EXHIBIT 13
<PAGE>


Teche Holding Company
211 Willow Street
Franklin, LA 70538

Teche Federal Savings Bank Offices

Franklin
211 Willow Street
Franklin, LA 70538
Telephone: (337)828-3212
LA WATS (800)256-1500
FAX (337)828-0110
www.teche.com

Morgan City
1001 Seventh Street
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 70503
(337)364-5145

Lafayette
Broadmoor
5121 Johnston Street
Lafayette, LA 70560
(337)981-1887

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

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

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


<PAGE>



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

Houma

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

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

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

Thibodaux
Winn Dixie Market Place
375 North Canal Blvd
Thibodaux, LA 70302
(504)446-6707

<PAGE>


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                                             11

Consolidated Balance Sheets                                              12

Consolidated Statements of Income                                        13

Consolidated Statements of Stockholders' Equity                          14

Consolidated Statements of Cash Flows                                    15

Notes to Consolidated Financial Statements                               17

Directors and Officers                                                   30

General Information                                                      30

<PAGE>
                                     [LOGO]
                               ------------------
                                 TECHE HOLDING
                                    COMPANY
                               ------------------
President's Message
--------------------------------------------------------------------------------
Dear Fellow Shareholders,

        1999 was a year of growth in several  important  areas of Teche  Holding
Company and our wholly  owned  subsidiary,  Teche  Federal  Savings  Bank.  Some
highlights in our growth include:

          o    Growth in earnings per share was over 10% in 1999. Since 1996 the
               annual rate of growth in earnings per share has been 8.4%.

          o    Non-interest  income  accounts  for  24% of  total  revenue  (net
               interest income plus  noninterest  income),  up from 20% in 1998,
               12.8% in 1997 and 6.5% in 1996.

          o    We  experienced  growth in checking  accounts and  consumer  loan
               balances.

          o    We originated over $105 million in loans.

          o    We opened a new office in Lafayette in the Broadmoor  area.  This
               follows three new offices opened in the Lafourche/Terrebonne area
               in 1998.  We now  service  our six  parish  area with 13  offices
               including two supermarket branches.

        Net interest income continues to be strong. During a period of shrinking
margins in the  banking  industry,  the net  interest  margin at Teche  remained
stable.  Our  challenges,  however,  are to continue  our growth in net interest
income while reducing  expenses and managing the risk  associated with increased
interest rates.

        During  1999,  Teche  Holding  Company  continued  its stock  repurchase
program,  consistent with sound financial management policies. This results in a
more  efficient  use of the  assets  of  the  Company  and a  better  return  on
investment for our stockholders.

        Finally, as part of our continued dedication to providing convenient and
efficient service to our customers,  the Franklin  drive-thru branch and the New
Iberia retail/operations and administrative center are scheduled to break ground
for construction in early 2000.

        Our staff  has been  diligently  preparing  for the Year  2000.  We have
inventoried  hardware,  software  and other items in this  preparation.  We look
forward  to the new  year and will be open  and  ready  to  continue  conducting
business on Monday, January 3, 2000.

        We will  continue  to sharpen  our focus on both the  opportunities  and
challenges of banking in the new  millennium.  As the 1990's draw to a close, we
pledge  to  continue  to  build  value  for  our  stockholders  and  to  provide
exceptional service to our customers.

        Wishing you a Merry Christmas and a prosperous New Year!

                                                       Sincerely,




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

                                                                               1
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL INFORMATION (Dollars in thousands)

                                                       At or for the Year Ended September 30,
                                       -----------------------------------------------------------------
                                             1999         1998         1997         1996         1995

<S>                                    <C>            <C>          <C>          <C>          <C>
Assets ..............................   $   434,265    $ 408,823    $ 404,097    $ 379,590    $ 323,852
Loans Receivable, Net ...............       342,986      345,172      346,875      316,216      257,869
Securities-Available for Sale .......        63,460       36,769       37,854       44,496        5,413
Securities-Held to Maturity .........          --           --           --           --         44,209
Cash and cash equivalents ...........        10,292       10,680        5,868        7,072        6,400
Deposits ............................       303,084      279,265      280,302      254,723      233,805
FHLB Advances .......................        78,682       67,721       65,398       66,900       24,200
Stockholders' Equity ................        48,700       52,527       54,359       52,282       61,908

Summary of Operations
Interest Income .....................   $    30,275    $  30,357    $  29,788    $  26,591    $  23,380
Interest Expense ....................        16,356       16,712       16,681       14,003       12,053
                                        -----------    ---------    ---------    ---------    ---------
Net Interest Income .................        13,919       13,645       13,107       12,588       11,327
Provision for Loan Losses ...........           150          180          240          300          360
                                        -----------    ---------    ---------    ---------    ---------
 Net Interest Income after
Provision for Loan Losses ...........        13,769       13,465       12,867       12,288       10,967
Non-Interest Income .................         4,452        3,475        2,590        1,852        1,029
SAIF Special Assessment .............          --           --           --          1,824         --
Non-Interest Expenses ...............        12,837       11,198        9,867        8,616        6,405
                                        -----------    ---------    ---------    ---------    ---------
 Income Before Gains(Losses) on Sales
  of Securities and Income Taxes ....         5,384        5,742        5,590        3,700        5,591
Gain (Loss)on Sale of Securities ....            14          138          274           91         (819)
Income Tax Expense ..................         1,889        2,067        1,997        1,270        1,635
                                        -----------    ---------    ---------    ---------    ---------
Net Income
  Actual ............................   $     3,509    $   3,813    $   3,867    $   2,521    $   3,137
                                        ===========    =========    =========    =========    =========

