30, 2005
      --------------------------      Chief Executive Officer
      A. David Evans

      /s/ Russell A. Adams            Director                    March 30, 2005
      --------------------------
      Russell A. Adams

      /s/ John B. Benton, Jr.         Director                    March 30, 2005
      --------------------------
      John B. Benton, Jr.

      /s/ John P. Collins             Director                    March 30, 2005
      --------------------------
      John P. Collins

      /s/ Michael S. Harper           Director                    March 30, 2005
      --------------------------
      Michael S. Harper

      /s/ A. Loye Jones               Director                    March 30, 2005
      --------------------------
      A. Loye Jones

      /s/ F. Dare Lott, Jr.           Director                    March 30, 2005
      --------------------------
      F. Dare Lott, Jr.


                                      -40-
<PAGE>

                 Name                          Title                    Date
      --------------------------      -----------------------     --------------

      /s/ Michael W. Wise             Director                    March 30, 2005
      --------------------------
       Michael W. Wise

      /s/ R. E. Woodard, III          Director                    March 30, 2005
      --------------------------
      R. E. Woodard, III

      /s/ Becky T. Harrell            Chief Financial Officer     March 30, 2005
      --------------------------      and Chief Accounting
      Becky T. Harrell                Officer


                                      -41-
<PAGE>

                              MINDEN BANCORP, INC.

                               2004 ANNUAL REPORT

                                 TO STOCKHOLDERS

<PAGE>

                                TABLE OF CONTENTS

================================================================================

                                                                            Page

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 Certified Public Accountants............................18

Consolidated Statements of Balance Sheets.....................................19

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

Consolidated Statements of Equity.............................................23

Consolidated Statements of Cash Flows.........................................24

Notes to Consolidated Financial Statements....................................27

Directors and Executive Officers..............................................41

Banking Locations and Stockholder Information.................................42


                                        i
<PAGE>

                       PRESIDENT'S LETTER TO STOCKHOLDERS
================================================================================

      On behalf of your board of directors,  senior  management,  and all of the
Minden Bancorp,  Inc. employees,  it is our pleasure to deliver our third annual
report that details the performance of your company in 2004.

      Founded  in 1910,  Minden has a proud  tradition  of  providing  financial
services to the residents of the city of Minden and  neighboring  communities in
northwestern   Louisiana.   The  completion  of  our  mutual   holding   company
reorganization  in 2002 and the  concurrent  stock  offering  which  raised  net
proceeds of $5.4 million not only enhanced our ability to provide a wide variety
of financial  services to our customers but also positioned us for the expansion
and  diversification  of our business.  In  furtherance  of that  expansion,  we
purchased in December 2004,  property in Minden on which to construct our second
full-service  banking facility.  The site of our new bank is a 12.85 acre parcel
of  property  located on Homer Road in Minden,  the site of the first  Wal-Mart.
This  state-of-the-art  facility will offer easy and  convenient  banking to our
customers   and  will  include   drive-though   teller  lanes  and  ATM  access.
Groundbreaking  on  construction  is  expected  to  occur  in June  2005  and we
anticipate,  subject to receipt of all regulatory approvals,  to open the branch
in early 2006.

      The year  2004  also saw the  completion  of our  first  stock  repurchase
program  covering 39,278 shares and the  announcement in September of our second
repurchase  program  covering 31,000 shares or  approximately  5.0% of our stock
held by minority  stockholders.  By the end of December 2004, we had repurchased
approximately  15,500 shares in our second repurchase program at an average cost
of $21.05  per  share.  We will  continue  to  evaluate  strategies  to  enhance
stockholder value.

      Our  financial  performance  continued  to be strong in 2004.  Net  income
increased to $1.4 million for fiscal 2004 as compared to $1.2 million for fiscal
2003.  The  16.9%  increase  in net  income  was in  large  part  driven  by the
substantial improvement in net interest income while we were able to contain the
growth in our operating expenses. The combination of the continued growth of our
interest-earning  assets and low  interest  rates  resulted  in record  interest
income. Our assets grew to $107.2 million, a $6.4 million or 6.4% increase,  due
primarily to a $4.5 million increase in our net loan portfolio.

      We believe  our future is bright and is filled  with great  potential  and
opportunity.  We are  excited  about  the  prospects  for 2005 and  beyond.  Our
challenge  for the years  ahead is to build upon the  momentum  we have  already
created  and further  position  ourselves  to  strategically  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

<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  common shares of 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  located in Minden,
Louisiana.   The  Association's  business  consists  principally  of  attracting
deposits  from the  general  public and using  those  funds to  originate  loans
secured by 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, 2004, the Company
had total assets of $107.2  million,  liabilities  of $88.8  million,  including
deposits of $70.7 million, and total shareholders' equity of $18.4 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 of 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 Savings
Association 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, 2003 to December 31, 2004.  Such prices do
not include  retail  financial  markups,  markdowns or  commissions  and may not
represent actual transactions.

                     2004                                High        Low
      ---------------------------------                 ------      ------

      Quarter ended:

          March 31, 2004                                $23.00      $18.00

          June 30, 2004                                 $23.25      $19.50

          September 30, 2004                            $20.00      $19.00

          December 31, 2004                             $21.10      $19.35


                     2003                                High        Low
      ---------------------------------                -------      ------

      Quarter ended:

          March 31, 2003                                $16.00      $16.00

          June 30, 2003                                 $16.30      $16.30

          September 30, 2003                            $17.40      $17.40

          December 31, 2003                             $18.00      $18.00
      --------------------------------------------------------------------

      As of February  28,  2005,  Minden  Bancorp had  1,396,611  common  shares
outstanding  held of record by  approximately  234  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 $0.05 per share as of record date January 27, 2004, and $0.07 per
share as of record dates April 30, 2004, July 26, 2004, and October 26, 2004 for
a total of $0.26 per share  for the year  ended  December  31,  2004.  Dividends
totaled $0.15 per share for the year ended December 31, 2003.


                                       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,
                                                          --------------------
                                                            2004       2003
                                                          --------    --------
                                                         (Dollars in Thousands)
      Selected Balance Sheet and Other Data:

      Total assets ...................................     107,183     100,744
      Cash and cash equivalents(1) ...................       2,939       2,332
      Investment securities available for sale .......      34,174      34,791
      Investment securities held to maturity .........       1,010          --
      Mortgage-backed securities held to
         maturity ....................................       1,087       1,328
      Loans receivable, net ..........................      62,600      58,097
      Total deposits .................................      70,665      68,121
      FHLB Advances ..................................      17,200      13,500
      Total stockholders' equity .....................      18,381      18,171
      Number of full service offices .................           1           1

                                                         Year Ended December 31,
                                                         -----------------------
                                                            2004        2003
                                                          --------    --------
                                                             (In Thousands)
      Selected Operating Data:

      Total interest income ..........................    $  5,610    $  5,035
      Total interest expense .........................       1,583       1,551
                                                          --------    --------
      Net interest income ............................       4,027       3,484
      Provision for loan losses ......................          --          --
                                                          --------    --------
      Net interest income after
         provision for loan losses ...................       4,027       3,484
      Total other operating income ...................         321         388
      Total other operating expense ..................       2,281       2,107
      Income before income taxes .....................       2,067       1,765
      Income tax expense .............................         693         590
                                                          --------    --------
      Net income .....................................    $  1,374    $  1,175
                                                          --------    ========


