1998

                                 Annual Report

                        First Allen Parish Bancorp, Inc.






<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                                     16

Stockholder Information                                               48

Corporate Information                                                 49
<PAGE>

March 30, 1999


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, 1998.

Consolidated assets of First Allen Parish Bancorp, Inc., increased $5.2 million,
or 15.4 %, to $38.7 million at December 31, 1998, from $33.5 million at December
31, 1997.

Net loans  receivable  increased  $1.2  million,  or $9.2%,  to $14.9 million at
December 31, 1998,  from $13.6 million at December 31, 1997,  due to an increase
in real estate loans, consumer loans and other loans.

Deposits  increased  $4.9  million,  or 17.1%,  to $33.6 million at December 31,
1998,  from $28.7 million at December 31, 1997.  There were no Federal Home Loan
Bank (FHLB) advances outstanding at December 31, 1998 and 1997.

Total  stockholders'  equity increased  $248,000 to $4.8 million at December 31,
1998,  from $4.5 million at December 31, 1997.  Earnings for the year provided a
$222,000  increase,  which was offset by dividends  paid to  stockholders  at 30
cents per share, or $80,000.  Allocation of ESOP shares and RRP shares increased
equity by $45,000 and $51,000, respectively.

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 November  1998, a newly
constructed  full-service  branch was opened in Oberlin,  Louisiana,  the Parish
Seat, staffed with a Manager and a Loan Assistant and two tellers,  and offering
a full range of banking services. We are very pleased with the positive response
from the community.  A Loan  Production  Office (LPO) was also opened in Kinder,
Louisiana,  staffed  with a Loan  Officer,  and  offering  a full  range of loan
products  and  services.   Community  response  has  been  very  positive,  with
increasing  demands  for a  full-service  banking  facility  at  this  location.
Expansion  efforts have created  additional  expense  items,  but this should be
offset by increased future income and growth.

                                        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  families  and  communities  it  serves.  Our  customers
appreciate the fact that we are the only hometown financial institution in Allen
Parish,  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 banking  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,


                                                        /s/Charles L. Galligan
                                                        ----------------------
                                                        Charles L. Galligan
                                                        President & CEO

                                        2
<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, a full service
branch located at 110 North Fifth St., Oberlin,  Louisiana and a loan production
office located at 531 North Ninth St., Suite A, Kinder, 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,
                                                -------------------
                                                  1998       1997
                                                -------    --------
                                                   (In thousands)
<S>                                             <C>         <C>    
Selected Financial Condition Data:
Total assets                                    $38,694     $33,519
Cash and cash equivalents                         6,319       1,884
Loans receivable, net
  Real estate                                    11,676      10,702
  Consumer and other                              3,220       2,944
Mortgage-backed and related securities           16,195      17,147
FHLB stock                                          263         259
Premises and equipment, at cost, net of
  accumulated depreciation                          705         262
Deposits                                         33,553      28,657
Total stockholders' equity                        4,784       4,535

</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                    Years Ended
                                                     December 31,
                                                -------------------
                                                  1998       1997
                                                -------    --------
                                               (In thousands, except
                                                 share information)
<S>                                             <C>        <C>    
Selected Operating Data:
Interest income                                 $ 2,411    $  2,302
Interest expense                                  1,244       1,226
                                                -------    --------
  Net interest income                             1,167       1,076
  Provision for loan losses                          59           3
                                                -------    --------
  Net interest income after provision for
    loan losses                                   1,018       1,073
                                                -------    --------
Total non-interest income                           312         276
                                                -------    --------
Total non-interest expense                        1,092         947
                                                -------    --------
    Income before income taxes                      328         402
                                                -------    --------
Income tax expense                                  106         148
                                                -------    --------
    Net income                                  $   222    $    254
                                                ========   ========

    Net income per common share - basic         $   .90    $   1.04
                                                ========   ========
    Net income per common share - diluted       $   .90    $   1.04
                                                ========   ========

    Average common shares outstanding            247,401    244,669
                                                ========   ========
</TABLE>
                                        4
<PAGE>
<TABLE>
<CAPTION>
                                                                     At or For the Years
                                                                      Ended December 31,
                                                                     -------------------
                                                                      1998       1997
                                                                     -------    -------
<S>                                                                     <C>        <C> 
Key Financial Ratios and Other Data:
Performance Ratios:
Return on average assets (net income divided
  by average total assets)                                              .65%       .80%

Return on average equity (net income divided
  by average equity)                                                   4.76%      5.75%

Net interest rate spread (difference between
  average yield on interest-earning assets
  and average cost of interest-bearing liabilities)                    3.11%      3.09%

Net interest margin (net interest income as a
  percentage of average interest-earning assets)                       3.56%      3.49%

Net interest income to non-interest expense                          106.82%    113.55%

Average interest-earning assets to average interest
  bearing liabilities                                                112.03%    109.99%

Net interest income after provision for
  loan losses, to total non-interest expense                         101.45%    113.23%

Non-interest expense to average assets                                 3.22%      2.97%

Asset Quality Ratios:
Non-performing loans to total loans                                     .70%       .92%

Non-performing assets to total assets                                   .30%       .37%

Allowance for loan losses to non-performing loans                    259.38%    238.91%

Allowance for loan losses to non-performing assets                   259.38%    238.91%

Capital Ratios (1):
Equity to assets at year end                                          12.36%     13.53%
Equity to average assets ratio
  (Average equity divided by average total
    assets)                                                           13.71%     13.89%
Other Data:
Number of full-service offices                                              2        1
Number of loan production offices                                           1        1
</TABLE>
<PAGE>

(1)  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-earning 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-earning  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.

        During 1998,  the Company's  board of directors,  with approval from the
Office of Thrift  Supervision,  authorized  the  construction  of a full-service
branch in Oberlin,  Louisiana and a loan production office in Kinder, Louisiana.
The Company invested  approximately $405,000 in premises and equipment for these
facilities.  Management  believes this  investment will increase future earnings
because of the competitive edge the new branch and loan production  office allow
in these market areas.

Financial Condition

        Total assets  increased  $5.2  million,  or 15.4%,  to $38.7  million at
December  31, 1998 from $33.5  million at December  31,  1997.  The increase was
primarily  funded by an increase in deposits of $4.9 million to $33.6 million at
December 31, 1998 from $28.7 million at December 31, 1997. The proceeds from the
increase in deposits  were used to finance a $1.2 million  increase in net loans
receivable, a $4.4 million increase in cash and cash equivalents and $400,000 in
construction of a full-service branch in Oberlin, Louisiana.

                                        6
<PAGE>
        Net  loans  receivable  increased  by $1.2  million,  or 9.2%,  to $14.9
million at December  31, 1998 from $13.6  million at December 31, 1997 due to an
increase in real estate and consumer and other loans.

        Mortgage-backed  and related  securities and cash equivalents  increased
$3.5 million or 18.2% to $22.5  million at December 31, 1998 from $19.0  million
at December 31, 1997.  This  increase was financed from the increase in deposits
as mentioned above.

        Deposits  increased  $4.9 million or 17.1% to $33.6  million at December
31, 1998 from $28.7  million at December 31, 1997.  There were no FHLB  advances
outstanding at December 31, 1998 and December 31, 1997.

        Total  equity  increased  $248,000 to $4.8  million at December 31, 1998
from $4.5  million  at  December  31,  1997.  Earnings  for the year  provided a
$222,000  increase,  which  was  offset by  dividends  paid to  stockholders  of
$80,000.  Allocation of ESOP shares and RRP shares  increased  equity by $45,000
and $51,000, respectively.

