EXHIBIT 13
<PAGE>


                             TECHE HOLDING COMPANY

                                      2000

                                     ANNUAL

                                     REPORT

<PAGE>

Teche Holding Company
211 Willow Street
Franklin, LA 70538

Teche Federal Savings Bank
211 Willow Street
Franklin, LA 70538
Telephone: (337)828-3212
LA WATS (800)256-1500
FAX (337)828-0110
Call Center (800)897-0315

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

Morgan City
1001 7th St.
Morgan City, LA 70380
(504)384-0653

Bayou Vista
206 Arlington
Bayou Vista, LA 70380
(504)395-5244

New Iberia
529 N. Lewis
New Iberia, LA 70560
(337)364-5528

New Iberia
142 W. St. Peter Street
New Iberia, LA 70560
(337)364-5145

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

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

Lafayette
2306 W. Pinhook Rd.
Lafayette, LA 70508
(337)232-3419

Lafayette
Marketing/Auditing
606 Lee Avenue
Lafayette, LA 70501
(337)237-8066

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

Houma
706 Barrow St.
Houma, LA 70360
(504)868-8766

Houma
1983 Prospect Blvd.
Houma, LA 70363
(504)857-9990

Houma
Winn Dixie Market Place
1218 St. Charles St.
Houma, LA 70360
(504)873-5799

Thibodaux
Winn Dixie Market Place
375 North Canal Blvd
Thibodaux, LA 70301
(504)446-6707



                               Table of Contents
                                                                          Page

President's Message                                                        1

Selected Financial Information                                             2

Business of The Company & Business of the Bank                             3

Market and Dividend Information                                            3

Management's Discussion and Analysis of Financial
Condition and Results of Operations                                        4

Independent Auditors' Report                                               10

Consolidated Balance Sheets                                                11

Consolidated Statements of Income                                          12

Consolidated Statements of Stockholders' Equity                            13

Consolidated Statements of Cash Flows                                      14

Notes to Consolidated Financial Statements                                 16

Directors and Officers                                                     29

General Information                                                        29

<PAGE>
[LOGO]
                                  TECHE HOLDING
                                     COMPANY


President's Message
--------------------------------------------------------------------------------

Dear Fellow Shareholders,

     The year 2000 was a milestone  in the growth of Teche  Holding  Company and
our wholly owned subsidiary, Teche Federal Savings Bank. We have made remarkable
progress  this  year and  since  we  became a  public  company  in 1994.  We are
currently the 4th largest  publicly  traded bank based in Louisiana and the 15th
largest  bank  operating  in  Louisiana.  We have added an average of one branch
office each year for the last eight years and  currently  have 14  locations  in
South Louisiana. Our branching strategy enables us to offer exceptional customer
service to our growing  customer base. Over 1,000  individuals open new accounts
each month,  a testimony  to our  outstanding  customer  service,  products  and
marketing.

Some highlights in our growth include:

                                                 2000 Growth   5-year growth
Operating Revenue                                     6%            58%
Non Interest Income                                  26%           445%
Assets                                                9%            47%
Number of Checking Accounts                          16%           163%
Core Earnings Per Share                              21%            85%

     We have achieved considerable growth while maintaining profitability and we
intend to continue  this course in 2001.  Our goal is  SmartGrowth - growth with
profitability.  This strategy  guides our day to day  management  decisions.  In
balancing  growth  initiatives with  profitability  over the past five years, we
have seen our non interest income increase 445%,  while our non interest expense
has increased only 115% over the same period.

     We are investing in a platform for growth  through our  branching  strategy
and  centralizing  our operations in a new operations  center which will open in
New Iberia in the spring of 2000. We are also investing in technology which is a
business essential in the 21st Century.

     One of our key goals is to continue to grow our  consumer  loan  portfolio,
including our successful  home equity loan program.  Nearly half of our checking
account  customers are  homeowners and we are able to serve them with their home
loan needs. Consumer and commercial loans were 17.3% of our total loans in 2000,
up from 12.7% in 1999.  While consumer and commercial  loans are a small part of
our loan portfolio, this growth represents SmartGrowth. We are very proud of our
progress and of our loan officers who are building our success in these areas.

     Increased  earnings  and  continued  stock  repurchases  resulted  in a 21%
increase  in core  earnings  per share  (excludes  gains and  losses on sales of
securities)  this  year.  Uppermost  in  our  priorities  is a  return  for  our
shareholders now and into the future.

     Wishing you a Merry Christmas and a prosperous New Year!

                                        Sincerely,

                                        /s/Patrick O. Little
                                        ----------------------------------------
                                        Patrick O. Little

                                                                               1
<PAGE>

SELECTED FINANCIAL DATA (Dollars in thousands, except per share data)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                   At or for the Year Ended September 30,
                                      ---------------------------------------------------------
                                        2000        1999        1998        1997        1996
<S>                                 <C>         <C>         <C>         <C>         <C>
Assets ............................   $474,527    $434,265    $408,823    $404,097    $379,590
Loans Receivable, Net .............    386,512     342,986     345,172     346,875     316,216
Securities-Available for Sale .....     54,635      63,460      36,769      37,854      44,496
Securities-Held to Maturity .......      2,574          --          --          --          --
Cash and cash equivalents .........     10,384      10,292      10,680       5,868       7,072
Deposits ..........................    309,896     303,084     279,265     280,302     254,723
FHLB Advances .....................    111,853      78,682      67,721      65,398      66,900
Stockholders' Equity ..............     48,621      48,700      52,527      54,359      52,282
Summary of Operations
Interest Income ...................   $ 32,976     $30,275     $30,357    $ 29,788    $ 26,591
Interest Expense ..................     19,098      16,356      16,712      16,681      14,003
                                      --------    --------    --------    --------    --------
Net Interest Income ...............     13,878      13,919      13,645      13,107      12,588
Provision for Loan Losses .........        120         150         180         240         300
                                      --------    --------    --------    --------    --------
Net Interest Income after
 provision for Loan Losses ........     13,758      13,769      13,465      12,867      12,288
Non-Interest Income ...............      5,608       4,452       3,475       2,590       1,852
SAIF Special Assessment ...........         --          --          --          --       1,824
Non-Interest Expenses .............     13,778      12,837      11,198       9,867       8,616
                                      --------    --------    --------    --------    --------
 Income Before Gains on Sales
  of Securities and Income Taxes ..      5,588       5,384       5,742       5,590       3,700
Gains on Sales of Securities ......         --          14         138         274          91
Income Tax Expense ................      1,928       1,889       2,067       1,997       1,270
                                      --------    --------    --------    --------    --------
Net Income
  Actual ..........................   $  3,660    $  3,509    $  3,813    $  3,867    $  2,521
                                      ========    ========    ========    ========    ========
  Before SAIF Special Assessment ..                                                   $  3,725
                                                                                      ========
Selected Financial Ratios
Ratio of Equity to Assets .........       10.2%       11.2%       12.8%       13.5%       13.8%
Book Value/Common Share ...........   $  19.43    $  17.79    $  16.97    $  15.81    $  14.76
Dividends declared per Share ......   $   0.50    $   0.50    $   0.50    $   0.50    $   0.50
Basic Income per Common Share
  Actual ..........................   $   1.56    $   1.32    $   1.23    $   1.26    $   0.70
  Before SAIF Special Assessment ..                                                   $   1.03
Diluted Income per Common Share
  Actual ..........................   $   1.55    $   1.29    $   1.17    $   1.23    $   0.70
  Before SAIF Special Assessment ..                                                   $   1.03
Annualized Return on Average Assets
  Actual ..........................       0.81%       0.84%       0.94%       0.99%       0.72%
  Before SAIF Special Assessment ..                                                       1.07%
Annualized Return on Average Equity
  Actual ..........................       7.70%       6.90%       6.79%       7.34%       4.29%
  Before SAIF Special Assessment ..                                                       6.33%
Net Interest Margin ...............       3.21%       3.46%       3.45%       3.42%       3.68%
Non-Interest Expense/Average Assets
  Actual ..........................       3.06%       3.06%       2.75%       2.52%       3.00%
  Before SAIF Special Assessment ..                                                       2.48%
Non-Interest Income/Average Assets        1.24%       1.06%       0.85%       0.66%       0.53%
Non Performing Loans/Loans (1) ....       0.28%       0.24%       0.21%       0.32%       0.17%
Allowance for Loan Losses/Loans (1)       0.93%       1.02%       1.01%       0.96%       1.00%
Dividend Payout
  Actual ..........................      32.05%      37.88%      40.65%      39.68%      71.43%
  Before SAIF Special Assessment ..                                                      48.54%
</TABLE>

(1) Total loans before allowance for loan losses

2
<PAGE>

Business of the Bank

Teche  Federal  Savings Bank (the "Bank")  attracts  savings  deposits  from the
general  public and uses such deposits  primarily to originate  loans secured by
first mortgages on owner-occupied, one- to four-family residences in its primary
market  area.  To a lesser  extent,  the Bank  purchases  loans  and  originates
residential  construction,  multi-family  and  commercial  real estate loans and
consumer loans, and invests in mortgage-backed and investment securities.

