TECHE HOLDING COMPANY

                               2004 ANNUAL REPORT

<PAGE>

Teche Holding Company
1120 Jefferson Terrace Boulevard
New Iberia, LA  70560
PHONE (337) 560-7151
FAX (337) 365-7130
LA WATS (800) 256-1500

New Iberia
1120 Jefferson Terrace Boulevard
New Iberia, LA  70560
(337) 365-0366 Call Center (800) 897-0315

Franklin
211 Willow Street
Franklin, LA 70538
 (337) 828-3212

Franklin Drive-Thru
1823 Main Street
Franklin, LA 70538
(337) 828-4177

Morgan City
1001 7th Street
Morgan City, LA 70380
(985) 384-0653

Bayou Vista
206 Arlington Avenue
Bayou Vista, LA 70380
(985) 395-5244


New Iberia
529 N. Lewis Street
New Iberia, LA  70563
 (337) 367-2516

New Iberia
142 W. St. Peter Street
New Iberia, LA 70560
(337) 364-5528

Lafayette
Broadmoor
5121 Johnston Street
Lafayette, LA 70503
(337) 981-1887

Lafayette
Downtown
1001 Johnston Street
Lafayette, LA 70501
(337) 232-6463

Lafayette
2200 W. Pinhook Road
Lafayette, LA 70508
(337) 232-3419

Baton Rouge
3524 S. Sherwood Forest Boulevard
Baton Rouge, LA  70816
(225) 293-0954

Baton Rouge
Wal*Mart SuperCenter
2171 O'Neal Lane
Baton Rouge, LA   70816
(225) 751-0264

Breaux Bridge
601 E. Bridge Street
Breaux Bridge, LA 70517
(337) 332-2149

Houma
706 Barrow Street
Houma, LA 70360
(985) 868-8766

Houma
1963 Prospect Boulevard
Houma, LA 70363
(985) 857-9990

Thibodaux
921 Canal Boulevard
Thibodaux, LA  70301
(985) 446-6707

Opelousas
428 E. Landry Street
Opelousas, LA  70570
(337) 942-5748

Eunice
840 E. Laurel Avenue.
Eunice, LA   70535
(337) 457-9585


Table of Contents                                                              1

President's Message                                                        2 - 3

Selected Financial Data                                                        4

Business of the Bank - Business of the Company                                 5

Summary of Quarterly Operating Results                                         5

Market and Dividend Information                                                6

Management's Discussion and Analysis of Financial
Condition and Results of Operations                                       7 - 12

Report of Independent Registered Public Accounting Firm                       13

Consolidated Balance Sheets                                                   14

Consolidated Statements of Income                                             15

Consolidated Statements of Stockholders' Equity                               16

Consolidated Statements of Cash Flows                                         17

Notes to Consolidated Financial Statements                                    19

Directors and Officers                                                        38

General Information                                                           38

<PAGE>
                                     TECHE
                                HOLDING COMPANY

President's Message

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

Dear Fellow Shareholders,

         Teche  Holding  Company  continued to expand during 2004 with growth in
both branches and SmartGrowth  deposits and loans. At Teche we are excited about
many key  achievements  during the past year and will  highlight  the  following
areas of progress:  expansion  into new markets,  our  transition to a community
bank, our financial performance and shareholder returns.

         Teche Holding Company Expands into New Markets. During this fiscal year
we entered the Baton Rouge market, doubling the potential customer base of Teche
Federal.  Baton  Rouge  is  the  second  largest  market  in  Louisiana  and  we
established our first branch on Sherwood Forest  Boulevard on November 24, 2003.
This branch has outperformed  our previous  start-up  branches,  attracting more
than $20 million in deposits in its first year.  Our second  branch  opened in a
Wal*Mart  store on  February  9, 2004,  also in the  rapidly  growing  southeast
section  of the city and also  attracting  customers  at a record  pace.  We are
currently scouting for other locations, especially in East Baton Rouge parish.

         Teche  expanded  into St.  Landry  Parish on July 2,  2004  when  Teche
Federal merged with St. Landry  Financial  Corporation,  the holding company for
First Federal  Savings & Loan  Association  of Opelousas.  Teche now has two new
locations,  one in Opelousas and the other in Eunice,  and has begun  attracting
new  customers  since we  introduced  our  comprehensive  banking  services  and
products.

         This merger went  smoothly for both  customers and employees due to the
work of a highly  skilled  team who  focused  on a seamless  transition  in back
office operations, loan services, processing,  collections, audit and compliance
functions. The technologies were compatible; the team and our officers were able
to meld the two corporate cultures effectively as well.

         Although  the  Thibodaux  market is not a new market for Teche,  we did
make some changes due to our customer growth.  We replaced a supermarket  branch
with a full-service branch. We also consolidated a supermarket location in Houma
with one of our existing full service branches.

         Overall,  at September  30th last year we had 15 branches;  now we have
extended our geographic area and are successfully operating 18 branches. We have
also expanded our banking hours and now have 14 branch  offices that are open on
Saturday.

         Teche Holding  Company  Continues  Transition  Into Community Bank. Our
strategy  of  SmartGrowth,  which  emphasizes  growth  with  profitability,   is
facilitating our transition.

         We have sustained  excellent  progress in the expansion of our customer
base, which is now more than 50,000.  We continue to attract  customers with our
totally free checking  program,  which generates  significant fee income. We now
open more than 2,000 deposit and loan accounts per month.

         Our  recurring fee income is now 36% of total  revenue,  the highest it
has ever been. We also continue to see strong growth in our SmartGrowth deposits
(checking,   money  market,   and  savings   accounts)  and  SmartGrowth   loans
(commercial, alternative mortgage, consumer and home equity loans).

         Total deposits increased $83 million. Our merger with First Federal and
the  introduction  of the highly  successful  Platinum  Account were the primary
contributors  to this  deposit  growth.  SmartGrowth  deposits  grew 22% to $210
million,  and now  represent  49% of total  deposits.  We have  made  tremendous
progress in  SmartGrowth  deposits,  which have  increased 131% over five years.
This growth is important to us because these deposits have low costs to the Bank
and form the capital base for our high yielding SmartGrowth loans.

         In 2004,  total loans grew by $114 million,  fueled mostly by the First
Federal merger and growth in commercial  loans.  Our SmartGrowth  loan portfolio
grew 41%, to $247 million.  SmartGrowth  loans now represent 52% of total loans.
Commercial  loans grew 53%, to $65 million.  Along with significant loan growth,
the Bank maintained excellent loan quality.

2
<PAGE>

         Financial Performance 2004 - A Stellar Year. We increased our assets by
$116 million or 22% in 2004 to a record $653 million and our equity increased 6%
to $60.3  million.  Revenue  growth  continues  a steady  upward  trend with $27
million in 2004 compared to $25 million in 2003.

         Earnings  per share were $2.48 this year and  represent a 92%  increase
over 5 years. Though branch expansions into Thibodaux and Baton Rouge and merger
expenses  had an  adverse  impact on  earnings  this  year,  we  consider  these
expansions as investments in future growth.

         TSH -  Excellent  Shareholder  Returns.  We are proud of the returns we
have provided to our shareholders.  Our Earnings Per Share (EPS) has grown at an
average compound rate of 14% over the last five years fueling an appreciation in
our stock price.  A shareholder  who purchased a share of Teche on September 29,
1999 for $14.38  would have  watched it grow to $40.00 on  September  30,  2004,
appreciation of 278% in five years. In addition, Teche has had seven consecutive
quarters of dividend  increases.  The total annual  dividend of $0.78 per common
share in 2004 is a 34% increase over the $0.58 dividend in 2003. Last year Teche
paid  dividends  totaling  29% of earnings  and has paid a cash  dividend for 38
consecutive quarters.

         We  are  committed  to  continuing  the   profitability   and  superior
shareholder  returns  that  we  have  generated  in the  last  five  years.  Our
SmartGrowth  strategy  has helped us to stay on course and increase the segments
of our  portfolio  that  generate the highest  returns and expand to areas which
have the  potential for future  earnings and growth.  We have a solid and tested
strategy that is generating excellent results.

         On behalf of the Board of Directors,  I want to express my appreciation
to the officers and employees who have  contributed to our success in 2004. Your
efforts have made us the fourth largest  publicly traded bank  headquartered  in
Louisiana and one of the most  successful.  We appreciate  our customers who are
the  foundation  of our  growth  and pledge to  continue  to  provide  them with
superior customer service. To our shareholders I pledge to continue to be a good
steward  of  your  investment.  We  are  committed  to  continued  progress  and
profitability in 2005.

                                                    Sincerely,


                                                    /s/Patrick Little

                                                    Patrick Little
                                                    Chairman,
                                                    Chief Executive Officer


                                                                               3

<PAGE>

SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                   At or for the Year Ended September 30,

                                                 2004              2003             2002              2001             2000
<S>                                        <C>               <C>              <C>               <C>              <C>
Assets                                       $653,034          $536,946         $514,017          $467,531         $474,527
Loans Receivable, Net                         471,327           357,130          350,623           380,830          386,512
Securities-Available for Sale                  98,939            99,378           64,110            41,230           54,635
Securities-Held to Maturity                    21,636            30,269           30,897               ---            2,574
Cash and Cash Equivalents                      15,362            14,439           35,375            24,108           10,384
Deposits                                      432,417           349,268          349,125           342,917          309,896
FHLB Advances                                 154,439           126,310          103,471            67,120          111,853
Stockholders' Equity                           60,287            56,996           56,366            52,112           48,621

SUMMARY OF OPERATIONS
Interest Income                              $ 30,668          $ 29,485         $ 33,697          $ 35,186         $ 32,976
Interest Expense                               13,076            13,672           16,345            20,505           19,098
                                             --------          --------         --------          --------         --------
Net Interest Income                            17,592            15,813           17,352            14,681           13,878
Provision for Loan Losses                          60                75              205                80              120
                                             --------          --------         --------          --------         --------
Net Interest Income after
   Provision for Loan Losses                   17,532            15,738           17,147            14,601           13,758
Non-Interest Income                             9,740             9,606            7,900             6,699            5,608
Non-Interest Expense                           18,730            16,016           15,613            14,768           13,778
                                             --------          --------         --------          --------         --------
Income Before Gains on Sales of
   Securities and Income Taxes                  8,542             9,328            9,434             6,532            5,588
Gains on Sales of Securities                      232                43               87               123              ---
Income Tax Expense                              2,848             3,186            3,285             2,296            1,928
                                             --------          --------         --------          --------         --------
Net Income                                   $  5,926          $  6,185         $  6,236          $  4,359         $  3,660
                                             ========          ========         ========          ========         ========

SELECTED FINANCIAL RATIOS
Ratio of Equity to Assets                       9.23%            10.60%            11.0%             11.1%            10.2%
Book Value/Common Share                        $26.54            $25.36           $23.80            $21.61           $19.43
Dividends declared per Share                    $0.78             $0.58            $0.50             $0.50            $0.50
Basic Income per Common Share                   $2.66             $2.73            $2.72             $1.86            $1.56
Diluted Income per Common Share                 $2.48             $2.55            $2.58             $1.81            $1.55
Return on Average Assets                        0.87%             1.19%            1.25%             0.93%            0.81%
Return on Average Equity                        9.40%            10.82%           11.56%             8.71%            7.70%
Net Interest Margin                             3.24%             3.28%            3.66%             3.26%            3.21%
Non-Interest Expense/Average Assets             3.33%             3.08%            3.13%             3.14%            3.06%
Non-Interest Income/Average Assets              1.53%             1.85%            1.58%             1.42%            1.24%
Non Performing Loans/Loans (1)                  0.63%             0.23%            0.65%             0.18%            0.28%
Allowance for Loan Losses/Loans (1)             0.92%             0.94%            0.98%             0.89%             .93%
Dividend Payout                                29.31%            21.02%           18.15%            26.88%           32.05%
</TABLE>

(1) Total loans before allowance for loan losses

4
<PAGE>

Business of the Bank

         Teche  Federal Bank (the "Bank")  attracts  savings  deposits  from the
general  public  and uses  such  deposits  to  originate  primarily  residential
mortgage loans, commercial mortgage loans and consumer loans. Additionally,  the
Bank invests in  mortgage-backed  and investment  securities.  (See  "Management
Strategy" on page 7)

         It is the Bank's intention to remain an independent  community  savings
bank serving the local banking needs of its primary market area, which presently
includes  eighteen  offices  in the  Louisiana  Parishes  of St.  Mary,  Iberia,
Lafayette, St. Landry, St. Martin,  Terrebonne,  Lafourche and East Baton Rouge.
The FDIC insures deposits at the bank up to the maximum legal amount.

Business of the Company

         Teche  Holding  Company  (the  "Company")  is a  Louisiana  corporation
organized  in December  1994 at the  direction  of the Board of Directors of the
Bank to  acquire  all of the  capital  stock  that  the  Bank  issued  upon  its
conversion from the mutual to stock form of organization.