        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 1998 of $80,000 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,
                                                    -----------------------------------------------------------
                                                               1998                            1997
                                                    ---------------------------    ----------------------------
                                                                        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)                                 $11,014     $949      8.61%    $10,037     $  911     9.08%
  Consumer and other loans                            3,204      329     10.27       2,731        255     9.36
  Mortgage-backed securities                         16,337    1,047      6.41      15,975      1,042     6.48
  FHLB stock                                            258       16      5.94         256         15     5.95
  Other interest-bearing deposits                     1,956       70      3.62       1,828         79     4.66
                                                    -------   ------     -----     -------     ------     ---- 
      Total interest-earning assets                  32,769    2,411      7.36      30,827      2,302     7.47

Non-interest earning assets                           1,208     -         0.00       1,051       -        0.00
                                                    -------   ------     -----     -------     ------     ---- 
      Total average assets                          $33,977   $2,411      7.10%    $31,878     $2,302     7.22%
                                                    =======   ======     =====     =======     ======    =====

Interest-bearing liabilities:
  Passbook accounts                                 $ 2,450   $   50      2.05%    $ 2,641     $   53     2.01%
  NOW and money market accounts                       6,117      102      1.67       6,643         90     1.36
  Certificates                                       20,563    1,087      5.29      18,460      1,068     5.79
  FHLB advances                                         119        5      4.13         282         16     5.64
                                                    -------   ------     -----     -------     ------     ---- 
      Total interest-bearing liabilities             29,249    1,244      4.25      28,026      1,227     4.38

Non-interest bearing liabilities                        616     -         0.00         699       -        0.00
                                                    -------   ------     -----     -------     ------     ---- 
      Total average liabilities                     $29,865   $1,244      4.17%    $28,725     $1,227     4.27%
                                                    =======   ======     =====     =======     ======    =====
Net interest income                                           $1,167                           $1,075
Net interest rate spread(2)                                   ======      3.11%                ======     3.09%
                                                                                                          =====
Net interest margin(3)                                                    3.56%                           3.49%
Average interest-earning assets to average interest-bearing                                               =====
  liabilities                                                    112.03%                        109.99%
                                                                 ======                         ======
</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,
                                                                                      1998 vs. 1997
                                                                              ------------------------------
                                                                               Increase/(Decrease)
                                                                                    Due to              Total
                                                                              -----------------       Increase
                                                                              Volume      Rate       (Decrease)
                                                                              ------     ------        ------

                                                                                     (Dollars in thousands)
<S>                                                                           <C>        <C>           <C>   
Interest-earning assets:
  Mortgage loans                                                              $   80     $  (42)       $   38
  Consumer and other loans                                                        47         27            74
  Mortgage-backed securities                                                      11         (5)            6
  FHLB stock                                                                    -          -             -
  Other                                                                            4        (11)           (7)
                                                                              ------     ------        ------
    Total interest-earning assets                                             $  142     $  (31)       $  111
                                                                              ------     ------        ------
Interest-bearing liabilities:
  Passbook accounts                                                           $   (4)    $    1        $   (3)
  NOW and money market accounts                                                   (6)        63            57
  Certificate accounts                                                            77        (59)           18
  Federal Home Loan Bank advances                                                 (8)        (4)          (12)
                                                                              ------     ------        ------

    Total interest-bearing liabilities                                            59          1            60
                                                                              ------     ------        ------

Net change in interest income                                                 $   83     $  (32)       $   51
                                                                              ======     ======        ======
</TABLE>
                                        9
<PAGE>
Comparison of Operating Results for the Years Ended December 31, 1998 and 1997

          General.  Net income for the year ended December 31, 1998 decreased by
$32,000 or 12.7% to $222,000 or $.90 per share from  $254,000 or $1.04 per share
for the year ended  December  31,  1997.  The  decrease  was due to the combined
effects of a $35,000  increase in net interest  income after  provision for loan
losses, a $42,000 increase in service charges on deposits,  a $5,000 increase in
loan  origination  and servicing fees, a $17,000  decrease in other expenses,  a
$42,000  decrease in income taxes and a $3,000 decrease in net other real estate
expenses offset by a $2,000 decrease in insurance  commissions  earned, a $6,000
decrease in gain on foreclosed real estate, a $7,000 decrease in other operating
revenues,  a $100,000 increase in compensation and employee benefits,  a $16,000
increase in occupancy and equipment  expenses,  a $20,000 increase in stationery
and printing and a $26,000 increase in data processing.

          Interest  Income.  For the year ended  December 31, 1998, net interest
income  increased by $91,000 to $1.17  million  from $1.08  million for the year
ended  December  31,  1997.  This  reflects  an increase of $109,000 in interest
income to $2.4  million from $2.3 million and an increase of $18,000 in interest
expense to $1.24  million  from $1.23  million.  The small  increase in interest
income was due primarily to an increase in total interest-earning  assets offset
by decreased rates earned.  The small increase in interest  expense was also due
primarily to an increase in total interest-bearing liabilities.

          Interest  income on loans  increased  $111,000 or 9.4% to $1.3 million
for the year  ended  December  31,  1998 from $1.2  million  for the year  ended
December 31, 1997.  Interest income on  mortgage-backed  and related  securities
increased  slightly by $6,000 for the year ended December 31, 1998 from the year
ended December 31, 1997.

          Interest  Expense.  Interest  expense for the year ended  December 31,
1998  increased  $18,000 to $1.24  million from $1.22 million for the year ended
December 31, 1997.  Average  balances in certificates of deposit  increased $2.1
million to $20.6 million at December 31, 1998 from $18.5 million at December 31,
1997;  however,  the decline in rates paid resulted in a slightly  lower cost of
funds. Average non-certificate  balances decreased $717,000 to $8.6 million from
$9.3 million from 1997 to 1998.  Interest expense on FHLB advances  decreased to
$5,000 for the year ended December 31, 1998 from $16,000 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  $304,057 at December  31, 1998 and $300,260 at December 31,
1997.  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, 1998 was $58,664, and $3,000 for the year
ended December 31, 1997.  Management's focus on asset quality has resulted in an
allowance  for loan  losses to  non-performing  assets of  259.3%.  The ratio of
nonperforming loans to total loans remains low at .70% at December 31, 1998.

                                       10
<PAGE>
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,  1998,
non-interest  income  was  $312,000  compared  to  $277,000  for the year  ended
December  31,  1997.  The increase of $35,000 was due to increases of $42,000 in
service  charges on deposits,  $5,000 in loan  origination  and servicing  fees,
$3,000  decrease in net other real estate expenses offset by decreases of $6,000
in gain in foreclosed real estate, $7,000 in other operating revenues and $2,000
in insurance commissions earned.

                 Non-interest  Expense.  Non-interest expense increased $145,000
or 15.3% to $1.1 million for the year ended  December 31, 1998 from $947,000 for
the year ended  December  31, 1997.  This  increase was the result of a $100,000
increase  in  compensation  and  employee  benefits  primarily  from  additional
salaries  associated  with the new  branch,  loan  production  office  and stock
benefit plans, a $16,000 increase in occupancy and equipment expenses, a $20,000
increase in stationery  and printing and a $26,000  increase in data  processing
offset by a $17,000  decrease in other expenses.  The increases in occupancy and
equipment and stationery and printing were directly  related to increased  costs
associated  with the new  branch and loan  production  office.  Data  processing
expenses  increased  primarily  because  of efforts  to  upgrade  computers  and
software to "year 2000"  compliance (see Note 24 in the  consolidated  financial
statements).   Other  expenses  decreased   primarily  due  to  a  reduction  in
professional fees.

