March 30, 1998




Dear Stockholder,

We are  pleased  to  provide  you with the  Annual  Report  on the  Consolidated
Financial statements of First Allen Parish Bancorp, Inc., (The Company), holding
company of First Federal Savings & Loan Association of Allen Parish (First
Federal), for the year ended December 31, 1997.

Consolidated assets of First Allen Parish Bancorp, Inc., increased $2.0 million,
or 6.4%, to $33.5  million at December 31, 1997,  from $31.5 million at December
31, 1996.

Net loans  receivable  increased  $1.7 million,  or $14.3%,  to $13.6 million at
December 31, 1997,  from $11.9 million at December 31, 1996,  due to an increase
in real estate loans, consumer loans and other loans.

Deposits  increased  $2.9  million,  or 11.3%,  to $28.7 million at December 31,
1997,  from $25.7 million at December 31, 1996.  There were no Federal Home Loan
Bank (FHLB) advances  outstanding at December 31, 1997, compared to $1.2 million
at December 31, 1996.

Total  stockholders'  equity increased  $215,000 to $4.5 million at December 31,
1997,  from $4.3 million at December 31, 1996.  Earnings for the year provided a
$254,000  increase,  which was offset by dividends  paid to  stockholders  at 30
cents per share, or $79,000.

The  Company  has a strong  capital  base and  exceeds  all  regulatory  capital
requirements. This strong capital base has enabled us to invest in the expansion
of our market area and increase  our market  share.  In 1997, a Loan  Production
Office (LPO) was opened in Oberlin,  Louisiana,  our Parish Seat, staffed with a
Manager and a Loan  Assistant,  and  offering a full range of loan  products and
services.  Due to a positive  community  response and demands for a full-service
facility, First Federal has applied for, and received,  approval from the Office
of Thrift Supervision (OTS) to open a full-service branch in Oberlin, Louisiana.
The expansion will create  additional  expense items, but this should be off-set
by increased future income and growth.  Subsequently,  a lot has been purchased,
and plans are being finalized to construct a new branch  facility,  projected to
be completed and in operation by mid-year 1998.






                                        1
<PAGE>

Since its origination in 1962, First Federal Savings & Loan Association of Allen
Parish has been, and intends to continue to be, a  community-oriented  financial
institution,  offering  a full range of banking  services  aimed at meeting  the
financial needs of the communities it serves. Our customers  appreciate the fact
that we are a hometown  financial  institution,  easily  accessible and here for
them. In the years ahead, the Company's Board of Directors, management and staff
will remain committed to the continued growth of First Federal,  offering a wide
variety of services, meeting the financial needs of its customers and building a
strong stockholder value.

Thank you for your  investment in First Allen Parish  Bancorp,  Inc.,  and First
Federal Savings & Loan Association of Allen Parish.

                                                        Sincerely,




                                                        Charles L. Galligan
                                                        President & CEO



                                        2

<PAGE>
TABLE OF CONTENTS

                                                                         Page
                                                                         ----

President's Message                                                       1

General Information                                                       3

Selected Consolidated Financial and Other Data of the Company             4

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

Consolidated Financial Statements                                         17

Stockholder Information                                                   48

Corporate Information                                                     49






<PAGE>
                               GENERAL INFORMATION




        First Allen Parish Bancorp, Inc. (the Company) is a Delaware Corporation
which is the holding company for First Federal  Savings and Loan  Association of
Allen Parish (the Association). The Company was organized by the Association for
the  purpose  of  acquiring  all of the  capital  stock  of the  Association  in
connection  with the  conversion of the  Association  from mutual to stock form,
which was completed on September 27, 1996 (the Conversion). The only significant
assets of the Company are the capital  stock of the  Association,  the Company's
loan to an employee stock  ownership  plan, and investment  securities in United
States government and agency obligations.  The business of the Company initially
consists of the business of the Association.

        The  Association,  which was  originally  chartered in 1962 as a federal
chartered  mutual savings and loan  association,  is  headquartered  in Oakdale,
Louisiana.  Its deposits are insured up to the maximum  allowable  amount by the
Federal Deposit Insurance Corporation (FDIC). The Association serves communities
located in Allen Parish and in the surrounding parishes in Louisiana through its
main office  located at 222 South 10th  Street,  Oakdale,  Louisiana  and a loan
production office located at 215 Sixth Avenue, Oberlin, Louisiana.

        The   Association   has  been  and   intends  to   continue   to  be,  a
community-oriented financial institution offering financial services to meet the
needs of the market area it serves.  The Association  attracts deposits from the
general  public and uses such funds  together  with FHLB  advances to  originate
loans secured by real estate,  including one-to-four family residential mortgage
loans,  commercial real estate loans, land loans,  construction  loans and loans
secured by other properties.  The Association also originates consumer and other
loans consisting primarily of loans secured by automobiles,  manufactured homes,
share loans and lines of credit. The Association has also invested a significant
portion  of its  assets in  mortgage-backed  and  related  securities  and other
investments.







                                        3

<PAGE>

                         SELECTED CONSOLIDATED FINANCIAL
                          AND OTHER DATA OF THE COMPANY


        Set forth below are selected  consolidated  financial  and other data of
the Company.  The financial  data is derived in part from, and should be read in
connection  with,  the  Consolidated  Financial  Statements,  and Notes  thereto
presented elsewhere in this Annual Report.
<TABLE>
<CAPTION>


                                                                    At
                                                                December 31,
                                                          ----------------------
                                                           1997           1996
                                                           ----           ----
                                                             (In thousands)
<S>                                                       <C>            <C>
Selected Financial Condition Data:
Total assets ...................................          33,519         $31,490
Cash and cash equivalents ......................           1,884           1,474
Loans receivable, net
  Real estate ..................................          10,702           9,410
  Consumer and other ...........................           2,944           2,528
Mortgage-backed and related securities .........          17,147          17,185
FHLB stock .....................................             259             259
Deposits .......................................          28,657          25,750
FHLB advances ..................................            --             1,200
Total stockholders' equity .....................           4,535           4,319

<CAPTION>
                                                              Years Ended
                                                              December 31,
                                                       -------------------------
                                                            1997        1996
                                                            ----        ----
                                                        (In thousands, except
                                                          share information)

Selected Operating Data:
Interest income .................................      $   2,302       $   2,135
Interest expense ................................          1,226           1,151
  Net interest income ...........................          1,076             984
  (Provision for) recovery from loan losses .....             (3)              8
  Net interest income after (provision for)
    recovery from loan losses ...................          1,073             992

Total non-interest income .......................            276             249

Total non-interest expense ......................            947             986
    Earnings before income taxes ................            402             255
Income tax expense ..............................            148              88
    Net earnings ................................      $     254       $     167
                                                       =========       =========

    Net earnings per share ......................      $    1.04       $    0.69
                                                       =========       =========

    Average common shares outstanding ...........        244,669         243,346
                                                       =========       =========

</TABLE>
                                        4
<PAGE>
<TABLE>
<CAPTION>
                                                                 At or For the Years
                                                                  Ended December 31,
                                                                 -------------------
                                                                  1997         1996
                                                                  ----         ----
<S>                                                            <C>          <C>
Key Financial Ratios and Other Data:
Performance Ratios:
Return on average assets (net income divided
  by average total assets) .............................           .80%        .55%

Return on average equity (net income divided
  by average equity) ...................................          5.75%       6.29%

Net interest rate spread (difference between
  average yield on interest-earning assets
  and average cost of interest-bearing liabilities) ....          3.09%       3.08%

Net interest margin (net interest income as a
  percentage of average interest-earning assets) .......          3.49%       3.37%

Net interest income to non-interest expense ............        113.55%      99.82%

Average interest-earning assets to average interest-
  bearing liabilities ..................................        109.99%     107.50%

Net interest income after (provision for) recovery from
  loan losses, to total non-interest expense ...........        113.23%     100.63%

Non-interest expense to average assets (1) .............          2.97%       3.26%

Asset Quality Ratios:
Non-performing loans to total loans ....................           .92%        .37%

Non-performing assets to total assets ..................           .37%        .38%

Allowance for loan losses to non-performing loans ......        238.91%     670.81%

Allowance for loan losses to non-performing assets .....        238.91%     249.02%

Capital Ratios (2):
Equity to assets at year end ...........................         13.53%      13.71%
Equity to average assets ratio
  (Average equity divided by average total
    assets) ............................................         13.89%       8.83%

Other Data:
Number of full-service offices .........................          1           1
Number of loan production offices ......................          1           0
</TABLE>

(1)     Without the SAIF assessment of $170,000, non-interest expense would have
        been $816,000 for 1996 or 2.7% of average total assets.
(2)     For a  discussion  of  the  Company's  regulatory  capital  ratios,  see
        Management's  Discussion and Analysis of Financial Condition and Results
        of Operations - Liquidity and Capital Resources.


                                        5
<PAGE>
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


General

         First Allen  Parish  Bancorp,  Inc.  was formed in June,  1996 by First
Federal  Savings  and Loan  Association  of Allen  Parish to become the  holding
company of the  Association.  The  acquisition of the Association by First Allen
Parish  Bancorp,  Inc. was  consummated on September 27, 1996 in connection with
the Association's conversion from the mutual to the stock form.

        The Company's results of operations depend primarily on its level of net
interest   income,   which  is  the  difference   between   interest  earned  on
interest-bearing assets, consisting primarily of mortgage and consumer loans and
investments, and the interest paid on interest-bearing  liabilities,  consisting
primarily of deposits and Federal Home Loan Bank (FHLB)  advances.  Net interest
income is a function  of the  Company's  "interest  rate  spread,"  which is the
difference between the average yield earned on  interest-bearing  assets and the
average rate paid on interest-bearing  liabilities, as well as a function of the
average  balance of  interest-bearing  assets as  compared  to  interest-bearing
liabilities.  The interest rate spread is affected by  regulatory,  economic and
competitive  factors  that  influence  interest  rates,  loan demand and deposit
flows.  The  Company,   like  other  financial   institutions,   is  subject  to
interest-rate  risk to the degree  that its  interest-earning  assets  mature or
reprice at different times, or on a different basis,  than its  interest-bearing
liabilities.  The Company's operating results are also affected by the amount of
its  non-interest  income,  including  loan fees and  service  charges and other
income.  Non-interest expense consists principally of employee  compensation and
employee  benefits,   occupancy  expenses,  data  processing,   federal  deposit
insurance premiums,  stationery and printing and other operating  expenses.  The
Company's  operating  results are affected by general  economic and  competitive
conditions,  in particular,  the changes in market  interest  rates,  government
policies and actions by regulatory authorities.

Financial Condition

        Total  assets  increased  $2.0  million,  or 6.4%,  to $33.5  million at
December  31, 1997 from $31.5  million at December  31,  1996.  The increase was
primarily  funded by an increase in deposits of $2.9 million to $28.7 million at
December 31, 1997 from $25.8 million at December 31, 1996. The proceeds from the
increase in deposits  were used to finance a $1.7 million  increase in net loans
receivable and a $409,000 increase in cash and cash equivalents.

        Net loans  receivable  increased  by $1.7  million,  or 14.3%,  to $13.6
million at December  31, 1997 from $11.9  million at December 31, 1996 due to an
increase in real estate and consumer and other loans.

        Mortgage-backed  and related  securities and cash equivalents  increased
$372,000 or 1.99% to $19.0  million at December  31, 1997 from $18.7  million at
December 31, 1996.  This  increase was financed from the increase in deposits as
mentioned above.


                                        6
<PAGE>
        Deposits  increased  $2.9 million or 11.3% to $28.7  million at December
31, 1997 from $25.7  million at December 31, 1996.  There were no FHLB  advances
outstanding at December 31, 1997 compared to $1.2 million at December 31, 1996.

        Total  equity  increased  $215,000 to $4.5  million at December 31, 1997
from $4.3  million  at  December  31,  1996.  Earnings  for the year  provided a
$254,000  increase,  which  was  offset by  dividends  paid to  stockholders  of
$79,000.

        The Company's capital exceeded all of the capital  requirements  imposed
by FIRREA. OTS regulations  provide that an institution that exceeds all capital
requirements  before and after a proposed  capital  distribution  and,  like the
Company, has not been notified of a need for more than normal supervision could,
after prior notice but without  approval by the OTS, make capital  distributions
during  the  calendar  year of up to 100% of its net  income to date  during the
calendar year plus the amount that would reduce by one-half its "surplus capital
ratio" (the excess  capital over its capital  requirements)  at the beginning of
the calendar  year.  Any additional  capital  distributions  would require prior
regulatory approval.

         The Association  declared  dividends in 1997 of $79,000 or 30 cents per
share.

Results of Operations

        The Company's results of operations depend primarily on the level of its
net  interest  income  and  non-interest  income and its  control  of  operating
expenses. Net interest income depends upon the volume of interest-earning assets
and interest-bearing liabilities and the interest rates earned or paid on them.

        The Company's  non-interest income consists primarily of fees charged on
transaction  accounts  and fees  charged  for  delinquent  payments  received on
mortgage and consumer  loans. In addition,  non-interest  income is derived from
insurance  commissions,  loan origination and servicing fees and other operating
revenues.