Summary of Quarterly Operating Results

<TABLE>
<CAPTION>
                                                         2004                                             2003
                                         First     Second    Third     Fourth             First     Second    Third    Fourth
                                                         (Amounts in thousands, except for per share data)
<S>                                   <C>        <C>      <C>        <C>               <C>        <C>      <C>       <C>
Interest Income                         $7,260     $7,524   $7,536     $8,348            $7,763     $7,390   $7,287    $7,045
Interest Expense                         3,168      3,171    3,215      3,522             3,693      3,471    3,311     3,197
Net Interest Income                      4,092      4,353    4,321      4,826             4,070      3,919    3,976     3,848
Provision for Loan Losses                   15         15       15         15                30         15       15        15
Income Before Income Taxes               2,404      2,188    2,121      2,061             2,462      2,076    2,806     2,027
Net Income                               1,635      1,488    1,421      1,382             1,613      1,359    1,838     1,375
Basic Income per Common Share             0.74       0.67     0.64       0.62              0.71       0.60     0.79      0.61
Diluted Income per Common Share           0.68       0.62     0.60       0.58              0.67       0.56     0.74      0.57
</TABLE>

                                                                               5
<PAGE>

Market and Dividend Information

         Teche  Holding  Company's  common stock  trades on the  American  Stock
Exchange  under the symbol "TSH." The following sets forth the high and low sale
prices and cash dividends  declared for the common stock for the last two fiscal
years.

<TABLE>
<CAPTION>
==================================================================================================================================
Quarter ended                        Sales Price                 Period End Close       Cash         Date Declared
                                                                                      Dividend
                                                                                      Declared
                                     ----------------------
                                        High          Low
----------------------------------------------------------------------------------------------------------------------------------
<S>                                 <C>           <C>                   <C>          <C>          <C>
December 31, 2002                     $27.37        $23.25                $27.37       $0.125       December 13, 2002
----------------------------------------------------------------------------------------------------------------------------------
March 31, 2003                        $29.80        $25.74                $29.80       $0.125       March 13, 2003
----------------------------------------------------------------------------------------------------------------------------------
June 30, 2003                         $32.95        $28.50                $32.51       $0.160       June 12, 2003
----------------------------------------------------------------------------------------------------------------------------------
September 30, 2003                    $35.50        $31.50                $35.50       $0.170       September 12, 2003
----------------------------------------------------------------------------------------------------------------------------------
December 31, 2003                     $36.74        $34.25                $36.28       $0.180       December 16, 2003
----------------------------------------------------------------------------------------------------------------------------------
March 31, 2004                        $41.45        $35.10                $35.70       $0.190       March 17, 2004
----------------------------------------------------------------------------------------------------------------------------------
June 30, 2004                         $38.00        $34.35                $38.00       $0.200       June 16, 2004
----------------------------------------------------------------------------------------------------------------------------------
September 30, 2004                    $40.00        $37.00                $40.00       $0.210       September 16, 2004
==================================================================================================================================
</TABLE>

       According to the records of the Company's  transfer agent, there were 512
registered  stockholders  of record at November 30,  2004.  This number does not
include  any  persons or  entities  that hold their stock in nominee or "street"
name through various brokerage firms.

       The Company's  ability to pay dividends is  substantially  dependent upon
the dividends it receives from the Bank. Under current regulations,  the Bank is
not  permitted  to pay  dividends if its  regulatory  capital  would  thereby be
reduced  below  (1)  the  amount  then  required  for  the  liquidation  account
established in connection with the Bank's  conversion from mutual to stock form,
or (2) the  regulatory  capital  requirements  imposed  by the  Office of Thrift
Supervision  ("OTS").   Capital   distributions  are  also  subject  to  certain
limitations  based on the  Bank's  net  income.  See Notes 19 and 20 of Notes to
Consolidated  Financial  Statements.  The Bank's total  capital at September 30,
2004  exceeded the amounts of its  liquidation  account and  regulatory  capital
requirements.

6

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

General

         The Private  Securities  Litigation  Reform act of 1995  contains  safe
harbor  provisions  regarding  forward-looking  statements.  When  used  in this
discussion, the words "believe", "anticipates",  "contemplates",  "expects", and
similar expressions are intended to identify  forward-looking  statements.  Such
statements  are  subject to certain  risks and  uncertainties  that could  cause
actual  results to differ  materially  from  those  projected.  Those  risks and
uncertainties include changes in interest rates, risk associated with the effect
of opening new branches,  the ability to control costs and expenses, and general
economic  conditions.  The Company  undertakes no obligation to publicly release
the results of any  revisions to those  forward-looking  statements  that may be
made to reflect events or circumstances  after the date hereof or to reflect the
occurrences of unanticipated events.

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

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

         Earnings of the Company also are significantly affected by economic and
competitive  conditions,  particularly  changes in  interest  rates,  government
policies and regulations of regulatory authorities.

         References to the "Bank" herein, unless the context requires otherwise,
refer to the Company on a consolidated basis.

Overview

         The Company's  assets  increased to $653 million at September 30, 2004.
This was due in part to our acquisition of St. Landry  Financial  Corporation on
July 2, 2004. Net income was  $5,926,000  for the year ended  September 30, 2004
which was slightly below the  $6,185,000 for the year ended  September 30, 2003.
We have  provided  details of the  reasons  for these  changes in the  following
pages.

Management Strategy

         Management's  strategy has been to maximize  earnings and profitability
through  steady  growth while  maintaining  asset  quality.  The Bank's  lending
strategy has  historically  focused on the  origination of  traditional  one- to
four-family mortgage loans with the primary emphasis on single-family residences
in the  Bank's  primary  market  area.  Additionally,  management  emphasizes  a
"SmartGrowth"  strategy  that  focuses  on the  origination  of  consumer  loans
(primarily home equity loans),  alternative mortgage loans, commercial loans and
commercial  real estate loans for  retention in the  Company's  loan  portfolio.
Alternative  mortgage loans  originated by the Bank are residential  real estate
loans that do not meet all of the Bank's  standard loan  underwriting  criteria.
Consumer loans,  commercial  loans and commercial  real estate loans,  generally
have shorter  terms to maturity and higher yields than  residential  real estate
loans. While alternative mortgage loans,  consumer loans,  commercial loans, and
commercial   real  estate  loans  have  greater  credit  risk  than   conforming
residential  real estate loans,  the Company  believes its SmartGrowth  strategy
will have a favorable  impact on the Company's net interest  margin,  as well as
assist in interest rate risk management.  SmartGrowth also emphasizes  growth in
core deposits (primarily transaction  accounts),  which include demand deposits,
NOW accounts, money market deposit accounts and savings accounts.

Asset and Liability Management

         Interest Rate Sensitivity  Analysis.  Net interest income,  the primary
component of the Bank's net income,  is derived from the difference  between the
yield on interest-earning  assets and the cost of interest-bearing  liabilities.
The Bank has sought to manage its  exposure  to  changes  in  interest  rates by
monitoring  the  effective  maturities  or  repricing   characteristics  of  its
interest-earning  assets and interest-bearing  liabilities.  The matching of the
Bank's assets and  liabilities  may be analyzed by examining the extent to which
its assets and  liabilities  are interest rate  sensitive and by monitoring  the
expected  effects of interest  rate changes on its net  interest  income and net
portfolio value.

                                                                               7
<PAGE>

         The ability to maximize net interest  income is largely  dependent upon
achieving  a  positive  interest  rate  spread  that  can  be  sustained  during
fluctuations in prevailing  interest rates. The Bank is exposed to interest rate
risk  as a  result  of  the  difference  in  the  maturity  of  interest-bearing
liabilities  and  interest-earning  assets and the volatility of interest rates.
Because  most  deposit  accounts  react  more  quickly to market  interest  rate
movements  than do  traditional  mortgage  loans due to their  shorter  terms to
maturity,  increases in interest  rates may have an adverse effect on the Bank's
earnings.  Conversely,  this same  mismatch  will  generally  benefit the Bank's
earnings during periods of declining or stable interest rates.

         The Bank  attempts to manage its interest  rate  exposure by shortening
the maturities of its  interest-earning  assets by emphasizing  adjustable  rate
mortgages   ("ARMs"),   originating  shorter  term  loans  such  as  residential
construction,  consumer,  and home  equity  loans and the  investment  of excess
liquidity in purchased  loans,  adjustable rate  mortgage-backed  securities and
other securities with relatively short terms to maturity.  Furthermore, the Bank
works to manage the  interest  rates it pays on  deposits  while  maintaining  a
stable deposit base and providing  quality services to its customers.  In recent
years,  the Bank has used  borrowings  while  continuing to rely  primarily upon
deposits as its source of funds.  At September  30, 2003,  the weighted  average
term  to  repricing  of the  Bank's  ARM  loan  and  mortgage-backed  securities
portfolio was approximately 23 months. In contrast, at September 30, 2004, $90.8
million  of the Bank's  certificate  accounts  and $218.2  million of the Bank's
regular  deposit  accounts (e.g.  demand,  NOW, money market,  savings),  out of
$432.4 million of total deposits, were scheduled to mature or reprice within one
year or sooner. Based on past experience, however, management believes that much
of the Bank's deposits will remain at the Bank.

         Management  believes  that it has adequate  capital to accept a certain
degree of interest rate risk. Should interest rates rise management believes the
Bank's  capital  position  will enable it to withstand  the  negative  impact on
earnings.

         Rate/Volume  Analysis.  The table below sets forth certain  information
regarding  changes in interest  income and interest  expense of the Bank for the
periods   indicated.   For  each   category  of   interest-earning   assets  and
interest-bearing liabilities, information is provided on changes attributable to
(i) changes in volume (changes in average volume  multiplied by old rate);  (ii)
changes in rates (changes in rate multiplied by old average  volume);  and (iii)
the net change.  The changes  attributable  to the combined impact of volume and
rate have been  allocated  proportionately  to the changes due to volume and the
changes due to rate.

<TABLE>
<CAPTION>
                                                                               Year Ended September 30,
                                                                               ------------------------
                                                                 2004 vs. 2003                           2003 vs. 2002
                                                                 -------------                           -------------
                                                           Increase (Decrease) Due to               Increase (Decrease) Due to
                                                           --------------------------               --------------------------
                                                       Volume          Rate          Net         Volume         Rate          Net
                                                       ------          ----          ---         ------         ----          ---
                                                                                 (Dollars in Thousands)
<S>                                                   <C>          <C>          <C>           <C>        <C>             <C>
Interest-earning assets:
Securities (1)                                         $  837      $   175        $1,012        $1,327     $(2,215)        $(888)
Loans receivable, net                                   1,872       (1,460)          412        (1,494)     (1,751)       (3,245)
Other interest-earning assets (2)                        (256)          15          (241)           74        (153)          (79)
                                                       ------      -------        ------        ------     -------       -------
Total Interest-Earning Assets                           2,453       (1,270)        1,183           (93)     (4,119)       (4,212)
                                                       ------      -------        ------        ------     -------       -------
Interest-bearing liabilities'
Deposits                                                  474       (1,616)       (1,142)          (25)     (3,016)       (3,041)
FHLB advances and other borrowings                      1,217         (671)          546           657        (289)          368
                                                       ------      -------        ------        ------     -------       -------
Total Interest-Bearing Liabilities                      1,691       (2,287)         (596)          632      (3,305)       (2,673)
                                                       ------      -------        ------        ------     -------       -------
   Net change in net interest income                   $  762      $ 1,017        $1,779        $ (725)    $  (814)      $(1,539)
                                                       ======      =======        ======        ======     =======       =======
</TABLE>

(1) Includes investment securities and FHLB stock.
(2) Includes certificates of deposit and other interest-bearing accounts.