          Income Taxes.  Income taxes decreased $42,000 or 28.6% to $106,000 for
the year ended  December 31, 1998 from $148,000 for the year ended  December 31,
1997.  The  decrease in income  taxes was the result of the  relatively  smaller
increases  in  net  interest   income  after   provision  for  loan  losses  and
non-interest income offset by the increase in non-interest expenses.

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



                                       11

<PAGE>
been  informed  by the OTS that it is exempt from this rule.  Nevertheless,  the
following table presents the Company's NPV at December 31, 1998 as calculated by
the OTS, based on information provided to the OTS by the Company.
<TABLE>
<CAPTION>
          Change in                            December 31, 1998
       Interest Rates                         Net Portfolio Value
      In Basis Points                  ------------------------------
       (Rate Shock)                    Amount                  Change
       ------------                    ------                  ------
                                           (Dollars in thousands)
           <S>                          <C>                   <C>  
            400                         3,867                 (11)%
            300                         4,114                  (6)
            200                         4,265                  (2)
            100                         4,331                  (1)
          Static                        4,355                  -
           (100)                        4,422                   2
           (200)                        4,615                   6
           (300)                        5,040                  16
           (400)                        5,472                  26
</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 6% if interest rates  increased by 300bp,  whereas the
NPV would increase by 16% 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
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.

                                       12
<PAGE>
          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 4 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, 1998 and 1997,  liquidity  eligible  assets  totaled  $6.5  million and $2.1
million,  respectively.  At those dates, the Association's liquidity ratios were
11.8%  and  8.2%,   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,  1998,  the  Association  had
outstanding  commitments  to  extend  credit  which  amounted  to $1.1  million.
Management  believes  that loan  repayments  and other  sources of funds will be
adequate to meet the Company's foreseeable liquidity needs.

          At  December  31,  1998,   the   Association   had  $17.2  million  in
certificates  of deposit  due within one year and $12.4  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, 1998 and 1997,
the  Company   originated   loans   totaling  $8.5  million  and  $7.1  million,
respectively.  During those same periods, the Company purchased  mortgage-backed
securities  totaling  $2.4  million  and  $2.9  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 21 in the  consolidated
financial  statements)  at  December  31,  1998 were  significantly  higher than
regulatory  minimum  requirements.  The Association had tangible capital of $3.7
million or 9.88% 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
$3.7 million or 9.88% of total  assets,  which is $2.6 million above the minimum
leverage ratio of 3.0%. The  Association  had total  risk-based  capital of $3.9
million and total  risk-weighted  assets of $15.8  million,  or total capital of
24.81%  of  risk-weighted   assets.   This  was  $2.7  million  above  the  8.0%
requirement.
                                       13
<PAGE>
Capability of the Company's Data  Processing  Hardware to  Accommodate  the Year
2000

          The  Company is aware of the issues  associated  with the  programming
code in existing  computer systems as the millennium  (year "2000")  approaches.
The "year 2000" problem is pervasive and complex,  as virtually  every  computer
operation  will be affected in some way by the  rollover of the  two-digit  year
value of zero.  The issue is whether  computer  systems will properly  recognize
date-sensitive  information  when the year changes to 2000.  Systems that do not
properly  recognize such  information  could generate  erroneous data or cause a
system to fail.

          The Company is  utilizing  both  internal  and  external  resources to
identify,  correct  or  reprogram,  and test the  systems  for the  "year  2000"
compliance.  It is anticipated that all  reprogramming  efforts will be complete
March 31, 1999, allowing adequate time for testing. To date,  confirmations have
been received from the Company's primary processing vendors that plans are being
developed to address  processing of transactions in the "year 2000".  Management
has assessed the "year 2000" compliance  expense and related potential effect on
the Company's  earnings,  and the board has approved  $75,000 to be dedicated to
this project  which is to be expended  during years ended  December 31, 1998 and
1999.

Recent Accounting Developments

          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
                                       14

<PAGE>
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.

          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. 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.

                                       15
<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,
1998 and 1997,  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, 1998 and 1997, 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 28, 1999

                                       16
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statements of Financial Condition
                           December 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                           1998         1997
                                                                                       -----------   -----------
                                     ASSETS
<S>                                                                                    <C>           <C>        
Cash and cash equivalents:
  Interest-bearing                                                                     $ 5,506,432   $ 1,297,774
  Non-interest bearing                                                                     812,796       586,468
Mortgage-backed and related securities - held-to-maturity (estimated
  market value of $9,770,282 and $11,609,680)                                            9,743,993    11,668,946
Mortgage-backed and related securities - available-for-sale,
  estimated market value                                                                 6,451,230     5,478,291
Loans receivable, net                                                                   14,896,198    13,645,908
Accrued interest receivable                                                                235,545       229,363
Other receivables                                                                           43,925        62,895
Federal Home Loan Bank stock, at cost                                                      263,000       259,300
Premises and equipment, at cost, less accumulated depreciation                             705,495       262,447
Other assets                                                                                35,016        27,795
                                                                                       -----------   -----------

    Total assets                                                                       $38,693,630   $33,519,187
                                                                                       ===========   ===========
                           LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES

Deposits                                                                               $33,553,066   $28,656,542
Advances by borrowers for taxes and insurance                                               20,402        23,212
Federal income taxes:
  Current                                                                                   24,263        54,956
  Deferred                                                                                  84,623       135,398
Dividends payable                                                                           40,311        39,676
Accrued expenses and other liabilities                                                     141,542        27,620
Deferred income                                                                             46,279        47,065
                                                                                       -----------   -----------
    Total liabilities                                                                   33,910,486    28,984,469
                                                                                       ===========   ===========
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, 266,622 and 264,506 shares issued and outstanding)                             2,666         2,645
Additional paid-in capital                                                               2,388,502     2,314,066
Retained earnings, substantially restricted                                              2,547,519     2,405,441
Accumulated other comprehensive income                                                       8,447        (2,284)
Unearned employee benefits - ESOP                                                         (163,990)     (185,150)
                                                                                       -----------   -----------

    Total stockholders' equity                                                           4,783,144     4,534,718
                                                                                       -----------   -----------

    Total liabilities and stockholders' equity                                         $38,693,630   $33,519,187
                                                                                       ===========   ===========
</TABLE>
The accompanying notes are an integral part of this statement.