                                                   (Footnotes on following page)


                                       4
<PAGE>

<TABLE>
<CAPTION>
                                                                                  At or for the Year Ended
                                                                                        December 31,
                                                                                  ------------------------
                                                                                      2004          2003
                                                                                     ------        ------
<S>                                                                                  <C>           <C>
      Selected Operating Ratios(2):

      Performance Ratios:
      Return on average assets ...............................................         1.30%         1.31%
      Return on average equity ...............................................         7.51          6.65
      Equity to assets at end of period ......................................        17.15         18.04
      Interest rate spread(3) ................................................         3.79          3.76
      Net interest margin(3) .................................................         4.03          4.12
      Average interest-earning assets to
         average interest-bearing liabilities ................................       115.26        119.69
      Net interest income after provision for loan losses to total
         other expenses ......................................................       176.55        165.35
      Total other expenses to average total assets ...........................         2.16          2.36
      Asset Quality Ratios:
      Non-performing loans to total
         loans at end of period(4) ...........................................         1.21           .57
      Non-performing assets to
         total assets at end of period(4) ....................................          .73           .35
      Allowance for loan losses to total
         loans at end of period ..............................................         1.38          1.50
      Allowance for loan losses to total non-performing loans at
         end of period(4) ....................................................       114.19        261.11
      Capital Ratios:(5)
      Tangible capital ratio .................................................        14.65%        17.47%
      Core capital ratio .....................................................        14.65         17.47
      Total capital ratio ....................................................        30.29         37.43
</TABLE>

----------
(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.

(5)   Percentages relate to Minden Building and Loan Association only.


                                       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.  Net  interest  income is
dependent  upon the level of  interest  rates and the extent to which such rates
are changing.  The Company's  profitability also depends, to a lesser extent, on
noninterest income, provision for loan losses,  noninterest expenses and federal
income  taxes.  The  Company  had net  income of $1.4  million  in 2004 and $1.2
million in 2003.

      The  Company's  primary  asset is Minden  Building  and Loan  Association.
Historically,  Minden  Building and Loan'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.  Minden  Building  and  Loan's  loans are  primarily  funded by
certificates  of  deposit,  which  typically  have a higher  interest  rate than
passbook accounts. The combination of these factors has resulted in low interest
rate spreads and returns on equity. Although in recent years Minden Building and
Loan has significantly  increased the amount of commercial real estate, consumer
and commercial  business loans  originated,  Minden  Building and Loan 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

Minden  Building and Loan's ability to maintain net interest income depends upon
its ability to earn a higher  yield on assets than the rates it pays on deposits
and  borrowings.  Minden  Building and Loan's  interest-earning  assets  consist
primarily  of  long-term  residential  mortgage  loans which have fixed rates of
interest.  Consequently,  Minden  Building  and  Loan'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. In addition,  Minden Building and Loan 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 Minden  Building and
Loan's net worth. Increases in the value of assets will increase the NPV whereas
decreases in value of assets will decrease the NPV. Conversely, increases in the
value of  liabilities  will  decrease  NPV  whereas  decreases  in the  value of
liabilities  will  increase  the  NPV.  The  changes  in  value  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,  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
Minden  Building and Loan's  historical  experience.  The  following  sets forth
Minden Building and Loan's NPV as of December 31, 2004.


                                       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
------------------           -------------      --------------     -----------       -----------
                                              (Dollars in Thousands)
<S>                              <C>                 <C>             <C>                <C>
        300                      17,234              16.18%          $(4,112)           (19)%
        200                      19,251               17.64           (2,186)           (10)
        100                      20,773               18.74             (664)            (3)
         --                      21,437               19.19               --             --
       (100)                     21,652               19.30              215              1
</TABLE>

      As of December 31, 2004, Minden Building and Loan's NPV was $21.4 million,
or 19.19% of the market  value of assets.  Following a 200 basis  point  assumed
increase in interest  rates,  Minden  Building  and Loan's  "post shock" NPV was
estimated to be $19.3 million, or 17.6% of the market value of assets reflecting
a decrease of 10% 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 Minden  Building and
Loan'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
Minden Building and Loan'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 Minden  Building
and Loan'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.  Minden Building and Loan'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,  Minden  Building  and  Loan  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, Minden Building and Loan 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


                                       8
<PAGE>

construction loans,  invested in securities with short terms or adjustable rates
and increased the amount of deposits in transaction accounts.

      For the year ending December 31, 2004, Minden Building and Loan originated
$4.8 million in  commercial  real estate loans  compared to $4.7 million for the
year ending December 31, 2003.  Originations of consumer loans increased to $5.9
million in fiscal year 2004 from $4.1 million in fiscal year 2003.  Originations
of  commercial  business  loans  increased to $12.6  million for the year ending
December  31, 2004  compared to $9.5  million for the year ending  December  31,
2003.  Originations of construction loans increased to $4.4 million for the year
ending  December  31, 2004 from $2.9  million for the year ending  December  31,
2003.  Minden Building and Loan'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.

      Minden Building and Loan's adjustable-rate securities at December 31, 2004
consisted  of $24.3  million  of  mortgage-backed  securities  and $8.6  million
invested  in a mutual  fund  that  invests  in  adjustable-rate  mortgage-backed
securities  compared to $27.8  million of  mortgage-backed  securities  and $6.3
million invested in the mutual fund at December 31, 2003.

      Deposits in transaction  accounts were $25.0  million,  or 35.42% of total
deposits at December 31, 2004, compared to $21.2 million, or 31.19%, at December
31, 2003. Minden Building and Loan'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.

Changes in Financial Condition

      Assets. The Company's total assets increased by $6.4 million, or 6.39%, to
$107.2  million at December  31, 2004 from $100.7  million at December 31, 2003.
The increase was primarily due to a $4.5 million,  or 7.8%,  increase in the net
loan portfolio due primarily to a $1.5 million,  or 4.1% increase in one-to-four
family residential loans,  $502,000, or 5.6%, increase in commercial real estate
loans and a $905,000,  or 10.6%,  increase in commercial  business loans,  and a
$1.8 million  increase or 47.5% in consumer  loans.  In addition,  the Company's
securities available for sale portfolio decreased by $617,000, or 1.8%, to $34.2
million at December 31, 2004.

      Residential  loans accounted for 59.2% of Minden Building and Loan's total
loan  portfolio  at December 31, 2004.  Minden  Building and Loan's  one-to-four
family  residential  loans  increased  to $37.7  million at  December  31,  2004
primarily as  management  continued to implement  the business  plan calling for
increased loan portfolio diversity. Although single family residential loans are
Minden Building and Loan's primary lending  product,  originations of commercial
business, consumer and construction loans increased significantly in 2004 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
14.9% of Minden  Building and Loan's  total loan  portfolio at December 31, 2004
compared to 15.0% at December 31, 2003.  Commercial  business loans


                                       9
<PAGE>

increased  to 14.8% of Minden  Building  and  Loan's  total  loan  portfolio  at
December 31, 2004 from 14.3% at December 31, 2003.  Consumer loans  increased to
8.8% of its total loan  portfolio  at  December  31,  2004  compared  to 6.3% at
December 31, 2003. The net loan portfolio  amounted to $62.6 million,  or 58.4%,
of total assets at December 31, 2004,  compared to $58.1 million,  or 57.7%,  of
total assets at December 31, 2003.  Minden  Building and Loan expects  continued
growth in its loan portfolio in 2005.