8
<PAGE>

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

<TABLE>
<CAPTION>
                                                                          Year Ended September 30,
                                                                          ------------------------
                                              2004                                  2003                                 2002
                                 ---------------------------------------------------------------------------------------------------
                                   Average             Average     Average             Average      Average                 Average
                                   Balance  Interest  Yield/Cost   Balance   Interest Yield/Cost    Balance   Interest    Yield/Cost
                                   -------  --------  ----------   -------   -------- ----------    -------   --------    ----------
                                                                           (Dollars in Thousands)
<S>                             <C>         <C>        <C>      <C>          <C>       <C>       <C>         <C>         <C>
Assets
   Interest-Earning Assets
   Securities (1)                 $137,290   $ 4,707     3.43%    $112,718    $ 3,695    3.28%     $ 92,108    $ 4,583     4.98%
   Loans receivable (2) (3)        404,379    25,936     6.41%     349,716     25,524    7.30%      364,676     28,769     7.89%
   Other interest-earning
     assets (4)                      1,798        25     1.39%      20,095        266    1.32%       16,952        345     2.04%
                                   -------   -------               -------    -------               -------    -------
   Total interest-earning assets   543,467   $30,668     5.64%     482,529    $29,485    6.11%      473,736    $33,697     7.11%
                                             =======                          =======                          =======
   Non-interest earning assets      38,502                          37,106                           25,725
                                  --------                        --------                         --------
Total Assets                      $581,969                        $519,635                         $499,461
                                  ========                        ========                         ========
Liabilities and Stockholders'
Equity
   Interest-bearing Liabilities
   NOW accounts                   $ 56,979     $ 144     0.25%    $ 51,291        137    0.27%      $44,105      $ 269     0.60%
   Statement & regular
     savings accounts               33,060        80     0.24%      28,655        182    0.64%       25,925        344     1.33%
   Money funds accounts             65,866       530     0.80%      67,105        720    1.07%       54,761      1,126     2.06%
   Certificates of Deposit         189,023     5,838     3.08%     179,318      6,695    3.73%      202,321      9,036     4.47%
                                   -------   -------               -------    -------               -------    -------
         Total Deposits            344,928     6,592     1.91%     326,369      7,734    2.37%      327,112     10,775     3.29%
   FHLB advances and other
     borrowings                    146,878     6,484     4.41%     102,546      5,938    5.79%       91,140      5,570     6.11%
                                   -------   -------               -------    -------               -------    -------
   Total interest-bearing
     liabilities                   491,806   $13,076     2.66%     428,915    $13,672    3.19%      418,252    $16,345     3.91%
                                             =======                          =======                          =======
   Non-interest-bearing
     liabilities                    32,167                          33,469                           27,274
                                  --------                        --------                         --------

         Total Liabilities         523,973                         462,384                          445,526
Stockholders' Equity                57,996                          57,251                           53,935
                                  --------                        --------                         --------
Total Liabilities and
  Stockholders' Equity            $581,969                        $519,635                         $499,461
                                  ========                        ========                         ========
Net interest income/interest
  rate spread (5)                            $17,592     2.98%               $15,813     2.92%                $17,352      3.20%
                                             =======                         =======                          =======
Net interest margin (6)                                  3.24%                           3.28%                             3.66%
Interest-earning assets/
Interest bearing liabilities                           110.50%                         112.50%                           113.27%
</TABLE>

(1)  Includes securities and Federal Home Loan Bank (" FHLB") stock.
(2)  Amount is net of  deferred  loan fees,  loan  discounts  and  premiums  and
     loans-in-process and includes non-accruing loans.
(3)  Interest  income  includes  loan fees of  approximately  $410,000  in 2004,
     $676,000 in 2003 and $606,000 in 2002.
(4)  Amount  includes   certificates  of  deposit  and  other   interest-bearing
     deposits.
(5)  Interest rate spread represents the difference between the yield on average
     interest-earning   assets   and  the  cost  of   average   interest-bearing
     liabilities.
(6)  Net  interest  margin  represents  net interest  income  divided by average
     interest-earning assets.

                                                                               9

<PAGE>

Changes in Financial Condition From September 30, 2003 to September 30, 2004

         General.  Total assets  increased  $116.1  million,  or 21.6% to $653.0
million at  September  30,  2004 from  $536.9  million at  September  30,  2003,
primarily as a result of net loan  originations  and loans acquired  through the
merger with St. Landry Financial Corporation.

         Cash and Cash  Equivalents.  Cash  increased  $0.9  million  from $14.4
million at September 30, 2003 to $15.3 million at September 30, 2004.

         Securities   Available-for-Sale   and  Held  to  Maturity.   Securities
available-for-sale  decreased  $0.4 million from $99.4  million at September 30,
2003 to  $98.9  million  at  September  30,  2004.  Securities  held-to-maturity
decreased  $8.6 million to $21.6 million  primarily due to principal  repayments
during the year.

         Loans Receivable, Net. The Bank's net loans receivable increased $114.2
million or 32.0% to $471.3 million from $357.1 million at September 30, 2003 due
primarily to net loan  originations and loans acquired through the merger during
the year.  Approximately 73% of real estate loans originated and acquired during
the year had adjustable interest rates.

         Deposits.  The  Bank's  deposits  increased  $83.1  million or 23.8% to
$432.4  million from $349.3  million at September 30, 2003.  Increases  were due
primarily  to new accounts  and  accounts  acquired  through the merger with St.
Landry Financial Corporation during the year.

         Advances from FHLB.  Advances from the Federal Home Loan Bank of Dallas
increased  $28.1  million,  or 22.2% to $154.4  million  from $126.3  million at
September 30, 2003.  Advances were used primarily to fund loan growth during the
year.

         Stockholders'  Equity.  Stockholders' equity increased $3.3 million, or
5.8% from $57.0 million at September 30, 2003, to $60.3 million at September 30,
2004,  due  primarily  to net income and to proceeds  from the exercise of stock
options, less dividends and stock repurchases.

Comparison of Operating  Results for Years Ended  September  30, 2004,  2003 and
2002

Analysis of Net Income

         General.  The Company had net income of $5.9 million,  $6.2 million and
$6.2 million for the years ended 2004, 2003 and 2002. The $0.3 million  decrease
during fiscal 2004 was primarily due to increased  operating  expenses resulting
from  expansion  into new market  areas  offset  somewhat  by  increases  in net
interest income and non-interest income.

         Interest  Income.  Interest  income  amounted to $30.7  million,  $29.5
million and $33.7 million for the years ended 2004, 2003 and 2002, respectively.
The $1.2  million  increase  during  fiscal  2004  compared  to fiscal  2003 was
primarily  due to an increase in the  average  balance of loans and  securities,
offset  somewhat  by a decrease  in  interest  rates  earned on loans as average
market interest rates declined during fiscal years ending 2004 and 2003.

         The average  balance of loans and  securities  increased  during fiscal
2004 by  approximately  $55  million,  or  15.6%  and  $25  million,  or  21.8%,
respectively.  During  fiscal  2004  average  interest  rates  earned  on  loans
decreased  to 6.41% from  7.30%  while  average  rates on  securities  increased
slightly from 3.28% to 3.43%.

         Interest  income  decreased  $4.2 million or 12.5%  during  fiscal 2003
compared to fiscal 2002 due  primarily to the  origination  and  refinancing  of
loans at lower interest rates as market interest rates declined during the year.
During  fiscal  2003  average  interest  rates  earned on loans  and  securities
decreased to 7.30% and 3.28% from 7.89% and 4.98%,  respectively.  Additionally,
the average balance of loans decreased during fiscal 2003 from $364.7 million to
$349.7 million.

         Interest Expense. Interest expense totaled $13.1 million, $13.7 million
and $16.3  million  for the years  ending  September  30,  2004,  2003 and 2002,
respectively.  The $0.6  million  or 4.4%  decrease  from  2003 for 2004 was due
primarily to  decreased  interest  rates paid on deposits and advances  from the
Federal Home Loan Bank, offset somewhat by an increase in the average balance of
deposits and advances.  During fiscal 2004 average interest paid on deposits and
advances  decreased  to 1.91% and 4.41% from 2.37% and 5.79%,  respectively,  as
market interest rates declined during the year. The decrease in interest expense
was offset somewhat by increases in the average balance of deposits and advances
during the year to $344.9  million and $146.9  million  from $326.4  million and
$102.5 million, respectively.

         Interest  expense  decreased  $2.7  million or 1.6% during  fiscal 2003
compared to fiscal 2002  primarily due to the decrease in market  interest rates
during the year.  The average  rates paid on deposits and advances  decreased in
fiscal  2003  compared  to fiscal  2002 to 2.37% and 5.79% from 3.29% and 6.11%,
respectively.

10

<PAGE>

         Net Interest  Income.  Net interest  income  increased  $1.8 million to
$17.6  million  during the year  ending  September  30,  2004  primarily  due to
increased  interest  income on loans and  securities  coupled with a decrease in
interest expense on deposits,  offset somewhat by a increase in interest expense
on advances.

         Net interest  income  during fiscal 2003  decreased  compared to fiscal
2002 by $1.5  million due to a decrease  in the rates  earned on loans which was
offset somewhat by a decrease in rates paid on deposits and advances.

         Provision  for Loan  Losses.  The Bank  provided  $60,000,  $75,000 and
$205,000 to the  allowance  for loan losses for the years  ended  September  30,
2004, 2003 and 2002  respectively.  The allowance for loan losses was $4,365,000
at 2004 fiscal year end,  $3,397,000  at 2003 fiscal year end and  $3,459,000 at
2002 fiscal year end. The increase in the 2004 allowance for loan losses was due
primarily to the merger during the year.

         Management  periodically  estimates  the  likely  level  of  losses  to
determine  whether the allowance for loan losses is adequate to absorb  probable
losses in the existing portfolio. Based on these estimates, an amount is charged
or credited  to the  provision  for loan  losses and  credited or charged to the
allowance for loan losses in order to adjust the allowance to a level determined
to be adequately absorb probable losses. These estimates are made at least every
quarter and there has been no  significant  change in the  Company's  estimation
methods during the current year.

         While the Bank  maintains  its  allowance for losses at a level that it
considers  to be  adequate  to  provide  for  existing  losses,  there can be no
assurance  that further  additions  will not be made to the loss  allowances and
that such  losses  will not  exceed  the  estimated  amounts.  See Note 1 to the
Consolidated Financial Statements.

         Non-Interest  Income.   Non-interest  income  during  the  years  ended
September 30, 2004,  2003 and 2002  amounted to $9.7  million,  $9.6 million and
$7.9 million respectively. The increase in fiscal year 2004 was primarily due to
an  increase  in  fee  income  resulting  from  an  increase  in the  number  of
transaction accounts during the year.

         Non-Interest Expense. Non-interest expense totaled $18.7 million; $16.0
million and $15.6 million  during the years ended  September 30, 2004,  2003 and
2002,  respectively.  The $2.7 million  increase during fiscal year 2004 was due
primarily to the merger with St. Landry  Financial  Corporation  and to four new
branch offices opened during the year.

         The Company is subject to the Louisiana Shares Tax. This amounted to an
expense of  $594,000,  $596,000 and  $650,000 in the years ended  September  30,
2004, 2003 and 2002, respectively.

         Gain on Sale of Securities. In the years ended September 30, 2004, 2003
and 2002,  gains on the sale of  securities  amounted to  $232,000,  $43,000 and
$87,000, respectively.

         Income Tax Expense.  For the years ended  September 30, 2004,  2003 and
2002,  the Bank incurred  income tax expense of $2.8  million,  $3.2 million and
$3.3 million,  respectively.  The varying  amounts were caused  primarily by the
varied pretax income of the Bank as the Company's  overall  effective income tax
rate approximated the statutory rate.

Liquidity and Capital Resources

         The  Bank's  average  liquidity  ratio  is based  on  deposits  and was
approximately  21% percent during  September  2004. The Bank manages its average
liquidity  ratio  to  meet  its  funding  needs,  including:  deposit  outflows;
disbursement  of payments  collected  from  borrowers  for taxes and  insurance;
repayment of Federal  Home Loan Bank  advances  and other  borrowings;  and loan
principal  disbursements.  The Bank also  monitors  its  liquidity  position  in
accordance with its asset/liability management objectives.

         In addition  to funds  provided  from  operations,  the Bank's  primary
sources  of funds  are:  savings  deposits,  principal  repayments  on loans and
mortgage-backed  securities;  and matured or called investment  securities.  The
Bank also borrows funds from the Federal Home Loan Bank of Dallas (the "FHLB").

         Scheduled  loan  repayments  and maturing  investment  securities are a
relatively  predictable  source  of funds.  However,  saving  deposit  flows and
prepayments on loans and mortgage-backed securities are significantly influenced
by changes in market interest rates,  economic  conditions and competition.  The
Bank strives to manage the pricing of its deposits to maintain a balanced stream
of cash  flows  commensurate  with its loan  commitments  and other  predictable
funding needs.

         The  Bank  usually   maintains  a  portion  of  its  cash  on  hand  in
interest-bearing demand deposits with the FHLB to meet immediate loan commitment
and savings withdrawal funding requirements.  When applicable, cash in excess of
immediate   funding  needs  is  invested   into   longer-term   investment   and
mortgage-backed securities, some of which may also qualify as liquid investments
under current OTS regulations.

                                                                              11
<PAGE>

         The Bank has other sources of liquidity if a need for additional  funds
arises,  such as FHLB of Dallas  advances  and the  ability  to  borrow  against
mortgage-backed and other securities.  On September 30, 2004, the Bank had total
FHLB borrowings of $154.4 million, or 23.6% of the Bank's assets.  Approximately
$58.2  million  is due in the year ended  September  30,  2005.  The Bank has an
additional $52.1 million available under a line of credit with the FHLB.

         Management believes the Bank has sufficient resources available to meet
its  foreseeable  funding  requirements.  At September  30,  2004,  the Bank had
outstanding  loan  commitments of $31.9  million,  and  certificates  of deposit
scheduled to mature within one year of $90.9 million, substantially all of which
management  expects,  based on past  experience,  will remain with the Bank upon
maturity.