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

                        Consolidated Statements of Income
                     Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                               1998               1997
                                                            ----------         ----------
<S>                                                         <C>                <C>       
Interest income:                         
  Loans receivable:
    First mortgage loans                                    $  948,509         $  911,296
    Consumer and other loans                                   329,065            255,480
  Mortgage-backed and related securities                     1,047,424          1,041,868
  Other interest earning assets                                 86,107             93,760
                                                            ----------         ----------
      Total interest income                                  2,411,105          2,302,404
                                                            ----------         ----------
Interest expense:
  Deposits                                                   1,239,238          1,210,611
  Borrowed funds                                                 4,895             15,926
                                                            ----------         ----------
     Total interest expense                                 1,244,133          1,226,537
                                                            ----------         ----------

Net interest income                                          1,166,972          1,075,867
Provision for loan losses                                       58,664              3,000
                                                            ----------         ----------
Net interest income after provision for
   loan losses                                               1,108,308          1,072,867
                                                            ----------         ----------
Non-interest income:
  Service charges on deposits                                  235,428            193,605
  Insurance commissions earned                                   8,916             10,934
  Loan origination and servicing fees                           49,020             44,433
  Net other real estate expenses                                   119             (3,227)
  Gain on foreclosed real estate                                   314              6,417
  Other operating revenues                                      17,979             24,657
                                                            ----------         ----------
      Total non-interest income                                311,776            276,819
                                                            ----------         ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                               1998               1997
                                                            ----------         ----------
<S>                                                         <C>                <C>       
Non-interest expense:
  Compensation and employee benefits                           562,529            462,626
  Occupancy and equipment expenses                              82,925             66,935
  SAIF deposit insurance premiums                               17,326             17,160
  Stationery and printing                                       71,630             51,966
  Data processing                                               84,848             58,933
  Other expenses                                               273,257            289,857
                                                            ----------         ----------
      Total non-interest expenses                            1,092,515            947,477
                                                            ----------         ----------

      Income before income taxes                               327,569            402,209

Income tax expense                                             105,503            147,709
                                                            ----------         ----------

      Net income                                            $  222,066         $  254,500
                                                            ==========         ==========

Net income per common share - basic                         $      .90         $     1.04
                                                            ==========         ==========

Net income per common share - diluted                       $      .90         $     1.04
                                                            ==========         ==========
Average common shares outstanding                              247,401            244,669
</TABLE>


The accompanying notes are an integral part of this statement.

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

           Consolidated Statements of Changes in Stockholders' Equity
                     Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                       Accumulated
                                                            Additional                    Other       Unearned       Total
                                                   Common    Paid-in      Retained    Comprehensive   Employee    Stockholders'
                                                   Stock     Capital      Earnings       Income       Benefits       Equity
                                                  ------    ----------    ----------     -------       ---------   ----------
Balance, December 31, 1996                        $2,645   $2,298,84     $2,230,294      $(6,004)     $(206,310)   $4,319,467
                                                  ------    ----------    ----------     -------       ---------   ----------
<S>                                               <C>       <C>           <C>            <C>           <C>          <C>       
Comprehensive income:

  Net income                                           -           -        254,500            -              -             -

  Change in unrealized gain (loss)
    on securities available-for-sale, net
    of deferred taxes                                  -           -              -        3,720              -             -

    Comprehensive income                               -           -              -            -              -       258,220

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

Allocation of ESOP shares                              -      15,224              -            -         21,160        36,384
                                                  ------    ----------    ----------     -------       ---------   ----------
Balance, December 31, 1997                          2,64   2,314,066      2,405,441       (2,284)      (185,150)    4,534,718

Comprehensive income:

  Net income                                           -           -        222,066            -              -             -

  Change in unrealized gain (loss) on
    securities available-for-sale,
    net of deferred taxes                              -           -              -       10,731              -             -

    Comprehensive income                               -           -              -            -              -       232,797

Dividends                                              -           -        (79,988)           -              -       (79,988)

Allocation of ESOP shares                              -      23,673              -            -        21,160         44,833

Allocation of recognition and
  retention plan shares                               21      50,763              -            -              -        50,784
                                                  ------    ----------    ----------     -------       ---------    ----------
Balance, December 31, 1998                        $2,666    $2,388,502    $2,547,519     $ 8,447       $(163,990)   $4,783,144
                                                  ======    ==========    ==========     =======       =========    ==========
</TABLE>

The accompanying notes are an integral part of this statement.

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

                      Consolidated Statements of Cash Flows
                     Years Ended December 31, 1998 and 1997
<TABLE>
<CAPTION>
                                                                                           1998           1997
                                                                                      -----------     -----------
<S>                                                                                   <C>             <C>    
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                          $   222,066     $   254,500
                                                                                      -----------     -----------
  Adjustments to reconcile net income to net cash 
     provided by operating activities:
      Depreciation of premises and equipment                                               46,603          36,267
      Provision for loan losses                                                            58,664           3,000
      Gain on sale of foreclosed real estate                                                 (314)         (6,417)
      Gain on sale of mortgage-backed and related securities-
        available-for-sale                                                                   -             (2,826)
      Premium amortization net of discount accretion                                       (4,173)         (8,888)
      Deferred income taxes                                                               (48,761)         13,133
      Stock dividend on FHLB stock                                                        (15,100)        (15,000)
      Compensation RRP                                                                     50,784            -
      Compensation ESOP                                                                    23,673          15,224
      Changes in assets and liabilities -
        Increase in accrued interest receivable                                            (9,526)        (22,906)
        Increase in prepaid assets                                                         (8,969)         (1,137)
        Increase (decrease) in accrued expenses and other
          liabilities                                                                      22,726         (17,004)
        Increase (decrease) in current income taxes payable                               (30,693)         52,113
        Increase (decrease) in deferred income                                               (786)         28,247
        (Increase) decrease in other receivables                                           18,970         (20,095)
                                                                                      -----------     -----------
            Total adjustments                                                             103,098          53,711
                                                                                      -----------     -----------

            Net cash provided by operating activities                                     325,164         308,211
                                                                                      -----------     -----------

CASH FLOWS FROM INVESTING ACTIVITIES
  Principal repayment of mortgage-backed and related
    securities - held-to-maturity                                                       1,917,679       1,876,561
  Principal repayments of mortgage-backed and related
    securities - available-for-sale                                                     1,487,739         593,367
  Purchase of mortgage-backed and related
    securities - held-to-maturity                                                            -           (328,438)
  Purchase of mortgage-backed and related
    securities - available-for-sale                                                    (2,444,007)     (2,542,913)
  Sale of mortgage-backed and related securities - available -
    for-sale                                                                                 -            382,328
  Net increase in loans made to customers                                              (1,268,094)     (1,710,918)
  Proceeds from sale of foreclosed real estate                                               -            147,500
  Purchase of property and equipment                                                     (397,856)        (16,336)
                                                                                      -----------     -----------

            Net cash used by investing activities                                        (704,539)     (1,598,849)
                                                                                      -----------     -----------
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
                                                                                           1998           1997
                                                                                      -----------     -----------
<S>                                                                                     <C>             <C>      
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase in demand deposits,
    NOW accounts, passbook savings accounts, and
    certificates of deposits                                                            4,896,524       2,948,893
  Decrease in advances from FHLB                                                             -         (1,200,000)
  Net decrease in advances by borrowers
    for taxes and insurance                                                                (2,810)         (8,642)
  Dividends paid to shareholders                                                          (79,353)        (39,676)

            Net cash provided by financing
              activities                                                                4,814,361       1,700,575
                                                                                      -----------     -----------

            Net increase in cash and cash equivalents                                   4,434,986         409,937

CASH AND CASH EQUIVALENTS, beginning of period                                          1,884,242       1,474,305
                                                                                      -----------     -----------

CASH AND CASH EQUIVALENTS, end of period                                              $ 6,319,228     $ 1,884,242
                                                                                      ===========     ===========
</TABLE>
(continued)

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

                Consolidated Statements of Cash Flows (continued)
                     Years Ended December 31, 1998 and 1997

<TABLE>
<CAPTION>
                                                                                          1998            1997
                                                                                      -----------     -----------
Supplemental Disclosures
<S>                                                                                    <C>             <C>       
Cash paid for:            
  Interest on deposits, advances, and other borrowings                                 $1,216,785      $1,226,767
  Income taxes                                                                            176,177         134,956
 
Transfers from loans to real estate acquired through
  foreclosure                                                                                -             27,919

Proceeds from sales of foreclosed real estate financed
  through loans                                                                              -            147,500

Total (increase) decrease in unrealized loss on
  mortgage-backed and related securities available-for-
  sale, net of deferred taxes                                                              10,731           3,720
</TABLE>

The accompanying notes are an integral part of this statement.