      Non-performing  assets totaled  $768,000 and $342,000 at December 31, 2004
and  2003,  respectively,  or .72% and .34% of its total  assets at such  dates.
Minden Building and Loan's non- performing  loans totaled  $768,000 and $342,000
at December 31, 2004 and 2003, respectively, or 1.21% and .57% of its total loan
portfolio at each of such dates. The non-performing loans consist of non-accrual
loans and accruing  loans that are  contractually  past due 90 days or more. The
$426,000  increase  in  non-performing  loans was  primarily  the  result of the
increase from $284,000 to $594,000 accruing loans which were delinquent 90 days,
most of which were in  bankruptcy  and an increase  of $116,000 in  non-accruing
loans.  Minden  Building  and Loan did not own any real estate owned at December
31, 2004 or December 31, 2003.  Minden  Building and Loan's  allowance  for loan
losses amounted to $877,000,  or 1.4% of the total loan portfolio and 114.19% of
total  non-performing  loans at December 31, 2004. The allowance for loan losses
totaled $893,000, or 1.5% of Minden Building and Loan's total loan portfolio and
261.1% of its total non-performing loans at December 31, 2003.

      Investment  securities  totaled  $36.3  million at December 31,  2004,  an
increase of $152,000, or .42%, from the balance at December 31, 2003.

      Cash and cash  equivalents,  which  include  interest-earning  deposits in
other  institutions,  amounted  to $2.9  million,  or 2.7% of total  assets,  at
December  31,  2004,  compared  to $2.3  million,  or 2.3% of total  assets,  at
December 31, 2003.

      Deposits.  Minden Building and Loan's deposits  increased by $2.5 million,
or 3.7%, to a total of $70.7 million at December 31, 2004. The increase resulted
primarily from  management's  continuing  efforts to maintain growth in deposits
through  marketing  and pricing  strategies.  Consolidation  of other  financial
institutions in Minden  Building and Loan's market area also  contributed to its
increase in deposits.  Proceeds from the growth in deposits were  generally used
to fund new loan originations or to purchase investment securities.

      Equity. The Company's total equity increased by $210,000, or 1.2%, in 2004
and amounted to $18.4 million,  or 17.1%,  of total assets at December 31, 2004.
The  increase  was due  primarily  to net income of $1.4  million  substantially
offset by a decrease of $1.1  million to fund the  repurchase  of the  Company's
stock.  As of  December  31,  2004 the Company  had  repurchased  54,839  shares
pursuant to a repurchase program at an average cost of $20.16 per share.


                                       10
<PAGE>

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

      The table on the  following  page 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.

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

                                                                              2004                               2003
                                                                 -------------------------------    --------------------------------
                                                   Yield/Cost
                                                       at
                                                    December     Average                Average     Average                Average
                                                    31, 2004     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) ......................      6.85%    $ 59,801      4,347       7.27     $ 56,699    $  4,180     7.36%
  Investment securities(2) ......................      3.22       39,181      1,209       3.09       26,043         815     3.13
  Interest-earning deposits .....................      4.52          853         54       6.33        1,759          40     2.27
                                                                --------      -----                --------    --------
  Total interest-earning assets .................      5.49       99,835      5,610       5.62       84,501       5,035     5.96
                                                                             ------       ----                 --------     ----
  Non-interest-earning assets ...................                  4,589                              4,870
                                                                --------                           --------
     Total assets ...............................               $104,424                           $ 89,371
                                                                ========                           ========

Interest-bearing liabilities:
  Deposits ......................................      2.06     $ 69,353      1,330       1.92     $ 62,728       1,438     2.29
  Borrowings ....................................      1.47       17,264        253       1.47        7,870         113     1.44
                                                                --------      -----                --------    --------
     Total interest-bearing liabilities .........      1.80       86,617      1,583       1.83       70,598       1,551     2.20
                                                                             ------       ----                 --------     ----
  Non-interest-bearing liabilities ..............                  1,238                              1,006
                                                                --------                           --------
     Total liabilities ..........................                 87,855                             71,604
  Total equity(3) ...............................                 16,569                             17,667
                                                                --------                           --------
  Total liabilities and equity ..................               $104,424                           $ 89,371
                                                                ========                           ========

  Net interest income; interest rate spread(4) ..                            $4,027       3.79%                $  3,484     3.76%
                                                                             ======       ====                 ========     ====
  Net interest margin(5) ........................                                         4.03%                             4.12%
                                                                                          ====                              ====
  Average interest-earning assets to average
     interest-bearing liabilities ...............                 115.26%                            119.69%
                                                                  ======                             ======
</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


                                       11
<PAGE>

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.

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31,
                                                            -------------------------------------------------------------------
                                                                     2004 vs. 2003                       2003 vs. 2002
                                                            ------------------------------    ---------------------------------
                                                                 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 .............................       (157)        324        167       $(278)      $ 760       $ 482
   Investment securities .............................        385           9        394        (279)        321          42
   Interest-earning deposits .........................         (2)         16         14          13         (10)          3
                                                            -----       -----      -----       -----       -----       -----
        Total ........................................        226         349        575        (544)      1,071         527
                                                            -----       -----      -----       -----       -----       -----

Interest-bearing liabilities:
   Deposits ..........................................       (120)         12       (108)       (689)        494        (195)
   Borrowings ........................................        108          32        140         (73)         88          15
                                                            -----       -----      -----       -----       -----       -----
     Total ...........................................        (12)         44         32        (762)        582        (180)
                                                            -----       -----      -----       -----       -----       -----
   Increase (decrease) in net interest
     income ..........................................      $ 238       $ 305      $ 543       $ 218       $ 489       $ 707
                                                            =====       =====      =====       =====       =====       =====
</TABLE>

Comparison of Operating Results for the Years Ended December 31, 2004 and 2003

      General.  Net income  amounted to $1.4 million for the year ended December
31, 2004, an increase of $199,000,  or 16.9%,  from net income  recorded for the
year ended December 31, 2003. The increase in earnings resulted primarily from a
$543,000 increase in net interest income which was partially offset by a $67,000
decrease in other  operating  income,  a $174,000  increase  in other  operating
expenses and an increase of $103,000 in income tax expense.

      Net Interest  Income.  Total interest and dividend income amounted to $5.6
million for the year ended December 31, 2004, an increase of $575,000, or 11.4%,
over the year ended December 31, 2003. Interest income on loans, including fees,
totaled  $4.3  million  for the year ended  December  31,  2004,  an increase of
$167,000,  or 4.0%, over the year ended December 31, 2003. This increase was due
to a $3.1 million,  or 5.5%, increase in the  weighted-average  balance of loans
outstanding partially offset by a 9 basis point decrease in the weighted average
yield from 2003 to 2004. Interest income on investment  securities  increased by
$388,000,  or 49.4%, as a result of a $13.1 million, or 50.45%,  increase in the
weighted-average  balance  outstanding  partially  offset  by  a 4  basis  point
decrease   in  the   weighted-average   yield   year  to   year.   Income   from
interest-earning    deposits,    which   consists   of   overnight   funds   and
interest-bearing  demand accounts,  increased by $14,000,  or 35.0% for the year
ended December 31, 2004 compared to the year ended December 31, 2003.