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  fourteen full service  offices in the Louisiana  Parishes of St. Mary,
Iberia, Lafayette, St. Martin, Terrebonne and upper Lafourche. Deposits at Teche
Federal are insured up to the maximum legal amount by the FDIC.

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 (the "Conversion").


Summary of Quarterly Operating Results
<TABLE>
<CAPTION>
                                                  2000                              1999
                                   ----------------------------------------------------------------------
                                    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 ................   $7,828   $8,043   $8,387   $8,718   $7,420   $7,499   $7,564   $7,792
Interest Expense ...............    4,358    4,529    4,906    5,305    4,146    3,999    4,056    4,155
Net Interest Income ............    3,470    3,514    3,481    3,413    3,274    3,500    3,508    3,637
Provision for Loan Losses ......       30       30       30       30       45       45       30       30
Income Before Income Taxes......    1,330    1,373    1,489    1,396    1,370    1,312    1,372    1,344
Net Income .....................      864      920      962      914      890      853      892      874
Basic Income Per Common Share ..     0.36     0.40     0.41     0.39     0.32     0.32     0.34     0.34
Diluted Income Per Common Share      0.36     0.39     0.41     0.39     0.32     0.31     0.33     0.34
</TABLE>

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 Dividend Declared    Date Declared
                        High     Low
<S>                <C>        <C>          <C>                 <C>                <C>
December 31, 1998   $15.750    $13.000      $15.375             $0.125             November 18, 1998
March 31, 1999      $15.563    $14.000      $14.500             $0.125             February 19, 1999
June 30, 1999       $17.375    $14.375      $17.125             $0.125             May 19, 1999
September 30, 1999  $17.250    $14.500      $15.125             $0.125             August 18, 1999
December 31, 1999   $14.875    $13.000      $13.250             $0.125             November 18,, 1999
March 31, 2000      $14.000    $10.625      $12.500             $0.125             February 17, 2000
June 30, 2000       $13.500    $11.875      $12.8125            $0.125             May 24, 2000
September 30, 2000  $13.625    $12.125      $13.500             $0.125             August 24, 2000
</TABLE>

According  to the  records  of the  Company's  transfer  agent,  there  were 601
registered  stockholders  of record at November 20,  2000.  This number does not
include any persons or entities who 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 18 and 19 of notes to  Consolidated  Financial
Statements.  The Bank's total capital at September 30, 2000 exceeded the amounts
of its liquidation account and regulatory capital requirements.

                                                                               3
<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  which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in  interest  rate  risks  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  which  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

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.  This focus,  because  home  mortgage  lending is
typically  considered  to be one of the safer forms of  lending,  is designed to
reduce the risk of loss on the Bank's loan portfolio. However, the relative lack
of  diversification  in its loan  portfolio  structure  does increase the Bank's
portfolio  concentration  risk by making the value of the  portfolio  relatively
more susceptible to declines in real estate values in its market area. In recent
years,  management has placed added  emphasis on the  origination of home equity
loans and other consumer types of loans. In addition,  the Bank  supplements its
home lending  operations  with the  origination  of  commercial  loans,  and the
purchase of loans, investments and mortgage-backed securities..

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.

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. Since most deposit
accounts  react  more  quickly  to  market   interest  rate  movements  than  do
traditional mortgage loans because of 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.

4
<PAGE>

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 increased its short-term borrowings while continuing to rely
primarily  upon  deposits as its source of funds.  At September  30,  2000,  the
weighted   average  term  to  repricing   of  Teche   Federal's   ARM  loan  and
mortgage-backed  securities  portfolio was approximately 25 months. In contrast,
at September 30, 2000,  $127.5  million of the Bank's  certificate  accounts and
$90.7 million of the Bank's regular deposit  accounts (e.g.  demand,  NOW, money
market,  savings),  out of $309.9 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.
Furthermore,  at September 30, 2000, the Bank had approximately $57.5 million in
short-term  advances and $16.4 million in adjustable  rate  mortgage-backed  and
other securities.

Management  believes that it has adequate  capital to accept a certain degree of
interest rate risk. Should interest rates rise further,  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,
                                                         2000 vs 1999               1999 vs 1998
                                            --------------------------------------------------------------------
                                                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)                      $   832    $   257    $ 1,089    $   691    $   (97)   $   594
         Loans receivable, net                 1,840        170      2,010       (722)      (209)      (931)
         Other interest-earning assets (2)      (335)       (63)      (398)       291        (36)       255
                                             -------    -------     ------     ------    -------    -------
Total Interest Earning Assets                  2,337        364      2,701        260       (342)       (82)
                                             -------    -------     ------     ------    -------    -------
Interest-bearing liabilities
         Deposits                                683        (55)       628        555       (899)      (344)
FHLB advances and other borrowings             1,507        607      2,114        117       (129)       (12)
                                             -------    -------     ------     ------    -------    -------
Total interest-bearing liabilities             2,190        552      2,742        672     (1,028)      (356)
                                             -------    -------     ------     ------    -------    -------
Net change in net interest income            $   147    $  (188)    $  (41)    $ (412)   $   686    $   274
                                             =======    =======     ======     ======    =======    =======
</TABLE>

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

                                                                               5
<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,
                                  --------------------------------------------------------------------------------------
                                              2000                       1999                         1998
                                  --------------------------- ---------------------------  -----------------------------
                                                     Average                     Average                        Average
                                   Average           Yield/    Average            Yield/   Average               Yield/
                                   Balance  Interest  Cost     Balance Interest    Cost    Balance   Interest    Cost
                                                                 (Dollars in Thousands)
<S>                              <C>       <C>       <C>     <C>        <C>    <C>       <C>        <C>      <C>
Assets
 Interest Earning Assets
  Securities, Net (1)             $ 67,113  $ 4,365   6.50%   $ 54,139   $ 3,276   6.05%   $ 42,769   $ 2,682    6.27%
  Loans receivable (2) (3)         364,237   28,419   7.84%    340,540    26,539   7.79%    349,769    27,470    7.85%
   Other Interest-earning
    assets(4)                        1,210      192   5.12%      7,527       460   6.11%      2,475       205    8.28%
                                  --------  -------           --------   -------           --------   -------
   Total interest-earning assets   432,560  $32,926   7.62%    402,206   $30,275   7.53%    395,013   $30,357    7.69%
                                             =======                     =======                      =======
  Non-interest earning assets       18,268                      17,232                       12,436
                                  --------                    --------                     --------
 Total assets                     $450,828                    $419,438                     $407,449
                                  ========                    ========                     ========
Liabilities and Equity
 Interest-bearing Liabilities
  NOW accounts                    $ 38,747  $   784   2.02%   $ 25,198   $   473   1.88%   $ 22,545   $   397    1.76%
  Statement & regular
   savings accounts                 23,357      444   1.90%     26,553       582   2.19%     25,861       663    2.56%
  Money funds accounts              11,424      435   3.81%      8,343       307   3.68%      9,342       343    3.67%
  Certificates of Deposit          216,694   11,533   5.32%    215,157    11,206   5.21%    207,722    11,509    5.54%
                                  --------  -------           --------   -------           --------   -------
    Total Deposits                 290,222   13,196   4.55%    275,251    12,568   4.57%    265,470    12,912    4.86%
  FHLB advances and
   other borrowings                 95,753    5,902   6.16%     70,401     3,788   5.38%     68,306     3,800    5.56%
                                  --------  -------           --------   -------           --------   -------
 Total interest-bearing
  liabilities                      385,975  $19,098   4.95%    345,652   $16,356   4.73%    333,776   $16,712    5.01%
                                             =======                     =======                      =======
  Non-interest-bearing
  liabilities                       17,311                      22,954                       17,488
                                  --------                    --------                     --------
Total liabilities                  403,286                     368,606                      351,264
Stockholders' Equity                47,542                      50,832                       56,185
                                  --------                    --------                     --------
Total liabilities and
 Stockholders' Equity             $450,828                    $419,438                     $407,449
                                  ========                    ========                     ========
Net interest income/interest
 rate spread (5)                             $13,828  2.67%              $13,919   2.80%              $13,645    2.68%
                                             =======                     =======                      =======
Net interest margin (6)                               3.21%                        3.46%                         3.45%
Interest-earning assets/
  Interest bearing liabilities                      112.07%                      116.36%                       118.35%
</TABLE>
(1)  Includes securities and FHLB stock
(2)  Amount  is  net  of  deferred  loan  fees,  loan  discounts  and  premiums,
     loans-in-process  and allowance  for loan losses and includes  non-accruing
     loans.
(3)  Interest  income  includes  loan fees of  approximately  $151,000  in 2000,
     $102,000 in 1999, $86,000 in 1998.
(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.