                                       21
<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.      Use of Estimates

                        The  preparation  of financial  statements in conformity
                with   generally   accepted   accounting   principles   requires
                management  to make  estimates and  assumptions  that affect the
                reported  amounts of assets and  liabilities  and  disclosure of
                contingent  assets and  liabilities at the date of the financial
                statements  and the  reported  amounts  of income  and  expenses
                during the reporting  period.  Actual  results could differ from
                those estimates.

                        Material estimates that are particularly  susceptible to
                significant  change relate to the determination of the allowance
                for losses on loans and the valuation of real estate acquired in
                connection  with  foreclosures  or in  satisfaction of loans. In
                connection with the  determination  of the allowances for losses
                on  loans  and  foreclosed  real  estate,   management   obtains
                independent appraisals for significant properties.

                        While management uses available information to recognize
                losses on loans and foreclosed real estate,  future additions to
                the  allowances  may be  necessary  based  on  changes  in local
                economic conditions.  Because of these factors, it is reasonably
                possible that the  allowances for losses on loans and foreclosed
                real estate may change materially in the future.

        C.      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.

                                       22
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



                        Cash and cash  equivalents  at  December  31 include the
                following:

<TABLE>
<CAPTION>
                                                                  1998         1997
                                                              ----------    ----------
<S>                                                           <C>           <C>       
                Interest-bearing deposits
                  in other institutions                       $5,506,432    $1,297,774
                Non-interest bearing deposits                    812,796       586,468
                                                              ----------    ----------

                    Total                                     $6,319,228    $1,884,242
                                                              ==========    ==========
</TABLE>
        D.      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.

                        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,  1998,  the Company had no  outstanding
                commitments to sell  securities.  Gains of $ -0- and $2,826 were
                realized  in  1998  and  1997,   respectively  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:
<PAGE>
<TABLE>
<CAPTION>
                                                       December 31,
                                                 -----------------------
                                                   1998          1997
                                                   Gross        Gross
                                                 Unrealized   Unrealized
                                                    Gain         Loss
                                                 ----------   ----------
<S>                                               <C>            <C>    
                Held-to-maturity
                  securities                      $26,289        $59,266
                Available-for-sale
                  securities                       12,997          3,460
</TABLE>

                                       23
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

        E.      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.

                        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 No. 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

                                       24
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

                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.

        F.      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.

        G.      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.

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

                Notes to Consolidated Financial Statements (Continued)

                        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.

        H.      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.

        I.      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.

        J.      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:
<TABLE>
<CAPTION>
                <S>                                                   <C>     
                Buildings                                               40 years
                Furniture and fixtures                                7-10 years
                Automobiles                                              5 years
</TABLE>
                        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.
                                       26
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

        K.      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.

        L.      New Accounting Pronouncements

                        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.

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

             Notes to Consolidated Financial Statements (Continued)

                        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.

                        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. 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.

        M.      Reclassified Items

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

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

             Notes to Consolidated Financial Statements (Continued)

 (2)    Federal Home Loan Bank Stock

                The  carrying  values of the FHLB stock at December 31, 1998 and
        1997  are  $263,000  and  $259,300,  respectively.  FHLB  stock  was not
        considered  impaired  at  December  31,  1998 or 1997 and was carried at
        cost.

 (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, 1998
                                ------------------------------------------------------------
                                               Net
                                           Unamortized
                                             Premium                  Gross       Estimated
                                 Principal  (Unearned    Carrying   Unrealized     Market
                                  Balance   Discounts)    Value     Gain (Loss)     Value
                                ----------  ---------   ----------  -----------   ----------
<S>                             <C>         <C>         <C>           <C>         <C>       
    GNMA
      certificates              $  240,926  $    141    $  241,067    $ 2,331     $  243,398
    FHLMC
      certificates               3,303,815   (17,417)    3,286,398      3,744      3,290,142
    FNMA
      certificates               5,954,919    34,537     5,989,456      9,370      5,998,826
    Collateralized
      mortgage
      obligations                   35,710     2,801        38,511     (2,737)        35,774
    Municipal bond                 200,000   (11,439)      188,561     13,581        202,142
                                ----------  --------    ----------    -------     ----------
                                $9,735,370  $  8,623    $9,743,993    $26,289     $9,770,282
                                ==========  ========    ==========    =======     ==========
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
                                       Available-for-Sale Securities December 31, 1998
                                ------------------------------------------------------------
                                               Net
                                           Unamortized
                                             Premium                  Gross       Estimated
                                 Principal  (Unearned    Carrying   Unrealized     Market
                                  Balance   Discounts)    Value     Gain (Loss)     Value
                                ----------  ---------   ----------  -----------   ----------
<S>                              <C>         <C>        <C>           <C>        <C>       
    GNMA
        certificates             $  379,394  $  8,495   $  387,889    $(4,695)   $  383,194
    FHLMC
        certificates              2,241,232   (13,588)   2,227,644      3,663     2,231,307
    FNMA
        certificates              3,275,008    (4,015)   3,270,993     15,878     3,286,871
    SBA
        certificates                546,442     5,465      551,907     (2,049)      549,858
                                 ----------   -------   ----------    -------    ----------
                                 $6,442,076   $(3,643)  $6,438,433    $12,797    $6,451,230
                                 ==========   =======   ==========    =======    ==========
</TABLE>
                                       29
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)
<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        54,981      (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>
<PAGE>


                During    1998,    there    were   no   sales   of    securities
        available-for-sale.   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.

                Investment  securities with a carrying  amount of  approximately
        $6,749,000  and $802,000 were pledged to secure  deposits as required or
        permitted by law at December 31, 1998 and 1997, respectively.


                                       30
<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, 1998:
<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                 $  106,200    $  106,109  $    6,416   $    6,281
          After five years
            through ten years         80,700        81,814        -            -
          After ten years          9,557,093     9,582,359   6,432,017    6,444,949
                                  ----------    ----------  ----------   ----------
                                  $9,743,993    $9,770,282  $6,438,433   $6,451,230
                                  ==========   ===========  ==========   ==========
</TABLE>
 (4)    Loans Receivable

                Major classification of loans at December 31 are as follows:
<TABLE>
<CAPTION>
                                                                  1998         1997
                                                              -----------   -----------
<S>                                                           <C>           <C>        
        First mortgage loans (principally conventional):
          Principal balances -
            Secured by one-to-four family residences          $ 8,884,378   $ 8,376,124
            Land loans                                            483,376       612,187
            Commercial loans                                    2,083,735     1,467,219
            Construction loans                                    394,001       352,800
            Other real estate loans                               255,757       279,585
                                                              -----------   -----------
                                                               12,101,247    11,087,915
        Less: Undisbursed portion of first mortgage
             loans                                               (163,694)     (124,612)
                                                              -----------   -----------
               Total first mortgage loans                      11,937,553    10,963,303