                                       12
<PAGE>

      Total  interest  expense  totaled $1.6 million for the year ended December
31, 2004, an increase of $32,000, or 2.1%, from the amount recorded for the year
ended December 31, 2003. Interest expense on deposits decreased by $108,000,  or
7.5%, due primarily to a 37 basis point decrease in the weighted average cost of
deposits year to year which was partially offset by an increase of $6.6 million,
or 10.6%,  in the  weighted-average  balance of deposits  outstanding.  Interest
expense on borrowings  increased by $140,000,  or 123.9%,  as a result of a $9.4
million, or 119.4%,  increase in the  weighted-average  balance outstanding year
over  year  and a 3  basis  point  increase  in  the  weighted-average  cost  of
borrowings year to year.

      As a result of the  foregoing  changes in  interest  income  and  interest
expense, net interest income increased by $543,000, or 15.6%, to a total of $4.0
million for the year ended  December 31, 2004,  compared to $3.5 million for the
year ended  December 31, 2003.  The  interest  rate spread  increased by 3 basis
points to 3.79% in fiscal 2004 from 3.76% in fiscal  2003,  and the net interest
margin was 4.03% for the year ended  December 31, 2004 compared to 4.12% for the
year ended December 31, 2003.

      Provision  for  Losses  on  Loans.  Minden  Building  and Loan  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 Minden  Building  and Loan'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 2004 and  2003.  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 $321,000 for the
year ended December 31, 2004, a decrease of $67,000, or 17.3%, over the $388,000
recorded for the year ended  December 31, 2003.  The decrease was  primarily the
result of a net $38,000  gain on sales of assets in 2004 as compared to $165,000
in 2003. That change was partially  offset by an increase of $46,000 in customer
service fees in 2004.

      Other Operating  Expenses.  Other operating  expenses totaled $2.3 million
for the year ended December 31, 2004, an increase of $174,000, or 8.3%, over the
total  recorded  for the year ended  December 31,  2003.  The increase  resulted
primarily from a $91,000, or 7.9%, increase in salaries and benefits, a $92,000,
or 26.2%, in office  occupancy  expenses.  The increase in salaries and benefits
was  primarily  attributable  to increases in both  salaries,  the fair value of
shares of


                                       13
<PAGE>

Company  common  stock  held by the  Company's  employee  stock  ownership  plan
released to participants'  accounts, and the number of staff members. The office
occupancy  expense  increase was primarily  attributable  to increased taxes and
assessments on the office location.

      Income  Taxes.  Income tax  expense  totaled  $693,000  for the year ended
December 31, 2004, an increase of $103,000,  or 17.5%, over the $590,000 for the
year ended  December 31, 2003.  Minden  Building and Loan's  effective tax rates
were  33.5%  and  33.4%  for  the  years  ended  December  31,  2004  and  2003,
respectively.

Off-Balance-Sheet Obligations

      Minden  Building  and  Loan  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.
Minden  Building  and  Loan'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.

      Minden Building and Loan has not used, and has no intention of using,  any
significant off- balance sheet financing arrangements for liquidity purposes. In
addition,  Minden  Building Loan 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 Minden
Building and Loan's liquidity or capital resources. Minden Building and Loan 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


                                       14
<PAGE>

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 (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, 2004 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 36.32% for the quarter ended December
31, 2004.  Minden Building and Loan 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.

      Minden  Building  and  Loan'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.  Minden Building and Loan sets the
interest rates on its deposits to maintain a desired level of total deposits. In
addition,   Minden   Building  and  Loan  invests  excess  funds  in  short-term
interest-earning  accounts and other  assets,  which  provide  liquidity to meet
lending  requirements.  Minden  Building and Loan's  deposit  accounts  with the
Federal  Home Loan Bank of Dallas  amounted to $694,000 and $657,000 at December
31, 2004 and 2003, respectively.

      A significant  portion of Minden Building and Loan's liquidity consists of
securities  classified  as  available  for sale  and cash and cash  equivalents.
Minden  Building and Loan's  primary  sources of cash are net income,  principal
repayments  on loans and  mortgage-backed  securities  and  increases in deposit
accounts. If Minden Building and Loan requires funds beyond its ability to


                                       15
<PAGE>

generate them internally,  borrowing agreements exist with the Federal Home Loan
Bank of Dallas  which  provide an  additional  source of funds.  At December 31,
2004,  Minden  Building and Loan had $17.2  million in advances from the Federal
Home Loan Bank of Dallas.

      At December  31,  2004,  Minden  Building  and Loan had  outstanding  loan
commitments of $9.4 million to originate loans,  including loans in process.  At
December 31, 2004,  certificates of deposit scheduled to mature in less than one
year, totaled $40.2 million. Based on prior experience, management believes that
a significant  portion of such deposits will remain with us,  although there can
be no  assurance  that  this  will be the case.  In  addition,  the cost of such
deposits could be significantly  higher upon renewal,  in a rising interest rate
environment.  Minden  Building  and Loan  intends to utilize  its high levels of
liquidity to fund its lending  activities.  If additional  funds are required to
fund lending activities, Minden Building and Loan intends to sell its securities
classified as available for sale as needed.

      Minden  Building  and Loan 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, 2004,  Minden Building and
Loan exceeded each of its capital requirements with ratios of 14.65%, 14.65% and
30.29%, 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

The following is a description of new accounting pronouncements and their effect
on the Company's financial condition and results of operations.

      Inventory Costs an Amendment of ARB No. 43, CHAPTER 4

      In November  2004, the FASB issued SFAS No. 151,  "Inventory  Costs" (SFAS
No.151).  SFAS No.151  amends ARB 43,  Chapter 4 to clarify that  certain  costs
should be recognized as  current-period  charges and not  capitalized as part of
inventory.  This statement is effective for inventory  costs incurred during the
fiscal years beginning after June 15, 2005. The adoption of


                                       16
<PAGE>

SFAS No. 151 did not have a material impact on the Company's financial condition
or results of operation.

      Accounting For Real Estate Time-Sharing Transactions

      In December 2004, the FASB issued SFAS No.152  "Accounting for Real Estate
Time-Share Transactions" an amendment of FASB Statements No. 66 and 67 (SFAS No.
152).  SFAS No. 152 concludes  that the sale of Time-Share  interests  should be
accounted  for as sales of real estate  using the  other-than-retail-land  sales
model  under FASB No. 66 and 67.  This  statement  is  effective  for  financial
statements for fiscal years  beginning after June 15, 2005. The adoption of SFAS
No. 152 did not have a material impact on the Company's  financial  condition or
results of operation.

      Exchanges of Non-monetary Assets an Amendment of APB OPINION No. 29

      In December 2004, the FASB issued SFAS No. 153, "Exchanges of Non-monetary
Assets" (SFAS No. 153). This statement addresses the measurement of exchanges of
non-monetary   assets.  This  statement  is  effective  for  non-monetary  asset
exchanges  occurring in the fiscal  periods  beginning  after June 15, 2005. The
adoption  of SFAS  no.  153 did not  have a  material  impact  on the  Company's
financial condition or results of operation.