        The schedule on the following page presents,  for the periods indicated,
the total dollar amount of interest income from average  interest-earning assets
and the resultant yields, as well as the total dollar amount of interest expense
on  average  interest-bearing  liabilities  and  resultant  rates.  All  average
balances are monthly average balances.  Management does not believe that the use
of monthly balances  instead of daily balances has caused a material  difference
in the  information  presented.  Nonaccruing  loans have been  included as loans
carrying a zero yield.

                                        7
<PAGE>
<TABLE>
<CAPTION>
                                                                        Years Ended December 31,
                                                    ----------------------------------------------------------
                                                                1997                           1996
                                                                         Average                       Average
                                                     Average             Yield/   Average               Yield/
                                                    Balance   Interest     Cost    Balance   Interest     Cost
                                                    -------   --------     ----    -------   --------     ----
                                                                         (Dollars in thousands)
<S>                                                 <C>       <C>        <C>       <C>        <C>        <C>
Interest-earning assets:
  Mortgage loans(1)                                 $10,037   $  911      9.08%    $ 8,997    $   839     9.32%
  Consumer and other loans                            2,731      255      9.36       2,392        210     8.77
  Mortgage-backed securities                         15,975    1,035      6.48      15,702        986     6.29
  FHLB stock                                            256       15      5.95         256         15     5.90
  Other interest-bearing deposits                     1,828       85      4.66       1,817         85     4.68
      Total interest-earning assets                  30,827    2,301      7.47      29,164      2,135     7.32

Non-interest earning assets                           1,051     -         0.00       1,016       -        0.00
      Total average assets                          $31,878   $2,301      7.22%    $30,180    $ 2,135     7.07%
                                                    =======   ======     =====     =======    =======    =====

Interest-bearing liabilities:
  Passbook accounts                                 $ 2,641   $   53      2.01%    $ 3,005    $    63     2.09%
  NOW and money market accounts                       6,643       90      1.36       6,000         88     1.46
  Certificates                                       18,460    1,068      5.79      17,949        991     5.52
  FHLB advances                                         282       16      5.64         175          9     5.14
      Total interest-bearing liabilities             28,026    1,227      4.38      27,129      1,151     4.24

Non-interest bearing liabilities                        699     -         0.00         592       -         0.00
      Total average liabilities                     $28,725   $1,227      4.27%    $27,721    $ 1,151     4.15%
                                                    =======   ======     =====     =======    =======    =====

Net interest income                                           $1,074                          $   984
Net interest rate spread(2)                                   ======      3.09%               =======     3.08%
                                                                           =====                          =====
Net interest margin(3)
Average interest-earning assets to                                        3.49%                           3.37%
  average interest-bearing                                                =====                          =====
  liabilities                                                    109.99%                       107.50%
                                                                 ======                        ======
</TABLE>

(1)  Average balances include non-accrual loans.
(2)  Net interest  rate spread  represents  the  difference  between the average
     yield on  interest-earning  assets and the average rate on interest-bearing
     liabilities.
(3)  Net interest  margin  represents  net  interest  income  divided by average
     interest-earning assets.

                                        8
<PAGE>
Rate/Volume Analysis

     The table  below  sets  forth  certain  information  regarding  changes  in
interest income and interest expense of the Company for the years indicated. For
each  category  of  interest-earning  assets and  interest-bearing  liabilities,
information  is  provided  on  changes  attributable  to (i)  changes  in volume
(changes in volume multiplied by old rate); (ii) changes in rate (change in rate
multiplied  by old  volume);  and the net  change.  For  purposes of this table,
changes attributable to both rate and volume,  which cannot be segregated,  have
been allocated  proportionally  to the changes due to volume and the changes due
to rate.
<TABLE>
<CAPTION>
                                                     Years Ended December 31,
                                                           1997 vs. 1996
                                                 Increase/(Decrease)
                                                      Due to              Total
                                                 -------------------     Increase
                                                  Volume     Rate       (Decrease)
                                                  ------     ----       ----------
                                                      (Dollars in thousands)
<S>                                               <C>         <C>         <C>
Interest-earning assets:
  Mortgage loans ...........................      $  94       $ (21)      $  73
  Consumer and other loans .................         31          15          46
  Mortgage-backed securities ...............         20          35          55
  FHLB stock ...............................         (1)          1        --
  Other ....................................        (15)          8          (7)
    Total interest-earning assets ..........      $ 129       $  38       $ 167

Interest-bearing liabilities:
  Passbook accounts ........................      $  (7)      $  (2)      $  (9)
  NOW and money market accounts ............          6          (5)          1
  Certificate accounts .....................         29          48          77
  Federal Home Loan Bank advances ..........          6           1           7

    Total interest-bearing liabilities .....         34          42          76

Net change in interest income ..............      $  95       $  (4)      $  91
                                                  =====       =====       =====

</TABLE>






                                        9
<PAGE>
Comparison of Operating Results for the Years Ended December 31, 1997 and 1996

          General.  Net earnings for the year ended  December 31, 1997 increased
by $87,000 or 52.1% to $254,000 or $1.04 per share,  from  $167,000 or $0.69 per
share,  for the year ended  December 31, 1996. The increase was primarily due to
the  combined  effects of an  $81,000  increase  in net  interest  income  after
provision/recovery  from loan losses, a $13,000 increase in loan and origination
fees, a $5,000 increase in gain on foreclosed real estate,  a $7,000 increase in
other  operating  revenues,  and a $211,000  decrease in SAIF deposit  insurance
premiums offset by a $69,000 increase in compensation and employee  benefits,  a
$102,000  increase in other expenses and a $60,000 increase in income taxes. For
the years ended  December 31, 1997 and 1996,  the returns on average assets were
 .80% and .55%, respectively,  while the returns on average equity were 5.75% and
6.29%, respectively.

          A provision in the Omnibus  Appropriations Bill passed by Congress and
signed by  President  Clinton on  September  30, 1996  included  an  anticipated
special  assessment  to  recapitalize  the Savings  Association  Insurance  Fund
(SAIF).  The 65.7 cents per $100 of  qualifying  accounts  as of March 31,  1995
created a pre-tax  expense of $170,000 to the Company in 1996.  Without the SAIF
assessment,  net income would have been $280,000, return on average assets would
have been .92%,  return on average equity would have been 10.5% and earnings per
share would have been $1.15 for the year ended December 31, 1996.

          The  recapitalization  of SAIF  reduced the future  deposit  insurance
premiums  from 23 cents per $100 of deposits to 6.4 cents per $100 of  deposits.
The 6.4 cent  premium  is  projected  for the  years  1997  through  1999,  then
decreasing further to 2.4 cents from 2000 until 2017,  assuming a merger of SAIF
and the Bank  Insurance  Fund (BIF).  The  Association's  insurance  premium was
$17,000 for the year ended December 31, 1997.

          Interest  Income.  For the year ended  December 31, 1997, net interest
income  increased by $92,000 to $1.08  million from  $984,000 for the year ended
December 31, 1996.  This reflects an increase of $167,000 in interest  income to
$2.3 million from $2.1 million and an increase of $75,000 in interest expense to
$1.2 million from $1.1 million.  The increase in interest income was due to both
an increase in total  interest-earning  assets and an increase in rates  earned.
The  increase  in  interest  expense  was  due to  both  an  increase  in  total
interest-bearing liabilities and increased rates paid.

          Interest income on loans  increased  $118,500 or 11.3% to $1.2 million
for the year  ended  December  31,  1997 from $1.1  million  for the year  ended
December 31, 1996.  Interest income on  mortgage-backed  and related  securities
increased  $55,000 or 5.6% to $1.04 million for the year ended December 31, 1997
from  $987,000 for the year ended  December  31, 1996.  The increase in interest
income from  mortgage-backed  and related  securities  was due to both increased
rates  earned and  increase in volume of such  securities  while the increase in
interest income from loans was primarily due to the increase in volume of loans.




                                       10
<PAGE>
          Interest  Expense.  Interest  expense for the year ended  December 31,
1997  increased  $68,000 to $1.2  million  from $1.1  million for the year ended
December 31, 1996.  The increase was primarily due to an increase in the average
rate paid on  certificates of deposit.  Certificates  of deposit  increased from
1996 to 1997 and interest rates paid on them  increased  resulting in a slightly
higher cost of funds.  Average  balances in  certificates  of deposit  increased
$500,000 to $18.5  million at December  31, 1997 from $17.9  million at December
31, 1996.  Average  non-certificate  balances increased $280,000 to $9.3 million
from $9.0 million from 1996 to 1997. Interest expense on FHLB advances increased
to $16,000 for the year ended December 31, 1997 from $9,000 for the prior year.

          Provision for Loan Losses. The Association  maintains an allowance for
loan losses based upon  management's  periodic  evaluation of known and inherent
risks in the loan, the Association's  past loss experience,  adverse  conditions
that may affect the borrower's  ability to repay loans,  estimated  value of the
underlying collateral and current and expected market conditions.  The allowance
for loan losses was  $300,260 at December  31, 1997 and $296,452 at December 31,
1996.  The  provision  for loan losses is the method by which the  allowance for
losses is  adjusted  during the period.  The  Association's  provision  for loan
losses for the year  ended  December  31,  1997 was  $3,000,  as  compared  to a
recovery  of $7,972  for the year  ended  December  31,  1996 on loans for which
reserves had  previously  been  established.  The recovery of $7,972 in 1996 was
primarily  due to the payment of consumer  loans for which  provisions  had been
made in prior  periods.  Management's  focus on asset quality has resulted in an
allowance  for loan losses to  non-performing  assets of  238.91%.  The ratio of
nonperforming  loans to total loans  remains low at .92% at December  31,  1997.
Management  believes  its  allowance  for  loan  losses  is at a  level  that is
considered to be adequate to provide for estimated losses; however; there can be
no assurance  that further  additions will not be made to the loss allowance and
that such losses will not exceed the estimated amount.

          Non-interest   Income.   For  the  year  ended   December   31,  1997,
non-interest  income  was  $277,000  compared  to  $249,000  for the year  ended
December  31,  1996.  The  increase of $28,000 was due to increases of $4,000 in
service  charges on deposits,  $13,000 in loan  origination  and servicing fees,
$5,000  in gain in  foreclosed  real  estate,  and  $7,000  in  other  operating
revenues.

         Non-interest Expense. Non-interest expense decreased $39,000 or 4.0% to
$947,000 for the year ended  December 31, 1997 from  $986,000 for the year ended
December  31,  1996.  This  decrease was the result of a decrease of $212,000 in
SAIF  deposit  insurance  premiums  and a decrease of $6,000 in  stationery  and
printing offset by increases of $69,000 in compensation  and employee  benefits,
$8,000 in occupancy and equipment expenses and $102,000 in other expenses. Other
expenses  increased  $102,000  primarily because of increases of expenses in the
holding company of $36,000 in professional fees, $8,000 in advertising,  $32,000
in  franchise  and  shares  taxes and  $24,000  in other  fees  related to stock
transactions in the holding company.

          Income Taxes.  Income taxes increased $60,000 or 68.2% to $148,000 for
the year ended  December 31, 1997 from  $88,000 for the year ended  December 31,
1996.  The  increase  in income  taxes was the  result  of the  increase  in net
interest  income  after  provision/recovery  from loan  losses and  increase  in
non-interest income as well as the decrease in non-interest expense.


                                       11
<PAGE>
Interest Rate Sensitivity

          Net  Portfolio  Value.  In order to encourage  associations  to reduce
their interest rate risk, the OTS adopted a rule  incorporating an interest rate
risk ("IRR") component into the risk-based capital rules. The IRR component is a
dollar  amount  that will be  deducted  from total  capital  for the  purpose of
calculating an institution's  risk-based capital  requirement and is measured in
terms of the  sensitivity  of its net  portfolio  value  ("NPV")  to  changes in
interest rates. NPV is the difference  between incoming and outgoing  discounted
cash flows  from  assets,  liabilities,  and  off-balance  sheet  contracts.  An
institution's  IRR  is  measured  as the  change  to its  NPV as a  result  of a
hypothetical 200 basis point ("bp") change in market interest rates. A resulting
change in NPV of more than 2% of the  estimated  market value of its assets will
require the  institution  to deduct from its capital 50% of that excess  change.
The rules provide that the OTS will  calculate  the IRR component  quarterly for
each institution.  The Company,  based on asset size and risk-based capital, has
been  informed  by the OTS that it is exempt from this rule.  Nevertheless,  the
following table presents the Company's NPV at December 31, 1997 as calculated by
the OTS, based on information provided to the OTS by the Company.
<TABLE>
<CAPTION>

                 Change in
              Interest Rates                          December 31, 1997
             In Basis Points                         Net Portfolio Value
              (Rate Shock)                    Amount                  Change
              ------------                    ------                  ------
                                                     (Dollars in thousands)
<S>                                            <C>                     <C>
                   400                         2,786                   (27)%
                   300                         3,168                   (17)
                   200                         3,471                    (9)
                   100                         3,689                    (4)
                Static                         3,825                     -
                  (100)                        3,940                     3
                  (200)                        4,102                     7
                  (300)                        4,387                    15
                  (400)                        4,793                    25
</TABLE>
          As shown in the above table, increase in interest rates will result in
net decreases in the Company's NPV, while decrease in interest rates will result
in smaller  net  increases  in the NPV.  For  example,  the table  reflects  the
Company's NPV decreasing 17% if interest rates  increased by 300bp,  whereas the
NPV would increase by 15% if interest rates decreased by 300bp.