6
<PAGE>

Changes in Financial Condition From September 30, 1999 to September 30, 2000

General.  Total assets  increased  $40.2 million,  or 9.3% to $ 474.5 million at
September  30, 2000 from $434.3  million at September  30, 1999,  primarily as a
result of an increase in home equity loans.

Loans Receivable,  Net. The Bank's net loans receivable  increased $43.5 million
or 12.7% to $386.5  million  from  $343.0  million  at  September  30,  1999 due
primarily  to an  increase  in home  equity  loans.  Of all  real  estate  loans
originated in fiscal 2000, 71.8% had adjustable rates.

Deposits. The Bank's deposits,  after interest credited,  increased $6.8 million
or 2.2% to $309.9 million from $ 303.1 million at September 30, 1999.

Advances From FHLB. Advances from the Federal Home Loan Bank of Dallas increased
$33.2  million,  or 42.2% to $111.9  million from $78.7 million at September 30,
1999, and were primarily used to fund loan growth during the year. Stockholders'
Equity.

Stockholders'  equity decreased $79,000, or 0.2% from $48.7 million at September
30, 1999, to $48.6 million,  due primarily to the repurchase of common stock for
the treasury pursuant to the Company's stock repurchase program, offset somewhat
by earnings.

Comparison of Operating  Results for Years ended  September  30, 2000,  1999 and
1998.

Analysis of Net Income

General.  The Bank  reported net income of $3.7  million,  $3.5 million and $3.8
million for fiscal 2000,  1999 and 1998. The $151,000,  or 4.3% increase  during
fiscal 2000  compared to fiscal 1999 was  primarily  due to increased fee income
offset somewhat by increased  non-interest  expense. The decrease of $304,000 or
8.0% during  fiscal 1999  compared to fiscal 1998 was primarily due to increased
net non-interest expense.

Interest  Income.  Interest income amounted to $33.0 million,  $30.3 million and
$30.4 million for the years ended 2000,  1999 and 1998,  respectively.  The $2.7
million or 8.9% increase in fiscal 2000 was  primarily  due to increased  yields
and  higher  average  balances  of loans and  securities.  The  $82,000  or 0.3%
decrease  in fiscal  1999 was  primarily  due to  decreased  yields on loans and
securities

Interest  Expense.  Interest  expense  totaled $19.1 million,  $16.4 million and
$16.7 million for the years ended September  2000, 1999 and 1998,  respectively.
The $2.7 million or 16.5%  increase in fiscal 2000 was  primarily due to a $15.0
million increase in the average balance of deposits and a $23.3 million increase
in the average  balance of advances and a 78 basis point increase in the average
rate paid on advances.

Net Interest  Income.    Net interest income  amounted to $ 13.9 million,  $13.9
million and $13.6 million for the years ended September 30, 2000, 1999 and 1998.

Provision for Loan Losses. The Bank provided $120,000,  $150,000 and $180,000 to
the allowance for loan losses for the years ended  September 30, 2000,  1999 and
1998, respectively.  The allowance for loan losses was $3,630,000 at 2000 fiscal
year end,  $3,537,000 at 1999 fiscal year end and $3,515,000 at 1998 fiscal year
end. The decrease in the  provisions for loan losses in 2000 as compared to 1999
resulted from management's  evaluation of the adequacy of the allowance for loan
losses.

While the Bank  maintains its allowance for losses at a level which it considers
to be adequate to provide for potential  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  Consolidated  Financial
Statements.

Non-Interest  Income.  Non-interest  income during the years ended September 30,
2000,  1999 and 1998  amounted to $5.6  million,  $4.5  million and $3.5 million
respectively.  The increases in both fiscal 2000 and fiscal 1999 were  primarily
due to increased fee income due to an increase in transaction accounts.

                                                                               7
<PAGE>

Non-Interest  Expense.  Non-interest  expense increased  steadily over the three
periods,  totaling  $13.8  million,  $12.8 million and $11.2 million  during the
years ended September 30, 2000, 1999 and 1998. The increases in both fiscal 2000
and  1999  were due to  continued  expansion  of  office  facilities,  increased
marketing  expenses and increased  investment in new  technology.  The principal
component of non-interest expense, compensation and employee benefits, increased
in each of the last three years.  Other operating  expenses  increased from $1.7
million to $2.1 million to $2.2 million for the years ended  September 30, 1998,
1999 and 2000, respectively.

On January 1, 1996,  Teche became  subject to the  Louisiana  Shares Tax and the
Louisiana  Franchise Tax. This amounted to an expense of $669,000,  $680,000 and
$541,000 in the years ended September 30, 2000, 1999 and 1998, respectively.

Gain on Sale of  Securities.  In the years ended  September  30, 2000,  1999 and
1998,  gains on the sale of  securities  amounted to $0,  $14,000 and  $138,000,
respectively.

Income Tax Expense.  For the years ended  September 30, 2000, 1999 and 1998, the
Bank incurred income tax expense of $1.9 million, $1.9 million and $2.1 million,
respectively.  The varying  amounts were caused  primarily by the varied pre-tax
income of the Bank.

Liquidity  and  Capital  Resources

The Bank is required to maintain  minimum levels of "liquid  assets," as defined
by the OTS regulations. This requirement,  which may be varied from time to time
depending upon economic conditions and deposit flows, is based upon a percentage
of deposits and short-term  borrowings.  The required minimum ratio at September
30, 2000 was 4.0 percent.  The Bank's average  liquidity ratio was approximately
13.8 percent during September 2000. 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.

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, 2000, the Bank had total
FHLB borrowings of $111.9 million, or 23.6% of the Bank's assets.

Management  believes  the Bank has  sufficient  resources  available to meet its
foreseeable  funding   requirements.   At  September  30,  2000,  the  Bank  had
outstanding  loan  commitments of $10.7  million,  and  certificates  of deposit
scheduled  to mature  within one year of $127.5  million,  substantially  all of
which management expects, based on past experience, will remain with the Bank.

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, 2000, Teche Federal exceeded all regulatory capital  requirements.
See Note 17 to the Consolidated Financial Statements.

8
<PAGE>

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.

New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board  issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities" which establishes
accounting and reporting standards for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging activities.
Under  this  Statement,  a company  that  elects to apply  hedge  accounting  is
required to establish  at the  inception of the hedge the method it will use for
assessing  the  effectiveness  of the  hedging  derivative  and the  measurement
approach for  determining  the  ineffective  aspect of the hedge. At the date of
initial application,  a company may transfer any held-to-maturity  security into
the available-for-sale  category or the trading category. A company will then be
able  in  the   future   to   designate   a   security   transferred   into  the
available-for-sale  category as the hedged item. The unrealized  holding gain or
loss on a held-to-maturity  security transferred to another category at the date
of the initial  application will be reported in net income or accumulated  other
comprehensive  income  consistent  with the  requirements  of SFAS No. 115. Such
transfers  from the  held-to-maturity  category at the date of initial  adoption
will not call into question a company's  intent to hold other debt securities to
maturity in the future.

SFAS No.  133,  as  amended by SFAS No.  137,  applies  to all  entities  and is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The Company will adopt this accounting  standard on October 1, 2000 and does not
presently  believe that the adoption of it will have a  significant  effect upon
its  financial  position,  results of operations or cash flows as of the date of
adoption.

In September 2000, the Financial Accounting Standards Board issued SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities"  which  establishes  accounting  and  reporting  standards  for
transfers and servicing of financial assets and  extinguishments of liabilities.
Under this Statement, after a transfer of financial assets, a company recognizes
the  financial  and  servicing  assets it controls  and the  liabilities  it has
incurred,  derecognizes financial assets when control has been surrendered,  and
derecognizes  liabilities when extinguished.  This Statement provides consistent
standards for  distinguishing  transfers of financial assets that are sales from
transfers that are secured borrowings.

SFAS No. 140 is  generally  effective  for  periods  after March 31,  2001.  The
Company  will adopt this  accounting  standard on April 1, 2001.  The Company is
presently  studying the effects  this  statement  will have on the Company,  but
based on a preliminary  analysis,  does not believe that the adoption of it will
have a significant  effect on its financial  position,  results of operations or
cash flows as of the date of adoption.

                                                                               9
<PAGE>
[LOGO] Deloitte &
           Touche
-----------------    -----------------------------------------------------------
                     Deloitte & Touche LLP             Telephone: (504) 581-2727
                     Suite 3700                        Facsimile: (504) 561-7293
                     One Shell Square
                     701 Poydras Street
                     New Orleans, Louisiana 70139-3700


                          INDEPENDENT AUDITORS' REPORT


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,  2000 and 1999,  and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  2000.  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 auditing standards generally accepted
in the  United  States of  America.  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,  2000  and  1999,  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
September 30, 2000 in conformity with accounting  principles  generally accepted
in the United States of America.