         Regulations  of the OTS  require  the  Bank to  meet  or  exceed  three
separate  standards of capital  adequacy.  These  regulations  require financial
institutions  to have  minimum  tangible  capital  equal to 1.5 percent of total
adjusted  assets;  minimum core capital  equal to 4.0 percent of total  adjusted
assets;  and  risk-based  capital  equal to 8.0  percent of total  risk-weighted
assets.  At  September  30,  2004,  the Bank  exceeded  all  regulatory  capital
requirements. See Note 19 to Consolidated Financial Statements.

Impact of Inflation and Changing Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with  Generally
Accepted  Accounting  Principles,  which  require the  measurement  of financial
position  and  operating   results  in  terms  of  historical   dollars  without
considering the change in the relative  purchasing  power of money over time and
due to inflation.  The impact of inflation is reflected in the increased cost of
the Bank's operations.  Unlike most industrial companies,  nearly all the assets
and  liabilities of the Bank are financial.  As a result,  interest rates have a
greater impact on the Bank's  performance  than do the effects of general levels
of inflation. Interest rates do not necessarily move in the same direction or to
the same extent as the prices of goods and services.

Critical Accounting Policies

         Certain  critical  accounting  policies  affect  the  more  significant
judgments and estimates used in the  preparation of the  consolidated  financial
statements.  The Bank's single most critical  accounting  policy  relates to its
allowance for loan losses,  which reflects the estimated  losses  resulting from
the inability of its borrowers to make loan payments. If the financial condition
of its  borrowers  were to  deteriorate,  resulting  in an  impairment  of their
ability  to make  payments,  its  estimates  would be  updated,  and  additional
provisions for loan losses may be required.  One of the Company's other critical
accounting policies is our evaluation of goodwill resulting from our acquisition
of St. Landry Financial  Corporation on July 2, 2004.  Goodwill does not require
amortization,  but is subject to at least an annual  assessment  for  impairment
unless  interim  events or  circumstances  make it more  likely than not that an
impairment  loss has occurred.  Impairment is defined as the amount by which the
implied fair value of the goodwill is less than the goodwill's  carrying  value.
Impairment losses would be charged to operating expense.

12

<PAGE>

DELOITTE                                                   Deloitte & Touche LLP
                                                           701 Poydras Street
                                                           Suite 3700
                                                           New Orleans, LA 70139
                                                           USA

                                                           Tel: 504-581-2727
                                                           Fax: 504-561-7293
                                                           www.deloitte.com


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Shareholders
Teche Holding Company
Franklin, Louisiana

We have audited the  accompanying  consolidated  balance sheets of Teche Holding
Company  and  subsidiary  as of  September  30,  2004 and 2003,  and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  2004.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted  our audits in  accordance  with  standards  of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the 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,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of  Teche  Holding  Company  and
subsidiary  as of  September  30,  2004  and  2003,  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
September 30, 2004 in conformity with accounting  principles  generally accepted
in the United States of America.

/s/Deloitte & Touche LLP

New Orleans, Louisiana
December 15, 2004

                                                     Member of
                                                    Deloitte Touche Tohmatsu  13

<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2004 AND 2003
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------


ASSETS                                                              2004         2003

<S>                                                              <C>          <C>
Cash and cash equivalents                                        $  15,362    $  14,439
Securities available-for-sale--at estimated fair value
  (amortized cost of $99,741 in 2004 and $100,302 in 2003)          98,939       99,378
Securities held-to-maturity--at amortized cost (estimated fair
  value of $21,812 in 2004 and $30,714 in 2003)                     21,636       30,269
Loans receivable--net of allowance for loan losses of
  $4,365 in 2004 and $3,397 in 2003                                471,327      357,130
Accrued interest receivable                                          2,507        2,251
Investment in Federal Home Loan Bank stock--at cost                  8,561        6,477
Real estate owned--net                                                 194          268
Prepaid expenses and other assets                                    1,844          877
Goodwill                                                             3,529
Life insurance contracts                                             9,832        9,324
Premises and equipment--at cost, less accumulated depreciation      19,303       16,533
                                                                 ---------    ---------
TOTAL ASSETS                                                     $ 653,034    $ 536,946
                                                                 =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                         $ 432,417    $ 349,268
Advances from Federal Home Loan Bank                               154,439      126,310
Advance payments by borrowers for taxes and insurance                1,578        1,385
Accrued interest payable                                               748          624
Accounts payable and other liabilities                               3,565        2,363
                                                                 ---------    ---------
      Total liabilities                                            592,747      479,950

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 10,000,000 shares authorized;
     4,479,979 and 4,395,603 shares issued                              45           44
  Preferred stock, 5,000,000 shares authorized, none issued
  Additional paid-in capital                                        46,785       45,701
  Retained earnings                                                 50,789       46,598
  Unearned ESOP shares                                                (283)        (424)
  Treasury stock - 2,208,828 and 2,148,000 shares--at cost         (36,527)     (34,322)
  Unrealized loss on securities available-for-sale--net
    of deferred income taxes                                          (522)        (601)
                                                                 ---------    ---------
      Total stockholders' equity                                    60,287       56,996
                                                                 ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $ 653,034    $ 536,946
                                                                 =========    =========
</TABLE>

See notes to consolidated financial statements.

14

<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED  STATEMENTS OF INCOME YEARS ENDED SEPTEMBER 30, 2004, 2003 AND 2002
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------

                                                         2004       2003        2002
<S>                                                <C>        <C>         <C>
INTEREST INCOME:
  Interest and fees on loans                         $ 25,936   $ 25,524    $ 28,769
  Interest and dividends on securities                  4,707      3,695       4,583
  Other interest income                                    25        266         345
                                                     --------   --------    --------
                                                       30,668     29,485      33,697
                                                     --------   --------    --------

INTEREST EXPENSE:
  Deposits                                              6,592      7,734      10,775
  Advances from Federal Home Loan Bank                  6,484      5,938       5,570
                                                     --------   --------    --------
                                                       13,076     13,672      16,345
                                                     --------   --------    --------

NET INTEREST INCOME                                    17,592     15,813      17,352

PROVISION FOR LOAN LOSSES                                  60         75         205
                                                     --------   --------    --------

NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                      17,532     15,738      17,147
                                                     --------   --------    --------

NON-INTEREST INCOME:
  Service charges                                       8,813      8,230       7,522
  Gain (loss) on sale of real estate owned                 25        (48)         21
  Other income                                            902      1,424         357
                                                     --------   --------    --------
    Total non-interest income                           9,740      9,606       7,900
                                                     --------   --------    --------

GAIN ON SALE OF SECURITIES                                232         43          87
                                                     --------   --------    --------

NON-INTEREST EXPENSE:
  Compensation and employee benefits                    9,264      7,727       7,269
  Occupancy, equipment and data processing expense      4,038      3,535       3,377
  Marketing and professional                            2,335      2,006       2,133
  SAIF deposit insurance premiums                          54         59          62
  Louisiana shares tax                                    594        596         650
  Other operating expenses                              2,445      2,093       2,122
                                                     --------   --------    --------

    Total non-interest expense                         18,730     16,016      15,613
                                                     --------   --------    --------

INCOME BEFORE INCOME TAXES                              8,774      9,371       9,521

INCOME TAXES                                            2,848      3,186       3,285
                                                     --------   --------    --------

NET INCOME                                           $  5,926   $  6,185    $  6,236
                                                     ========   ========    ========

BASIC INCOME PER COMMON SHARE                        $   2.66   $   2.73    $   2.72
                                                     ========   ========    ========

DILUTED INCOME PER COMMON SHARE                      $   2.48   $   2.55    $   2.58
                                                     ========   ========    ========

</TABLE>

See notes to consolidated financial statements.

                                                                              15

<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2004, 2003 AND 2002
(Dollars in thousands,  except per share amounts)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------

                                                                                                           Unrealized
                                                                                                           Gain (Loss)
                                                         Additional              Unearned                 on Securities
                                              Common       Paid-In    Retained     ESOP        Treasury   Available-
                                              Stock        Capital    Earnings    Shares        Stock     for-Sale, net      Total
                                              -----        -------    --------    ------        -----     -------------      -----

<S>                                            <C>       <C>         <C>        <C>          <C>               <C>        <C>
BALANCE--October 1, 2001                        $ 43      $ 43,374    $ 36,609   $ (1,089)    $ (27,518)        $ 693      $ 52,112

Contribution to ESOP                                           413                    332                                       745

Exercise of stock options                          1           831                                                              832

Purchase of common stock for treasury                                                            (2,450)                     (2,450)

Dividends declared - $.50 per share                                     (1,132)                                              (1,132)

Comprehensive income:
  Net income                                                             6,236                                                6,236
  Change in unrealized gain (loss) on
    securities available-for-sale--net                                                                             23            23
                                                                                                                           --------
           Total comprehensive income                                                                                         6,259
                                                ----      --------    --------   --------     ---------         -----      --------
BALANCE--September 30, 2002                       44        44,618      41,713       (757)      (29,968)          716        56,366

Contribution to ESOP                                           689                    333                                     1,022

Exercise of stock options                                      394                                                              394

Purchase of common stock for treasury                                                            (4,354)                     (4,354)

Dividends declared - $.58 per share                                     (1,300)                                              (1,300)

Comprehensive income:
  Net income                                                             6,185                                                6,185
  Change in unrealized gain (loss) on
    securities available-for-sale--net                                                                         (1,317)       (1,317)
                                                                                                                           --------
           Total comprehensive income                                                                                         4,868
                                                ----      --------    --------   --------     ---------         -----      --------
BALANCE--September 30, 2003                       44        45,701      46,598       (424)      (34,322)         (601)       56,996

Contribution to ESOP                                           379                    141                                       520

Exercise of stock options                          1           705                                                              706

Purchase of common stock for treasury                                                            (2,205)                     (2,205)

Dividends declared - $.78 per share                                     (1,735)                                              (1,735)

Comprehensive income:
  Net income                                                             5,926                                                5,926
  Change in unrealized gain (loss) on
    securities available-for-sale--net                                                                             79            79
                                                                                                                           --------
           Total comprehensive income                                                                                         6,005
                                                ----      --------    --------   --------     ---------         -----      --------
BALANCE--September 30, 2004                     $ 45      $ 46,785    $ 50,789     $ (283)    $ (36,527)       $ (522)     $ 60,287
                                                ====      ========    ========     ======     =========        ======      ========
</TABLE>

See notes to consolidated financial statements.

16

<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2004, 2003 AND 2002
(Dollars in thousands)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------


                                                              2004        2003        2002

<S>                                                     <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                              $  5,926    $  6,185    $  6,236
  Adjustments to reconcile net income
    to net cash provided by operating activities:
      Accretion of discount and amortization of premium
        on investments and mortgage-backed securities          612       1,210         217
      Provision for loan losses                                 60          75         205
      ESOP expense                                             417         846         633
      MSP expense                                                                       20
      Deferred income tax credit                              (150)       (100)       (115)
      Gains on sale of loans and credit card portfolio                    (655)
      Gains on sale of securities                             (232)        (43)        (87)
      (Gain) loss on sale of real estate owned                 (25)         48         (21)
      Depreciation                                           1,076         893       1,076
      Change in accrued interest receivable                    (24)        250        (114)
      Change in accrued interest payable                        93         (78)       (262)
      Other--net                                                96        (164)       (285)
                                                          --------    --------    --------
           Net cash provided by operating activities         7,849       8,467       7,503
                                                          --------    --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sales of investment securities
     available-for-sale                                        859         192         354
  Purchase of securities available-for-sale                (20,655)    (80,386)    (55,688)
  Principal repayments on securities available-for-sale     25,907      41,734      32,359
  Purchase of securities held-to-maturity                              (19,985)    (35,754)
  Principal repayments on securities held-to-maturity        8,633      20,613       4,857
  Collection of receivable from sale of securities           6,104
  Net loan (originations) repayments                       (44,161)     (8,740)     30,150
  Purchase of loans                                        (18,342)    (12,363)
  Proceeds from sales of loans                                          15,236
  Purchase of life insurance contracts                                              (8,500)
  Investment in FHLB stock--net                             (1,361)     (1,266)       (435)
  Purchase of premises and equipment                        (2,882)     (2,193)     (3,098)
  Net cash used in acquisition                              (9,169)
                                                          --------    --------    --------
           Net cash used in investing activities           (55,067)    (47,158)    (35,755)
                                                          --------    --------    --------

                                                                                (Continued)

</TABLE>


                                                                              17
<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2004, 2003 AND 2002
(Dollars in thousands)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------

                                                              2004        2003        2002

<S>                                                     <C>         <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                            (1,735)     (1,300)     (1,132)
  Net increase in deposits                                  35,362         143       6,208
  Proceeds of long-term FHLB advances                       15,000      15,000      51,000
  Repayment of long-term FHLB advances                     (10,243)     (6,361)    (14,649)
  Net increase in short-term FHLB advances                  11,500      14,200
  Cash paid for purchase of common stock for treasury       (2,205)     (4,354)     (2,450)
  Proceeds from exercise of stock options                      356         394         832
  Change in advance payments by
    borrowers for taxes and insurance                          106          33        (290)
                                                          --------    --------    --------
      Net cash provided by financing activities             48,141      17,755      39,519
                                                          --------    --------    --------

NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                             923     (20,936)     11,267

CASH AND CASH EQUIVALENTS--
  Beginning of year                                         14,439      35,375      24,108
                                                          --------    --------    --------
CASH AND CASH EQUIVALENTS--
  End of year                                             $ 15,362    $ 14,439    $ 35,375
                                                          ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
  Cash paid for interest                                  $ 12,983    $ 13,750    $ 16,083
                                                          ========    ========    ========

  Income taxes paid                                       $  2,815    $  3,120    $  3,516
                                                          ========    ========    ========

                                                                                (Concluded)

</TABLE>

See notes to consolidated financial statements.