          Certain  shortcomings are inherent in the method of analysis presented
in both the computation of NPV and in the analysis of the maturing and repricing
of interest-earning  assets and interest-bearing  liabilities.  Although certain
assets and liabilities may have similar  maturities or periods within which they
will reprice,  they may react  differently to changes in market  interest rates.
The interest rates on certain types of assets and  liabilities  may fluctuate in
advance of changes in market interest rates, while interest rates on other types
may lag behind changes in market rates. Additionally, adjustable-rate mortgages


                                       12
<PAGE>
have features which restrict changes in interest rates on a short-term basis and
over the life of the asset.  The  proportion of  adjustable-rate  loans could be
reduced in future periods if market  interest rates would decrease and remain at
lower  levels for a sustained  period,  due to increased  refinancing  activity.
Further,  in the  event of a change  in  interest  rates,  prepayment  and early
withdrawal levels would likely deviate  significantly  from those assumed in the
table.  Finally, the ability of many borrowers to service their  adjustable-rate
debt may decrease in the event of a sustained interest rate increase.

Liquidity and Capital Resources

          The Company's  primary  sources of funds are deposits,  borrowings and
principal  and interest  payments on loans and  mortgage-backed  and  investment
securities.  In the event  that the  Company  should  require  funds  beyond its
ability to generate them internally,  additional  sources of funds are available
through the use of FHLB advances.  While  scheduled loan repayments and maturing
investments are relatively predictable,  deposit flows and early loan repayments
are  more  influenced  by  interest  rates,   general  economic  conditions  and
competition.

          Federal regulations require the Association to maintain minimum levels
of liquid  assets.  The required  percentage  has varied from time to time based
upon  economic  conditions  and savings  flows and is currently 5 percent of net
withdrawable  savings  deposits and borrowings  payable on demand in one year or
less during the  preceding  calendar  month.  Liquid assets for purposes of this
ratio include cash, certain time deposits,  U. S. Government,  government agency
and other securities and obligations  generally  having remaining  maturities of
less than five years.  The  Association's  most liquid  assets are cash and cash
equivalents,  short-term investments and mortgage-backed and related securities.
The  levels  of these  assets  are  dependent  on the  Association's  operating,
financing, lending and investing activities during any given period. At December
31, 1997 and 1996,  liquidity  eligible  assets  totaled  $2.1  million and $2.0
million,  respectively.  At those dates, the Association's liquidity ratios were
8.2% and 7.8%, respectively, in excess of the 5% minimum regulatory requirement.

          The Company  uses its liquid  resources  principally  to meet  ongoing
commitments,  to fund maturing  certificates of deposit and deposit withdrawals,
to invest, to fund existing and future loan commitments,  to maintain  liquidity
and to meet  operating  expenses.  At December 31,  1997,  the  Association  had
outstanding commitments to extend credit which amounted to $509,075.  Management
believes  that loan  repayments  and other  sources of funds will be adequate to
meet the Company's foreseeable liquidity needs.

          At  December  31,  1997,   the   Association   had  $17.8  million  in
certificates  of deposit  due within  one year and $8.0  million in savings  and
checking accounts. Based on past experience, management expects that most of the
deposits will be retained or replaced by new deposits.

          The primary  investment  activities of the Company are the origination
of one- to four-  family  residential,  commercial  real  estate,  one- to four-
family construction, land and consumer loans, and the purchase of investment and
mortgage-backed securities. During the years ended December 31, 1997 and 1996,


                                       13
<PAGE>
the  Company   originated   loans   totaling  $7.1  million  and  $5.9  million,
respectively.  During those same periods, the Company purchased  mortgage-backed
securities  totaling  $2.9  million  and  $3.9  million,   respectively.   These
activities were funded  primarily by deposits and principal  repayments on loans
and mortgage-backed securities.

          In  connection  with its  conversion  on  September  27,  1996  from a
federally chartered mutual savings and loan association to a federally chartered
stock  savings  and  loan  association,   the  Association's  capital  structure
increased  substantially  with the  issuance of stock and the  formation  of its
holding company, First Allen Parish Bancorp, Inc.

          The Company  issued  264,506  shares of common stock that  resulted in
$2,645 of common  stock and  $2,298,842  of  additional  paid-in  capital net of
conversion  costs of $345,577.  Capital ratios (see Note 20 in the  consolidated
financial  statements)  at  December  31,  1997 were  significantly  higher than
regulatory  minimum  requirements.  The Association had tangible capital of $3.6
million or 11.2% of total assets,  which is approximately $3.2 million above the
minimum requirement of 1.5% of total assets. The Association had core capital of
$3.6 million or 11.2% of total  assets,  which is $2.7 million above the minimum
leverage ratio of 3.0%. The  Association  had total  risk-based  capital of $3.8
million and total  risk-weighted  assets of $14.1  million,  or total capital of
26.9% of risk-weighted assets. This was $2.7 million above the 8.0% requirement.

          The  deposits  of savings  associations  such as the  Association  are
presently  insured  by the  SAIF  which  along  with  the  BIF is one of the two
insurance  funds  administered  by the FDIC.  On September  30, 1996,  President
Clinton signed into law the fiscal year 1997 Omnibus  Appropriations  Bill which
included  the  Deposit  Insurance  Funds  Act of  1996.  Provisions  of the bill
included  a  one-time  assessment  on  SAIF-insured   deposits.   The  Company's
assessment  of  $170,000  was  recorded  in  the  1996  consolidated   financial
statements. Following the recapitalization, SAIF premiums will be reduced to the
same level as for BIF deposits.

          Separately,  Financing Corporation (FICO) bond payments will be shared
by SAIF and BIF-insured  financial  institutions with SAIF-insured  institutions
paying 80% of the annual  cost and  BIF-insured  institutions  paying 20% of the
annual cost through December 31, 1999, after which assessments will be paid on a
pro rata basis.  Until then,  the FICO  assessment  will be 1.3 basis points for
banks versus 6.4 basis points for thrifts per $100 of deposits.  Previously, the
minimum combined SAIF and FICO assessments for thrifts had been 23 basis points.
Although the special one-time assessment  significantly  increased  non-interest
expense for 1996, the anticipated  reduction in the premium schedule reduced the
Company's federal insurance premiums for 1997 to $17,000 from $229,000 in 1996.

Recent Accounting Developments

          SFAS No. 125,  Accounting  for  Transfers  and  Servicing of Financial
Assets  and  Extinguishments  of  Liabilities,  supersedes  SFAS No.  122 and is
effective   for  all   transfers   and   servicing  of   financial   assets  and
extinguishments of liabilities occurring after December 31, 1996. This statement
provides  accounting  and  reporting  standards  for  transfers and servicing of
financial  assets  and   extinguishments  of  liabilities  based  on  consistent
application  of a  financial-components  approach  that  focuses on control.  It
distinguishes  transfers of financial  assets that are sales from transfers that
are secured borrowings.



                                       14
<PAGE>
         Under the financial-components approach, after a transfer of financial
assets,  an entity recognizes all financial and servicing assets it controls and
liabilities  it has  incurred  and  recognizes  financial  assets  it no  longer
controls and liabilities that have been extinguished.  The  financial-components
approach  focuses on the assets and  liabilities  that exist after the transfer.
Many of these assets and  liabilities  are  components of financial  assets that
existed  prior to the  transfer.  If a transfer does not meet the criteria for a
sale,  the  transfer  is  accounted  for as a secured  borrowing  with pledge of
collateral.

          SFAS No. 128,  Earnings per Share,  supersedes  APB opinion No. 15 and
AICPA Accounting  Interpretation's  1-102 of Opinion No. 15 and is effective for
financial  statements  issued for periods  ending after  December  31, 1997.  It
establishes  standards  for  computing  and  presenting  earnings  per share and
applies to entities with  publicly held common stock or potential  common stock.
This statement  simplifies the standards for computing  earnings per share found
in APB  Opinion  No. 15,  Earnings  per  Share,  and makes  them  comparable  to
international  earnings per share  standards.  It replaces the  presentation  of
primary  earnings per share with a presentation  of basic earnings per share. It
also requires dual  presentation of basic and diluted  earnings per share on the
face of the income  statement for all entities with complex  capital  structures
and requires a  reconciliation  of the  numerator and  denominator  of the basic
earnings per share  computation to the numerator and  denominator of the diluted
earnings per share.

         SFAS No.  129,  Disclosure  of  Information  about  Capital  Structure,
supersedes  specific  disclosure  requirements of APB opinions No. 10 and No. 15
and  FASB  Statement  No.  47 and  consolidates  them in this  statement.  It is
effective for financial  statements issued for periods ending after December 15,
1997. This statement  continues the previous  requirements  to disclose  certain
information  about an entity's  capital  structure found in APB opinions No. 10,
Omnibus Opinion - 1996, and No. 15,  Earnings per Share,  and FASB Statement No.
47, Disclosure of Long-Term  Obligations,  for entities that were subject to the
requirements  of those  standards.  It  eliminates  the  exemption  of nonpublic
entities from certain  disclosure  requirements of Opinion No. 15 as provided by
FASB  Statement  No. 21,  Suspension  of the Reporting of Earnings Per Share and
Segment Information of Nonpublic Enterprises.

          SFAS No. 130, Reporting  Comprehensive  Income,  establishes standards
for reporting and display of comprehensive income and its components  (revenues,
expenses,  gains  and  losses)  in  a  full  set  of  general-purpose  financial
statements and is effective for fiscal years  beginning after December 31, 1997.
It requires that all items that are required to be recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  This statement does not require a specific format of that financial
statement but requires that an enterprise  display an amount  representing total
comprehensive income for the period in that financial  statement.  An enterprise
is required to classify items of other comprehensive income by their nature in a
financial  statement and display the accumulated  balance of other comprehensive
income separately from retained  earnings and additional  paid-in capital in the
equity section of a statement of financial position.




                                       15
<PAGE>
          SFAS No. 131,  Disclosures about Segments of an Enterprise and Related
Information,  established standards for the way that public business enterprises
report information about operating  segments in annual financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments  in  interim  financial   reports  issued  to  shareholders.   It  also
establishes  standards  for related  disclosures  about  products and  services,
geographic areas, and major customers.  This Statement supersedes FASB Statement
No. 14, Financial Reporting for Segments of a Business  Enterprise,  but retains
the  requirement to report  information  about major  customers.  It amends FASB
Statement No. 94,  Consolidation of All Majority-Owned  Subsidiaries,  to remove
the special disclosure requirements for previously unconsolidated  subsidiaries.
This  Statement  does  not  apply  to  nonpublic  business   enterprises  or  to
not-for-profit   organizations.   This  statement  is  effective  for  financial
statements for periods beginning after December 15, 1997.

          Management  believes  adoption of SFAS Nos. 125, 128, 129, 130 and 131
will  not have a  material  effect  on the  financial  position  or  results  of
operations, nor will adoption require additional capital resources.

Impact of Inflation and Changing Prices

          The  audited  Consolidated  Financial  Statements  and  Notes  thereto
presented  herein  have been  prepared in  accordance  with  generally  accepted
accounting  principles.  These principles  generally  require the measurement of
financial position and operating results in terms of historical dollars, without
considering  changes in the relative  purchasing power of money over time due to
inflation.

          The  primary  assets  and  liabilities  of  the  Company  and  savings
institutions  such as the  Association  are  monetary  in  nature.  As a result,
interest rates have a more significant impact on the Company's  performance than
the effects of general  levels of inflation.  Interest  rates,  however,  do not
necessarily  move in the same direction or with the same magnitude as the prices
of goods and services,  since such prices are affected by inflation. In a period
of rapidly rising  interest rates,  the liquidity and maturity  structure of the
Company's  assets and  liabilities are critical to the maintenance of acceptable
performance levels.

          The principal effect of inflation, as distinct from levels of interest
rates, on the Company's earnings is in the area of non-interest expense. Expense
items such as employee compensation and benefits,  occupancy and equipment costs
may be subject to increases as a result of inflation.  An  additional  effect of
inflation  is the  possible  increase  in the  dollar  value  of the  collateral
securing  loans made by the  Company.  The  Company is unable to  determine  the
extent,  if any, to which the properties  securing its loans have appreciated in
dollar value due to inflation.



                                       16
<PAGE>

                          INDEPENDENT AUDITOR'S REPORT







The Board of Directors
First Allen Parish Bancorp, Inc. and Subsidiary
Oakdale, Louisiana


          We have audited the accompanying  consolidated statements of financial
condition of First Allen Parish Bancorp,  Inc. and Subsidiary as of December 31,
1997 and 1996,  and the related  consolidated  statements of income,  changes in
stockholders' equity and cash flows for the years then ended. These consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

          We conducted our audits in accordance with generally accepted auditing
standards.  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
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 financial position of First
Allen Parish Bancorp,  Inc. and Subsidiary as of December 31, 1997 and 1996, and
the results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.