/s/Deloitte & Touche LLP
------------------------
DELOITTE & TOUCHE LLP
November 10, 2000


[LOGO]
---------------------
Deloitte Touche
Tohmatsu
---------------------

10
<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
                                                                            2000                1999
<S>                                                                      <C>                 <C>
ASSETS
Cash and cash equivalents                                                 $ 10,384            $ 10,292
Securities available-for-sale, at estimated market
  value (amortized cost of $56,097 in 2000 and $64,832 in 1999)             54,635              63,460
Securities held-to-maturity, at cost (estimated market value of $2,607)      2,574                  --
Loans receivable, net of allowance for loan losses of
  $3,630 in 2000 and $3,537 in 1999                                        386,512             342,986
Accrued interest receivable                                                  2,404               2,159
Investment in Federal Home Loan Bank stock, at cost                          5,781               4,229
Real estate owned, net                                                         232                 178
Prepaid expenses and other assets                                              649                 621
Premises and equipment, at cost, less accumulated depreciation              11,356              10,340
                                                                          --------            --------
TOTAL ASSETS                                                              $474,527            $434,265
                                                                          ========            ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                  $309,896            $303,084
Advances from Federal Home Loan Bank                                       111,853              78,682
Advance payments by borrowers for taxes and insurance                        1,625               1,578
Accrued interest payable                                                       685                 432
Accounts payable and other liabilities                                       1,847               1,789
                                                                          --------            --------
      Total liabilities                                                    425,906             385,565
COMMITMENTS AND CONTINGENCIES                                                   --                  --
STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 10,000,000 shares authorized;
    4,233,350 shares issued                                                     42                  42
  Preferred stock, 5,000,000 shares authorized, none issued                     --                  --
  Additional paid-in capital                                                42,221              42,153
  Retained earnings                                                         33,417              30,928
  Unearned ESOP shares                                                      (1,421)             (1,754)
  Unearned compensation - Management Stock Plan                                (41)               (390)
  Treasury stock - 1,731,000 and 1,496,000 shares, at cost                 (24,652)            (21,387)
  Unrealized loss on securities available-for-sale, net
    of deferred income taxes                                                  (945)               (892)
                                                                          --------            --------
      Total stockholders' equity                                            48,621              48,700
                                                                          --------            --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                $474,527            $434,265
                                                                          ========            ========
</TABLE>

See notes to consolidated financial statements.

                                                                              11
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                       2000      1999      1998
INTEREST INCOME:
  Interest and fees on loans                         $28,549   $26,539   $27,470
  Interest and dividends on securities                 4,365     3,276     2,682
  Other interest income                                   62       460       205
                                                     -------   -------   -------
                                                      32,976    30,275    30,357
                                                     -------   -------   -------
INTEREST EXPENSE:
  Deposits                                            13,196    12,568    12,912
  Advances from Federal Home Loan Bank                 5,902     3,676     3,800
  Other borrowed money                                    --       112        --
                                                     -------   -------   -------
                                                      19,098    16,356    16,712
                                                     -------   -------   -------
NET INTEREST INCOME                                   13,878    13,919    13,645
PROVISION FOR LOAN LOSSES                                120       150       180
                                                     -------   -------   -------
NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                     13,758    13,769    13,465
                                                     -------   -------   -------
NON-INTEREST INCOME:
  Service charges                                      5,230     4,246     3,033
  Gain on sale of real estate owned                       51        79        13
  Other income                                           327       127       429
                                                     -------   -------   -------
    Total non-interest income                          5,608     4,452     3,475
                                                     -------   -------   -------
GAIN ON SALE OF SECURITIES                                --        14       138
                                                     -------   -------   -------
NON-INTEREST EXPENSE:
  Compensation and employee benefits                   6,685     5,955     5,697
  Occupancy, equipment and data processing expense     3,085     2,804     2,377
  Marketing                                            1,072     1,031       737
  SAIF deposit insurance premiums                         92       168       172
  Louisiana shares tax                                   669       680       541
  Other operating expenses                             2,175     2,199     1,674
                                                     -------   -------   -------
    Total non-interest expense                        13,778    12,837    11,198
                                                     -------   -------   -------
INCOME BEFORE INCOME TAXES                             5,588     5,398     5,880
INCOME TAXES                                           1,928     1,889     2,067
                                                     -------   -------   -------
NET INCOME                                           $ 3,660   $ 3,509   $ 3,813
                                                     =======   =======   =======
BASIC INCOME PER COMMON SHARE                        $  1.56   $  1.32   $  1.23
                                                     =======   =======   =======
DILUTED INCOME PER COMMON SHARE                      $  1.55   $  1.29   $  1.17
                                                     =======   =======   =======

See notes to consolidated financial statements.

12
<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                                   Unrealized
                                                                                                      Gain
                                                                                                    (Loss) on
                                              Additional            Unearned Unearned             Securities
                                    Common      Paid-In   Retained   ESOP   Compensation        Treasury Available-
                                     Stock      Capital   Earnings   Shares     (MSP)    Stock    for-Sale, net     Total

<S>                                   <C>      <C>        <C>      <C>       <C>       <C>           <C>           <C>
BALANCE, October 1, 1997               $42      $41,642    $26,536  $(2,419)  $(1,258)  $(10,552)     $ 368         $54,359

Contribution to ESOP                                284                 333                                             617
Amortization of MSP                                                               468                                   468
Tax benefit from vesting
  of MSP shares                                      87                                                                  87
Exercise of stock options                            24                                                                  24
Purchase of common stock
  for treasury                                                                            (5,231)                    (5,231)
Dividends declared -
  $.50 per share                                            (1,592)                                                  (1,592)
Comprehensive income:
  Net income                                                 3,813                                                    3,813
  Change in unrealized gains on
    securities available-for-sale, net                                                                   18)            (18)
                                                                                                                    -------
      Total comprehensive income                                                                                      3,795
                                       ---      -------    -------  -------   -------   --------      -----         -------
BALANCE, September 30, 1998             42       42,037     28,757   (2,086)     (790)   (15,783)       350          52,527

Contribution to ESOP                                104                 332                                             436
Amortization of MSP                                                               400                                   400
Tax benefit from vesting
  of MSP shares                                      12                                                                  12
Purchase of common stock
  for treasury                                                                            (5,604)                    (5,604)
Dividends declared - $.50 per share                         (1,338)                                                  (1,338)
Comprehensive income:
  Net income                                                 3,509                                                    3,509
  Change in unrealized gain
    (loss) on securities
    available-for-sale, net                                                                          (1,242)         (1,242)
                                                                                                                    -------
        Total comprehensive income                                                                                    2,267
                                       ---      -------    -------  -------   -------   --------      -----         -------
BALANCE, September 30, 1999             42       42,153     30,928   (1,754)     (390)   (21,387)      (892)         48,700

Contribution to ESOP                                 71                 333                                             404
Amortization of MSP                                                               349                                   349
Tax expense from vesting
  of MSP shares                                      (3)                                                                 (3)
Purchase of common stock
  for treasury                                                                            (3,265)                    (3,265)
Dividends declared - $.50 per share                         (1,171)                                                  (1,171)
Comprehensive income:
  Net income                                                 3,660                                                    3,660
  Change in unrealized gain
    (loss) on securities
    available-for-sale, net                                                                             (53)            (53)
                                                                                                                   --------
        Total comprehensive income                                                                                    3,607
                                       ---      -------    -------  -------   -------   --------      -----         -------
BALANCE, September 30, 2000            $42      $42,221    $33,417  $(1,421)  $   (41)  $(24,652)     $(945)        $48,621
                                       ===      =======    =======  =======   =======   ========      =====         =======
</TABLE>
See notes to consolidated financial statements.
                                                                              13
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                  2000        1999          1998