      Share-Based Payments

      In December 2004, the FASB issued SFAS No. 123 (revised 2004) "Share-Based
Payment" (SFAS No. 123).  SFAS No.123  establishes  standards for the accounting
for transactions in which an entity  exchanges its equity  instruments for goods
or  services.  It  also  addresses   transactions  in  which  an  entity  incurs
liabilities  in exchange for goods or services  that are based on the fair value
of the  entity's  equity  instruments  or that may be settled by the issuance of
those equity  instruments.  This statement  focuses  primarily on accounting for
transactions in which an entity obtains employee services in share-based payment
transactions.  The  Statement  requires a public  entity to measure  the cost of
employees services received in exchange for an award of equity instruments based
on the  grant-date  fair  value of the  award  (with  limited  exceptions).  The
Statement is effective for public entities that file as a small business issuers
as of the beginning of the first interim of annual  reporting period that begins
after December 15, 2005. The impact of adoption of SFAS No. 123 has not yet been
determined.  The  statement  will be  effective  for the Company for the interim
reporting period ending March 31, 2006.


                                       17
<PAGE>

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

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

We have audited the accompanying  consolidated balance sheets of Minden Bancorp,
Inc.  and  Subsidiary  as of  December  31,  2004  and  2003,  and  the  related
consolidated  statements  of income,  equity,  and cash flows for the years then
ended.  These  consolidated  financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated financial position of Minden
Bancorp,  Inc.  and  Subsidiary  as of  December  31,  2004  and  2003,  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.


Heard, McElroy & Vestal, LLP
Shreveport, Louisiana
January 13, 2005


                                       18
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                           DECEMBER 31, 2004 AND 2003
                           --------------------------

<TABLE>
<CAPTION>
                A S S E T S                                          2004                   2003
                -----------                                          ----                   ----
                                                                                   (in thousands)
<S>                                                               <C>                   <C>
Cash and noninterest-bearing deposits                             $  1,745              $  1,475
Interest-bearing demand deposits                                       694                   657
Federal funds sold                                                     500                   200
                                                                  --------              --------
            Total cash and cash equivalents                          2,939                 2,332

Investment securities:
   Securities held-to-maturity (estimated market value of
       $2,123 in 2004 and $1,376 in 2003)                            2,097                 1,328
   Securities available-for-sale, at estimated market value         34,174                34,791

First National Banker's Bank stock, at cost                            210                   210
Federal Home Loan Bank stock, at cost                                1,016                   779
Loans, net of allowance for loan losses of $877 in
   2004 and $893 in 2003                                            62,600                58,097
Accrued interest receivable                                            512                   338
Premises and equipment, net                                          3,079                 2,313
Real estate owned-net                                                   --                    --
Other assets                                                           556                   556
                                                                  --------              --------

Total assets                                                      $107,183              $100,744
                                                                  ========              ========
</TABLE>

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


                                       19
<PAGE>

<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY                                         2004                  2003
------------------------------------                                         ----                  ----
<S>                                                                     <C>                   <C>
Liabilities:
------------
   Deposits:
       Noninterest-bearing                                              $   6,159             $   4,149
       Interest-bearing                                                    64,506                63,972
                                                                        ---------             ---------
            Total deposits                                                 70,665                68,121
   Accrued dividends on savings                                               187                   206
   Deferred federal income taxes                                              584                   514
   Federal Home Loan Bank advances                                         17,200                13,500
   Other liabilities                                                          166                   232
                                                                        ---------             ---------
            Total liabilities                                              88,802                82,573

Stockholders' equity:
---------------------
   Preferred stock-$.01 par value; authorized 4,000,000 shares;
       none issued-no rights/preferences set by board                          --                    --
   Common stock-$.01 par value; authorized 4,000,000 shares;
       1,399,911 shares issued and 1,454,750 shares outstanding                15                    15
   Additional paid-in capital                                              16,690                16,637
   Retained earnings                                                        3,106                 1,900
   Accumulated other comprehensive income                                     556                   514
                                                                        ---------             ---------
                                                                           20,367                19,066
   Unearned common stock held by Management Recognition
       and Retention Plan (22,518 shares-2004)                               (462)                 (435)
   Unallocated common stock held by ESOP (44,515
       shares unreleased)                                                    (415)                 (460)
   Treasury stock-at cost (54,839 shares)                                  (1,109)                   --
                                                                        ---------             ---------
            Total stockholders' equity                                     18,381                18,171
                                                                        ---------             ---------

Total liabilities and stockholders' equity                              $ 107,183             $ 100,744
                                                                        =========             =========
</TABLE>

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


                                       20
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                     YEARS ENDED DECEMBER 31, 2004 AND 2003
                     --------------------------------------

<TABLE>
<CAPTION>
                                                                               2004           2003
                                                                               ----           ----
                                                                        (in thousands except share data)
<S>                                                                          <C>            <C>
Interest and dividend income:
----------------------------

   Loans, including fees                                                     $  4,347       $  4,180
   Investments-taxable:
       Securities                                                                 234            161
       Mortgage-backed securities                                                 940            625
   Dividends-FHLMC/FHLB                                                            35             29
   Other (federal funds/interest-bearing demand)                                   54             40
                                                                             --------       --------
            Total interest and dividend income                                  5,610          5,035

Interest expense:
-----------------
   Interest-bearing demand deposits                                                41             49
   Savings                                                                        197            187
   Certificates of deposit                                                      1,092          1,202
   Interest on borrowed funds                                                     253            113
                                                                             --------       --------
            Total interest expense                                              1,583          1,551
                                                                             --------       --------

            Net interest income                                                 4,027          3,484
   Provision for loan losses-Note 3                                                --             --
                                                                             --------       --------
            Net interest income after provision for loan losses                 4,027          3,484

Other operating income:
-----------------------
   Customer service fees                                                          262            216
   Rent income                                                                     --              2
   Gain on sale of assets                                                          38            165
   Other income                                                                    21              5
                                                                             --------       --------
            Total other operating income                                          321            388

Other operating expenses:
-------------------------
   Salaries and benefits                                                        1,237          1,146
   Office occupancy expense                                                       443            351
   Professional fees and supervisory examinations                                 134            143
   SAIF insurance premium                                                          10              9
   Other general and administrative expenses                                      457            458
                                                                             --------       --------
            Total other operating expenses                                      2,281          2,107
                                                                             --------       --------

Income before income taxes                                                      2,067          1,765
--------------------------

Income tax expense                                                                693            590
------------------                                                           --------       --------

Net income                                                                   $  1,374       $  1,175
----------                                                                   ========       ========
</TABLE>

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


                                       21
<PAGE>

<TABLE>
<S>                                                                          <C>            <C>
Earnings per share (EPS)                                                     $   1.03       $    .85
------------------------
Diluted EPS                                                                  $    .98       $    .82
-----------
</TABLE>

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


                                       22
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                     YEARS ENDED DECEMBER 31, 2004 AND 2003
                     --------------------------------------

<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, 2002                                   $     15        $ 16,600        $    824        $    712       $ 18,151
-------------------------

Net income                                                        --              --           1,175              --          1,175
Dividends                                                         --              --             (99)             --            (99)
Amortization of awards under management
   recognition and retention plan (MRRP)                          --              37              --              --             37

Change in net unrealized gain
   (loss) on securities available for
   sale, net of tax effect of $101                              (198)           (198)           (198)
                                                                                            --------        --------       --------
       Total comprehensive income                                                                977
                                                            --------        --------        ========

Balance December 31, 2003                                   $     15        $ 16,637        $  1,900        $    514       $ 19,066
------------------------