18

<PAGE>

TECHE holding company and subsidiary

NOTES TO CONSOLIDATED  FINANCIAL STATEMENTS YEARS ENDED SEPTEMBER 30, 2004, 2003
AND 2002
(Dollars in thousands, except share and per share amounts)
--------------------------------------------------------------------------------


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      The significant accounting policies of the Company are described below.

      Principles of Consolidation--The consolidated financial statements include
      the accounts of Teche  Holding  Company and its  wholly-owned  subsidiary,
      Teche Federal Savings Bank (collectively  "the Company").  All significant
      intercompany   balances  and   transactions   have  been   eliminated   in
      consolidation.  The Company operates  principally in the community savings
      bank segment by attracting deposits from the general public and using such
      deposits  primarily to originate loans.  These loans include those secured
      by first mortgages on  owner-occupied,  family  residences as well as home
      improvement  and other consumer loans.  The Company also makes  commercial
      mortgage loans.

      Use of  Estimates--The  preparation of financial  statements in conformity
      with  accounting  principles  generally  accepted in the United  States of
      America 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 revenues and  expenses  during the  reporting
      period. Actual results could differ from those estimates.

      Cash and Cash  Equivalents--Cash  and cash  equivalents  comprise cash and
      non-interest  bearing and  interest  bearing  demand  deposits  with other
      financial institutions.

      Securities--Securities    are    classified   as    held-to-maturity    or
      available-for-sale. Management determines the classification of securities
      when they are purchased and reevaluates this  classification  periodically
      as conditions change that could require reclassification.

      Securities  which the Company both positively  intends and has the ability
      to hold to maturity are classified as securities  held-to-maturity and are
      carried at amortized  cost.  Intent and ability to hold are not considered
      satisfied  when a security is  available to be sold in response to changes
      in interest rates,  prepayment rates,  liquidity needs or other reasons as
      part of an overall asset/liability management strategy.

      Securities  not  meeting  the  criteria  to be  classified  as  securities
      held-to-maturity are classified as  available-for-sale  and are carried at
      fair value.  Net unrealized  holding gains or losses are excluded from net
      income and are  recognized,  net of income taxes,  in other  comprehensive
      income and in accumulated other comprehensive income, a separate component
      of stockholders' equity.

      Premiums and  discounts on  securities,  both those  held-to-maturity  and
      those  available-for-sale,  are  amortized  and  accreted  to income as an
      adjustment to the securities'  yields using the interest method.  Realized
      gains and losses on securities,  including  declines in value judged to be
      other than temporary,  are reported as a component of income.  The cost of
      securities sold is specifically identified for use in calculating realized
      gains and losses.

                                                                              19
<PAGE>

      Loans  Receivable--Loans  receivable  are stated at the  unpaid  principal
      balances,  less the  allowance for loan losses and net deferred loan fees,
      and  unearned   discount.   Unearned   discount  relates   principally  to
      installment  loans.  Interest on loans is credited to operations  based on
      the principal amount outstanding using the interest method.

      When doubt exists as to  collectability  of a loan,  the loan is placed on
      non-accrual status. When a loan is placed on non-accrual status,  interest
      accrued  prior  to  the  judgment  of   uncollectibility   is  charged  to
      operations.  Loans are returned to an accruing status only as payments are
      received and if  collection of all principal and interest is not in doubt.
      If doubt  exists,  any  payments  received on such  non-accrual  loans are
      applied  first to  outstanding  loan  amounts and next to the  recovery of
      charged-off  loan  amounts.  Any  excess is treated  as  recovery  of lost
      interest.

      The  Company  considers  a loan to be impaired  when,  based upon  current
      information  and events,  it believes it is possible that the Company will
      be unable to collect all amounts due according to the contractual terms of
      the loan  agreement.  The Company's  impaired loans include  troubled debt
      restructurings,  and  performing and  non-performing  major loans in which
      full  payment of  principal  or  interest  is not  expected.  The  Company
      calculates  a reserve  required  for  impaired  loans based on the present
      value of expected  future cash flows  discounted  at the loan's  effective
      interest rate, or the loan's  observable market price or the fair value of
      its collateral.  The Company did not have a significant amount of impaired
      loans at September 30, 2004 or 2003.

      Allowance  for Loan  Losses--The  allowance for loan losses is a valuation
      allowance  available for losses incurred on loans.  Any losses are charged
      to the allowance  for loan losses when the loss actually  occurs or when a
      determination  is made  that a loss is likely  to  occur.  Recoveries  are
      credited to the allowance at the time of recovery.

      Periodically  during the year  management  estimates  the likely  level of
      losses to determine  whether the  allowance for loan losses is adequate to
      absorb  losses in the existing  portfolio.  Based on these  estimates,  an
      amount is charged to the  provision  for loan  losses and  credited to the
      allowance  for loan  losses in order to adjust  the  allowance  to a level
      determined to be adequate to absorb such losses.

      Management's judgment as to the level of losses on existing loans involves
      the consideration of current and anticipated economic conditions and their
      potential  effects on specific  borrowers;  an  evaluation of the existing
      relationships among loans, known and inherent risks in the loan portfolio,
      and the present level of the allowance; results of examination of the loan
      portfolio by regulatory agencies;  and management's internal review of the
      loan  portfolio.  In  determining  the  collectibility  of certain  loans,
      management also considers the fair value of any underlying collateral.

      It should be understood  that estimates of loan losses involve an exercise
      of judgment.  While it is possible that in particular  periods the Company
      may sustain  losses which are  substantial  relative to the  allowance for
      loan losses,  it is the judgment of management that the allowance for loan
      losses reflected in the consolidated  balance sheets is adequate to absorb
      losses in the existing loan portfolio.

      Loan Fees,  Loan  Costs,  Discounts  and  Premiums--Loan  origination  and
      commitment  fees, and certain direct loan  origination  costs are deferred
      and  amortized  as an  adjustment  to the related  loan's  yield using the
      interest method over the contractual life of the loan.

      Federal Home Loan Bank  Stock--Federal Home Loan Bank stock is recorded at
      cost and is periodically reviewed for impairment. Cash and stock dividends
      on this stock are reported as income.

20

<PAGE>

      Goodwill--Goodwill  does not  require  amortization  but is  subject to at
      least an  annual  assessment  for  impairment,  unless  interim  events or
      circumstances  make it more  likely than not that an  impairment  loss has
      occurred.  Impairment  is defined as that amount by which the implied fair
      value  of the  goodwill  is  less  than  the  goodwill's  carrying  value.
      Impairment losses would be charged to operating  expense.  Goodwill is not
      deductible for income tax purposes.

      Core Deposit  Intangible--The  core deposit intangible with a cost of $520
      and accumulated  amortization  of $40 is included in prepaid  expenses and
      other assets on the consolidated balance sheet at September 30, 2004. This
      core deposit  intangible  relates to the acquisition of St. Landry Bank in
      2004.

      Premises and Equipment--The Company computes depreciation generally on the
      straight-line  method for both financial  reporting and federal income tax
      purposes.  The estimated  useful lives used to compute  depreciation  are:
      buildings and improvements, twenty to forty years; and furniture, fixtures
      and equipment, three to ten years.

      Real  Estate  Owned--Real   estate  acquired  through,   or  in  lieu  of,
      foreclosure  is  initially  recorded  at the  fair  value  at the  time of
      foreclosure,  less estimated cost to dispose, and any related writedown is
      charged  to the  allowance  for  loan  losses.  The fair  values  have not
      exceeded the balances of the related loans.  Valuations  are  periodically
      performed by management and provisions for estimated losses on real estate
      owned are charged to operations when any significant and permanent decline
      reduces the fair value, less sales costs, to less than the carrying value.
      The ability of the Company to recover the carrying value of real estate is
      based upon future  sales of the real estate  owned.  The ability to effect
      such sales is  subject to market  conditions  and other  factors,  many of
      which  are  beyond  the  Company's  control.   Operating  income  of  such
      properties,  net of  related  expenses,  and  gains  and  losses  on their
      disposition are included in the  accompanying  consolidated  statements of
      income.

      Life  Insurance   Contracts--Life  insurance  contracts  represent  single
      premium life insurance  contracts on the lives of certain  officers of the
      Company. The Company is the beneficiary of these policies. These contracts
      are  reported  at their  cash  surrender  value  and  changes  in the cash
      surrender value are included in other non-interest income.

      Retirement  Plan--The  expense of the  multi-employer  retirement  plan in
      which the Company participates equals the amount of contributions required
      by the Company.

      Income Taxes--Income taxes are accounted for using the liability method.

      Income Per  Share--Basic  income per common share (EPS) excludes  dilution
      and is computed by dividing net income by the  weighted-average  number of
      common  shares  outstanding  for the  period.  Diluted  EPS  reflects  the
      potential  dilution that could occur if  securities or other  contracts to
      issue  common  stock were  exercised  or  converted  into common  stock or
      resulted  in the  issuance  of common  stock  that then  shared in the net
      income of the  Company.  Diluted EPS is computed by dividing net income by
      the total of the  weighted-average  number of shares  outstanding plus the
      effect of outstanding  options and Management  Stock Plan ("MSP")  grants.
      The Company  accounts  for the shares  acquired by the ESOP in  accordance
      with Statement of Position 93-6 and,  therefore,  shares controlled by the
      ESOP are not considered in the weighted average shares  outstanding  until
      the  shares are  committed  for  allocation  to an  employee's  individual
      account.

      Comprehensive  Income--Comprehensive  income includes net income and other
      comprehensive  income or loss which, in the case of the Company,  includes
      only unrealized gains and losses on securities available-for-sale.

                                                                              21
<PAGE>

      Stock  Options--The  Company  applies  APB  Opinion  No.  25  and  related
      interpretations  in  accounting  for its stock  options.  Accordingly,  no
      compensation cost has been recognized.  The Financial Accounting Standards
      Board  requires  disclosure  of  the  compensation  cost  for  stock-based
      incentives  granted by the  Company  based on the fair value at grant date
      for awards.  The weighted average fair value of options granted during the
      years   ended   September   30,  2003  and  2002  was  $6.10  and  $10.15,
      respectively.  No options  were  granted in the year ended  September  30,
      2004.  Applying  SFAS No.  123 would  result in pro forma net  income  and
      income  per share  amounts  as  follows  (in  thousands,  except per share
      amounts):

                                           2004         2003         2002

Net income (in thousands):
  As reported                            $5,926       $6,185       $6,236
  Pro forma                               5,713        6,050        6,136

Basic income per share:
  As reported                            $ 2.66       $ 2.73       $ 2.72
  Pro forma                                2.56         2.67         2.68

Diluted income per share
  As reported                            $ 2.48       $ 2.55       $ 2.58
  Pro forma                                2.39         2.49         2.54


      The fair value of the 2003 and 2002 options were  estimated on the date of
      grant using an  option-pricing  model with the following  weighted-average
      assumptions  used for grants:  dividend yield of  approximately 2% and 2%;
      expected  volatility of 35 and 25 percent;  risk-free interest rate of 4.5
      and 4.2 percent; and expected lives of 8 years and 8 years, respectively.

      Reclassifications--Certain  reclassifications  have been made to the prior
      years'  financial  statements  in order to conform  to the  classification
      adopted for reporting in 2004.

2. INTEREST RATE RISK

      The Company is engaged  principally in providing  first mortgage and other
      types of loans to individuals and  businesses.  At September 30, 2004, the
      Company  had  interest  and  dividend   earning  assets  of  approximately
      $616,000,  most of which will not mature or be  repriced  until after five
      years. Interest bearing liabilities totaled approximately  $557,000,  most
      of which will  mature or can be  repriced  within two years.  The  shorter
      duration of interest-sensitive liabilities indicates that in a rising rate
      environment   the  Company  is  exposed  to  interest  rate  risk  because
      liabilities  may be repricing  faster at higher  interest  rates,  thereby
      reducing the market value of long-term assets and net interest income.  In
      a falling rate  environment  the market value of long-term  assets and net
      interest income may be increased.

3.    ACQUISITION

      On July 2, 2004,  the  Company  acquired  100% of the common  stock of St.
      Landry Financial  Corporation ("St.  Landry").  St. Landry was then merged
      into the Company.  The acquisition was accounted for as a purchase and the
      results  of St.  Landry's operations  are  included  in  the  consolidated
      financial  statements  of the Company  from the date of  acquisition.  St.
      Landry  operated  two banking offices in southern  Louisiana.  The Company
      acquired  St. Landry in order to expand the  geographic  area in which its
      services are offered. The aggregate purchase price was approximately $10.1
      million.