<S>                                                                           <C>         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                   $  3,660    $  3,509      $  3,813
  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                                 (78)        (73)           12
    Provision for loan losses                                                       120         150           180
    ESOP expense                                                                    353         436           617
    MSP expense                                                                     349         400           468
    Deferred income taxes (credit)                                                 (308)        175           (75)
    Gain on sale of premises                                                        (85)         --            --
    Gain on sale of securities                                                       --         (14)         (138)
    Gain on sale of real estate owned                                               (51)        (79)          (13)
    Depreciation                                                                  1,098         926           704
    Accretion of deferred loan fees and other                                       (89)         (3)          (86)
    Accretion of discount on loans                                                  (35)       (325)         (272)
    Change in accrued interest receivable                                          (245)        (94)          (14)
    Change in accrued interest payable                                              253         (53)          176
    Change in accounts payable and other liabilities                                366         281           100
    Other - net                                                                      54         123          (173)
                                                                                -------     -------       -------
      Net cash provided by operating activities                                   5,362       5,359         5,299
                                                                                -------     -------       -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities of investment securities available-for-sale            1,108          20         3,000
  Proceeds from sale of investment securities available-for-sale                     --         484           413
  Purchase of investment securities available-for-sale                           (1,995)    (40,908)      (12,856)
  Principal repayments on mortgaged-backed securities available-for-sale          9,700      11,888        10,627
  Purchase of mortgaged-backed securities held-to-maturity                       (3,416)         --            --
  Principal repayments on mortgaged-backed securities held-to-maturity              842          --            --
  Net (increase) decrease in certificates of deposit                                 --         658           (24)
  Net loan (origination) repayments                                             (43,522)      2,364         1,881
  Investment in FHLB stock                                                       (1,552)       (345)           43
  Proceeds from sale of premises                                                    595          --            --
  Purchase of premises and equipment                                             (2,624)     (2,502)       (3,114)
                                                                                -------     -------       -------
      Net cash used in investing activities                                     (40,864)    (28,341)          (30)
                                                                                -------     -------       -------
</TABLE>
                                                                     (Continued)
14
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                     2000        1999             1998

CASH FLOWS FROM FINANCING ACTIVITIES:
<S>                                                              <C>         <C>              <C>
  Dividends paid                                                    (1,171)     (1,338)          (1,592)
  Net increase (decrease) in deposits                                6,812      23,819           (1,037)
  Net increase in FHLB advances                                     33,171      10,961            2,323
  Cash paid for purchase of common stock for treasury               (3,265)    (10,435)            (400)
  Borrowings under loan agreement                                       --       6,767              347
  Repayment of borrowings under loan agreement                          --      (7,114)              --
  Increase (decrease) in advance payments by
    borrowers for taxes and insurance                                   47         (66)             (98)
                                                                  --------    --------         --------
      Net cash (used in) provided by financing activities           35,594      22,594             (457)
                                                                  --------    --------         --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                    92        (388)           4,812
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                        10,292      10,680            5,868
                                                                  --------    --------         --------
CASH AND CASH EQUIVALENTS, END OF YEAR                            $ 10,384    $ 10,292         $ 10,680
                                                                  ========    ========         ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                          $ 19,188     $16,504          $16,810
                                                                  ========    ========         ========
  Income taxes paid                                               $  1,970    $  1,932         $  1,877
                                                                  ========    ========         ========
  Financing activities not requiring the outflow of cash:
     Purchase of common stock for treasury financed by seller $         --    $     --         $  4,831
                                                                  ========    ========         ========
</TABLE>

See notes to consolidated financial statements.

15
<PAGE>

TECHE holding company and subsidiary
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT 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 secured
by first mortgages on owner-occupied, family residences.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  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  designated  as  held-to-maturity  are  stated at cost
adjusted for  amortization  of the related  premiums and accretion of discounts,
computed using the level yield method.  The Company has the positive  intent and
ability to hold these securities to maturity.

Securities  designated  as  available-for-sale  are stated at  estimated  market
value.  Unrealized  gains and losses are  aggregated  and reported as a separate
component  of  stockholders'   equity,  net  of  deferred  income  taxes.  These
securities  are acquired with the intent to hold them to maturity,  but they are
available for disposal in the event of unforeseen liquidity needs.

Gains  and  losses on  security  transactions  are  determined  on the  specific
identification method.

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 the payment of principal or interest on a loan is  delinquent  for 90 days,
or earlier in some cases, the loan is placed on non-accrual  status. When a loan
is placed on non-accrual status,  interest accrued during the current year prior
to the judgment of uncollectibility  is charged to operations.  Interest accrued
during prior  periods is charged to the  allowance  for loan  losses.  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, 2000 or 1999.

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.

16
<PAGE>
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.

Discounts  received in connection with mortgage loans purchased are amortized to
income over the contractual  term of the loan using the interest  method.  These
discounts have been deducted from the related loan balances.

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.  Interest is capitalized on major construction  programs and
amounted  to $78 and  $95 in the  years  ended  September  30,  2000  and  1999,
respectively.

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.

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 which, in the case of the Company, includes only unrealized
gains and losses on securities available-for-sale.

Reclassifications  -  Certain  reclassifications  have been made to the 1998 and
1999   consolidated   financial   statements   in  order  to   conform   to  the
classifications adopted for reporting in 2000.

                                                                              17
<PAGE>
2. INTEREST RATE RISK

The  Company  is  engaged  principally  in  providing  first  mortgage  loans to
individuals.  At September 30, 2000 the Company had interest  earning  assets of
approximately $450,000, most of which will not mature or be repriced until after
five years. Interest bearing liabilities totaled approximately $405,000, most of
which will mature or can be repriced  within one year.  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. SECURITIES

The amortized cost and estimated market values of securities  available-for-sale
are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                   September 30, 2000
                                                    ---------------------------------------------
                                                                  Gross      Gross      Estimated
                                                     Amortized  Unrealized Unrealized    Market
                                                        Cost      Gains      Losses      Value
<S>                                                 <C>          <C>        <C>         <C>
Investment securities:
  Federal Home Loan Bank bond due in February 2001   $  3,391     $   --     $    (6)    $ 3,385
  Municipal obligations                                    93         --          --          93
                                                     --------     ------     -------     -------
                                                        3,484         --          (6)      3,478
                                                     --------     ------     -------     -------
Mortgage-backed securities:
  Government National Mortgage Corporation             11,643         23         (54)     11,612
  Federal Home Loan Mortgage Corporation                8,019         16         (75)      7,960
  Federal National Mortgage Association                11,758         17        (398)     11,377
                                                     --------     ------     -------     -------
                                                       31,420         56        (527)     30,949
Collateralized mortgage obligations ("CMOs")           20,654         --      (1,047)     19,607
Equity securities                                         539         62          --         601
                                                     --------     ------     -------     -------
                                                     $ 56,097     $  118     $(1,580)    $54,635
                                                     ========     ======     =======     =======
</TABLE>
<TABLE>
<CAPTION>

                                                            September 30, 1999
                                              --------------------------------------------
                                                           Gross      Gross      Estimated
                                              Amortized  Unrealized Unrealized    Market
                                                 Cost      Gains      Losses      Value

<S>                                            <C>        <C>         <C>         <C>
Investment securities:
  Obligations of U.S. government
    corporations and agencies                   $ 4,362    $    13     $    --     $ 4,375
  Municipal obligations                             201         --          --         201
                                               --------    -------     -------     -------
                                                  4,563         13          --       4,576
                                               --------    -------     -------     -------
Mortgage-backed securities:
  Government National Mortgage Corporation       10,452         34         (86)     10,400
  Federal Home Loan Mortgage Corporation         10,718         17         (79)     10,656
  Federal National Mortgage Association           5,267         18         (64)      5,221
                                               --------    -------     -------     -------
                                                 26,437         69        (229)     26,277
Collateralized mortgage obligations ("CMOs")     33,293                 (1,251)     32,042
Equity securities                                   539         47         (21)        565
                                               --------    -------     -------     -------
                                               $ 64,832    $   129     $(1,501)    $63,460
                                               ========    =======     =======     =======
</TABLE>

The amortized  cost and estimated  market values of securities  held-to-maturity
are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                   September 30, 2000
                                                    ---------------------------------------------
                                                                  Gross      Gross      Estimated
                                                     Amortized  Unrealized Unrealized    Market
                                                        Cost      Gains      Losses      Value
<S>                                                 <C>          <C>        <C>         <C>
Collateralized mortgage obligations ("CMOs")         $ 2,574      $ 33      $    --     $ 2,607
                                                     =======      ====      =======     =======
</TABLE>

18
<PAGE>

Gross gains of $55 and $138 were  realized on sales of  securities  in the years
ended  September  30,  1999 and  1998,  respectively.  Gross  losses of $41 were
realized on sales of securities in the year ended September 30, 1999. There were
no gains or losses on sale of securities in 2000.

At  September  30,  2000  securities  with a cost of  approximately  $8,600 were
pledged to secure  deposits  and  advances  from the  Federal  Home Loan Bank as
required or permitted by law.