Net income                                                        --              --           1,374              --          1,374
Change in net unrealized gain
   on securities available for
   sale, net of tax effect of $22                                 42              42              42
                                                                                            --------        --------       --------
       Total comprehensive income                                                              1,416
                                                            --------        --------        ========

Dividends                                                         --              --            (168)             --           (168)
Amortization of awards under management
   recognition and retention plan (MRRP)                          --              53              --              --             53
                                                            --------        --------        --------        --------       --------

Balance December 31, 2004                                   $     15        $ 16,690        $  3,106        $    556       $ 20,367
-------------------------                                   ========        ========        ========        ========       ========
</TABLE>

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


                                       23
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                     YEARS ENDED DECEMBER 31, 2004 AND 2003
                     --------------------------------------

<TABLE>
<CAPTION>
                                                                                         2004              2003
                                                                                         ----              ----
                                                                                           (in thousands)
<S>                                                                                  <C>               <C>
Cash flows from operating activities:
-------------------------------------
   Net income                                                                        $  1,374          $  1,175
   Adjustments to reconcile net income to net cash
      provided by operating activities:
        Depreciation                                                                      151               141
        Deferred income taxes                                                              36               108
        MRRP expense                                                                       52                37
        Stock dividends                                                                   (17)              (12)
        Net amortization of securities                                                    154              (228)
        (Gain) on sale of assets                                                          (38)             (165)
        (Increase) in prepaid expenses and accrued income                                (138)             (239)
        (Decrease) in dividends payable and other liabilities                             (85)             (121)
                                                                                     --------          --------
           Net cash provided by operating activities                                    1,489               696

Cash flows from investing activities:
-------------------------------------
   Activity in available for sale securities:
      Maturities, prepayments and calls                                                15,195             7,901
      Purchases                                                                       (14,642)          (24,650)
   Activity in held to maturity securities:
      Maturities, prepayments and calls                                                   239               966
      Purchases                                                                        (1,228)             (295)
   Net (increase) in loans                                                             (4,503)           (6,030)
   Proceeds from sale of real estate owned                                                 --               500
   Purchases of premises and equipment                                                   (917)             (274)
   Other                                                                                   34                43
                                                                                     --------          --------
           Net cash (used) by investing activities                                     (5,822)          (21,839)

Cash flows from financing activities:
-------------------------------------
   Net increase in deposits                                                             2,544            11,265
   Net increase in advances from FHLB                                                   3,700             9,500
   Stock purchased                                                                     (1,136)             (435)
   Dividends paid                                                                        (168)              (99)
                                                                                     --------          --------
           Net cash provided by financing activities                                    4,940            20,231
                                                                                     --------          --------

Net increase (decrease) in cash and cash equivalents                                      607              (912)
----------------------------------------------------

Cash and cash equivalents at January 1                                                  2,332             3,244
--------------------------------------                                               --------          --------
</TABLE>

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


                                       24
<PAGE>

<TABLE>
<S>                                                                                  <C>               <C>
Cash and cash equivalents at December 31                                             $  2,939          $  2,332
----------------------------------------                                             ========          ========
</TABLE>

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


                                       25
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                     YEARS ENDED DECEMBER 31, 2004 AND 2003
                     --------------------------------------

                                                            2004           2003
                                                            ----           ----
                                                             (in thousands)

Supplemental disclosures:
   Interest paid on deposits and borrowed funds         $  1,602       $  1,557
   Income taxes paid                                         615            640

      Noncash investing and financing activities:
        Transfer of loans to real estate owned                --            276
                                                        ========       ========

        Increase (decrease) in unrealized gain on
           securities available for sale                $     63       $   (300)
                                                        ========       ========

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


                                       26
<PAGE>

                       MINDEN BANCORP, INC. AND SUBSIDIARY
                       -----------------------------------

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

                           DECEMBER 31, 2004 AND 2003
                           --------------------------

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

      Minden Building and Loan  Association (the  "Association")  is a Louisiana
      chartered building and loan association.  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 is
      the wholly-owned  subsidiary of Minden Bancorp, Inc. (the "Company").  The
      Company's only significant  asset and business  activity is its investment
      in the Association.  All intercompany transactions have been eliminated in
      consolidation  of  Minden  Bancorp,  Inc.  and  Minden  Building  and Loan
      Association.

      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


                                       27
<PAGE>

      as "available for sale" and recorded at fair value,  with unrealized gains
      and losses  excluded  from  earnings and  reported in other  comprehensive
      income.

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


                                       28
<PAGE>

      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.

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


                                       29
<PAGE>

      to  approximately  $67 and $65 for 2004 and  2003,  respectively,  and are
      included in other operating expense.

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

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

      Earnings per share (ESP). EPS is calculated  based upon 1,332,878  average
      weighted  common  shares  outstanding  stock less ESOP shares not released
      less treasury stock at December 31, 2004, and 1,332,878  average  weighted
      shares  outstanding  stock less ESOP shares not  released at December  31,
      2003.

      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 2004, the FASB issued the following statements:  No. 151, Inventory
      Costs and No. 152, Accounting for Real Estate Time - Sharing  Transactions
      and Exchange of  Nonmonetary  Assets.  Also, the FASB issued several Staff
      Positions  (FSPs);   however,   none  of  those  were  applicable  to  the
      Association.  These  statements are not expected to have a material impact
      on the Association's financial statements.

      During 2004,  the FASB also revised  FASB No. 123,  Share-Based  Payments.
      This  statement  will  be  applicable  the  first  quarter  of  2006.  The
      Association has not yet determined the effect on its financial statements.

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

      Securities  held-to-maturity  consist of the following  (in  thousands) at
      December 31, 2004 and 2003:

<TABLE>
<CAPTION>
                                                                      2004
                                           ----------------------------------------------------------
                                                              Gross          Gross          Estimated
                                            Amortized      Unrealized      Unrealized         Market
                                              Cost            Gains          Losses           Value
                                           ----------      ----------      ----------      ----------
<S>                                        <C>             <C>             <C>             <C>
      GNMA                                         77               1              --              78
      FNMA                                        987              27               2           1,012
      FHLMC                                        23              --              --              23
      Certificates of deposit                   1,010              --              --           1,010
                                           ----------      ----------      ----------      ----------
                                           $    2,097      $       28      $        2      $    2,123
                                           ==========      ==========      ==========      ==========
</TABLE>


                                       30
<PAGE>

<TABLE>
<CAPTION>
                                                                      2003
                                           ----------------------------------------------------------
                                                              Gross          Gross          Estimated
                                            Amortized      Unrealized      Unrealized         Market
                                              Cost            Gains          Losses           Value
                                           ----------      ----------      ----------      ----------
<S>                                        <C>             <C>             <C>             <C>
      GNMA                                        102               1              --             103
      FNMA                                      1,194              49               2           1,241
      FHLMC                                        32              --              --              32
                                           ----------      ----------      ----------      ----------
                                           $    1,328      $       50      $        2      $    1,376
                                           ==========      ==========      ==========      ==========
</TABLE>