                                     /s/ Kolder, Champagne, Slaven & Rainey, LLC
                                     -------------------------------------------
                                         Kolder, Champagne, Slaven & Rainey, LLC
                                         Certified Public Accountants



Lafayette, Louisiana
January 29, 1998


                                       17
<PAGE>
<TABLE>
<CAPTION>
                              FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                              Consolidated Statements of Financial Condition
                                        December 31, 1997 and 1996

                                                                                1997             1996
                                                                           ------------      ------------
                                 ASSETS
<S>                                                                        <C>               <C>
Cash and cash equivalents:
  Interest-bearing ...................................................     $  1,297,774      $    847,896
  Non-interest bearing ...............................................          586,468           626,409
Mortgage-backed and related securities - held-to-maturity (estimated
  market value of $11,609,680 and $12,979,395) .......................       11,668,946        13,238,771
Mortgage-backed and related securities - available-for-sale,
  estimated market value .............................................        5,478,291         3,946,564
Loans receivable, net ................................................       13,645,908        11,937,990
Accrued interest receivable ..........................................          229,363           206,457
Other receivables ....................................................           62,895            42,800
Foreclosed real estate, net of allowance for losses of $ - and $25,807             --              74,856
Federal Home Loan Bank stock, at cost ................................          259,300           259,200
Premises and equipment, at cost, less accumulated depreciation .......          262,447           282,353
Other assets .........................................................           27,795            26,574
                                                                           ------------      ------------
    Total assets .....................................................     $ 33,519,187      $ 31,489,870
                                                                           ============      ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

Deposits .............................................................     $ 28,656,542      $ 25,749,999
Advances from Federal Home Loan Bank .................................             --           1,200,000
Advances by borrowers for taxes and insurance ........................           23,212            31,854
Federal income taxes:
  Current ............................................................           54,956             2,843
  Deferred ...........................................................          135,398           122,265
Dividends payable ....................................................           39,676              --
Accrued expenses and other liabilities ...............................           27,620            44,624
Deferred income ......................................................           47,065            18,818
                                                                           ------------      ------------
    Total liabilities ................................................       28,984,469        27,170,403


                         STOCKHOLDERS' EQUITY

Serial preferred stock (.01 par value,
  100,000 shares authorized, none issued or outstanding) .............             --                --
Common stock (.01 par value, 900,000 shares
  authorized, 264,506 shares issued and outstanding) .................            2,645             2,645
Additional paid-in capital ...........................................        2,314,066         2,298,842
Retained earnings, substantially restricted ..........................        2,405,441         2,230,294
Unrealized loss on mortgage-backed and related securities held
  available-for-sale, net of tax benefit at $1,117 and $3,093 ........           (2,284)           (6,004)
Unearned employee benefits ...........................................         (185,150)         (206,310)
                                                                           ------------      ------------
    Total stockholders' equity .......................................        4,534,718         4,319,467
                                                                           ------------      ------------
    Total liabilities and stockholders' equity .......................     $ 33,519,187      $ 31,489,870
                                                                           ============      ============
</TABLE>
The accompanying notes are an integral part of this statement.


                                                    18
<PAGE>
<TABLE>
<CAPTION>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                        Consolidated Statements of Income
                     Years Ended December 31, 1997 and 1996

                                                        1997            1996
                                                   -----------      -----------
<S>                                                <C>              <C>
Interest income:
  Loans receivable:
    First mortgage loans .....................     $   911,296      $   838,531
    Consumer and other loans .................         255,480          209,692
  Mortgage-backed and related securities .....       1,041,868          987,064
  Other interest earning assets ..............          93,760          100,071
                                                   -----------      -----------
      Total interest income ..................       2,302,404        2,135,358
                                                   -----------      -----------

Interest expense:
  Deposits ...................................       1,210,611        1,142,332
  Borrowed funds .............................          15,926            8,909
                                                   -----------      -----------
      Total interest expense .................       1,226,537        1,151,241
                                                   -----------      -----------

Net interest income ..........................       1,075,867          984,117
(Provision for) recovery from loan losses ....          (3,000)           7,972
                                                   -----------      -----------
Net interest income after (provision for)
   recovery from loan losses .................       1,072,867          992,089
                                                   -----------      -----------
Non-interest income:
  Service charges on deposits ................         193,605          190,176
  Insurance commissions earned ...............          10,934           11,512
  Loan origination and servicing fees ........          44,433           31,329
  Net other real estate expenses .............          (3,227)          (3,502)
  Gain on foreclosed real estate .............           6,417            1,408
  Other operating revenues ...................          24,657           17,890
                                                   -----------      -----------
      Total non-interest income ..............         276,819          248,813
                                                   -----------      -----------
Non-interest expense:
  Compensation and employee benefits .........         462,626          394,039
  Occupancy and equipment expenses ...........          66,935           58,565
  SAIF deposit insurance premiums ............          17,160          228,542
  Stationery and printing ....................          51,966           58,250
  Data processing ............................          58,933           58,575
  Other expenses .............................         289,857          187,906
                                                   -----------      -----------
      Total non-interest expenses ............         947,477          985,877
                                                   -----------      -----------

      Earnings before income taxes ...........         402,209          255,025

Income tax expense ...........................         147,709           88,098
                                                   -----------      -----------

      Net earnings ...........................     $   254,500      $   166,927
                                                   ===========      ===========

Net earnings per share .......................     $      1.04      $      0.69
                                                   ===========      ===========

Average common shares outstanding ............         244,669          243,346
</TABLE>
The accompanying notes are an integral part of this statement.


                                       19
<PAGE>
<TABLE>
<CAPTION>
                                           FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                                     Consolidated Statements of Changes in Stockholders' Equity
                                               Years Ended December 31, 1997 and 1996


                                                                                  Unrealized loss on
                                                                                 Mortgage-backed and
                                                       Additional                Related Securities      Unearned
                                              Common     Paid-in      Retained    Available-for-sale,    Employee
                                               Stock     Capital      Earnings    Net of Tax Benefit     Benefits          Total
                                               -----     -------      --------    ------------------     --------          -----
<S>                                           <C>       <C>           <C>               <C>               <C>           <C>
Balance, December 31, 1995                    $ -       $     -       $2,063,367        $(4,781)          $    -        $2,058,586

Sale of common stock, net of offering
    costs of $345,577                          2,645     2,296,839          -              -                   -         2,299,484

Unearned ESOP shares                            -             -             -              -               (211,600)      (211,600)

Net earnings                                    -             -          166,927           -                   -           166,927

Allocation of ESOP shares                       -            2,003          -              -                  5,290          7,293

Change in unrealized loss on securities
  available-for-sale (net of
  tax benefit of $630)                          -            -              -            (1,223)               -            (1,223)
                                              ------    ----------    ----------        -------           ---------     ----------

Balance, December 31, 1996                     2,645     2,298,842     2,230,294         (6,004)           (206,310)     4,319,467

Net earnings                                    -             -          254,500           -                   -           254,500

Dividends                                       -             -          (79,353)          -                   -           (79,353)

Allocation of ESOP shares                       -           15,224          -              -                 21,160         36,384

Change in unrealized loss on securities
   available-for-sale
  (net of tax expense of $1,916)                -             -             -             3,720                -             3,720
                                              ------    ----------    ----------        -------           ---------     ----------
Balance, December 31, 1997                    $2,645    $2,314,066    $2,405,441        $(2,284)          $(185,150)    $4,534,718
                                              ======    ==========    ==========        =======           =========     ==========

</TABLE>

The accompanying notes are an integral part of this statement.


                                       20
<PAGE>
<TABLE>
<CAPTION>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                     Years Ended December 31, 1997 and 1996




                                                                       1997             1996
                                                                   -----------      -----------

<S>                                                                <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net earnings ...............................................     $   254,500      $   166,927
                                                                   -----------      -----------
  Adjustments  to  reconcile  net  earnings
     to net cash  provided  by  operating
    activities:
      Depreciation of premises and equipment .................          36,267           36,332
      Provision for (recovery from) loan losses ..............           3,000           (7,972)
      Gain on sale of foreclosed real estate .................          (6,417)          (1,408)
      Gain on sale of mortgage-backed and related securities-
        available-for-sale ...................................          (2,826)            --
      Premium amortization net of discount accretion .........          62,830           43,481
      Deferred income taxes ..................................          13,133            5,787
      Stock dividend on FHLB stock ...........................         (15,000)         (14,800)
      Changes in assets and liabilities -
        Increase in accrued interest receivable ..............         (22,906)          (7,873)
        Increase in prepaid assets ...........................          (1,137)          (3,358)
        Increase (decrease) in accrued expenses and other
          liabilities ........................................         (17,004)           3,162
        Increase in current income taxes payable .............          52,113            2,843
        (Increase) decrease in deferred income ...............         (28,247)           3,646
        (Increase) decrease in other receivables .............         (20,095)           4,320
                                                                   -----------      -----------
            Total adjustments ................................          53,711           64,160
                                                                   -----------      -----------

            Net cash provided by operating activities ........         308,211          231,087
                                                                   -----------      -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Principal repayment of mortgage-backed and related
    securities - held-to-maturity ............................       1,876,561        1,700,147
  Principal repayments of mortgage-backed and related
    securities - available-for-sale ..........................         593,367          385,904
  Purchase of mortgage-backed and related
    securities - held-to-maturity ............................        (328,438)      (2,699,731)
  Purchase of mortgage-backed and related
    securities - available-for-sale ..........................      (2,542,913)      (1,468,195)
  Sale of mortgage-backed and related securities - available -
    for-sale .................................................         382,328             --
  Net increase in loans made to customers ....................      (1,710,918)        (699,290)
  Proceeds from sale of foreclosed real estate ...............         147,500           30,000
  Purchase of property and equipment .........................         (16,336)          (8,890)
  Improvements on foreclosed real estate .....................            --            (14,746)
                                                                   -----------      -----------
            Net cash used by investing
              activities .....................................      (1,598,849)      (2,774,801)
                                                                   -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in demand deposits,
    NOW accounts, passbook savings accounts, and
    certificates of deposits .................................       2,948,893         (832,880)
  Increase (decrease) in advances from FHLB ..................      (1,200,000)       1,200,000
  Net decrease in advances by borrowers
    for taxes and insurance ..................................          (8,642)         (11,179)
  Issuance of common stock ...................................            --          2,299,483
  Dividends paid to shareholders .............................         (39,676)            --
                                                                   -----------      -----------
            Net cash provided by financing
              activities .....................................       1,700,575        2,655,424
                                                                   -----------      -----------

            Net increase in cash and cash equivalents ........         409,937          111,710

CASH AND CASH EQUIVALENTS, beginning of period ...............       1,474,305        1,362,595
                                                                   -----------      -----------

CASH AND CASH EQUIVALENTS, end of period .....................     $ 1,884,242      $ 1,474,305
                                                                   ===========      ===========
</TABLE>
                                   (continued)

                                       21
<PAGE>
<TABLE>
<CAPTION>
                     FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                    Consolidated Statements of Cash Flows (continued)
                         Years Ended December 31, 1997 and 1996




                                                                 1997           1996
<S>                                                         <C>             <C>
Supplemental Disclosures

Cash paid for:
  Interest on deposits, advances, and other borrowings      $ 1,226,767     $ 1,151,362
  Income taxes ........................................         134,956          82,811

Transfers from loans to real estate acquired through
  foreclosure .........................................          27,919          74,252

Proceeds from sales of foreclosed real estate financed
  through loans .......................................         147,500          30,000

Total (increase) decrease in unrealized loss on
  mortgage-backed and related securities available-for-
  sale, net of tax expense (benefit) ..................           3,720          (1,223)

Issuance of unearned ESOP shares ......................            --           211,600


</TABLE>



The accompanying notes are an integral part of this statement.


                                           22

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                   Notes to Consolidated Financial Statements



 (1)    Summary of Significant Accounting Policies

                The  accounting  and  reporting  policies of First Allen  Parish
        Bancorp,  Inc. and Subsidiary and the methods of applying those policies
        conform with generally accepted  accounting  principles.  The accounting
        and reporting  policies and the methods of applying those policies which
        significantly affect the determination of financial position, results of
        operations, and cash flows are summarized below.

        A.      The consolidated  financial  statements  include the accounts of
                the parent company,  First Allen Parish Bancorp,  Inc. (Company)
                and its fully-owned  subsidiary,  First Federal Savings and Loan
                Association  of Allen Parish  (Association).  First Allen Parish
                Bancorp,  Inc.  acquired  all of the  outstanding  stock  of the
                Association  effective  September  27,  1996.  All  intercompany
                accounts and transactions are eliminated.

        B.      Cash and Cash Equivalents

                        Cash  and   cash   equivalents   consist   of  cash  and
                interest-bearing  deposits  due  from  other  institutions.  For
                purposes of the statements of cash flows, the Company  considers
                all of these highly liquid  financial  instruments with original
                maturities,  when  purchased  of three months or less to be cash
                equivalents.

                        Cash and cash  equivalents  at  December  31 include the
                following:

                                                            1997         1996

                Interest-bearing deposits
                  in other institutions                 $1,297,774    $  847,896
                Non-interest bearing deposits              586,468       626,409

                    Total                               $1,884,242    $1,474,305
                                                        ==========    ==========

        C.      Mortgage-Backed and Related Securities

                        The Company follows Statement of Financial Accounting
                Standards No. 115 regarding classification of all debt
                securities and certain equity securities.