4. LOANS RECEIVABLE
Loans receivable are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                            September 30,
                                                                         -------------------
                                                                           2000      1999
<S>                                                                     <C>       <C>
Residential real estate mortgage loans:
  One-to-four family units                                               $310,505  $296,602
  Multi-family                                                              1,186     1,318
Land loans                                                                  8,173     5,501
Construction loans (net of loans in process)                               10,821     4,620
Non-residential real estate loans                                           5,465     5,207
Home improvement and equity loans                                          30,702    18,865
Loans on savings accounts                                                   4,960     5,166
Auto loans                                                                  5,358     4,199
Mobile home loans                                                           6,446       631
Credit card loans                                                           1,581     1,516
Other secured and unsecured                                                 5,537     3,556
                                                                         --------  --------
                                                                          390,734   347,181
Less:
  Allowance for loan losses                                                 3,630     3,537
  Deferred loan fees                                                          592       658
                                                                         --------  --------
                                                                         $386,512  $342,986
                                                                         ========  ========
</TABLE>

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

                                                           Year Ended
                                                          September 30,
                                                --------------------------------
                                                    2000       1999       1998

Beginning balance, October 1                     $ 3,537    $ 3,515    $ 3,355
Provision charged to operating expense               120        150        180
Recoveries                                            62         44         44
Loans charged off                                    (89)      (172)       (64)
                                                 -------    -------    -------
Ending balance, September 30                     $ 3,630    $ 3,537    $ 3,515
                                                 =======    =======    =======

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

At  September  30,  2000 and 1999  there  were  unamortized  discounts  on loans
purchased  of  approximately  $525 and  $560,  respectively.  These  unamortized
discounts have been deducted from the related loan balances in the table above.

The  amount  of  nonaccrual  loans  at  September  30,  2000  and  1999  was not
significant.  The amount of  interest  not accrued on these loans did not have a
significant effect on net income in 2000, 1999 or 1998.

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

                                                                              19
<PAGE>

5. REAL ESTATE OWNED

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

                                                    September 30,
                                                 -------------------
                                                   2000        1999
Real estate acquired  through  foreclosure        $ 344       $ 325
Less allowance for losses                          (112)       (147)
                                                  -----       -----
Real estate owned, net                            $ 232       $ 178
                                                  =====       =====

Changes in the  allowance  for losses on real  estate  owned are as follows  (in
thousands):

                                                    Year Ended
                                                   September 30,
                                             -----------------------
                                              2000     1999    1998
Beginning balance, October 1                 $ 147    $ 112   $ 112
Provision charged to operating expense          --       35      --
Reduction of allowance at date of sale         (35)      --      --
                                             -----    -----   -----
Ending balance, September 30                 $ 112    $ 147   $ 112
                                             =====    =====   =====

6. PREMISES AND EQUIPMENT
Premises and equipment are summarized as follows (in thousands):

                                                           September 30,
                                                     -------------------------
                                                        2000             1999
Land                                                 $  3,091       $    3,687
Buildings and improvements                              8,146            5,714
Furniture, fixtures and equipment                       5,782            5,884
                                                     --------       ----------
                                                       17,019           15,285
Less accumulated depreciation                          (5,663)          (4,945)
                                                     --------       ----------
                                                     $ 11,356       $   10,340
                                                     ========       ==========

Included in buildings and improvements at September 30, 2000, is construction in
progress of approximately $2,000,000.

7.   DEPOSITS Deposits are summarized as follows (in thousands):

                                                September 30,
                                          ----------------------
                                             2000          1999
Non-interest bearing demand accounts      $ 18,708      $ 14,820
Interest bearing:
  NOW accounts                              36,708        33,008
  Passbook and regular savings              21,901        25,867
  Money funds accounts                      13,363         7,041
  Certificates of deposit                  219,218       222,348
                                          --------      --------
                                          $309,898      $303,084
                                          ========      ========

Certificates  of deposit of $100 and over  amounted  to $50,600  and  $48,900 at
September 30, 2000 and 1999, respectively.

Certificates of deposits at September 30, 2000 mature as follows (in thousands):

         Less than one year        $127,505
         1-2 years                   63,684
         2-3 years                   11,576
         3-4 years                    8,758
         4-5 years                    6,370
         Over 5 years                 1,325
                                   --------
         TOTAL                     $219,218
                                   ========

20
<PAGE>

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

At  September  30,  2000,  the Company was  indebted to the FHLB for $111,853 of
advances  bearing  interest at a weighted average rate of 6.66% which are due as
follows (in thousands):

         Year Ended
         September 30,
         2001            $ 69,388
         2002               7,794
         2003               8,185
         2004               2,961
         2005                 883
         Thereafter        22,642
                         --------
                         $111,853
                         ========

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

Included  in the table  above is a $5,000  advance  callable  in the year  ended
September 30, 2003. This advance has been included in the above table based upon
its call date rather than its stated due date of 2008.

At September  30,  1999,  the Company was indebted to the Federal Home Loan Bank
(FHLB) for $78,682 of  advances  bearing  interest at an average  rate of 5.34%,
$44,300 of which were due or  callable  in the year ended  September  30,  2000,
$1,700 in 2001, $16,518 in 2002, $8,340 in 2003 and the balance thereafter.

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

9. INCOME TAXES

The Company was  permitted  under the Internal  Revenue Code to deduct an annual
addition to an allowance for bad debts in determining taxable income, subject to
certain  limitations.  The Company had generally  used the percentage of taxable
income method to calculate  this addition.  This addition  differed from the bad
debt experience used for financial accounting purposes.  Bad debt deductions for
income tax purposes were  included in taxable  income of later years only if the
bad debt reserve was used  subsequently  for  purposes  other than to absorb bad
debt losses.  Because the Company did not intend to use the reserve for purposes
other than to absorb bad debt losses,  generally accepted accounting  principles
did not require that  deferred  income  taxes be provided on that portion  which
existed as of September  30,  1988.  At September  30, 2000,  retained  earnings
included approximately $4,400 representing such bad debt deductions for which no
deferred income taxes have been provided.

During  the  year  ended  September  30,  1996  legislation  was  enacted  which
eliminated  the use of the  percentage of taxable income method to calculate the
addition  to the  allowance  for bad debts for  income  tax  purposes.  This was
effective  October  1,  1996 with  respect  to the  Company.  In  addition,  the
legislation  required that the Company  include in taxable  income the allowance
established  subsequent  to  September  30,  1988.  This  allowance  amounted to
approximately  $2,800 at  September  30,  1997 and is being  included in taxable
income in annual  installments of approximately  $470 beginning October 1, 1998.
As the taxes with respect to this  allowance are paid they are added to deferred
tax assets and, therefore, the payment of these taxes should have no significant
effect upon the Company's results of operations.

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, 2000 and
1999 are as follows (in thousands):

                                                                              21
<PAGE>
                                                       2000      1999
Deferred tax assets:
  MSP expense                                        $   120   $   175
  Allowance for loan losses                              450       100
  Unrealized loss on securities available-for-sale       517       480
  Other                                                  230       170
                                                     -------   -------
     Total deferred tax assets                         1,317       925
                                                     -------   -------
Deferred tax liabilities:
  Deferred loan fees and costs, net                      470       425
  Tax over book depreciation                             160       130
  Dividends on FHLB stock                                610       490
  Other                                                   17       165
                                                     -------   -------
     Total deferred tax assets (liabilities)           1,257     1,210
                                                     -------   -------
     Net deferred tax assets (liabilities)           $    60   $  (285)
                                                     =======   =======

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

                                     Year Ended
                                    September 30,
                         ---------------------------------
                           2000         1999         1998
Currently payable        $2,236       $1,714       $2,142
Deferred                   (308)         175          (75)
                         ------       ------       ------
                         $1,928       $1,889       $2,067
                         ======       ======       ======

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):

                                                      Year Ended
                                                      September 30,
                                               --------------------------
                                                 2000      1999      1998
Taxes computed at statutory rates              $1,900    $1,835    $1,999
Increase in taxes due to miscellaneous items       28        54        68
                                               ------    ------    ------
                                               $1,928    $1,889    $2,067
                                               ======    ======    ======
Actual tax rate                                    35%       35%       35%
                                               ======    ======    ======

10. NON-INTEREST EXPENSE
Occupancy, equipment and data processing expenses consisted of the following:

                                                            Year Ended
                                                           September 30,
                                                     -------------------------
                                                       2000     1999     1998
Occupancy, including depreciation, insurance,
  rent, utilities, etc                               $  879   $  833   $  751
Equipment, including depreciation, telephone, etc     1,569    1,408    1,155
Data processing                                         637      563      471
                                                     ------   ------   ------
                                                     $3,085   $2,804   $2,377
                                                     ======   ======   ======

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

                                                 Year Ended
                                                September 30,
                                      ------------------------------
                                        2000        1999        1998
Stationery, printing and postage      $  650      $  696      $  635
Other                                  1,525       1,503       1,039
                                      ------      ------      ------
                                      $2,175      $2,199      $1,674
                                      ======      ======      ======

22
<PAGE>

11. OTHER COMPREHENSIVE INCOME
The  adjustment  to  determine  other  comprehensive  income as  included in the
consolidated  statements  of changes in  stockholders'  equity  consists  of the
following for the years ended September 30, 2000, 1999 and 1998:
<TABLE>
<CAPTION>
                                                                    Tax        Net of
                                                       Before-Tax  (Expense)    Tax
                                                          Amount    Credit     Amount
<S>                                                     <C>         <C>       <C>
2000
----
  Gross change in unrealized gain (loss) on
    securities available-for-sale                        $   (79)    $  26     $   (53)
  Less: Reclassification for gain included in net income      --        --          --
                                                         -------     -----     -------
  Net change in unrealized gain (loss) on
   securities available-for-sale                         $   (79)    $  26     $   (53)
                                                         =======     =====     =======
1999
----
  Gross change in unrealized gain (loss) on
   securities available-for-sale                         $(1,898)    $ 665     $(1,233)
  Less: Reclassification for gain included in net income      14        (5)          9
                                                         -------     -----     -------
  Net change in unrealized gain (loss) on
    securities available-for-sale                        $(1,912)    $ 670     $(1,242)
                                                         =======     =====     =======
1998
----
  Gross change in unrealized gain (loss) on
    securities available-for-sale                        $   111     $ (39)    $    72
  Less: Reclassification for gain included in net income     138       (48)         90
                                                         -------     -----     -------
  Net change in unrealized gain (loss) on
    securities available-for-sale                        $   (27)    $   9     $   (18)
                                                         =======     =====     =======
</TABLE>

12. 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.  Charges to operations under the plan
include  normal  cost.  There  were no  required  payments  in the  years  ended
September  30,  2000,  1999 and 1998.  The market value of the net assets of the
retirement fund exceeds the liability of the present value of accrued  benefits.
No  separate  information  regarding  the  Company's  share  of the  assets  and
liabilities of this plan is available.