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

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

<TABLE>
<CAPTION>
                                                                     2004
                                           ----------------------------------------------------------
                                                              Gross          Gross          Estimated
                                            Amortized      Unrealized      Unrealized         Market
                                              Cost            Gains          Losses           Value
                                           ----------      ----------      ----------      ----------
<S>                                        <C>             <C>             <C>             <C>
      Shay Asset Fund-ARM                  $    8,697      $       --      $       87      $    8,610
      FHLMC Voting stock                           12             928              --             940
      Agencies                                    498              17              --             515
      Municipals                                  230               2              --             232
      FNMA ARM pools                           13,579              44              44          13,579
      FHLMC ARM pools                           5,815              32               9           5,838
      GNMA ARM pools                            4,499               2              41           4,460
                                           ----------      ----------      ----------      ----------
                                           $   33,330      $    1,025      $      181      $   34,174
                                           ==========      ==========      ==========      ==========

<CAPTION>
                                                                      2003
                                           ----------------------------------------------------------
                                                              Gross          Gross          Estimated
                                            Amortized      Unrealized      Unrealized         Market
                                              Cost            Gains          Losses           Value
                                           ----------      ----------      ----------      ----------
<S>                                        <C>             <C>             <C>             <C>
      Shay Asset Fund-ARM                  $    6,317      $       --      $       34          6,283
      FHLMC Voting stock                           16             911              --            927
      Agencies                                    497              35              --            532
      FNMA ARM pools                           12,927              59              96         12,890
      FHLMC ARM pools                           5,572              34              35          5,571
      GNMA ARM pools                            8,682               9             103          8,588
                                           ----------      ----------      ----------      ---------
                                           $   34,011      $    1,048      $      268         34,791
                                           ==========      ==========      ==========      =========
</TABLE>

      The amortized cost and estimated market value (in thousands) of investment
      securities at December 31, 2004, 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.


                                       31
<PAGE>

<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                         $    8,697       $    8,610       $      139       $      139
      After 1 year thru 5 years                       498              515            1,463            1,489
      After 5 years thru 10 years                     230              232               --               --
      After 10 years                               23,905           24,817              495              495
                                               ----------       ----------       ----------       ----------
                                               $   33,330       $   34,174       $    2,097       $    2,123
                                               ==========       ==========       ==========       ==========
</TABLE>

      At  December  31,  2004,  investment  securities  (in  thousands)  with  a
      financial  statement  carrying  amount of $2,895  were  pledged  to secure
      public  deposits.  A gain (in thousands) of $199 and a loss of $161 during
      2004. No gain or loss was recognized on  investments  in 2003.  Maturities
      and calls are detailed on the statement of cash flows.

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

      The composition of the  Association's  loan portfolio at December 31, 2004
      and 2003, is as follows (in thousands):

                                                              2004         2003
                                                              ----         ----

      First mortgage conventional loans:
        Secured by one-to-four-family residences          $ 37,711     $ 36,239
      Commercial real estate                                 9,468        8,966
      Commercial, other than real estate                     9,435        8,530
      Consumer loans (including overdrafts of
        $35 and $19)                                         3,815        2,784
      Consumer loans secured by deposits                     1,759          995
      Construction loans                                     1,477        2,191
                                                          --------     --------
            Total                                           63,665       59,705
      Less-allowance for loan losses                          (877)        (893)
            unfunded construction loan commitments            (188)        (715)
                                                          --------     --------
            Loans, net                                    $ 62,600     $ 58,097
                                                          ========     ========

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

                                                              2004         2003
                                                              ----         ----

      Balance, January 1                                  $    893     $    907
      Provision for loan losses                                 --           --
      Loans charged off-net of recoveries                      (16)         (14)
                                                          --------     --------
      Balance, December 31                                $    877     $    893
                                                          ========     ========

      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


                                       32
<PAGE>

      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 the
      schedule above for additional detail regarding the composition of the loan
      portfolio.  The  Association  requires  collateral  sufficient in value to
      cover the principal  amount of the loan.  Such  collateral is evidenced by
      mortgages on property held and readily accessible to the Association.

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

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

                                                            2004           2003
                                                            ----           ----

        Loans                                         $      395     $      219
        Mortgage-backed securities                           103            110
        Investment securities and other                       14              9
                                                      ----------     ----------
               Total accrued interest receivable      $      512     $      338
                                                      ==========     ==========

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

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

                                                            2004           2003
                                                            ----           ----

        Land and buildings                            $    3,152     $    2,334
        Furniture, fixtures and equipment                    540            481
                                                      ----------     ----------
               Total                                       3,692          2,815
        Less-accumulated depreciation                       (613)          (502)
                                                      ----------     ----------
               Net premises and equipment             $    3,079     $    2,313
                                                      ==========     ==========

6.    Deposits
      --------

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

                                                            2004           2003
                                                            ----           ----

      Demand deposit accounts (including official
        checks of $956 in 2004 and $536 in 2003)      $   11,006     $    8,981
      Passbook savings                                    14,022         12,268
      Certificates of deposit:
        1.00% - 1.99%                                      4,642          9,437
        2.00% - 2.99%                                     37,178         32,425
        3.00% - 3.99%                                      3,817          4,757
        4.00% - 4.99%                                         --            253
        5.00% - 5.99%                                         --             --
        6.00% - 6.99%                                         --             --
                                                      ----------     ----------
        Total certificates of deposit                     45,637         46,872
                                                      ----------     ----------
               Total deposits                         $   70,665     $   68,121
                                                      ==========     ==========


                                       33
<PAGE>

      Scheduled  maturities of  certificates of deposit at December 31, 2004 are
      as follows (in thousands):

                                        2005        2006        2007       Total
                                        ----        ----        ----       -----

      1.00% - 1.99%                 $  4,642    $     --    $     --    $  4,642
      2.00% - 2.99%                   33,615       3,476          87      37,178
      3.00% - 3.99%                    1,985       1,832          --       3,817
      4.00% - 4.99%                       --          --          --          --
                                    --------    --------    --------    --------
                                    $ 40,242    $  5,308    $     87    $ 45,637
                                    ========    ========    ========    ========

      Included  (in  thousands)  in deposits  at December  31, 2004 and 2003 are
      $12,410  and  $11,564,   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, 2004 and 2003 was as follows (in thousands):

                                                              2004          2003
                                                              ----          ----

            Current                                     $      657    $      495
            Deferred                                            36            95
                                                        ----------    ----------
                                                        $      693    $      590
                                                        ==========    ==========

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 2004 and 2003 to income before
      taxes as a result of the following:

                                                              2004          2003
                                                              ----          ----

      Expected income tax expense                              34%           34%
      Nontaxable income-FHLB stock dividend                   (.5)          (.6)
      Difference between financial and tax additions
         to allowance for loan losses                          --            --
      Nondeductible expenses and other                         --            --
                                                       ----------    ----------
              Effective tax rates                            33.5%         33.4%
                                                       ==========    ==========

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

      Deferred tax liabilities:
         Net unrealized gain on available for
           sale securities                             $      287    $      265
         Federal Home Loan Bank stock                         100            98
         Depreciation                                         161           151
         Compensation/other                                    34            --
                                                       ----------    ----------
              Deferred tax liability                   $      582    $      514
                                                       ==========    ==========

      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, 2004 and 2003 (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


                                       34
<PAGE>

      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  advances for periods from overnight to four and one-half months.
      Interest  rates  paid on the  advances  vary  by  term  and are set by the
      Federal Home Loan Bank.  Total  advances  outstanding at December 31, 2004
      and 2003 (in thousands) amount to $17,200 and $13,500,  respectively.  The
      advances  bear  interest at rates from 2.28% to 1.98% as of  December  31,
      2004 and 1.60% to 1.34% as of December 31, 2003.