     Consumer and other loans:
          Principal balances -
            Automobile                                           701 ,718       525,835
            Manufactured home                                      39,733        24,017
            Share loans                                           773,817       734,844
            Lines of credit                                     2,248,622     1,321,178
            Other consumer loans                                  934,779       970,638
                                                              -----------   -----------
                                                                4,698,669     3,576,512
</TABLE>
                                       31
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
<S>                                                            <C>          <C>        
        Less: Undisbursed portion of consumer loans             (1,415,291)    (585,478)
              Unearned discounts                                   (20,676)      (8,169)
                   Total consumer and other loans                3,262,702    2,982,865

        Less: Allowance for loan losses                           (304,057)    (300,260)

                 Loans receivable, net                         $14,896,198  $13,645,908
                                                               ===========  ===========
</TABLE>
                Activity  in the  allowance  for loan losses for the years ended
        December 31 is summarized as follows:

<TABLE>
<CAPTION>
                                              1998       1997
                                            --------   --------
<S>                                         <C>        <C>     
        Balance, beginning of year          $300,260   $296,452
          Provision for loan losses           58,664      3,000
          Charge offs less recoveries        (54,867)       808
                                            --------   --------

        Balance, end of year                $304,057   $300,260
                                            ========   ========
</TABLE>
                The Company had loans with unpaid  principal  balances  totaling
        $117,208 and $125,679 at December 31, 1998 and 1997, 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 $6,381
        and  $6,756,  respectively.   The  Company  is  not  committed  to  lend
        additional funds to debtors whose loans have been modified.

 (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,  1998  and  1997,   in  the  amounts  of  $106,730   and   $198,646,
        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 $10,475 and $18,595
        for the years ended December 31, 1998 and 1997,  respectively.  Interest
        income totalling $7,672 and $13,712 was included in income for the years
        ended  December  31,  1998 and 1997,  respectively.  The  Company is not
        committed  to lend  additional  funds to debtors  whose  loans have been
        restructured. No impaired loans existed at December 31, 1998 and 1997.

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

             Notes to Consolidated Financial Statements (Continued)

(6)     Accrued Interest Receivable

                Accrued  interest  receivable  at December 31 is  summarized  as
                 follows:
<TABLE>
<CAPTION>
                                                             1998       1997
                                                           --------   --------

<S>                                                        <C>        <C>     
        Mortgage-backed and related securities             $128,867   $132,058
        Loans receivable                                    106,678     97,305
                                                           --------   --------

                                                           $235,545   $229,363
                                                           ========   ========
</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>
                                                             1998       1997
                                                           --------   --------
<S>                                                        <C>        <C>     
        Balance, beginning of year                         $ -        $ 25,807
          Provisions charged to operations                               -
          Charge-offs less recoveries                        -         (25,807)

        Balance, end of year                               $ -        $   -
                                                           ========   ========
</TABLE>
(8)  Premises and Equipment

                Premises   and   equipment  at  December  31  consisted  of  the
following:
<TABLE>
<CAPTION>
                                                          1998        1997
                                                      ----------   ----------
<S>                                                   <C>          <C>       
        Land and buildings                            $  685,508   $  342,138

        Furniture, fixtures and equipment                440,285      294,004
                                                      ----------   ----------

                                                       1,125,793      636,142

        Less:  Accumulated depreciation                 (420,298)    (373,695)
                                                      ----------   ----------
                                                      $  705,495   $  262,447
                                                      ==========   ==========
</TABLE>
                                       33
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

                Depreciation  for the years ended December 31, 1998 and 1997 was
        $46,603 and $36,267, respectively.


(9)  Deposits

                Deposits at December 31 are summarized as follows:
<TABLE>
<CAPTION>
                            Weighted
                            Average           1998                  1997
                            Rate at     ------------------     -----------------
                            12/31/98    Amount     Percent     Amount    Percent
                            --------    ------     -------     ------    -------
<S>                           <C>     <C>          <C>     <C>            <C>   

        Demand and NOW
          accounts,
          including
          non-interest
          bearing deposits
          of $1,299,481 and
       $912,169               1.76%   $10,107,457  30.12%  $ 4,685,827    16.35%
        Money market          2.75%       603,651   1.80%      722,090     2.52%
        Passbook savings      2.08%     2,253,347   6.72%    2,584,113     9.02%
                             -----    ----------- ------    -----------  ------ 
                                       12,964,455  38.64%    7,992,030    27.89%
                                      ----------- ------    -----------  ------ 

        Certificates
          of deposit:
             3.99% or less    2.00%       312,451    .93%          -       0.00%
             4.00% to 5.99%   4.87%    15,342,596  45.73%    16,919,400   59.05%
             6.00% to 7.99%   6.02%     4,811,215  14.34%     3,627,464   12.66%
             8.00% to 9.99%   8.00%       122,349    .36%       117,648    0.40%
                             -----    ----------- ------    -----------  ------ 
                                       20,588,611  61.36%    20,664,512   72.11%
                                      ----------- ------    -----------  ------ 

                                      $33,553,066 100.00%   $28,656,542  100.00%
                                      =========== ======    ===========  ======
</TABLE>
                The aggregate amount of short-term jumbo certificates of deposit
        with a minimum  denomination of $100,000 was  approximately,  $4,450,784
        and $2,664,532 at December 31, 1998 and 1997, respectively.
<PAGE>
                At December 31, 1998  scheduled  maturities of  certificates  of
        deposit are as follows:
<TABLE>
<CAPTION>
                                            Year Ending December 31,
                             -------------------------------------------------------
                                 1999        2000        2001       2002      2003
                             -----------  ----------   --------    -------   -------
<S>                          <C>          <C>          <C>         <C>       <C> 
  3.00 to 3.99 percent       $      -     $  312,451   $   -       $  -      $  -
  4.00 to 5.99 percent        13,987,716   1,054,702    160,518     74,365    65,295
  6.00 to 7.99 percent         3,206,593   1,216,065    388,557       -         -
  8.00 to 8.99 percent             -         122,349       -          -         -

                             $17,194,309  $2,705,567   $549,075    $74,365   $65,295
                             ===========  ==========   ========    =======   =======
</TABLE>
               Deposits for directors,  officers and employees  totaled $763,291
         and $670,698 at December 31, 1998 and 1997, respectively.


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

             Notes to Consolidated Financial Statements (Continued)

                Interest  expense on deposits for the years ended December 31 is
        summarized as follows:
<TABLE>
<CAPTION>
                                             1998          1997
                                          ----------    ----------
<S>                                       <C>           <C>       
      Money market and NOW
          accounts                        $  102,288    $   92,541
        Passbook savings                      50,124        53,326
        Certificates of
          deposits                         1,086,826     1,064,744
                                          ----------    ----------

                                          $1,239,238    $1,210,611
                                          ==========    ==========
</TABLE>
                Income  from early  withdrawal  penalties  amounted  to $504 and
        $4,005 for the years ended December 31, 1998 and 1997, respectively.