13. 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, 2000, 1999 and
1998:

                                                      Year Ended
                                                      September 30,
                                                 ------------------------
                                                   2000    1999    1998
Weighted average number of common shares
  outstanding - used in computation of basic
  earnings per common share                       2,346   2,660   3,106
Effect of dilutive securities:
  Stock options                                      --      40     129
  MSP stock grants                                   20      27      31
                                                  -----   -----   -----
Weighted  average  number of common shares
  outstanding  plus effect of dilutive
  securities - used in  computation  of
  diluted  earnings per common share              2,366   2,727   3,266
                                                  =====   =====   =====
                                                                              23
<PAGE>

14. 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 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  principal  payable in annual
installments of at least $332,337.  The loan is  collateralized by the 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
Company  accounts for its ESOP in accordance  with  Statement of Position  93-6.
Accordingly,  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 $353, $436 and $617 for the years
ended  September  30,  2000,  1999 and 1998,  respectively.  The  following is a
summary of shares held in the ESOP Trust as of September 30, 2000 and 1999:

                                                               2000     1999

Shares released for allocation or committed to be released   178,306   146,101
Unreleased shares                                            142,167   175,401
                                                            --------  --------
Total ESOP shares                                            320,473   321,502
                                                            ========  ========
Market value of unreleased shares                           $  1,919  $  2,653
                                                            ========  ========

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, 1999 and 1998, the issuance of additional options were authorized.
The  exercise  prices are equal to the market price on the date of grant and 20%
of the options are generally exercisable within the first anniversary date after
the date of grant and 20% annually  thereafter.  All unexercised  options expire
ten years from the date of grant. No compensation  expense was recognized  under
the  Plans in 2000,  1999 or  1998.  The  following  table  summarizes  activity
relating to the Plans:

                                   Available               Weighted
                                      for      Options     Average
                                     Grant   Outstanding    Price

Balance, October 1, 1997            24,000     442,200      13.98
  Reserved                          34,000
  Granted                          (54,800)     54,800      19.88
  Exercised                             --      (1,350)     15.94
                                   -------     -------     ------
Balance, September 30, 1998          3,200     495,650      14.63
  Reserved                          30,682          --         --
  Granted                          (30,682)     30,682      16.34
                                   -------     -------     ------
Balance, September 30, 1999          3,200     526,332      14.73
  Reserved                              --          --         --
  Granted                               --          --         --
                                   -------     -------     ------
Balance, September 30, 2000          3,200     526,332     $14.73
                                   =======     =======     ======
Exercisable at September 30, 1998              181,147     $13.95
                                               =======     ======
Exercisable at September 30, 1999              278,007     $14.20
                                               =======     ======
Exercisable at September 30, 2000              380,993     $14.35
                                               =======     ======

24
<PAGE>
Options  exercisable at September 30, 2000 include  348,297 at $13.94 per share,
4,650 at $15.94  per  share,  21,920 at $19.88 per share and 6,126 at $16.38 per
share.  Outstanding  options at September 30, 2000 include 432,200 at $13.94 per
share with an average remaining contractual life of 5 years, 8,650 at $15.94 and
6 years, 54,800 at $19.88 and 7 years and 30,682 at $16.31 and 9 years.

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.  In the year ended  September  30, 1999 the
Board  of  Directors  authorized  restricted  grants  of 6,000  shares  to a new
executive  employee.  The recipients vest 20% annually as long as they remain as
Teche  Federal  Savings Bank  directors  or  employees.  The Company  recognizes
compensation  expense  ratably over the vesting  period and the cost of unvested
shares is reported  as unearned  compensation  as a reduction  of  stockholders'
equity.  Compensation expense related to the MSP was $349, $400 and $468 for the
years ended September 30, 2000, 1999 and 1998,  respectively.  There were 32,502
unvested shares at September 30, 2000.

The Company applies APB Opinion No. 25 and related interpretations in accounting
for its stock options. Accordingly, no compensation cost has been recognized. In
October  1995,  the  FASB  issued  SFAS No.  123,  "Accounting  for  Stock-Based
Compensation."  SFAS No. 123 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,  1999 and 1998 was $4.53 and  $5.22,  respectively.
Applying  SFAS No. 123 would result in pro forma net income and income per share
amounts as follows:

                                2000        1999        1998
Net income:
  As reported              $   3,660   $   3,509   $   3,813
  Pro forma                    3,285       3,115       3,428
Basic income per share:
  As reported              $    1.56   $    1.32   $    1.23
  Pro forma                     1.40        1.17        1.10
Diluted income per share
  As reported              $    1.55   $    1.29   $    1.17
  Pro forma                     1.39        1.16        1.06

The fair  value  of each  option  was  estimated  on the date of grant  using an
option-pricing  model with the following  weighted-average  assumptions used for
grants:  dividend yield of 2.5%;  expected  volatility of 20 percent;  risk-free
interest  rate of 5.5 to 6.0  percent;  and  expected  lives of 8 years  for all
options.

15.  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, 2000,  the Company had made various  commitments  to extend
credit  totaling  approximately  $10,695  including  $8,198  of the  undisbursed
portion of loans in process.  Most of these  commitments are at fixed rates. The
rates on fixed rate loan commitments range from 8.125% to 9.00% at September 30,
2000. The rates on variable rate loan commitments  range from 6.875% to 8.50% at
September  30,  2000.  As  of  September  30,  1999  such  commitments   totaled
approximately  $15,400 including $11,010 of the undisbursed  portion of loans in
process.

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

                                                                              25
<PAGE>
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.

16. 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.

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, 2000 and 1999 (in thousands):
<TABLE>
<CAPTION>
                                                        2000               1999
                                                ---------------------------------------
                                                           Estimated         Estimated
                                                Carrying    Fair    Carrying    Fair
                                                 Amount     Value    Amount     Value
<S>                                            <C>       <C>       <C>       <C>
Financial assets:
  Cash and certificates of deposit              $ 10,384  $ 10,384  $ 10,292  $ 10,292
  Investment securities                           57,209    57,242    63,460    63,460
  Loans                                          390,142   386,000   346,523   342,000
  Less: allowance for loan losses                  3,630     3,630     3,537     3,537
                                                 -------   -------   -------   -------
  Loans, net of allowance                        386,512   382,370   342,097   338,463
                                                 -------   -------   -------   -------
Financial liabilities:
  Deposits                                       309,896   308,400   303,084   301,600
  Advances from Federal Home Loan Bank           111,853   112,600    78,682    78,300
</TABLE>

17. 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):

                                           September 30, 2000
                           -----------------------------------------------------
                                                                   To be Well
                                                               Capitalized Under
                                                For Capital    Prompt Corrective
                                             Adequacy Purposes Action Provisions
                                             ----------------- -----------------
                                  Actual           Required         Required
                            --------------   ----------------- -----------------
                             Amount    %       Amount      %     Amount     %
Core capital                $43,140   9.1%    $18,982     4.0%  $28,473    6.1%
Tangible capital            $43,140   9.1%    $ 7,118     1.5%      N/A    N/A
Total Risk based capital    $46,588  16.8%    $22,147     8.0%  $27,683   10.0%
Leverage                    $43,140   9.1%        N/A     N/A   $23,727    5.0%

26
<PAGE>
                                           September 30, 1999
                           -----------------------------------------------------
                                                                   To be Well
                                                               Capitalized Under
                                                For Capital    Prompt Corrective
                                             Adequacy Purposes Action Provisions
                                             ----------------- -----------------
                                  Actual           Required         Required
                            --------------   ----------------- -----------------
                             Amount    %       Amount      %     Amount     %
Core capital                $41,092   9.5%    $17,353     4.0%  $25,982    6.0%
Tangible capital            $41,092   9.5%    $ 6,495     1.5%      N/A    N/A
Total Risk based capital    $44,128  18.2%    $19,403     8.0%  $24,255   10.0%
Leverage                    $41,092   9.5%        N/A     N/A   $21,652    5.0%

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, 2000 and 1999 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.