22
<PAGE>

      The following unaudited pro forma consolidated  results of operations give
      effect to the  acquisition  of St.  Landry as  though it had  occurred  on
      October 1, 2002 (in thousands, except per share data):

                                                                 Year Ended
                                                                September 30,
                                                        ------------------------
                                                                2004      2003

Interest income                                              $33,180   $33,457
Interest expense                                              14,208    15,418
Provision for loan losses                                        670       120
Net interest income after provision for loan losses           18,302    17,919
Net income                                                     5,078     6,509
Basic income per common share                                   2.28      2.87
Diluted income per common share                                 2.13      2.68


      The unaudited pro forma  information is not necessarily  indicative either
      of results of  operations  that would have  occurred had the purchase been
      made as of October  1, 2002,  or of future  results of  operations  of the
      combined companies.

      The following table summarizes the estimated fair values, in thousands, of
      the assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents                                               $   973
Securities                                                                5,930
Loans                                                                    51,646
Premises and equipment                                                      964
Core deposit intangible                                                     520
Goodwill                                                                  3,529
Receivable from sale of securities                                        6,104
Other                                                                     1,074
                                                                        -------

           Total assets acquired                                         70,740

Deposits                                                                 47,787
Advances from Federal Home Loan Bank                                     11,872
Other liabilities                                                           939
                                                                        -------

           Total liabilities assumed                                     60,598
                                                                        -------

Net assets acquired                                                     $10,142
                                                                        =======


      The  Company is in the process of  obtaining  third  party  valuations  of
      certain  assets  and  liabilities;   thus,  the  purchase  price  and  its
      allocation are subject to refinement.

      The  core  deposit   intangible   has  an  estimated   weighted   life  of
      approximately seven years.  Amortization of the core deposit intangible is
      computed using an accelerated  method and amounted to approximately $40 in
      2004.  Amortization is estimated to be approximately $145 in 2005, $100 in
      2006,  $70 in 2007,  $55 in 2008,  $41 in 2009  and the  remainder  of $69
      thereafter.

                                                                              23
<PAGE>

4.    SECURITIES

      The   amortized   cost   and   estimated   fair   values   of   securities
      available-for-sale are as follows (in thousands):


<TABLE>
<CAPTION>
                                                              September 30, 2004
                                               -------------------------------------------------
                                                               Gross        Gross     Estimated
                                               Amortized     Unrealized  Unrealized     Fair
                                                 Cost          Gains       Losses       Value
<S>                                          <C>          <C>          <C>          <C>
Investment securities:
  Federal Farm Credit Bank - due in 2011       $   3,275    $       -    $     (51)   $   3,224
  Municipal obligations                               38                                     38
                                               ---------    ---------    ---------    ---------
                                                   3,313                       (51)       3,262
                                               ---------    ---------    ---------    ---------
Mortgage-backed securities:
  Government National Mortgage Association        19,148           26         (297)      18,877
  Federal Home Loan Mortgage Corporation          35,779          181         (331)      35,629
  Federal National Mortgage Association           15,494           22         (404)      15,112
                                               ---------    ---------    ---------    ---------
                                                  70,421          229       (1,032)      69,618
ARM Mutual Funds                                  15,388                      (123)      15,265
Collateralized mortgage obligations ("CMOs")       9,457                       (15)       9,442
Equity securities                                  1,162          195           (5)       1,352
                                               ---------    ---------    ---------    ---------
                                               $  99,741    $     424    $  (1,226)   $  98,939
                                               =========    =========    =========    =========
</TABLE>

<TABLE>
<CAPTION>
                                                              September 30, 2003
                                               -------------------------------------------------
                                                               Gross        Gross     Estimated
                                               Amortized     Unrealized  Unrealized     Fair
                                                 Cost          Gains       Losses       Value
<S>                                          <C>          <C>          <C>          <C>
Investment securities:
  Federal Farm Credit Bank                     $   3,275    $       -    $     (39)   $   3,236
  Municipal obligations                               38                                     38
                                               ---------    ---------    ---------    ---------
                                                   3,313                       (39)       3,274
                                               ---------    ---------    ---------    ---------
Mortgage-backed securities:
  Government National Mortgage Association        26,604                      (433)      26,171
  Federal Home Loan Mortgage Corporation          41,098                      (120)      40,978
  Federal National Mortgage Association           18,760                      (276)      18,484
                                               ---------    ---------    ---------    ---------
                                                  86,462                      (829)      85,633
ARM Mutual Funds                                  10,200                       (61)      10,139
Collateralized mortgage obligations ("CMOs")         324            5           (3)         326
Equity securities                                      3            3                         6
                                               ---------    ---------    ---------    ---------
                                               $ 100,302    $       8    $    (932)   $  99,378
                                               =========    =========    =========    =========
</TABLE>

24
<PAGE>

      The   amortized   cost   and   estimated   fair   values   of   securities
      held-to-maturity are as follows (in thousands):

<TABLE>
<CAPTION>
                                                              September 30, 2004
                                               -------------------------------------------------
                                                               Gross        Gross     Estimated
                                               Amortized     Unrealized  Unrealized     Fair
                                                 Cost          Gains       Losses       Value
<S>                                          <C>          <C>          <C>          <C>
Mortgaged-backed securities:
  Federal National Mortgage Association       $20,523        $ 253          $ (43)      $20,733
  Other                                         1,113                         (34)        1,079
                                              -------        -----          -----       -------
                                              $21,636        $ 253          $ (77)      $21,812
                                              =======        =====          =====       =======
</TABLE>

<TABLE>
<CAPTION>
                                                              September 30, 2003
                                               -------------------------------------------------
                                                               Gross        Gross     Estimated
                                               Amortized     Unrealized  Unrealized     Fair
                                                 Cost          Gains       Losses       Value
<S>                                          <C>          <C>          <C>          <C>
Mortgaged-backed securities:
  Federal National Mortgage Association       $27,537        $ 472           $ -        $28,009
  Other                                         2,732                         (27)        2,705
                                              -------        -----          -----       -------
                                              $30,269        $ 472          $ (27)      $30,714
                                              =======        =====          =====       =======
</TABLE>


      Details  concerning  securities with unrealized losses as of September 30,
      2004 are as follows:

<TABLE>
<CAPTION>
                                             Securities              Securities
                                         with losses under        with losses over
                                             12 months               12 months                  Total
                                       ----------------------- ------------------------ ------------------------
                                                     Gross                    Gross                    Gross
                                          Fair     Unrealized     Fair     Unrealized      Fair     Unrealized
Available-for-Sale                        Value      Losses       Value      Losses        Value      Losses

<S>                                     <C>         <C>         <C>         <C>         <C>         <C>
Investment securities:
  Federal Farm Credit Bank                $      -    $      -    $  3,224    $    (51)   $  3,224    $    (51)

Mortgage-backed securities:
  Government National Mortgage Assoc                                17,004        (297)     17,004        (297)
  Federal Home Loan Mortgage
    Corporation                                                     17,374        (331)     17,374        (331)
  Federal National Mortgage Association        946          (2)     13,393        (402)     14,339        (404)
                                               946          (2)     47,771      (1,030)     48,717      (1,032)
                                          --------    --------    --------    --------    --------    --------

ARM Mutual Funds                             5,152         (40)     10,113         (83)     15,265        (123)
CMO's                                        9,442         (15)                              9,442         (15)
Equity securities                            1,011          (5)                              1,011          (5)
                                          --------    --------    --------    --------    --------    --------
                                          $ 16,551    $    (62)   $ 61,108    $ (1,164)   $ 77,659    $ (1,226)
                                          ========    ========    ========    ========    ========    ========

Held-to-Maturity

Federal National Mortgage Association     $  1,550    $    (43)   $      -    $      -    $  1,550    $    (43)
Other                                                                1,079         (34)      1,079         (34)
                                          --------    --------    --------    --------    --------    --------
                                          $  1,550    $    (43)   $  1,079    $    (34)   $  2,629    $    (77)
                                          ========    ========    ========    ========    ========    ========
</TABLE>

                                                                              25
<PAGE>

      The  Company  has 38  investments  at  September  30, 2004 of which 16 had
      unrealized   losses.   These  unrealized   losses  generally  result  from
      securities  which  were  purchased  at  a  premium  in  anticipation  of a
      continuing stable interest rate  environment.  As interest rates declined,
      prepayments of certain securities  increased which resulted in the decline
      in the fair value of the related securities. The Company believes that its
      premium  amortization  policies  are  appropriate  and  will  result  in a
      reasonable return on these investments being recorded in the statements of
      income.

      Gross gains of $232,  $43 and $87 were  realized on sales of securities in
      the years ended September 30, 2004, 2003 and 2002, respectively. No losses
      were  realized on sales of  securities  in the years ended  September  30,
      2004, 2003 or 2002.

      At September 30, 2004,  securities  with a cost of  approximately  $16,600
      were pledged to secure  deposits  and advances  from the Federal Home Loan
      Bank as required or permitted by law.

5. LOANS RECEIVABLE

      Loans receivable are summarized as follows (in thousands):

                                                              September 30,
                                                          ---------------------
                                                             2004       2003
Residential real estate mortgage loans:
  One-to-four family units--Conforming                     $213,184   $173,840
  One-to-four family units--Commercial                       16,955      1,982
  One-to-four family units--Alternative                      83,036     56,904
  Multi-family                                                7,503      6,854
Land loans                                                   11,758      7,743
Construction loans                                           16,713     13,546
Non-residential real estate loans (primarily commercial)     32,342     19,786
Commercial non-real estate loans                              7,756      3,457
Home improvement and home equity loans                       45,259     41,770
Loans on savings accounts                                     4,184      4,247
Auto loans                                                   11,410      3,607
Mobile home loans                                            22,528     14,693
Other secured and unsecured                                   3,503      2,557
                                                           --------   --------
                                                            476,131    350,986
Less:
  Allowance for loan losses                                   4,365      3,397
  Deferred loan fees                                            439        459
                                                           --------   --------
                                                           $471,327   $347,130
                                                           ========   ========

      Alternative one-to-four family mortgages represent those loans not meeting
      all of the Banks' standard loan underwriting criteria.

26
<PAGE>

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

                                                         Year Ended
                                                        September 30,
                                            ------------------------------------
                                               2004          2003          2002

Beginning balance--October 1                $ 3,397       $ 3,459       $ 3,436
Provision charged to operating expense           60            75           205
Acquisition                                     973
Recoveries                                       50           178            33
Loans charged off                              (115)         (315)         (215)
                                            -------       -------       -------

Ending balance--September 30                $ 4,365       $ 3,397       $ 3,459
                                            =======       =======       =======


      Substantially  all of the Company's loans receivable are with customers in
      southern Louisiana.

      The amount of  nonaccrual  loans at  September  30,  2004 and 2003 was not
      significant.  The amount of  interest  not accrued on these types of loans
      did not have a significant effect on net income in 2004, 2003 or 2002.

      The Company has  collateralized  its  advances  from the Federal Home Loan
      Bank with a blanket floating lien on its first mortgage loans.

6. REAL ESTATE OWNED

      Real estate owned consisted of the following (in thousands):

                                                         September 30,
                                                      ----------------------
                                                        2004           2003

Real estate acquired through foreclosure               $ 239          $ 318
Less allowance for losses                                (45)           (50)
                                                       -----          -----
Real estate owned--net                                 $ 194          $ 268
                                                       =====          =====


7. PREMISES AND EQUIPMENT

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

                                                      September 30,
                                                ----------------------------
                                                    2004              2003

Land                                            $  5,938          $  5,670
Buildings and improvements                        14,181            11,810
Furniture, fixtures and equipment                  7,884             6,954
                                                --------          --------
                                                  28,003            24,434
Less accumulated depreciation                     (8,700)           (7,901)
                                                --------          --------

                                                $ 19,303          $ 16,533
                                                ========          ========

                                                                              27
<PAGE>

8.    DEPOSITS

      Deposits are summarized as follows (in thousands):

                                                         September 30,
                                                  ---------------------------
                                                       2004             2003

Non-interest bearing demand accounts               $ 29,387         $ 30,486
Interest bearing:
  NOW accounts                                       56,249           50,550
  Passbook and regular savings                       38,897           30,002
  Money funds accounts                               85,635           61,290
  Certificates of deposit                           222,249          176,940
                                                   --------         --------

                                                   $432,417         $349,268
                                                   ========         ========



      Certificates  of deposit of over $100  amounted  to $46,280 and $35,519 at
      September 30, 2004 and 2003, respectively.