(10)    Deferred Income

                Deferred income at December 31 consisted of the following:
<TABLE>
<CAPTION>
                                                             1998      1997
                                                           -------   -------
<S>                                                        <C>       <C>    
        Interest on loans collected in advance             $ 6,038   $ 6,510
        Unrealized profit from the sale of
          repossessed property                              40,241    40,555
                                                           -------   -------

            Totals                                         $46,279   $47,065
                                                           =======   =======
</TABLE>
(11)    Accrued Expenses and Other Liabilities

                Accrued  expenses  and  other   liabilities   consisted  of  the
following:
<TABLE>
<CAPTION>                  
                                               1998       1997
                                             --------   --------
<S>                                          <C>        <C>     
        Accrued interest                     $ 27,969   $    620
        Payroll taxes                           1,735      2,177
        Accounts payable                       99,825     13,509
        Other                                  12,013     11,314
                                             --------   --------

                                             $141,542   $ 27,620
                                             ========   ========
</TABLE>
                                       35
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

(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>
 
                                                                    1998     1997
                                                                  -------   -------

<S>                                                               <C>       <C>    
        Interest on demand account in other institutions          $70,817   $78,539
        Federal Home Loan Bank dividends                           15,290    15,221
                                                                  -------   -------

            Totals                                                $86,107   $93,760
                                                                  =======   =======
</TABLE>
(13)    Other Noninterest Expenses

                Details of other expenses  included in noninterest  expenses for
        the years ended December 31 are provided below:
<TABLE>
<CAPTION>
                                                1998       1997
                                              --------   --------
<S>                                           <C>        <C>     
        Bank clearing charges                 $ 74,401   $ 82,504
        Insurance                               22,279     22,505
        Professional fees                       50,657     73,506
        Telephone                               14,597     13,018
        Advertising                             16,629     23,418
        Franchise and shares taxes              42,610     32,479
        Registrar fees                           5,493      4,635
        Supervisory examination                 11,263      3,471
        ESOP expenses                            2,050      1,950
        Property taxes                           6,058      7,693
        Dues and subscriptions                   7,882      5,947
        Miscellaneous other
          expenses                              19,338     18,731
                                              --------   --------
 
          Total                               $273,257   $289,857
                                              ========   ========
</TABLE>
(14)    Retirement Plans

        Profit Sharing Plan

                In 1988, the Company adopted a contributory  profit sharing plan
        for all full time employees. No contributions were made in 1998 and 1997
        due to contributions made on behalf of employees to the ESOP plan.

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

             Notes to Consolidated Financial Statements (Continued)

        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 1998 and 1997, 2,116 shares were allocated to participants
        each year.  The fair value of such shares,  $44,833 and $36,385 for 1998
        and 1997,  respectively,  was charged to expense.  The fair value of the
        remaining  unallocated  shares at  December  31,  1998 and 1997  totaled
        $278,783 and $370,300, respectively.

(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,  1998  and  1997,   $53,050   and   $38,665,
        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>
                                         1998       1997
                                       --------   --------
<S>                                    <C>        <C>     
        Income taxes current:
          Federal                      $159,223   $134,956
                                       --------   --------

        Deferred taxes due to
          timing differences            (53,720)   12,753

            Total income tax
              expense                  $105,503   $147,709
                                       ========   ========
</TABLE>
                                       37
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

                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>
                                                     1998     1997
                                                     -----    ----- 
<S>                                                   <C>      <C>  
        Computed at the expected
          statutory rate                              34.0%    34.0%
        Other                                         (1.8)     2.7

                                                      32.2%    36.7%
                                                     =====    =====
</TABLE>
                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>
                                                      1998       1997
                                                    --------   --------

<S>                                                 <C>        <C>     
        Deferred tax assets                         $ 45,784   $ 26,467
        Deferred tax liabilities                     130,407    161,865
                                                    --------   --------

          Net deferred tax liabilities              $ 84,623   $135,398
                                                    ========   ========
</TABLE>
                No  valuation  allowances  were  recorded  against  deferred tax
        assets as of December 31, 1998 and 1997.

                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.  The  Association  had
        postponed  recapture  of  income  from the  excess of  federal  bad debt
        reserves over base year  reserves  since 1996.  Taxable  income for 1998
        included  $119,038  of  recapture  of this  bad  debt  reserve,  thereby
        decreasing  the deferred tax liability and  increasing  current taxes by
        $40,473.

                                       38
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


                Retained  earnings of the Company at December  31, 1998 and 1997
        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.


(17)    Earnings Per Share

                The Company adopted FAS 128,  Earnings Per Share, as of December
        31, 1997.  Weighted average shares of common stock outstanding for basic
        EPS excludes  the weighted  average  shares  unreleased  by the Employee
        Stock Ownership Plan ("ESOP")  (16,399 and 18,515 shares at December 31,
        1998 and 1997, respectively) and the weighted average unvested shares in
        the  Recognition  and  Retention  Plan  (RRP)  (8,464  and -0- shares at
        December 31, 1998 and 1997, respectively).  The effect on diluted EPS of
        stock option  shares  outstanding  and unvested RRP shares is calculated
        using the treasury stock method. The following is a reconcilement of the
        numerator and denominator for basic and diluted Earnings Per Share.

<TABLE>
<CAPTION>
                                             Income        Shares      Per-Share
                                          (Numerator)   (Denominator)    Amount
                                          -----------   -------------  ---------
                                                Year Ended December 31, 1998
                                          --------------------------------------
<S>                                         <C>             <C>            <C> 

        Basic EPS
          Income available to common
            stockholders                    $222,066        247,401        $.90
                                                                           ====
        Effect of dilutive securities
          Stock options outstanding             -              -
          Restricted stock grants               -              -
                                            --------        -------             

        Diluted EPS
          Income available to common
            stockholders plus assumed
            conversions                     $222,066        247,401        $.90
                                            ========        =======        ====
</TABLE>
                                       39
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

<TABLE>
<CAPTION>
                                                Income       Shares      Per-Share
                                             (Numerator)  (Denominator)    Amount
                                             -----------  -------------    ------
                                                  Year Ended December 31, 1997
                                              ------------------------------------
<S>                                           <C>              <C>           <C>  
        Basic EPS
          Income available to common
            stockholders                      $254,500         244,669       $1.04
                                                                             =====
        Effect of dilutive securities
          Stock options outstanding              -                -
          Restricted stock grants                -                -
                                             ---------         -------       -----
        Diluted EPS
          Income available to common
            stockholders plus assumed
            conversions                      $254,500          249,669       $1.04
                                             ========          =======       =====
</TABLE>
(18)    Other Employee Benefits

        Recognition and Retention Plan

                The Company established the Recognition and Retention Plan (RRP)
        for certain  officers and directors on April 30, 1998.  During 1998, the
        Company  issued 2,116 shares of common stock to fund the vested  portion
        of the RRP.  The excess of fair value over par value of the common stock
        issued increased  additional paid-in capital by $50,763.  The fair value
        of the shares on the date of award is recognized ratably as compensation
        expense over the vesting  period,  which is five years.  The grantees of
        the  restricted  stock  have  the  right  to vote  the  shares  awarded.
        Dividends on unvested shares are held in trust and distributed  when the
        related  shares vest.  For the year ended  December 31, 1998, the amount
        included in compensation  expense was $50,784.  A summary of the changes
        in restricted stock follows:
<TABLE>
<CAPTION>
                                                Unvested    Vested
                                                 Shares     Shares
<S>                                               <C>         <C>  
        Balance, January 1, 1998                   -           -
        Approved by the plan                     10,580        -
        Vested                                   (2,116)       -
        Forfeited                                  -           -
        Earned and issued                          -          2,116
        Balance, December 31, 1998                8,464       2,116
                                                 ======      ======
</TABLE>

                                       40
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)

        Stock Option Plan

                In 1998, the Company adopted a stock option plan for the benefit
        of directors and officers. The number of shares of common stock reserved
        for issuance under the stock option plan was equal to 26,450 shares,  or
        10.0 percent, of the total number of common shares sold in the Company's
        initial  public  offering of its common  stock upon the  mutual-to-stock
        conversion of First Allen Parish Bancorp, Inc. The option exercise price
        cannot be less than the fair value of the underlying  common stock as of
        the date of the option grant and the maximum  option term cannot  exceed
        10 years.  The stock  options  granted to directors and officers in 1998
        are  exercisable  in five equal annual  installments.  Under APB No. 25,
        because the exercise  price of the Company's  stock  options  equals the
        market  price  of the  underlying  stock on the  date of the  grant,  no
        compensation expense is recognized.