18. SUMMARIZED FINANCIAL INFORMATION OF TECHE HOLDING COMPANY
(PARENT COMPANY ONLY)

                     Balance Sheets
                                           2000      1999
Assets:
  Investment in subsidiary              $42,270   $40,277
  Cash held by subsidiary                 3,838     5,358
  Due from ESOP                           1,421     1,754
  Other                                   1,092     1,311
                                        -------   -------
                                        $48,621   $48,700
                                        =======   =======
Liabilities and stockholders' equity:
  Stockholders' equity                  $48,621   $48,700
                                        -------   -------
                                        $48,621   $48,700
                                        =======   =======


                             Statements of Earnings
<TABLE>
<CAPTION>

                                                          Year Ended September 30
                                                      -------------------------------
                                                         2000       1999       1998

<S>                                                   <C>       <C>          <C>
Dividends received from subsidiary                    $ 2,500   $ 17,000     $   --
Equity in earnings of subsidiary greater than
  (less than) dividends received                        1,152    (13,351)     3,871
Interest income from subsidiary                           109        237        264
Management fees and other expenses allocated
  to the Parent                                          (150)      (252)      (252)
Other income (expenses), net                               63       (195)       (38)
Income tax (expense) credit                               (14)        70        (32)
                                                      -------    -------    -------
Net income                                            $ 3,660    $ 3,509    $ 3,813
                                                      =======    =======    =======
</TABLE>

                                                                              27
<PAGE>

                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                    Year Ended September 30
                                                               ----------------------------------
                                                                  2000        1999          1998
<S>                                                           <C>         <C>          <C>
Cash Flows from Operating Activities                           $  2,484    $ 16,903     $  1,273
                                                               --------    --------     --------
Cash Flows from Investing Activities:
  Repayment of loan by subsidiary                                   333         332          364
                                                               --------    --------     --------
    Net cash provided by investing activities                       333         332          364
                                                               --------    --------     --------
Cash Flows from Financing Activities:
  Borrowings under note payable agreement                            --       6,767          347
  Repayment of borrowings under loan agreement                       --      (7,114)          --
  Dividends paid                                                 (1,171)     (1,338)      (1,592)
  Cash paid for purchase of common stock for treasury            (3,265)    (10,435)        (400)
                                                               --------    --------     --------
    Net cash used in financing activities                        (4,436)    (12,120)      (1,645)
                                                               --------    --------     --------
Net increase (decrease) in cash and cash equivalents             (1,619)      5,115           (8)
Cash and cash equivalents, beginning of year                      6,007         892          900
                                                               --------    --------     --------
Cash and cash equivalents, end of year                         $  4,388    $  6,007     $    892
                                                               ========    ========     ========
</TABLE>
Cash dividends of $2,500 and $17,000 were paid by Teche Federal  Savings Bank to
Teche  Holding  Company  in  the  years  ended  September  30,  2000  and  1999,
respectively.

Stockholder's 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, 2000 was approximately $14,700.

19.  NEW ACCOUNTING STANDARDS

In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" which establishes
accounting and reporting standards for derivative instruments, including certain
derivative  instruments  embedded in other contracts and for hedging activities.
Under  this  Statement,  a company  that  elects to apply  hedge  accounting  is
required to establish  at the  inception of the hedge the method it will use for
assessing  the  effectiveness  of the  hedging  derivative  and the  measurement
approach for  determining  the  ineffective  aspect of the hedge. At the date of
initial application,  a company may transfer any held-to-maturity  security into
the available-for-sale  category or the trading category. A company will then be
able  in  the   future   to   designate   a   security   transferred   into  the
available-for-sale  category as the hedged item. The unrealized  holding gain or
loss on a held-to-maturity  security transferred to another category at the date
of the initial  application will be reported in net income or accumulated  other
comprehensive  income  consistent  with the  requirements  of SFAS No. 115. Such
transfers  from the  held-to-maturity  category at the date of initial  adoption
will not call into question a company's  intent to hold other debt securities to
maturity in the future.

SFAS No.  133,  as  amended by SFAS No.  137,  applies  to all  entities  and is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The Company will adopt this accounting  standard on October 1, 2000 and does not
presently  believe that the adoption of it will have a  significant  effect upon
its  financial  position,  results of operations or cash flows as of the date of
adoption.

In September 2000, the Financial Accounting Standards Board issued SFAS No. 140,
"Accounting for Transfers and Serving of Financial Assets and Extinguishments of
Liabilities" which establishes  accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of liabilities. Under this
Statement,  after a transfer  of  financial  assets,  a company  recognizes  the
financial and serving  assets it controls and the  liabilities  it has incurred,
derecognizes   financial   assets  when  control  has  been   surrendered,   and
derecognizes  liabilities when extinguished.  This Statement provides consistent
standards for  distinguished  transfers of financial  assets that are sales from
transfers that are secured borrowings.

SFAS No. 140 is  generally  effective  for  periods  after March 31,  2001.  The
Company  will adopt this  accounting  standard on April 1, 2001.  The Company is
presently studying the effect this statement will have on the Company, but based
on a preliminary analysis,  does not believe that the adoption of it will have a
significant  effect on its  financial  position,  results of  operations or cash
flows as of the date of adoption.

28
<PAGE>
[GRAPHIC OMITTED]

Directors of Teche Holding Company
and Teche Federal Savings Bank
--------------------------------------------------------------------------------
W. Ross Little, Chairman,
  Teche Holding Company
Patrick O. Little, Chairman,
  Teche Federal Savings Bank
Mrs. Mary Coon Biggs
Donelson T. Caffery, Jr.
Henry L. Friedman
Mrs. Virginia Kyle Hine
Robert Judice, Jr. -
  Advisory
Dr. Thomas F. Kramer
W. Ross Little, Jr.
Robert E. Mouton
Christian L. Olivier, Jr.
Mrs. Maunetta B. Risher -
  Advisory

INDEPENDENT AUDITORS
--------------------------------

Deloitte & Touche, LLP
One Shell Square
701 Poydras Street
New Orleans, LA 70139

LEGAL COUNSEL
--------------------------------

Biggs, Trowbridge, Supple,
Cremaldi and Curet, L.L.P.
Lawless Building
Willow Street
Franklin, LA 70538

SPECIAL COUNSEL
--------------------------------

Malizia Spidi & Fisch, PC
1100 New York Avenue, N.W.,
Suite 340 West
Washington, D.C. 20005

REGISTRAR AND STOCK
TRANSFER AGENT
--------------------------------

Registrar and Transfer Company
10 Commerce Drive
Cranford, NJ 07016-3572
(800) 525-7686
Fax (908) 272-1006


Officers of Teche Federal Savings Bank
--------------------------------------

Patrick O. Little          Chairman, President/CEO
Robert E. Mouton           Executive Vice President
Scott Sutton               Senior Vice-President/
                              Operations
Faye L. Ibert              Senior Vice-President
J.L. Chauvin               Senior Vice-President/Treasurer
                              Chief Financial Officer
Darryl Broussard           Senior Vice-President
                              Chief Lending Officer
Stanley Plessela           Vice-President
D. Ross Landry             Vice-President
W. Ross Little, Jr.        Vice-President, Secretary
Angela Badeaux             Vice President
Glen Brown                 Vice-President
James P. Hamilton          Assistant Vice-President
Elaine G. Cockerham        Assistant Vice-President
Lydia B. Hebert            Assistant Vice-President
Carol Nini                 Assistant Vice-President
Eddie LeBlanc              Assistant Vice-President,
                              Internal Auditor
Brenda Henson              Assistant Vice-President
Karen Verret               Assistant Vice-President
Wendy Frederick            Assistant Vice-President
Tamaria B. Lecompte        Assistant Vice-President
Gwen Doucet                Assistant Vice-President
Lavergne Boutte            Assistant Vice-President
Vicky Landry               Assistant Vice-President
Mary Beth Brady            Assistant Vice-President
Irma Nell Bourque          Assistant Vice-President
Andy Magers                Assistant Vice-President
Beverly Adams              Assistant Vice-President
Gerry Mouton               Assistant Vice-President
Debbie Stevens             Assistant Vice-President
Dalie Eldridge             Assistant Vice-President
Bill Babineaux             Assistant Vice-President
Lucille Wattigny           Assistant Vice-President
Susan Simoneaux            Assistant Vice-President
Theresa Landry             Assistant Vice-President
Lynn Blanchard             Assistant Vice-President

                                                                              29