                                       23

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                        Mortgage-backed  and related  securities that management
                has the ability and intent to hold to maturity are classified as
                held-to-maturity  and carried at cost, adjusted for amortization
                of  premium   and   accretion   of   discounts   using   methods
                approximating  the interest method.  Other  mortgage-backed  and
                related securities are classified as available-for-sale  and are
                carried at fair value.  Unrealized holding gains and losses, net
                of tax,  on  securities  available-for-sale  are  recognized  as
                direct  increases  or  decreases  in  retained   earnings  until
                realized.

                        At December  31,  1997,  the Company had no  outstanding
                commitments to sell securities. Gains of $2,826 were realized in
                1997 on the sale of mortgage-backed  and related securities held
                available-for-sale by using the specific  identification method.
                All sales are made without recourse.  Gross unrealized losses in
                the  held-to-maturity  portfolio  and in the  available-for-sale
                portfolio are as follows:
<TABLE>
<CAPTION>
                                                       December 31,
                                                 -----------------------
                                                   1997          1996
                                                   Gross        Gross
                                                 Unrealized   Unrealized
                                                    Loss         Loss
                                                    ----         ----
<S>                                               <C>           <C>
                Held-to-maturity
                  securities                      $59,266       $259,376
                Available-for-sale
                  securities                        3,460          9,097
</TABLE>

        D.      Loans Receivable

                        Loans   receivable   are  stated  at  unpaid   principal
                balances,  less the allowance for loan losses,  and net deferred
                loan origination fees and discounts.

                        Discounts  on  consumer  loans are  recognized  over the
                lives of the loans using the interest method.

                        A loan  (including a loan defined as impaired under SFAS
                114) is classified  as nonaccrual  when the loan becomes 90 days
                or more past due.  Any  unpaid  interest  previously  accrued on
                those loans is reversed from income.  Interest income  generally
                is  not  recognized  on  specific   impaired  loans  unless  the
                likelihood of further loss is remote. Interest payments received
                on such loans are applied as a reduction  of the loan  principal
                balances.   Interest  income  on  other   nonaccrual   loans  is
                recognized only to the extent of interest payments received.



                                       24

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                        The allowance for loan losses is  established  through a
                provision  for loan losses based on  management's  evaluation of
                the risk  inherent  in its loan  portfolio  and  changes  in the
                nature and volume of its loan  activity,  including  those loans
                which are  being  specifically  monitored  by  management.  Such
                evaluation,  which  includes  a review of loans  for which  full
                collectibility  may not be reasonably  assured,  considers among
                other matters,  the loan  classifications  discussed  above, the
                estimated  fair  value of the  underlying  collateral,  economic
                conditions, historical loan loss experience, the amount of loans
                outstanding  and  other  factors  that  warrant  recognition  in
                providing for an adequate loan loss  allowance.  Allowances  for
                impaired  loans are  generally  determined  based on  collateral
                values or the present value of estimated cash flows. The Company
                applies FASB  Statement  No. 114  Accounting  by  Creditors  for
                Impairment of a Loan,  which  requires that impaired  loans that
                are within the scope of this  statement be measured based on the
                present  value of expected  future cash flows  discounted at the
                loan's effective  interest rate or at the loan's market price or
                the fair  value  of the  collateral  if the  loan is  collateral
                dependent.  The Company uses the loan-by-loan measurement method
                for all loans, however,  residential mortgage loans and consumer
                installment loans are considered to be groups of smaller balance
                homogenous loans and are  collectively  evaluated for impairment
                and are not subject to SFAS 114 measurement  criteria. A loan is
                considered  impaired  when it is probable  that all  contractual
                amounts due will not be collected in  accordance  with the terms
                of the loan.  A loan is not deemed to be  impaired if a delay in
                receipt of payment  is  expected  to be less than 60 days or if,
                during a longer period of delay,  the Company expects to collect
                all amounts due,  including  interest accrued at the contractual
                rate  during  the  period of the delay.  Factors  considered  by
                management  include the property location,  economic  conditions
                and any  unique  circumstances  affecting  the loan.  Due to the
                composition of the Company's loan  portfolio,  the fair value of
                collateral is utilized to measure virtually all of the Company's
                impaired  loans.  If the fair value of an impaired  loan is less
                than the  related  recorded  amount,  a valuation  allowance  is
                established  or the  writedown is charged  against the allowance
                for loan losses if the impairment is considered to be permanent.

                        FASB  Statement  No. 118,  Accounting  by Creditors  for
                Impairment of a Loan-Income Recognition and Disclosures, amended
                SFAS No. 114 to allow a creditor  to use  existing  methods  for
                recognizing  interest income on impaired loans.  The Company has
                elected to continue to use its existing  nonaccrual  methods for
                recognizing interest on impaired loans.

                                       25
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



        E.      Loan Origination Fees, Commitment Fees and Related Costs

                        FASB  Statement No. 91,  Accounting  for  Non-refundable
                Fees and Costs  Associated  with  Originating or Acquiring Loans
                and Initial  Direct  Costs of Leases,  states that loan fees and
                certain direct loan origination  costs are normally deferred and
                the net fee or cost is  recognized  as an adjustment to interest
                income using a method which does not differ  materially from the
                interest  method,  over  the  contractual  life  of  the  loans,
                adjusted  for  estimated  prepayments  based  on  the  Company's
                historical  prepayment  experience.  Commitment  fees and  costs
                relating to commitments  whose  likelihood of exercise is remote
                should  be   recognized   over  the   commitment   period  on  a
                straight-line basis. If the commitment is subsequently exercised
                during  the  commitment   period,   the  remaining   unamortized
                commitment fee at the time of exercise should be recognized over
                the life of the loan as an  adjustment  of yield.  Loan fees and
                certain  direct loan  origination  costs are not deferred at the
                Company,   however,   due  to  immateriality.   These  fees  are
                recognized in the period collected.  The Company does not charge
                commitment fees.

        F.      Foreclosed Real Estate

                        Real estate properties  acquired through,  or in lieu of
                loan foreclosures are initially recorded at the lower of cost or
                fair  value  minus  estimated  costs  to  sell  at the  date  of
                foreclosure.  Costs relating to development  and  improvement of
                property are capitalized,  whereas costs relating to the holding
                of property are expensed.

                        Valuations are periodically performed by management, and
                an allowance for losses is established by a charge to operations
                if the carrying  value of a property  exceeds its  estimated net
                realizable value.

        G.      Federal Home Loan Bank Stock

                        Federal  Home Loan Bank (FHLB)  stock is carried at cost
                due to its lack of marketability and restricted ownership.  FHLB
                stock can be sold back only at its par value and only to FHLB or
                other member institutions.  FHLB stock is evaluated annually for
                impairment.




                                       26
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


        H.      Income Taxes

                        Provisions  for income taxes are based on taxes  payable
                for the  current  year  and  include  deferred  income  taxes on
                temporary  differences in the recognition of income and expenses
                for  tax  and  financial  statement  purposes,   primarily  from
                preparing  tax  returns  on the  cash  basis of  accounting  and
                preparing  the  financial   statements  on  the  accrual  basis.
                Deferred taxes are computed  utilizing the method  prescribed in
                FASB Statement 109, Accounting for Income Taxes.

        I.      Premises and Equipment

                        Land is carried at cost. Buildings, furniture, fixtures,
                and   equipment   are   carried   at  cost,   less   accumulated
                depreciation.  Maintenance,  repairs,  and  minor  renewals  are
                expensed  as  incurred.   Property  retired  or  sold,  and  the
                accumulated  depreciation  is removed  from the  accounts in the
                year of sale or retirement.  Gains or losses on disposition  are
                taken into income.

                        The  Company   computes   depreciation  by  use  of  the
                straight-line method over the following estimated useful lives:

                Buildings                                  40 years
                Furniture and fixtures                   7-10 years
                Automobiles                                 5 years

                        For income tax purposes, depreciation of assets acquired
                prior to  January  1, 1981 is  calculated  on the  straight-line
                method,  and  depreciation of assets acquired after December 31,
                1980 is calculated  using the  Accelerated  Cost Recovery System
                (ACRS) and Modified  Accelerated Cost Recovery System (MACRS) of
                the  Internal  Revenue  Service.  Provision is made for deferred
                income  taxes  applicable  to  the  difference  in  depreciation
                charges.

        J.      Deferred Income

                        Interest on loans  collected  in advance is deferred and
                is recognized to interest  income over the  contractual  life of
                the  loans.   Profits   from   repossessed   real   estate  sale
                transactions for which the proceeds were financed by the Company
                are  deferred  and  recognized  to income based upon the amount,
                composition,  and source of the down  payment  made by the buyer
                and periodic cash payments by the buyer.


                                       27
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


        K.      Earnings Per Share

                        Earnings  per share is based upon the  weighted  average
                common   and  common   equivalent   shares   outstanding,   less
                unallocated ESOP shares.

        L.      Use of Estimates

                        Management  of the  Association  has  made a  number  of
                estimates  and  assumptions  relating to the reporting of assets
                and  liabilities  and the  disclosure of  contingent  assets and
                liabilities to prepare these consolidated  financial  statements
                in conformity  with generally  accepted  accounting  principles.
                Actual results could differ from those estimates.

        M.      New Accounting Pronouncements

                        SFAS No. 125,  Accounting for Transfers and Servicing of
                Financial Assets and Extinguishments of Liabilities,  supersedes
                SFAS No. 122 and is effective for all transfers and servicing of
                financial assets and  extinguishments  of liabilities  occurring
                after December 31, 1996. This statement provides  accounting and
                reporting  standards  for  transfers  and servicing of financial
                assets and  extinguishments  of liabilities  based on consistent
                application of a  financial-components  approach that focuses on
                control. It distinguishes transfers of financial assets that are
                sales from transfers that are secured borrowings.

                        Under  the   financial-components   approach,   after  a
                transfer of financial assets, an entity recognizes all financial
                and servicing assets it controls and liabilities it has incurred
                and  recognizes  financial  assets  it no  longer  controls  and
                liabilities     that     have     been     extinguished.     The
                financial-components   approach   focuses   on  the  assets  and
                liabilities that exist after the transfer.  Many of these assets
                and liabilities are components of financial  assets that existed
                prior to the transfer.  If a transfer does not meet the criteria
                for a sale, the transfer is accounted for as a secured borrowing
                with pledge of collateral.

                        SFAS No. 128, Earnings per Share, supersedes APB opinion
                No. 15 and AICPA  Accounting  Interpretation's  1-102 of Opinion
                No. 15 and is  effective  for  financial  statements  issued for
                periods ending after December 31, 1997. It establishes standards
                for computing and  presenting  earnings per share and applies to
                entities  with  publicly  held common stock or potential  common
                stock.  This  statement  simplifies  the standards for computing
                earnings  per share found in APB Opinion  No. 15,  Earnings  per
                Share, and makes them comparable to  international  earnings per
                share standards. It replaces the presentation of


                                       28
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                primary earnings per share with a presentation of basic earnings
                per  share.  It also  requires  dual  presentation  of basic and
                diluted  earnings per share on the face of the income  statement
                for all entities with complex capital  structures and requires a
                reconciliation  of the  numerator and  denominator  of the basic
                earnings per share  computation to the numerator and denominator
                of the diluted earnings per share.

                        SFAS No. 129,  Disclosure of  Information  about Capital
                Structure,  supersedes specific  disclosure  requirements of APB
                opinions  No.  10 and  No.  15 and  FASB  Statement  No.  47 and
                consolidates  them  in  this  statement.  It  is  effective  for
                financial  statements  issued for periods  ending after December
                15, 1997. This statement continues the previous  requirements to
                disclose certain information about an entity's capital structure
                found in APB opinions No. 10,  Omnibus  Opinion - 1996,  and No.
                15, Earnings per Share, and FASB Statement No. 47, Disclosure of
                Long-Term  Obligations,  for  entities  that were subject to the
                requirements of those standards.  It eliminates the exemption of
                nonpublic  entities  from  certain  disclosure  requirements  of
                Opinion No. 15 as provided by FASB Statement No. 21,  Suspension
                of the  Reporting of Earnings Per Share and Segment  Information
                of Nonpublic Enterprises.

                        SFAS   No.   130,   Reporting    Comprehensive   Income,
                establishes standards for reporting and display of comprehensive
                income and its components (revenues, expenses, gains and losses)
                in a full set of  general-purpose  financial  statements  and is
                effective for fiscal years beginning after December 31, 1997. It
                requires that all items that are required to be recognized under
                accounting  standards as components of  comprehensive  income be
                reported in a financial  statement  that is  displayed  with the
                same  prominence as other financial  statements.  This statement
                does not require a specific  format of that financial  statement
                but requires that an enterprise  display an amount  representing
                total  comprehensive  income  for the  period in that  financial
                statement.  An enterprise is required to classify items of other
                comprehensive  income by their  nature in a financial  statement
                and  display  the  accumulated  balance  of other  comprehensive
                income separately from retained earnings and additional  paid-in
                capital  in the  equity  section  of a  statement  of  financial
                position.