      The  Association  has an  available  line of  credit  with the FHLB of $57
      million at December 31, 2004 with $39.8 million available for use.

9.    401(k) Pension/ESOP Plans
      -------------------------

      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 2004 and 2003 were $30 and
      $33, respectively.

      The Company established an ESOP and loaned (in thousands) the ESOP $524 to
      purchase  52,371  shares of common  stock,  which  amounted to 3.7% of the
      outstanding shares at December 31, 2004.

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

      The Company  has  received  payments  (in  thousands)  of $66 of which $21
      thousand was interest. The remaining balance due (in thousands) of $415 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 in 2004 and 2003,  which is
      included in salaries and benefits on the income statement.  As required by
      accounting  standards,  the  unreleased  shares  are not  included  in the
      calculation  of EPS and the loan  receivable  is shown as a  reduction  in
      stockholders' equity. As the note is paid, the shares will be released and
      allocated to the  participants of the ESOP. As of December 31, 2004, 7,856
      of those shares had been released.  The market value (in thousands) of the
      unreleased ESOP shares at December 31, 2004 was $868.

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


                                       35
<PAGE>

      average assets (as defined). Management believes, as of December 31, 2004,
      that the Association  meets all capital adequacy  requirements to which it
      is subject.

       As of December 31, 2004, 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, 2004
         Total capital (to Risk-
            Weighted Assets)               16,644      30.29%        >/=4,395       >/=8.0%          >/=5,494       >/=10.0%
         Core (Tier I) Capital (to
            Risk-Weighted Assets)          15,577      28.35%        >/=2,198       >/=4.0%          >/=3,296        >/=6.0%
         Core (Tier I) Capital
            (to Total Assets)              15,577      14.65%        >/=3,249       >/=3.0%          >/=5,401        >/=5.0%
         Tangible Capital
            (to Total Assets)              15,577      14.65%        >/=1,625       >/=1.5%               N/A           N/A
</TABLE>

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

      At December 31, 2004 and 2003, 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 $1,522
      and $1,301,  respectively.  During the year ended December 31, 2004, total
      principal  additions  (in  thousands)  were  $4,300  and  total  principal
      payments were $4,079. Such parties held deposits in the Association in the
      approximate amounts (in thousands) of $2,272 and $986 at December 31, 2004
      and 2003, 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, 2004 and
      2003 (in thousands),  the Association had $9,439 and $9,082,  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.


                                       36

<PAGE>

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.

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


                                       37
<PAGE>

      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 Association's financial instruments are as follows:

<TABLE>
<CAPTION>
                                                            December 31,
                                            ------------------------------------------------
                                                    2004                       2003
                                            ----------------------    ----------------------
                                            Carrying       Fair       Carrying        Fair
                                             Amount        Value       Amount        Value
                                             ------        -----       ------        -----
                                                             (in thousands)
<S>                                         <C>          <C>          <C>          <C>
      Financial assets:
         Cash and cash equivalents          $   2,939    $   2,939    $   2,332    $   2,332
         Securities available for sale         34,174       34,174       34,791       34,791
         Securities held to maturity            2,097        2,123        1,328        1,376
         Federal Home Loan Bank stock           1,226        1,226          989          989
         Loans, net                            62,600       63,539       58,097       59,026
         Accrued interest receivable              512          512          338          338

      Financial liabilities:
         Deposits                              70,665       70,665       68,121       68,121
         Accrued interest payable                 187          187          206          206
         Federal Home Loan Bank advances       17,200       17,200       13,500       13,500
</TABLE>

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

<TABLE>
<CAPTION>
                                                              December 31,
                                               ---------------------------------------------
                                                        2004                     2003
                                               --------------------     --------------------
                                               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          9,439         9,439       9,082        9,082
</TABLE>

     Off-balance sheet derivative financial instruments:  N/A

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

      The Association, 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.


                                       38
<PAGE>

      The  Association  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):

                                                        2004             2003
                                                        ----             ----

            Cash value of life insurance                 311              278
            Prepaid expenses and other                   245              278
                                                   ---------       ----------
                                                         556              556
                                                   =========       ==========

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 open
      market  transactions  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, 2004,  awards  covering  18,354  shares had been
      awarded.  As a result,  expense  for this plan is being  amortized  over a
      60-month  period and is based upon the market value of the Company's stock
      as of the 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  year  ended  December  31,  2004  and  2003  was  $53  and  $37,
      respectively, 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.

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

      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  49,885  shares  were
      outstanding as of December 31, 2003.  Twenty percent or 9,977 options were
      exercisable as of December 31, 2004; however none were exercised.

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

      The Company  accounts for its stock options in accordance  with Accounting
      Principals Board Opinion No. 25,  Accounting for Stock Issued to Employees
      (APB  25).  Under  APB 25,  since  the  exercise  price  of the  Company's
      employees'  stock options equals the market price of the underlying  stock
      on the date of grant, no compensation expense is recognized.

      Financial Account Standards Board (FASB) Statement No. 123, Accounting for
      Stock-Based  Compensation  (FAS No. 123) requires pro forma net income and
      earnings  per share  based upon the fair value  method of  accounting  for
      stock-based  compensation  plans.  If the Company had elected to


                                       39
<PAGE>

                              Minden Bancorp, Inc.

      recognize  compensation  based upon the fair value  method  prescribed  by
      Statement  No. 123, the Company's net income and per share would have been
      adjusted to the pro forma amounts  indicated  below (in thousands,  except
      per share amounts):

                                                                 Year Ended
                                                             December 31, 2004
                                                             -----------------

            Net income, as reported                                1,374
            Pro forma net income                                   1,312
            Diluted income per share, as reported                   $.98
            Pro forma diluted income per share                      $.94

      The pro forma  adjustments shown above are not indicative of future period
      pro forma  adjustments  when the  calculation  will reflect all applicable
      stock options.  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.


                                       40
<PAGE>

                              Minden Bancorp, Inc.

                        DIRECTORS AND EXECUTIVE OFFICERS
================================================================================

                                    Directors
                                    ---------

A. David Evans                             Russell A. Adams
President and Chief Executive Officer      Retired

John B. Benton, Jr.                        John P. Collins
Retired                                    Owner, A. J. Price, Inc.

Michael S. Harper                          A. Loye Jones
Owner, Harper Motors, Inc.                 Owner, Loye's Pharmacy, Inc.

F. Dare Lott, Jr.                          Michael W. Wise
Owner, Minden Animal Clinic                CPA, Jamieson Wise and Martin

R. E. Woodard, III
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


                                       41
<PAGE>

                              Minden Bancorp, Inc.

                  BANKING LOCATIONS AND STOCKHOLDER INFORMATION
================================================================================

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

      Minden  Bancorp,  Inc. is a federally  chartered  thrift  holding  company
conducting  business  through its wholly owned  subsidiary,  Minden Building and
Loan Association. Minden Building and Loan Association is a Louisiana-chartered,
SAIF-insured stock building and loan association operating through its office in
Minden, Louisiana.

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

                                 415 Main Street
                             Minden, Louisiana 71055

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

      The Annual Meeting of Stockholders of Minden Bancorp, Inc. will be held on
May 10, 2005, at 8:15 a.m.,  Central Time, in the main office of Minden Building
and Loan Association located at 415 Main Street, 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., 415 Main Street, Minden, Louisiana 71055.

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


                                       42