                The following  table  summarizes  the activity  related to stock
       options:
<TABLE>
<CAPTION>
                                       Available     Options
                                       for Grant   Outstanding
                                       -------       -------
<S>                                     <C>           <C>  
        At inception                    26,450          -
        Granted                        (22,483)         -
        Vested                            -            4,497
        Canceled                          -             -
        Exercised                         -             -
                                       -------       -------
        At December 31, 1998             3,967         4,497
                                       =======       =======
</TABLE>
                The 4,497  vested  outstanding  options were issued on April 30,
        1998 at an exercise  price equal to the market  value of $24.00 and were
        exercisable at December 31, 1998. The  weighted-average  grant-date fair
        value of options  granted  during the year ended  December  31, 1998 was
        $7.15.

                In  October  1995,  the FASB  issued  SFAS  123,  Accounting  of
        Stock-Based   Compensation.   SFAS  123  requires   disclosure   of  the
        compensation cost for stock-based  incentives  granted after January 31,
        1995,  based on the fair value at grant date for awards.  Applying  SFAS
        123 would result in pro forma net income and earnings per share  amounts
        as follows:
<PAGE>
<TABLE>
<CAPTION>                        
                                        1998
                                      --------
<S>                                   <C>     
        Net income              
          As reported                 $222,066
          Pro forma                   $197,102
        Earnings per share
          As reported - Basic             $.90
                      - Diluted           $.90
          Pro forma   - Basic             $.80
                      - Diluted           $.80
</TABLE>

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

             Notes to Consolidated Financial Statements (Continued)

(19)    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>
                                                       1998        1997
                                                    ---------   ---------
<S>                                                 <C>         <C>      
        Balance, beginning of year                  $ 249,429   $ 214,721
                                                    ---------   ---------
           Additions                                  118,266      70,562
          Payments                                   (139,395)    (35,854)
                                                    ---------   ---------
 
        Balance, end of year                        $ 228,300   $ 249,429
                                                    =========   =========
</TABLE>

(20)    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 $584,516.


(21)    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.



                                       42
<PAGE>

                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



                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,  1998,  that the  Association  meets all
        capital adequacy requirements to which it is subject.

                As of December 31, 1998, 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                       $3,732,780  $3,732,780  $3,912,280
                Minimum capital requirement                 566,489   1,132,979   1,261,280
                                                         ----------  ----------  ----------
                  Regulatory capital in excess of
                    of minimum capital
                    requirements                         $3,166,291  $2,599,801  $2,651,000
                                                         ==========  ==========  ==========

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

                The Association's regulatory
             capital                                          9.88%       9.88%      24.81%
                                                         ==========  ==========  ==========

</TABLE>
(22)    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.


                                       43
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)



                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>     <C>     
                December 31, 1998       $755,861    8.5% - 10.5%      182 days

                December 31, 1997       $194,550    8.5% -  9.0%   10-182 days
</TABLE>
                                                             Ranges
<TABLE>
<CAPTION>
                                                    --------------------------
                                         Fixed        Interest      Commitment
                                         Rate          Rates          Terms
                                       ---------------------------------------

<S>                                     <C>        <C>    <C>     <C>     
                December 31, 1998       $343,600   8.5% - 12.0%       182 days

                December 31, 1997       $314,525   8.0% -  9.0%   120-182 days
</TABLE>



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

             Notes to Consolidated Financial Statements (Continued)


                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 $5,100 and $1,000 at December 31, 1998 and 1997,
        respectively.


(23)    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.

                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.

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

             Notes to Consolidated Financial Statements (Continued)


                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, 1998         December 31, 1997
                                         ----------------------     -----------------------
                                          Carrying       Fair        Carrying      Fair
                                           Value         Value        Value        Value
                                         ----------  ----------     ----------   ----------
<S>                                      <C>         <C>          <C>           <C>        
        Financial assets:
          Cash and due from
            banks                        $6,319,228  $6,319,228   $  1,884,242  $ 1,884,242
          Securities to be held-
            to-maturity                   9,743,993   9,770,282     11,668,946   11,609,680
          Securities available-
            for-sale                      6,451,230   6,451,230      5,478,291    5,478,291
          Loans                          14,896,198  14,886,904     13,645,908   13,495,448
          Accrued interest
            receivable                      235,545     235,545        229,363      229,363
          Other receivables                  43,925      43,925         62,895       62,895
          Federal Home Loan Bank
            stock, at cost                  263,000     263,000        259,300      259,300

<CAPTION>
                                            December 31, 1998         December 31, 1997
                                         ----------------------     -----------------------
                                          Carrying       Fair        Carrying      Fair
                                           Value         Value        Value        Value
                                         ----------  ----------     ----------   ----------
<S>                                      <C>         <C>          <C>           <C>        
        Financial liabilities:
          Deposit liabilities            $33,553,066  $32,471,617  $28,656,542  $27,732,897
          Advances by borrowers
            for taxes and insurance           20,402       20,402       23,212       23,212
          Current federal income
            taxes payable                     24,263       24,263       54,956       54,956
          Accrued expenses and
            other liabilities                141,542      141,542       27,620       27,620
          Off-balance sheet items
            Standby letters of
              credit                           5,100        5,100        1,000        1,000
            Commitments to extend
              credit                       1,099,461    1,099,461      509,075      509,075
</TABLE>
                                       46
<PAGE>
                 FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY

             Notes to Consolidated Financial Statements (Continued)


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

                The  Company  is  aware  of  the  issues   associated  with  the
        programming  code in existing  computer  systems as the millennium (year
        "2000") approaches. The "year 2000" problem is pervasive and complex, as
        virtually  every computer  operation will be affected in some way by the
        rollover  of the  two-digit  year  value of zero.  The issue is  whether
        computer systems will properly recognize date-sensitive information when
        the year changes to 2000.  Systems that do not properly  recognize  such
        information could generate erroneous data or cause a system to fail.

                The Company is utilizing both internal and external resources to
        identify, correct or reprogram, and test the systems for the "year 2000"
        compliance.  It is anticipated  that all  reprogramming  efforts will be
        complete March 31, 1999,  allowing  adequate time for testing.  To date,
        confirmations  have been received from the Company's primary  processing
        vendors  that  plans  are  being  developed  to  address  processing  of
        transactions in the "year 2000". Management has assessed the "year 2000"
        compliance  expense  and  related  potential  effect  on  the  Company's
        earnings,  and the board has  approved  $75,000 to be  dedicated to this
        project which is to be expended during years ended December 31, 1998 and
        1999.



                                       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 Friday,  April 30,  1999,  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 1998 was as follows:
<TABLE>
<CAPTION>
                                         High      Low     Dividends
                                        ------    ------   ---------
                                        <S>       <C>       <C>    
                                        $24.50    $17.00    $79,988
</TABLE>
        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, 1998,  there were 266,622  shares of First Allen Parish
Bancorp,  Inc. common stock issued and outstanding  (including  unallocated ESOP
shares) and there were 91 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,  1998,  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 1998.
                                       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.

        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
<PAGE>

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