                                       29
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                        SFAS  No.  131,   Disclosures   about   Segments  of  an
                Enterprise and Related  Information,  established  standards for
                the way that  public  business  enterprises  report  information
                about  operating  segments in annual  financial  statements  and
                requires  that those  enterprises  report  selected  information
                about operating  segments in interim financial reports issued to
                shareholders.   It  also   establishes   standards  for  related
                disclosures  about products and services,  geographic areas, and
                major  customers.  This Statement  supersedes FASB Statement No.
                14, Financial  Reporting for Segments of a Business  Enterprise,
                but retains the  requirement to report  information  about major
                customers. It amends FASB Statement No. 94, Consolidation of All
                Majority-Owned  Subsidiaries,  to remove the special  disclosure
                requirements for previously  unconsolidated  subsidiaries.  This
                Statement does not apply to nonpublic business enterprises or to
                not-for-profit  organizations.  This  statement is effective for
                financial  statements for periods  beginning  after December 15,
                1997.

                        Management believes adoption of SFAS Nos. 125, 128, 129,
                130 and 131 will not have a  material  effect  on the  financial
                position or results of  operations,  nor will  adoption  require
                additional capital resources.

        N.      Reclassified Items

                        Certain items of the prior years have been  reclassified
                in order to conform to current presentation.


 (2)    Federal Home Loan Bank Stock

                The  carrying  values of the FHLB stock at December 31, 1997 and
        1996  are  $259,300  and  $259,200,  respectively.  FHLB  stock  was not
        considered  impaired  at  December  31,  1997 or 1996 and was carried at
        cost.

                                       30
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



 (3)    Mortgage-Backed and Related Securities

                The   carrying   values   and   estimated   market   values   of
        mortgage-backed  and related securities at December 31 are summarized as
        follows:
<TABLE>
<CAPTION>

                                    Held-to-Maturity Securities December 31, 1997
                            ------------------------------------------------------------
                                            Net
                                        Unamortized
                                          Premium                  Gross      Estimated
                             Principal   (Unearned    Carrying   Unrealized     Market
                              Balance    Discounts)    Value     Gain (Loss)    Value
                              -------    ----------    -----     -----------    -----
<S>                         <C>          <C>        <C>           <C>        <C>
    GNMA
      certificates          $   301,615  $    136   $   301,751   $  5,395   $   307,146
                            -----------  --------   -----------   --------   -----------
    FHLMC
      certificates            3,939,519   (18,365)    3,921,154    (11,991)    3,909,163
    FNMA
      certificates            7,161,015    43,141     7,204,156    (58,208)    7,145,948
    Collateralized
      mortgage
      obligations                50,899     3,992        54,891     (2,948)       51,943
    Municipal bond              200,000   (13,006)      186,994      8,486       195,480
                            -----------  --------   -----------   --------   -----------

                            $11,653,048  $ 15,898   $11,668,946   $(59,266)  $11,609,680
                            ===========  ========   ===========   ========   ===========
<CAPTION>

                                  Available-for-Sale Securities December 31, 1997
                             ----------------------------------------------------------
                                            Net
                                        Unamortized
                                          Premium                  Gross      Estimated
                             Principal   (Unearned    Carrying   Unrealized     Market
                              Balance    Discounts)    Value     Gain (Loss)    Value
                              -------    ----------    -----     -----------    -----
<S>                          <C>          <C>        <C>           <C>       <C>
    GNMA
        certificates         $  459,059   $10,243    $  469,302    $(3,119)  $  466,183
    FHLMC
        certificates          1,819,144   (18,176)    1,800,968      4,071    1,805,039
    FNMA
        certificates          2,392,250    (4,276)    2,387,974     (1,371)   2,386,603
    SBA
        certificates            815,353     8,154       823,507     (3,041)     820,466
                            -----------  --------   -----------   --------   -----------
                             $5,485,806   $(4,055)   $5,481,751    $(3,460)  $5,478,291
                             ==========   =======    ==========    =======   ==========
</TABLE>
                                       31
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


<TABLE>
<CAPTION>
                                 Held-to-Maturity Securities December 31, 1996
                          ------------------------------------------------------------
                                          Net
                                      Unamortized
                                        Premium                  Gross       Estimated
                           Principal   (Unearned    Carrying   Unrealized     Market
                            Balance    Discounts)    Value     Gain (Loss)    Value
<S>                       <C>          <C>        <C>           <C>        <C>
    GNMA
        certificates      $   369,772  $    562   $   370,334   $   1,178  $   371,512
    FHLMC
        certificates        4,530,875   (19,200)    4,511,675     (82,826)   4,428,849
    FNMA
        certificates        8,234,043    51,024     8,285,067    (170,188)   8,114,879
    Collateralized
        mortgage
        obligations            66,481     5,214        71,695      (7,540)      64,155
                          -----------  --------   -----------   --------   -----------

                          $13,201,171  $ 37,600   $13,238,771   $(259,376) $12,979,395
                          ===========  ========   ===========   =========  ===========

<CAPTION>
                                 Available-for-Sale Securities December 31, 1996
                         ------------------------------------------------------------
                                          Net
                                      Unamortized
                                        Premium                  Gross      Estimated
                           Principal   (Unearned    Carrying   Unrealized     Market
                            Balance    Discounts)    Value     Gain (Loss)     Value
                            -------    ----------    -----     -----------     -----
<S>                       <C>          <C>        <C>           <C>        <C>
    GNMA
        certificates      $  530,391    $11,902   $  542,293     $(6,560)  $  535,733
    FHLMC
        certificates         721,216      3,136      724,352       4,944      729,296
    FNMA
        certificates       1,303,828      8,622    1,312,450      (4,073)   1,308,377
    SBA
     certificates          1,363,155     13,411    1,376,566      (3,408)   1,373,158
                          ----------    -------   ----------     --------  ----------

                          $3,918,590    $37,071   $3,955,661     $(9,097)  $3,946,564
                          ==========    =======   ==========     =======   ==========
</TABLE>
                During 1997, the Association sold securities  available-for-sale
        for total  proceeds of $382,328  resulting  in gross  realized  gains of
        $2,826,  determined by specific identification.  During 1996, there were
        no sales of securities available-for-sale.

                Investment  securities with a carrying  amount of  approximately
        $802,000  and $457,000  were  pledged to secure  deposits as required or
        permitted by law at December 31, 1997 and 1996, respectively.


                                       32
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                The following is a summary of maturities of mortgage-backed  and
        related  securities   held-to-maturity  and   available-for-sale  as  of
        December 31, 1997:
<TABLE>
<CAPTION>
                                          Held-to-Maturity          Available-for-Sale
                                      Amortized     Estimated    Amortized    Estimated
                                        Cost       Market Value     Cost     Market Value
                                        ----       ------------     ----     ------------
<S>                                   <C>           <C>          <C>          <C>
        Amounts maturing:

          After one year
            through five
            years                     $     3,134   $     3,444  $   28,175   $   27,536
          After five years
            through ten years              16,573        17,365       8,167        7,994
          After ten years              11,649,239    11,588,871   5,445,409    5,442,761
                                      -----------   -----------  ----------   ----------

                                      $11,668,946   $11,609,680  $5,481,751   $5,478,291
                                      ===========   ===========  ==========   ==========
</TABLE>
 (4)    Loans Receivable

                Major classification of loans at December 31 are as follows:
<TABLE>
<CAPTION>
                                                           1997             1996
<S>                                                  <C>               <C>
First mortgage loans (principally conventional):
  Principal balances -
    Secured by one-to-four family residences ...     $  8,376,124      $  7,278,520
    Land loans .................................          612,187           450,955
    Commercial loans ...........................        1,467,219         1,519,441
    Construction loans .........................          352,800           486,815
    Other real estate loans ....................          279,585           237,293
                                                     ------------      ------------
                                                       11,087,915         9,973,024
Less: Undisbursed portion of first mortgage
     loans .....................................         (124,612)         (308,529)
                                                     ------------      ------------
       Total first mortgage loans ..............       10,963,303         9,664,495
                                                     ------------      ------------
</TABLE>
                                       33

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)
<TABLE>
<CAPTION>
                                                    1997              1996
                                                ------------      ------------
<S>                                             <C>               <C>
Consumer and other loans:
  Principal balances -
    Automobile ............................          525,835           474,424
    Manufactured home .....................           24,017            22,093
    Share loans ...........................          734,844           795,101
    Lines of credit .......................        1,321,178         1,003,407
    Other consumer loans ..................          970,638           721,446
                                                ------------      ------------
                                                   3,576,512         3,016,471

Less: Undisbursed portion of consumer loans         (585,478)         (446,524)
      Unearned discounts ..................           (8,169)             --
           Total consumer and other loans .        2,982,865         2,569,947

Less: Allowance for loan losses ...........         (300,260)         (296,452)

         Loans receivable, net ............     $ 13,645,908      $ 11,937,990
                                                ============      ============
</TABLE>
                Activity  in the  allowance  for loan losses for the years ended
        December 31 is summarized as follows:
<TABLE>
<CAPTION>

                                                            1997       1996
                                                         --------   --------
<S>                                                      <C>        <C>
        Balance, beginning of year                       $296,452   $317,406
          Provision for (recovery) from operations          3,000     (7,972)
          Charge offs less recoveries                         808    (12,982)
                                                         --------   --------

        Balance, end of year                             $300,260   $296,452
                                                         ========   ========

</TABLE>
                The Company had loans with unpaid  principal  balances  totaling
        $125,679 and $44,193 at December 31, 1997 and 1996,  respectively,  upon
        which  interest  was no longer  being  accrued  due to their  delinquent
        status.  Had the  accrual of  interest  not been  discontinued  on these
        loans, interest income would have been increased by approximately $6,756
        and  $2,818,  respectively.   The  Company  is  not  committed  to  lend
        additional funds to debtors whose loans have been modified.

                                       34
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


 (5)    Troubled Debt Restructuring

                In  accordance  with  FASB  Statement  No.  114,  Accounting  by
        Creditors for  Impairment  of a Loan,  as amended by FASB  Statement No.
        118, Accounting by Creditors for Impairment of a Loan-Income Recognition
        and Disclosures,  management has classified loans receivable at December
        31,  1997  and  1996,   in  the  amounts  of  $198,646   and   $153,649,
        respectively,  as troubled debt  restructuring  due to  modification  of
        terms.  The  interest  income that would have been  recognized  if those
        loans had been current with their original terms was $18,595 and $15,287
        for the years ended December 31, 1997 and 1996,  respectively.  Interest
        income  totalling  $13,712 and  $13,933  was  included in income for the
        years ended December 31, 1997 and 1996, respectively. The Company is not
        committed  to lend  additional  funds to debtors  whose  loans have been
        restructured. No impaired loans existed at December 31, 1997 and 1996.

 (6)    Accrued Interest Receivable

                Accrued  interest  receivable  at December 31 is  summarized  as
follows:
<TABLE>
<CAPTION>


                                                           1997       1996
                                                           ----       ----
<S>                                                      <C>        <C>
        Mortgage-backed and related securities           $132,058   $120,473
        Loans receivable                                   97,305     85,984
                                                         --------   --------

                                                         $229,363   $206,457
                                                         ========   ========

</TABLE>
 (7)    Allowance for Losses on Foreclosed Real Estate

                Activity in the allowance for losses for foreclosed  real estate
        for the years ended December 31 is as follows:
<TABLE>
<CAPTION>
                                                           1997           1996
                                                        --------        --------
<S>                                                     <C>             <C>

        Balance, beginning of year ..............       $ 25,807        $ 25,807
          Provisions charged to operations ......           --              --
          Charge-offs less recoveries ...........        (25,807)           --
                                                        --------        --------
        Balance, end of year ....................       $   --          $ 25,807
                                                        ========        ========
</TABLE>
                                       35

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



 (8)    Premises and Equipment

                Premises   and   equipment  at  December  31  consisted  of  the
following:
<TABLE>
<CAPTION>
                                                       1997              1996
                                                    ---------         ---------
<S>                                                 <C>               <C>
Land and buildings .........................        $ 342,138         $ 342,138

Furniture, fixtures and equipment ..........          294,004           277,668
                                                    ---------         ---------
                                                      636,142           619,806

Less:  Accumulated depreciation ............         (373,695)         (337,453)
                                                    ---------         ---------

                                                    $ 262,447         $ 282,353
                                                    =========         =========
</TABLE>
                Depreciation  for the years ended December 31, 1997 and 1996 was
        $36,267 and $36,332, respectively.