      Certificates  of  deposits  at  September  30,  2004 mature as follows (in
      thousands):

Less than one year                                               $ 90,852
1-2 years                                                          58,990
2-3 years                                                          47,572
3-4 years                                                          13,328
4-5 years                                                           6,141
Over 5 years                                                        5,366
                                                                 --------
TOTAL                                                            $222,249
                                                                 ========


9. ADVANCES FROM FEDERAL HOME LOAN BANK AND CASH RESERVE REQUIREMENTS

      At September  30, 2004,  the Company was indebted to the FHLB for $154,439
      of advances bearing interest at a weighted average rate of 4.54% which are
      due as follows (in thousands):

Year Ended
September 30

2005                                                             $ 58,189
2006                                                                5,806
2007                                                                5,121
Thereafter                                                         85,323
                                                                 --------
                                                                 $154,439
                                                                 ========


      These  advances  are  collateralized  by a  blanket  floating  lien on the
      Company's first mortgage loans.

      At September  30, 2003,  the Company was indebted to the Federal Home Loan
      Bank for  $126,310 of  advances  bearing  interest  at an average  rate of
      4.88%,  $25,544 of which were due or callable in the year ended  September
      30, 2004,  $19,445 in 2005, $4,076 in 2006, $4,301 in 2007 and the balance
      thereafter.  At September 30, 2004, the Company had an additional  $52,100
      available under its line of credit with the FHLB.

28
<PAGE>

      The Company is required to maintain certain cash reserves  relating to its
      deposit  liabilities.  This requirement is ordinarily satisfied by cash on
      hand.

10. OTHER NON-INTEREST INCOME

      Included in other  non-interest  income for the year ended  September  30,
      2003 was  approximately  $655 of gains on sales of loans and the Company's
      credit card portfolio.

11. INCOME TAXES

      Deferred income taxes reflect the net tax effects of temporary differences
      between  the  carrying  amounts of assets and  liabilities  for  financial
      reporting   purposes  and  the  amounts  used  for  income  tax  purposes.
      Significant   components  of  the   Company's   deferred  tax  assets  and
      liabilities  as of  September  30,  2004  and  2003  are  as  follows  (in
      thousands):

                                                         2004     2003

Deferred tax assets:
  Allowance for loan losses                            $1,156   $  870
  Unrealized loss on securities available-for-sale        280      323
  Liabilities related to acquisition                      233
  Other                                                   292      250
                                                       ------   ------
         Total deferred tax assets                      1,961    1,443
                                                       ------   ------
Deferred tax liabilities:
  Deferred loan fees and costs--net                       253      290
  Basis differences on securities available-for-sale      309
  Tax over book depreciation                              217      130
  Dividends on FHLB stock                                 745      650
  Other                                                   305      148
                                                       ------   ------
         Total deferred tax liabilities                 1,829    1,218
                                                       ------   ------

         Net deferred tax assets                       $  132   $  225
                                                       ======   ======


      The components of income tax expense are as follows (in thousands):

                                                   Year Ended
                                                  September 30,
                                     ----------------------------------------
                                              2004         2003         2002

Currently payable                           $2,998       $3,286       $3,400
Deferred                                      (150)        (100)        (115)
                                            ------       ------       ------
                                            $2,848       $3,186       $3,285
                                            ======       ======       ======


                                                                              29
<PAGE>

      Income taxes differ from the amounts computed by applying the U.S. Federal
      income tax rate of 34% to earnings  before income  taxes.  The reasons for
      these differences are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                    Year Ended
                                                                   September 30,
                                                         -------------------------------
                                                             2004       2003      2002

<S>                                                     <C>        <C>       <C>
Taxes computed at statutory rates                         $ 2,983    $ 3,186   $ 3,237
(Decrease) increase in taxes due to miscellaneous items      (135)                  48
                                                          -------    -------   -------
                                                          $ 2,848    $ 3,186   $ 3,285
                                                          =======    =======   =======

Actual tax rate                                              32.5 %     34.0 %    34.5 %
                                                          =======    =======   =======
</TABLE>


      Generally  accepted  accounting  principles does not require that deferred
      income  taxes be provided on certain  portions of the  allowance  for loan
      losses that existed as of  September  30,  1988.  At  September  30, 2004,
      retained  earnings  includes   approximately   $4,400   representing  such
      allowances for which no deferred income taxes have been provided.

12. NON-INTEREST EXPENSE

      Occupancy,  equipment  and  data  processing  expenses  consisted  of  the
      following (in thousands):

                                                            Year Ended
                                                           September 30,
                                                    --------------------------
                                                       2004     2003     2002

Occupancy, including depreciation, insurance,
  rent, utilities, etc                               $1,469   $1,189   $1,091
Equipment, including depreciation, telephone, etc     1,688    1,502    1,521
Data processing                                         881      844      765
                                                     ------   ------   ------

                                                     $4,038   $3,535   $3,377
                                                     ======   ======   ======


      Other operating expenses consisted of the following (in thousands):

                                                      Year Ended
                                                     September 30,
                                        ----------------------------------------
                                           2004           2003           2002

Stationery, printing and postage         $  781         $  730         $  698
Debit card expense                          436            339            471
Other                                     1,228          1,024            953
                                         ------         ------         ------
                                         $2,445         $2,093         $2,122
                                         ======         ======         ======

30
<PAGE>

13. OTHER COMPREHENSIVE INCOME (LOSS)

      The adjustment to determine other comprehensive  income (loss) as included
      in the consolidated statements of changes in stockholders' equity consists
      of the following for the years ended September 30, 2004, 2003 and 2002 (in
      thousands):

<TABLE>
<CAPTION>
                                                                      Tax      Net of
                                                       Before-Tax  (Expense)    Tax
                                                         Amount     Credit     Amount
                                                         ------     ------     ------
<S>                                                    <C>        <C>        <C>
2004
----
  Gross change in unrealized gain (loss) on securities
    available-for-sale                                  $   354    $  (124)   $   230
  Less reclassification for gain included in net income     232        (81)       151
                                                        -------    -------    -------
  Net change in unrealized gain (loss) on securities
    available-for-sale                                  $   122    $   (43)   $    79
                                                        =======    =======    =======

2003
----
  Gross change in unrealized gain (loss) on securities
    available-for-sale                                  $(1,982)   $   693    $(1,289)
  Less reclassification for gain included in net income      43        (15)        28
                                                        -------    -------    -------
  Net change in unrealized gain (loss) on securities
    available-for-sale                                  $(2,025)   $   708    $(1,317)
                                                        =======    =======    =======

2002
----
  Gross change in unrealized gain (loss) on securities
    available-for-sale                                  $   122    $   (42)   $    80
  Less reclassification for gain included in net income      87        (30)        57
                                                        -------    -------    -------
  Net change in unrealized gain (loss) on securities
    available-for-sale                                  $    35    $   (12)   $    23
                                                        =======    =======    =======
</TABLE>


14. RETIREMENT PLAN

      The Company  participates in a defined benefit  multi-employer  retirement
      plan which covers substantially all employees. The plan is administered by
      the Financial Institutions Retirement Fund. The Company froze the benefits
      under this plan  during the year ended  September  30,  2004.  The expense
      relating  to this  plan  amounted  to  $166  and  $75 in the  years  ended
      September  30,  2004 and 2003,  respectively,  and are the  amounts of the
      required payments  relating to these years.  There was no required payment
      in the year ended  September 30, 2002.  The market value of the net assets
      of the  retirement  fund  exceeds the  liability  of the present  value of
      accrued  benefits  as of the  most  recent  valuation  date.  No  separate
      information regarding the Company's share of the assets and liabilities of
      this plan is available.

                                                                              31
<PAGE>

15. INCOME PER SHARE

      Following is a summary of the information used in the computation of basic
      and  diluted  income per common  share for the years ended  September  30,
      2004, 2003 and 2002 (in thousands):

                                                                Year Ended
                                                               September 30,
                                                          ----------------------
                                                            2004    2003    2002

Weighted average number of common shares
  outstanding - used in computation of basic
  income per common share                                  2,230   2,264   2,290
Effect of dilutive securities:
  Stock options                                              156     163     125
  MSP stock grants                                             3       1       1
                                                           -----   -----   -----
Weighted  average  number of common shares
  outstanding  plus effect of dilutive
  securities - used in computation of diluted income per
  common share                                             2,389   2,428   2,416
                                                           =====   =====   =====


16. EMPLOYEE STOCK PLANS

      The Company  maintains  an ESOP for the benefit of Teche  Federal  Savings
      Bank's employees who meet certain eligibility requirements. The ESOP Trust
      acquired  332,337  shares of common stock in the Company's  initial public
      offering in 1995 with proceeds from a loan from the Company. Teche Federal
      Savings Bank makes cash contributions to the ESOP on a basis sufficient to
      enable the ESOP to make the required loan payments to the Company.

      The note  payable  referred  to above  bears  interest  at the prime  rate
      adjusted  quarterly  with  interest  payable  quarterly  and  with  future
      principal payable in annual installments of approximately $142 in 2005 and
      2006. The loan is  collateralized  by the  unreleased  shares of the stock
      purchased.

      As the debt is repaid,  shares are released from  collateral and allocated
      to qualified  employees  based on the  proportion of principal paid in the
      year.  The shares  pledged as  collateral  are  reported as a reduction of
      stockholders'  equity in the  consolidated  balance sheets.  As shares are
      released from collateral,  the Company reports  compensation expense equal
      to the  current  market  price  of  the  shares,  and  the  shares  become
      outstanding for income per share computations. Dividends on allocated ESOP
      shares are recorded as a reduction of retained  earnings and  dividends on
      unallocated ESOP shares are recorded as a reduction of debt.

      Compensation  expense  related to the ESOP was $417, $846 and $633 for the
      years ended September 30, 2004, 2003 and 2002, respectively. The following
      is a summary of shares held in the ESOP Trust as of September 30, 2004 and
      2003:

                                                               2004       2003

Shares released for allocation or committed to be released    226,266    245,504

Unreleased shares                                              28,359     42,465
                                                             --------   --------
Total ESOP shares                                             254,625    287,969
                                                             ========   ========
Market value of unreleased shares (in thousands)             $  1,134   $  1,508
                                                             ========   ========


32
<PAGE>

      In the year ended  September  30, 1996,  the  stockholders  of the Company
      approved  the Teche  Holding  Company  1995 Stock Option Plan (the "Plan")
      under which  options to purchase  423,200  common shares were reserved and
      granted to executive  employees  and  directors of Teche  Federal  Savings
      Bank. In the years ended September 30, 2002,  1999 and 1998,  issuances of
      additional  options were  authorized.  At September 30, 2004,  options for
      approximately 157,000 shares of Company stock are available for grant. The
      exercise prices are equal to the market price on the date of grant and 20%
      to  25%  of  the  options  are  generally  exercisable  within  the  first
      anniversary  date  after  the  date  of  grant  and  20% to  25%  annually
      thereafter.  All  unexercised  options  expire  ten years from the date of
      grant.  No  compensation  expense was recognized  under the Plans in 2004,
      2003 or 2002.  The following  table  summarizes  activity  relating to the
      Plans:

                                                                   Weighted
                                             Options               Average
                                           Outstanding              Price
                                           -----------              -----

Balance--October 1, 2001                     402,898                14.90

  Exercised                                 (103,226)               16.12
  Granted                                     47,567                20.43
  Expired and other                           (1,200)               19.80
                                             -------            ---------

Balance--September 30, 2002                  346,039                15.43

  Exercised                                  (24,800)               18.36
  Granted                                     62,100                28.04
  Expired and other                             (929)               21.07
                                             -------            ---------

Balance--September 30, 2003                  382,410                17.30

  Exercised                                 (123,397)               14.32
  Expired and other                             (400)               34.85
                                             -------            ---------

Balance--September 30, 2004                  258,613            $   19.01
                                             =======            =========

Exercisable at September 30, 2002            292,295            $   14.59
                                             =======            =========
Exercisable at September 30, 2003            288,539            $   14.59
                                             =======            =========
Exercisable at September 30, 2004            186,407            $   16.23
                                             =======            =========


      Information concerning outstanding options at September 30 follows:

                                                                    Average
                                                                   remaining
     Exercise                                                     contractual
      price             Outstanding          Exerciable          life in years

       13.94            120,835              120,835                    1
       19.88              3,400                3,400                    3
       16.34             30,682               30,682                    5
       18.50             27,149               11,951                    7
       25.70             12,696                5,078                    8
       23.27             33,475                7,225                    8
       34.85             30,376                7,236                    9
                        -------              -------

                        258,613              186,407
                        =======              =======


                                                                              33
<PAGE>

      In the year ended  September  30, 1996,  the  stockholders  of the Company
      approved the Management Stock Plan ("MSP") under which  restricted  grants
      of 169,280 shares were made to executive  employees and directors of Teche
      Federal  Savings Bank.  Teche Federal  Savings Bank acquired the Company's
      stock on the open market for the benefit of the recipients. The recipients
      vested 20% annually as long as they remained as Teche Federal Savings Bank
      directors  or  employees.  The  Company  recognized  compensation  expense
      ratably  over the  vesting  period  and the cost of  unvested  shares  was
      reported as unearned  compensation as a reduction of stockholders' equity.
      Compensation  expense  related  to the MSP was $-0-,  $-0- and $41 for the
      years ended  September 30, 2004, 2003 and 2002,  respectively.  All shares
      were vested at September 30, 2002.