(9)     Deposits

                Deposits at December 31 are summarized as follows:
<TABLE>
<CAPTION>


                             Weighted
                             Average
                             Rate at           1997                  1996
                             12/31/97     Amount    Percent     Amount    Percent
                             --------     ------    -------     ------    -------
<S>                           <C>       <C>         <C>      <C>          <C>
        Demand and NOW
          accounts,
          including
          non-interest
          bearing deposits
          of $912,169 and
       $456,542               1,66%     4,685,827    16.35%  $ 3,678,782    14.28
        Money market          2.38%       722,090     2.52%      833,048     3.23
        Passbook savings      2.08%     2,584,113     9.02%    2,757,739    10.70
                              ----     ----------   ------   -----------   ------
                                        7,992,030    27.89%    7,269,569    28.21
                                       ----------   ------   -----------   ------

        Certificates
          of deposit:
             3.99% or less     -             -       0.00%         4,809     0.00
             4.00% to 5.99%   5.26%    16,919,400   59.05%    18,408,487    71.76
             6.00% to 7.99%   6.00%     3,627,464   12.66%          -        0.00
             8.00% to 9.99%   8.00%       117,648    0.40%        67,134     0.03
                              ----     ----------   ------   -----------   ------
                                       20,664,512   72.11%    18,480,430    71.79
                                       ----------   ------   -----------   ------
                                       28,656,542  100.00%   $25,749,999   100.00
                                      ===========  ======    ===========   ======
</TABLE>

                                       36
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

                The aggregate amount of short-term jumbo certificates of deposit
        with a minimum  denomination of $100,000 was  approximately,  $2,664,532
        and $3,179,379 at December 31, 1997 and 1996, respectively.

                At December 31, 1997  scheduled  maturities of  certificates  of
        deposit are as follows:
<TABLE>
<CAPTION>

                                           Year Ending December 31,
                            -------------------------------------------------------
                                1998        1999        2000       2001      2002
                                ----        ----        ----       ----      ----
<S>                         <C>          <C>          <C>         <C>       <C>

  4.00 to 5.99 percent      $15,424,339  $1,163,270   $177,139    $82,194   $72,458
  6.00 to 7.99 percent        2,417,613     917,077    292,774       -         -
  8.00 to 8.99 percent             -         32,642     85,006       -         -
                            -----------  ----------   --------    -------   -------

                            $17,841,952  $2,112,989   $554,919    $82,194   $72,458
                            ===========  ==========   ========    =======   =======
</TABLE>
                Deposits for directors,  officers and employees totaled $670,698
        and $476,377 at December 31, 1997 and 1996, respectively.

                Interest  expense on deposits for the years ended December 31 is
        summarized as follows:
<TABLE>
<CAPTION>


                                                      1997                1996
                                                 ----------           ----------
<S>                                              <C>                  <C>
Money market and NOW
  accounts ...........................           $   92,541           $   88,399
Passbook savings .....................               53,326               62,108
Certificates of
  deposits ...........................            1,064,744              991,825
                                                 ----------           ----------

                                                 $1,210,611           $1,142,332
                                                 ==========           ==========
</TABLE>
                Income from early  withdrawal  penalties  amounted to $4,005 and
        $6,524 for the years ended December 31, 1997 and 1996, respectively.

                                       37
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



(10)    Advances from Federal Home Loan Bank

                Borrowed funds at December 31 consisted of the following:
<TABLE>
<CAPTION>
                                                      1997                1996
                                                ---------------     -----------------
                                                Rate     Amount     Rate       Amount
                                                ----     ------     ----       ------
<S>                                             <C>      <C>        <C>      <C>
        Advances from Federal Home Loan Bank      -         -       5.61%    $1,200,000
</TABLE>

                Pursuant to a blanket  floating  lien with the Federal Home Loan
        Bank,  the advance at December  31,  1996 was secured by  $1,559,387  in
        mortgage-backed  securities.  There were no advances  from  Federal Home
        Loan Bank outstanding at December 31, 1997.

(11)    Deferred Income

                Deferred income at December 31 consisted of the following:

<TABLE>
<CAPTION>
                                                            1997           1996
                                                         -------         -------
<S>                                                      <C>             <C>
Interest on loans collected in advance .........         $ 6,510         $ 4,976
Unrealized profit from the sale of
  repossessed property .........................          40,555          13,842
                                                         -------         -------

    Totals .....................................         $47,065         $18,818
                                                         =======         =======
</TABLE>


(12)    Interest Income on Other Interest Earning Assets

                Details of  interest  income on other  interest  earning  assets
        included in interest income for the years ended December 31 are provided
        below:
<TABLE>
<CAPTION>
                                                             1997          1996
                                                          --------      --------
<S>                                                       <C>           <C>

Interest on demand account in other institutions ...      $ 78,539      $ 84,976
Federal Home Loan Bank dividends ...................        15,221        15,095
                                                          --------      --------

    Totals .........................................      $ 93,760      $100,071
                                                          ========      ========
</TABLE>
                                       38
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(13)    Other Noninterest Expenses

                Details of other expenses  included in noninterest  expenses for
        the years ended December 31 are provided below:
<TABLE>
<CAPTION>
                                                        1997               1996
                                                     --------           --------
<S>                                                  <C>                <C>
Bank clearing charges ....................           $ 82,504           $ 87,335
Insurance ................................             22,505             20,431
Professional fees ........................             73,506             37,571
Telephone ................................             13,018             12,274
Advertising ..............................             23,418             15,620
Franchise and shares taxes ...............             32,479               --
Registrar fees ...........................              4,635               --
Supervisory examination ..................              3,471               --
ESOP expenses ............................              1,950               --
Property taxes ...........................              7,693              6,887
Dues and subscriptions ...................              5,947              5,000
Miscellaneous other
  expenses ...............................             18,731              2,788
                                                     --------           --------
  Total ..................................           $289,857           $187,906
                                                     ========           ========
</TABLE>

(14)    Retirement Plans

        Profit Sharing Plan

                In 1988, the Company adopted a contributory  profit sharing plan
        for all full time employees. Contributions are to be made annually based
        on  participants'  salaries.  The  contributions  for  the  years  ended
        December  31,  1997 and  1996  included  in  compensation  and  employee
        benefits expense were $ -0- and $31,711, respectively.

        Employee Stock Ownership Plan (ESOP)

                All employees meeting age and service  requirements are eligible
        to  participate in an ESOP.  Under the terms of the ESOP,  contributions
        are allocated to participants using a formula based on compensation.
        Participants vest over five years.

                In 1996,  the ESOP  purchased  21,160  shares of Company  common
        stock.  The  remaining  unamortized  cost of such  shares  purchased  is
        reflected  as unearned  employee  benefits in the  accompanying  balance
        sheet.  During 1997,  2,116 shares were allocated to  participants.  The
        fair value of such  shares,  $36,385,  was charged to expense.  The fair
        value of the remaining  unallocated shares at December 31, 1997 totalled
        $370,300.

                                       39

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(15)    Officer's Deferred Compensation Contract

                The Company has a deferred compensation contract with one member
        of the Board of Directors.  The agreement  provides for payment of equal
        annual  installments  over  ten  years to be made to the  director  upon
        retirement  or  to  his   beneficiary  in  the  event  of  death  before
        retirement.  The  agreement is  terminated  should the  director  resign
        before the stated date of retirement.

                At   December   31,  1997  and  1996,   $38,665   and   $24,831,
        respectively, had been accrued as deferred compensation payable.


(16)    Income Taxes

                The Company  utilizes  FASB  Statement 109 to account for income
taxes.

                The  components  of  income  tax  expense  for the  years  ended
        December 31 are as follows:
<TABLE>
<CAPTION>



                                                       1997               1996
                                                    --------            --------
<S>                                                 <C>                 <C>
Income taxes current:
  Federal ..............................            $134,956            $ 82,811

Deferred taxes due to
  timing differences ...................              12,753               5,287
                                                    --------            --------
    Total income tax
      expense ..........................            $147,709            $ 88,098
                                                    ========            ========
</TABLE>

                The total  provision for federal  income taxes differs from that
        computed by applying  statutory  corporate  tax rates as follows for the
        years ended December 31:
<TABLE>
<CAPTION>
                                                           1997              1996
                                                           ----              ----
<S>                                                        <C>               <C>
Computed at the
  expected statutory
  rate .....................................               34.0%             34.0%
Other ......................................                2.7                .5
                                                           ----              ----
                                                           36.7%             34.5%
                                                           ====              ====
</TABLE>

                                       40

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

                Temporary  differences  giving rise to the  deferred tax amounts
        consist primarily of converting the financial statements from accrual to
        cash basis for tax purposes and by the excess of tax bad debts over book
        bad debts since 1987.

                Amounts  for  deferred  tax  liabilities  at  December 31 are as
follows:
<TABLE>
<CAPTION>

                                                         1997             1996
                                                      --------          --------
<S>                                                   <C>               <C>
Deferred tax assets ........................          $ 26,467          $ 22,767
Deferred tax liabilities ...................           161,865           145,032
                                                      --------          --------

  Net deferred tax liabilities .............          $135,398          $122,265
                                                      ========          ========
</TABLE>


                No  valuation  allowances  were  recorded  against  deferred tax
        assets as of December 31, 1997 and December 31, 1996.

                Under the  Internal  Revenue  Code,  the  Company  is allowed to
        deduct  an  experience   method  bad  debt  deduction  based  on  actual
        charge-offs.  This  deduction  is an addition  to tax bad debt  reserves
        established for the purpose of absorbing  losses.  The Act also provides
        that  federal  income tax bad debt  reserves  in excess of the base year
        reserves  will be included in taxable  income over a six year  inclusion
        period.  The  Association  has  established  a deferred tax liability of
        approximately $41,670 for this recapture.  Postponement of the recapture
        is  possible  for a two-year  period if an  association  meets a minimum
        level of mortgage lending for 1996 and 1997.

                Retained  earnings of the Company at December  31, 1997 and 1996
        includes approximately  $368,500, for which provision for federal income
        tax has been made. This amount  represents  allocations of income to bad
        debt  deductions for tax purposes only.  Reduction of amounts  allocated
        for purposes  other than tax bad debt losses will create  income for tax
        purposes  only,  which  will be subject  to the then  current  corporate
        income tax rate.


                                       41
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(17)    Related Party Transactions

                In the ordinary  course of business,  the Company makes loans to
        its directors, officers, and employees. These loans are made on the same
        terms  as  loans  to  other  customers.   The  activity  of  such  loans
        outstanding for the years ended December 31 are as follows:
<TABLE>
<CAPTION>

                                                     1997                1996
                                                  ---------           ---------
<S>                                               <C>                 <C>
Balance, beginning of year .............          $ 214,721           $ 293,138
  Additions ............................             70,562              14,657
  Payments .............................            (35,854)            (93,074)
                                                  ---------           ---------

Balance, end of year ...................          $ 249,429           $ 214,721
                                                  =========           =========

</TABLE>

(18)    Concentration of Credit

                The majority of the Company's  loans and its standby  letters of
        credit have been  granted to  customers  in the  Company's  market area,
        which is  primarily  Allen  Parish,  Louisiana.  The Parish is largely a
        rural  area  and  relies  heavily  on  the  agricultural   industry  and
        government employment.  The concentrations of credit by type of loan are
        set forth in the note on loans  receivable as presented  earlier in this
        report.  The Company,  as a matter of policy,  does not extend credit to
        any  borrower  or group of  related  borrowers  in  excess  of its legal
        lending limit of approximately $708,000.


(19)    Federal Deposit Insurance Premiums

                The deposits of the Company are presently insured by the Savings
        Association   Insurance  Fund  (SAIF),  which  together  with  the  Bank
        Insurance Fund (BIF),  are the two insurance  funds  administered by the
        FDIC.  In the  third  quarter  of 1996,  the FDIC  lowered  the  premium
        schedule  for  BIF-insured  institutions  in  anticipation  of  the  BIF
        achieving its statutory  reserve ratio.  The reduced  premium  created a
        significant   disparity  in  deposit   insurance   expense,   causing  a
        competitive advantage for BIF members.  Legislation enacted on September
        30, 1996  provided  for a one-time  special  assessment  of .657% of the
        Company's  SAIF insured  deposits at March 31, 1995.  The purpose of the
        assessment was to bring the SAIF to its statutory  reserve ratio.  Based
        on the above  formula,  the  Company's  SAIF  assessment of $170,020 was
        recorded in the 1996  consolidated  financial  statements.  Although the
        special one-time assessment  significantly increased noninterest expense
        for 1996 the SAIF premium declined significantly in 1997 to $17,160.


                                       42
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(20)    Regulatory Capital Requirements

                The  Association  is  subject  to  various   regulatory  capital
        requirements  administered by the 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  Company's
        consolidated 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 risk-based  capital, as defined
        in the regulations, to risk-weighted assets, as defined, and of tangible
        and core capital,  as defined,  to total assets, as defined.  Management
        believes,  as of  December  31,  1997,  that the  Association  meets all
        capital adequacy requirements to which it is subject.

                As of March 31,  1997,  the most  recent  notification  from the
        Office of Thrift Supervision (OTS),  categorized the Association as well
        capitalized under the regulatory framework for prompt corrective action.
        To be categorized as well  capitalized,  the  Association  must maintain
        minimum total risk-based,  tangible and core capital ratios as set forth
        in the table.  There are no conditions or events since that notification
        that management believes have changed the institution's category.
<TABLE>
<CAPTION>

                                          Tangible         Core         Risk-based
                                         ----------      ----------      ----------
<S>                                      <C>             <C>             <C>
   Regulatory capital ..............     $3,650,487      $3,650,487      $3,809,987
   Minimum capital requirement .....        489,145         978,291       1,131,680
                                         ----------      ----------      ----------
     Regulatory capital in excess of
       of minimum capital
       requirements ................     $3,161,342      $2,672,196      $2,678,307
                                         ==========      ==========      ==========

   Minimum capital requirement .....            1.5%            3.0%            8.0%
                                         ==========      ==========      ==========

   The Association's regulatory
    capital ........................           11.2%           11.2%           26.9%
                                         ==========      ==========      ==========

</TABLE>
                                       43

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(21)    Financial Instruments with Off-Balance-Sheet Risk/Commitments

                The   Company  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  and to reduce  its own  exposure  to
        fluctuations in interest  rates.  These  financial  instruments  include
        commitments  to extend  credit and  standby  letters  of  credit.  Those
        instruments involve, to varying degrees, elements of credit and interest
        rate  risk in  excess  of the  amount  recognized  in the  statement  of
        financial position. The contract or notional amount of those instruments
        reflect the extent of the Company's involvement in particular classes of
        financial instruments.

                The   Company's   exposure  to  credit  loss  in  the  event  of
        nonperformance  by the other party to the financial  instrument for loan
        commitments   to  extend  credit  and  standby   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.

                Unless noted otherwise,  the Company does not require collateral
        or other security to support financial instruments with credit risk.

                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.  Commitments  generally have fixed  expiration dates or
        other termination clauses. Since many of the commitments are expected to
        expire  without being drawn upon,  the total  commitment  amounts do not
        necessarily  represent future cash  requirements.  The Company evaluates
        each customer's credit worthiness on a case-by-case basis. The amount of
        collateral  obtained,  if it is deemed  necessary  by the  Company  upon
        extension of credit,  is based on management's  credit evaluation of the
        counterparty.   Collateral   held  varies  but  may   include   accounts
        receivable;    inventory,    property,   plant,   and   equipment;   and
        income-producing  commercial properties. In addition to undisbursed loan
        proceeds, outstanding mortgage commitments amounted to:
<TABLE>
<CAPTION>

                                                          Ranges
                                                   -----------------------------
                                    Variable        Interest         Commitment
                                      Rate            Rates             Terms
                                      ----            -----             -----
<S>                                <C>             <C>               <C>
December 31, 1997 .........        $194,550        8.5%-9.00%        10-182 days

December 31, 1996 .........        $326,800        8.5%-9.25%        182 days
</TABLE>



                                       44
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
                                                             Ranges
                                                --------------------------------
                                  Fixed           Interest          Commitment
                                  Rate             Rates               Terms
                                  ----             -----               -----
<S>                             <C>             <C>                 <C>
December 31, 1997 ......        $314,525        8.00% -9.00%        120-182 days

December 31, 1996 ......        $ 89,750        8.00%-14.00%        159-182 days
</TABLE>

                Standby letters of credit are conditional  commitments issued by
        the Company to guarantee the performance of a customer to a third party.
        Those  guarantees  are  primarily  issued to support  public and private
        borrowing arrangements,  including commercial paper, bond financing, and
        similar  transactions.  The Company had  short-term  standby  letters of
        credit  outstanding  of $1,000 and $2,000 at December 31, 1997 and 1996,
        respectively.


(22)    Estimated Fair Value of Financial Instruments

                The following  methods and assumptions  were used by the Company
        in estimating fair values of financial instruments as disclosed herein:

                Cash and cash  equivalents  - The  carrying  amounts of cash and
                short-term instruments approximate their fair value.

                Securities    to   be   held   to   maturity   and    securities
                available-for-sale  - Fair  values  for  investment  securities,
                excluding  restricted  equity  securities,  are  based on quoted
                market  prices.   The  carrying  values  of  restricted   equity
                securities approximate fair values.

                Loans receivable - Fair values for variable and fixed rate loans
                are  estimated  using  discounted  cash  flow  analysis,   using
                interest  rates  currently  being offered for loans with similar
                terms to borrowers of similar credit quality.

                Deposit  liabilities  - The fair  values  disclosed  for  demand
                deposits  are,  by  definition,  equal to the amount  payable on
                demand at the reporting date (that is, 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 the certificates to a schedule of aggregated expected
                monthly maturities on time deposits.


                                       45
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



                Short-term  borrowings  - Fair  values  of  borrowed  funds  are
                estimated  using  discounted  cash  flow  analyses  based on the
                Company's current incremental  borrowing rates for similar types
                of borrowing arrangements.

                Accrued  interest - The  carrying  amounts  of accrued  interest
                approximate their fair values.

                Off-balance  sheet  items  -  The  fair  value  of  these  items
                approximate their contractual amounts.

                The estimated fair values of the Company's financial instruments
        were as follows:
<TABLE>
<CAPTION>
                                            December 31, 1997         December 31, 1996
                                        -------------------------  -----------------------
                                          Carrying       Fair        Carrying      Fair
                                           Value         Value        Value        Value
                                           -----         -----        -----        -----
<S>                                      <C>          <C>         <C>          <C>
        Financial assets:
          Cash and due from
            banks                       $  1,884,242  $ 1,884,242 $ 1,474,305   $1,474,305
          Securities to be held-
            to-maturity                   11,668,946   11,609,680  13,238,771   12,979,395
          Securities available-
            for-sale                       5,478,291    5,478,291   3,946,564    3,946,564
          Loans                           13,645,908   13,495,448  11,937,990   11,794,550
          Accrued interest
            receivable                       229,363      229,363     206,457      206,457
          Other receivables                   62,895       62,895      42,800       42,800
          Federal Home Loan Bank
            stock, at cost                   259,300      259,300     259,200      259,200

<CAPTION>

                                           December 31, 1997         December 31, 1996
                                        ---------------------     -----------------------
                                         Carrying       Fair        Carrying      Fair
                                          Value         Value        Value        Value
                                          -----         -----        -----        -----
<S>                                      <C>          <C>         <C>          <C>
        Financial liabilities:
          Deposit liabilities            28,656,542   27,732,897  25,749,999   25,790,309
          Borrowed funds                       -            -      1,200,000    1,200,000
          Advances by borrowers
            for taxes and insurance          23,212       23,212      31,854       31,854
          Current federal income
            taxes payable                    54,956       54,956       2,843        2,843
          Accrued expenses and
            other liabilities                27,620       27,620      44,624       44,624
          Off-balance sheet items
            Standby letters of
              credit                          1,000        1,000       2,000        2,000
            Commitments to extend
              credit                        509,075      509,075     416,550      416,550
</TABLE>
                                       46

<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


(23)    Capability of the Company's Data Processing Hardware to Accommodate the
        Year 2000

                Like  many  financial  institutions,  the  Company  relies  upon
        computers for the daily conduct of its business and for data  processing
        generally.  There is concern among  industry  experts that on January 1,
        2000,  computers  will be unable to "read" the new year and there may be
        widespread  computer  malfunctions.  The  Company  generally  relies  on
        independent  third  parties to provide data  processing  services to the
        Company and has been advised by its data processing  service center that
        the  issue  has  been   addressed.   The  Company   recognized   that  a
        comprehensive  and  coordinated  plan of  action  was  needed  to ensure
        complete  readiness  to  perform  Year  2000  processing.  A  Year  2000
        Committee  has been  formed  to  initiate  and  implement  the Year 2000
        project, policies, document readiness of the Company to accommodate Year
        2000 processing and to track and test progress  towards full compliance.
        The Company  contracts  with service  bureaus to provide the majority of
        its  data  processing  and  is  dependent  upon  purchased   application
        software.   In-house  applications  are  linked  to  wordprocessing  and
        spreadsheet  functions.  The Company is in the process of ensuring  that
        external vendors and servicers are adequately  addressing the system and
        software  issues  related to the Year 2000 by obtaining  written  system
        certifications  that the systems are fully Year 2000  compliant  or that
        the vendor has a plan to become fully compliant in the very near future.
        The Company will  coordinate  end-to-end  tests with primary  servicers,
        which  allow the  Company to  simulate  daily  processing  on  sensitive
        century dates. In the evaluation,  the Company will ensure that critical
        operations  will  continue if servicers or vendors are unable to achieve
        the Year 2000 requirements.  Upon the completion of the system inventory
        and  vendor   certification,   the  committee  will  identify   critical
        applications and develop detailed plans for hardware/system upgrades and
        system  replacements  where necessary.  All upgrades are scheduled to be
        implemented to allow full compliance.




                                       47
<PAGE>
                        FIRST ALLEN PARISH BANCORP, INC.

                             Stockholder Information

ANNUAL MEETING:

        The Annual Meeting of Stockholders  will be held at 2:00 p.m.,  Oakdale,
Louisiana  time on Thursday,  April 30, 1998,  at the main office of First Allen
Parish Bancorp, Inc., 222 South 10th Street, Oakdale, Louisiana 71463.

STOCK LISTING:

        First Allen Parish Bancorp, Inc. common stock is traded on the National
Association of Securities Dealers, Inc. (NASDAQ) "Pink Sheets" under the symbol
"FALN".

PRICE RANGE OF COMMON STOCK:

        The per share price range of the common stock for 1997 was as follows:

                                High      Low    Dividends
                                ----      ---    ---------

                               $20.00   $14.38    $79,353

        The stock price information set forth in the table above was provided by
Trident  Securities,  Inc.,  1275  Peachtree  Street N. E., Suite 460,  Atlanta,
Georgia  30309.  The  common  stock  traded  infrequently  and the  share  price
information reflected stock trades known to management of the Company.

        At December  31, 1997,  there were 264,506  shares of First Allen Parish
Bancorp,  Inc. common stock issued and outstanding  (including  unallocated ESOP
shares) and there were 100 registered holders of record.

STOCKHOLDERS AND GENERAL INQUIRIES:

        Charles L. Galligan, President/CEO
        First Allen Parish Bancorp, Inc.
        222 South 10th Street
        Oakdale, Louisiana  71463
        (318) 335-2031

TRANSFER AGENT:

        Registrar and Transfer Co.
        10 Commerce Drive
        Cranford, New Jersey  07016
        (800) 368-5948


ANNUAL AND OTHER REPORTS:

        A copy of the First Allen Parish  Bancorp,  Inc.  Annual  Report on Form
10-K for the year ended  December 31,  1997,  as filed with the  Securities  and
Exchange  Commission (SEC), may be obtained without charge by contacting Charles
L. Galligan,  President and Chief Executive Officer, First Allen Parish Bancorp,
Inc., 222 South 10th Street (Post Office Box 706), Oakdale, Louisiana 71463.

        The Company paid semiannual  dividends of 15 cents per share in June and
December of 1997.



                                       48
<PAGE>
                        FIRST ALLEN PARISH BANCORP, INC.

                              Corporate Information

COMPANY AND ASSOCIATION ADDRESS:

        First Allen Parish Bancorp, Inc.
        222 South 10th Street
        Post Office Box 706                           Telephone:  (318) 335-2031
        Oakdale, Louisiana  71463                     Telefax:    (318) 335-2941

OFFICERS:

        Dr. James D. Sandefur, Chairman of the Board
        Charles L. Galligan, President and Chief Executive Officer
        Leslie A. Smith, Secretary
        Betty Jean Parker, Treasurer and Chief Financial Officer

BOARD OF DIRECTORS:

        Dr. James D. Sandefur.  Dr. Sandefur has served as Chairman of the Board
        since January 1996. Dr. Sandefur was a practicing  optometrist,  and was
        the owner of the Vision Clinic located in Oakdale,  Louisiana from March
        1968 until June 1996. Dr. Sandefur is currently  semi-retired  and works
        as a consultant for the Vision Clinic.

        Charles L. Galligan.  Mr. Galligan has served as the President and Chief
        Executive  Officer  since  joining  the  Association  in 1991.  In these
        capacities,  he is responsible for overseeing the day-to-day  operations
        of the Association.  Prior to joining the Association,  Mr. Galligan was
        President  of  Vermilion  Federal  Savings  Bank  located in  Abbeville,
        Louisiana.

        Jesse  Boyd,  Jr. Mr.  Boyd is the owner and  president  of Boyd  Buick-
        Cadillac-Chevrolet-Pontiac-Olds-GMC,  Inc., a car  dealership,  and Boyd
        Oil  Company,  a  bulk  oil  distributorship,  located  in  Oakdale  and
        Glenmora, Louisiana, respectively.

        James E.  Riley.  Mr.  Riley  owned and  operated a pharmacy in Oberlin,
        Louisiana until his retirement in 1990.

        J. C. Smith.  Mr.  Smith's  principal  business  is farming.  He is also
        involved in J. C. Smith & Sons, Partnership, a farming operation, and J.
        C. Smith & Sons Auto and Home Service  Center,  a retail hardware store,
        both located in Oberlin, Louisiana.

        Leslie A. Smith. Mr. Smith is a retired  principal from the Allen Parish
        School Board.

INDEPENDENT AUDITORS:

        Conrad Chapman, CPA
        Kolder, Champagne, Slaven & Rainey, LLC
        234 Rue Beauregard
        Lafayette, Louisiana  70508
        (318) 232-4141

SPECIAL COUNSEL:

        Robert I. Lipsher, Esq.
        Luse, Lehman, Gorman, Pomerenk & Schick
        5335 Wisconsin Avenue, N. W.
        Suite 400
        Washington, DC  20015
        (202) 274-2000

                                       49