17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

      In the normal  course of  business  the  Company  is a party to  financial
      instruments with off-balance sheet risk to meet the financing needs of its
      customers.  The financial instruments include commitments to extend credit
      and  commitments  to sell loans.  Those  instruments  involve,  to varying
      degrees,  elements of credit risk in excess of the amounts  recognized  in
      the consolidated balance sheets. The contract amounts of those instruments
      reflect  the  extent of the  involvement  the  Company  has in  particular
      classes of financial instruments.

      As of September  30, 2004,  the Company had made  various  commitments  to
      extend credit totaling  approximately  $32,000.  Most of these commitments
      are at fixed rates.  As of September 30, 2003,  such  commitments  totaled
      approximately $34,000.

      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 and may require  payment of a fee.  Since some of the  commitments
      are  expected  to  expire  without  being  fully  drawn  upon,  the  total
      commitment  amount  disclosed above does 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 considered
      necessary  by  the  Company  upon   extension  of  credit,   is  based  on
      management's credit evaluation of the customer.

18. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

      The following methods and assumptions were used to estimate the fair value
      of each class of  financial  instruments  for which it is  practicable  to
      estimate that value:

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

      Investment and Mortgage-Backed Securities--For investment securities, fair
      value equals quoted market price,  if available.  If a quoted market price
      is not available,  fair value is estimated  using quoted market prices for
      similar securities.

      Loans--The fair value of loans is estimated by discounting the future cash
      flows  using the  current  rates at which  similar  loans would be made to
      borrowers for the same remaining maturities.

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

34
<PAGE>

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

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

      The  estimated  fair  values  of  the  Company's   significant   financial
      instruments are as follows at September 30, 2004 and 2003 (in thousands):


                                             2004                  2003
                                   -----------------------  --------------------
                                                 Estimated             Estimated
                                      Carrying     Fair     Carrying     Fair
                                       Amount      Value     Amount      Value
Financial assets:
  Cash and cash equivalents           $ 15,362   $ 15,362   $ 14,439   $ 14,439
  Investment securities                120,575    120,751    129,647    130,092

  Loans                                475,692    487,000    360,527    373,000
  Less allowance for loan losses         4,365      4,365      3,397      3,397
                                      --------   --------   --------   --------
  Loans--net of allowance              471,327    482,635    357,130    369,603
                                      --------   --------   --------   --------

Financial liabilities:
  Deposits                             432,417    434,000    349,268    354,000
  Advances from Federal Home
     Loan Bank                         154,439    162,000    126,310    137,000


19. REGULATORY CAPITAL

      The Bank's actual capital and its  statutorially  required  capital levels
      based on the consolidated  financial  statements  accompanying these notes
      were as follows (in thousands):

<TABLE>
<CAPTION>
                                                    September 30, 2004
                         ------------------------------------------------------------------------------
                                                                                    To be Well
                                                                                 Capitalized Under
                                                        For Capital              Prompt Corrective
                                                     Adequacy Purposes           Action Provisions
                         ----------------------   -------------------------  --------------------------
                              Actual                      Required                   Required
                         ----------------------   -------------------------  --------------------------
                             Amount        %             Amount        %            Amount          %

<S>                      <C>          <C>            <C>          <C>           <C>           <C>
Core capital                $53,360      8.2 %          $25,899      4.0 %         $38,848       6.0 %

Tangible capital            $53,360      8.2 %          $ 9,712      1.5 %             N/A       N/A

Total Risk based capital    $57,481     14.6 %          $31,445      8.0 %         $39,306      10.0 %

Leverage                    $53,360      8.2 %              N/A      N/A           $32,373       5.0 %
</TABLE>


                                                                              35
<PAGE>

<TABLE>
<CAPTION>
                                                    September 30, 2003
                         ------------------------------------------------------------------------------
                                                                                    To be Well
                                                                                 Capitalized Under
                                                        For Capital              Prompt Corrective
                                                     Adequacy Purposes           Action Provisions
                         ----------------------   -------------------------  --------------------------
                              Actual                      Required                   Required
                         ----------------------   -------------------------  --------------------------
                             Amount       %             Amount        %            Amount          %

<S>                      <C>          <C>            <C>          <C>           <C>           <C>

Core capital               $49,605      9.3 %          $21,431      4.0 %         $32,147       6.0 %

Tangible capital           $49,605      9.3 %          $ 8,036      1.5 %             N/A       N/A

Total Risk based capital   $52,933     17.3 %          $24,489      8.0 %         $30,611      10.0 %

Leverage                   $49,605      9.3 %              N/A      N/A           $26,789       5.0 %
</TABLE>


      The  Federal  Deposit  Insurance  Corporation   Improvement  Act  of  1991
      ("FDICIA")  requires  each  federal  banking  agency to  implement  prompt
      corrective actions for institutions that it regulates. In response to this
      requirement,  OTS adopted  final rules based upon  FDICIA's  five  capital
      tiers. The rules provide that a savings bank is "well  capitalized" if its
      total  risk-based  capital ratio is 10% or greater,  its Tier 1 risk-based
      capital  ratio is 6% or  greater,  its  leverage  is 5% or greater and the
      institution is not subject to a capital directive.  Under this regulation,
      the Bank was deemed to be "well  capitalized" as of September 30, 2004 and
      2003 based upon the most recent  notifications from its regulators.  There
      are no  conditions  or events since those  notifications  that  management
      believes would change its classifications.

20.  SUMMARIZED  FINANCIAL  INFORMATION OF TECHE HOLDING COMPANY (PARENT COMPANY
     ONLY) (IN THOUSANDS)

                                 Balance Sheets

                                                2004                     2003

Assets:
  Investment in subsidiary                   $56,920                  $49,108
  Cash and cash equivalents                    1,375                    4,628
  Due from ESOP                                  283                      424
  Other                                        1,709                    2,836
                                             -------                  -------
                                             $60,287                  $56,996
                                             =======                  =======

Stockholders' equity                         $60,287                  $56,996
                                             =======                  =======


                             Statements of Earnings
<TABLE>
<CAPTION>
                                                           Year Ended September 30
                                                       ------------------------------
                                                          2004       2003       2002

<S>                                                   <C>        <C>        <C>
Dividends received from subsidiary                     $ 9,000    $ 3,700    $ 7,600
Equity in earnings of subsidiary (less than) greater
  than dividends received                               (3,011)     2,635     (1,365)
Interest income from subsidiary                             57         86        212
Management fees and other expenses allocated to
  the Parent                                               (77)       (77)      (135)
Other expenses--net                                        (43)      (159)       (76)
                                                       -------    -------    -------
Net income                                             $ 5,926    $ 6,185    $ 6,236
                                                       =======    =======    =======
</TABLE>

36

<PAGE>

                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                     Year Ended September 30
                                                               ------------------------------------
                                                                     2004        2003        2002

<S>                                                            <C>         <C>         <C>
Cash flows from operating activities                             $ 10,252    $  3,493    $  7,254

Cash flows from investing activities:
  Repayment of loan by subsidiary                                     141         333         332
  Purchase of land                                                                         (2,281)
  Cash used in acquisition                                        (10,062)
                                                                 --------    --------    --------
           Net cash (used in) provided by investing activities     (9,921)        333      (1,949)
                                                                 --------    --------    --------
Cash flows from financing activities:
  Dividends paid                                                   (1,735)     (1,300)     (1,132)
  Proceeds from exercise of stock options                             356         394         832
  Cash paid for purchase of common stock for treasury              (2,205)     (4,354)     (2,450)
                                                                 --------    --------    --------
           Net cash used in financing activities                   (3,584)     (5,260)     (2,750)
                                                                 --------    --------    --------
Net (decrease) increase in cash and cash equivalents               (3,253)     (1,434)      2,555

Cash and cash equivalents--beginning of year                        4,628       6,062       3,507
                                                                 --------    --------    --------
Cash and cash equivalents--end of year                           $  1,375    $  4,628    $  6,062
                                                                 ========    ========    ========
</TABLE>

      Cash  dividends  of $9,000,  $3,700 and $7,600 were paid by Teche  Federal
      Savings Bank to Teche  Holding  Company in the years ended  September  30,
      2004, 2003 and 2002, respectively.

      Stockholders' equity of the Company includes the undistributed earnings of
      Teche  Federal  Savings  Bank.  Dividends are payable only out of retained
      earnings or current  net  income.  Moreover,  dividends  to the  Company's
      stockholders  can  generally  be paid  only  from  liquid  assets of Teche
      Holding  Company and dividends paid to the Company by the Bank. The amount
      of capital of the Bank  available  for dividends at September 30, 2004 was
      approximately  $14,500.  The Bank is required to file an application  with
      the Office of Thrift Supervision prior to paying dividends to the Company.

                                     ******

                                                                              37
<PAGE>

                       DIRECTORS OF TECHE HOLDING COMPANY
                                       AND
                               TECHE FEDERAL BANK

                           Patrick O. Little, Chairman
                                 Mary Coon Biggs
                            Donelson T. Caffery, Jr.
                                  J. L. Chauvin
                                Henry L. Friedman
                              Robert J. Judice, Jr.
                              Dr. Thomas F. Kramer
                               W. Ross Little, Jr.
                                Robert E. Mouton
                            Christian L. Olivier, Jr.
                          Maunette B. Risher - Advisory

<TABLE>
<CAPTION>
                         OFFICERS OF TECHE FEDERAL BANK

<S>                     <C>                                         <C>                         <C>
Patrick O. Little          Chairman, President/CEO                     Irma Nell Bourque          Assistant Vice President
Scott Sutton               Senior Vice President/Operations            Brenda Henson              Assistant Vice President
J. L. Chauvin              Senior Vice President/Treasurer             Karen Verret               Assistant Vice President
                           Chief Financial Officer                     Wendy Frederick            Assistant Vice President
Darryl Broussard           Senior Vice President                       Darryl Charles             Assistant Vice President
                           Chief Lending Officer                       Elaine G. Gussman          Assistant Vice President
W. Ross Little, Jr.        Senior Vice President, Secretary            Gwen Doucet                Assistant Vice President
                           Sales & Marketing                           Genevieve Bihm             Assistant Vice President
Russell Gauthier           Baton Rouge Regional President              Judy Breaux                Assistant Vice President
Eddie LeBlanc              Vice President, Internal Auditor            Katy Hinze                 Assistant Vice President
D. Ross Landry             Vice President                              Peggy Romero               Assistant Vice President
Angela Badeaux             Vice President                              Ruby Langley               Assistant Vice President
Glen Brown                 Vice President                              Melina Aguillard           Assistant Vice President
Kevin Caswell              Vice President                              Jutta Codori               Assistant Vice President
Bill Babineaux             Vice President                              Gerald Emon                Assistant Vice President
Lynn Blanchard             Vice President                              Susan Leonard              Assistant Vice President
Carol Nini                 Vice President                              Andrew Myers               Assistant Vice President
Belinda Cavazos            Vice President                              Sean Riecke                Assistant Vice President
Susan Simoneaux            Vice President
William F. Ball            Vice President                              ST. LANDRY ADVISORY BOARD
Harold Favret              Vice President
Lavergne Boutte            Assistant Vice President                    Wayne M. Gilmore, Chairman
Carl W. Tritschler         Assistant Vice President                    H. Kent Aguillard
Beverly Adams              Assistant Vice President                    Anna Lee Dunbar
Debbie Stevens             Assistant Vice President                    Lynette Young Feucht
Dalie Eldridge             Assistant Vice President                    Patrick Fontenot
Theresa Landry             Assistant Vice President                    Simon Howard Fournier
Pauline Belley             Assistant Vice President                    Morgan J. Goudeau, III
Cynthia Cutrera            Assistant Vice President                    Martin A. Roy, Jr.
Stephanie Dandry           Assistant Vice President                    Randy Tomlinson
Georgia Boudreaux          Assistant Vice President                    Marvin Schwartzenburg
Angelina Mire              Assistant Vice President                    Robert J. Wolfe, Jr.
Mary Beth Brady            Assistant Vice President                    J. Nilas Young


INDEPENDENT AUDITORS                                                   SPECIAL COUNSEL
Deloitte & Touche LLP                                                  Malizia Spidi & Fisch, PC
One Shell Square                                                       1100 New York, Avenue, N.W., Suite 340 West
701 Poydras Street, Suite 3700                                         Washington, D.C.  20005
New Orleans, LA  70139

LEGAL COUNSEL                                                          REGISTRAR AND STOCK  TRANSFER AGENT
Biggs,  Supple,  Cremaldi and Curet,  LLP                              Registrar and Transfer Company
Lawless  Building                                                      10 Commerce Drive
Willow Street                                                          Cranford, NJ 07016-3572
Franklin, LA 70538                                                     (800) 525-7686
                                                                       Fax (908) 272-1006
</TABLE>

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