  Before Special Assessment .........                                            $   3,725
                                                                                 =========

SELECTED FINANCIAL RATIOS
Ratio of Equity to Assets ...........            11.2%      12.8%        13.5%        13.8%        19.1%
Book Value/Common Share .............   $        17.79 $   16.97    $   15.81    $   14.76    $   14.63
Dividends declared per Share ........   $         0.50 $    0.50    $    0.50    $    0.50    $    0.25
Basic Income per Common Share (1)
  Actual ............................   $         1.32 $    1.23    $    1.26    $    0.70    $    0.46
  Before SAIF Special Assessment ....                                            $    1.03
Diluted Income per Common Share (1)
  Actual ............................   $         1.29 $    1.17    $    1.23    $    0.70    $    0.46
  Before SAIF Special Assessment ....                                            $    1.03
Annualized Return on Average Assets
  Actual ............................             0.84%     0.94%        0.99%        0.72%        1.04%
  Before SAIF Special Assessment ....                                                 1.07%
Annualized Return on Average Equity
  Actual ............................             6.90%     6.79%        7.34%        4.29%        7.87%
  Before SAIF Special Assessment ....                                                 6.33%
Net Interest Margin .................             3.46%     3.45%        3.42%        3.68%        3.84%
Non-Interest Expense/Average Assets
  Actual ............................             3.06%     2.75%        2.52%        3.00%        2.12%
  Before SAIF Special Assessment ....                                                 2.48%
Non-Interest Income/Average Assets ..             1.06%     0.85%        0.66%        0.53%        0.34%
Non Performing Loans/Loans (2) ......             0.24%     0.21%        0.32%        0.17%        0.26%
Allowance for Loan Losses/Loans (2) .             1.02%     1.01%        0.96%        1.00%        1.14%
Dividend Payout
  Actual ............................            37.88%    40.65%       39.68%       71.43%       54.35%
  Before SAIF Special Assessment ....                                                48.54%
</TABLE>

(1) There were no shares outstanding prior to April 17, 1995.
(2) 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, subject to the Board of Directors' fiduciary duties,
to remain an independent  community savings bank serving the local banking needs
of its primary  market area,  which  presently  includes  thirteen  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>
                                                 1999                                1998
                                 ------------------------------------------------------------------------
                                   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                   $7,420   $7,499   $7,564   $7,792   $7,541   $7,595   $7,630   $7,591
Interest Expense                   4,146    3,999    4,056    4,155    4,285    4,160    4,120    4,147
Net Interest Income                3,274    3,500    3,508    3,637    3,256    3,435    3,510    3,444
Provision for Loan Losses             45       45       30       30       45       45       45       45
Income Before Income Taxes         1,370    1,312    1,372    1,344    1,404    1,517    1,592    1,367
Net Income                           890      853      892      874      913      996    1,014      890
Basic Income Per Common Share       0.32     0.32     0.34     0.34     0.30     0.32     0.33     0.29
Diluted Income Per Common Share     0.32     0.31     0.33     0.34     0.28     0.30     0.31     0.28
</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 year period.
<TABLE>
<CAPTION>
        Quarter ended                  Sales Price        Period End Close  Cash Dividend Declared      Date Declared
        -------------                  -----------        ----------------  ----------------------      -------------
                                  High           Low
                                  ----           ---
<S>                             <C>           <C>             <C>                  <C>                 <C>
     December 31, 1997           $24.000       $20.000         $22.250              $0.125              December 17, 1997
     March 31, 1998              $22.875       $20.000         $22.750              $0.125              February 18, 1998
     June 30, 1998               $22.375       $18.125         $19.625              $0.125              May 19, 1998
     September 30, 1998          $20.000       $14.375         $15.125              $0.125              August 19, 1998
     December 31, 1998           $15.750       $13.000         $15.375              $0.125              November 18, 1999
     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
</TABLE>

According  to the  records  of the  Company's  transfer  agent,  there  were 596
registered  stockholders  of record at November 22,  1999.  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, 1999 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  rates,  risks  associated  with opening new  branches,  the
ability to control costs and expenses,  and general economic  conditions.  Teche
Holding 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 operation are primarily dependent on the
Bank's net interest income, or the difference between the interest income earned
on its loan and  securities  portfolio,  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. The Bank
supplements its home lending  operations with the origination of home equity and
other  consumer  types of 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>

Teche Federal  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  and  consumer  loans and the  investment  of excess  liquidity  in
purchased  loans,  adjustable rate  securities  with  relatively  short terms to
maturity.  Furthermore, Teche Federal 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, 1999, the weighted  average term to repricing
of Teche  Federal's  ARM  loan  and  mortgage-backed  securities  portfolio  was
approximately 22 months. In contrast,  $150.2 million of the Bank's  certificate
accounts and $80.7 million of the Bank's regular  deposit  accounts  (e.g.  NOW,
money market, savings) out of $303.1 million of total deposits mature or reprice
within one year or less. Based on past experience,  however, management believes
that much of the Bank's deposits will remain at the Bank. Furthermore,  the Bank
has  approximately  $44.3  million in  short-term  advances and $17.4 million in
adjustable rate securities.

Management  believes that it has adequate  capital to accept a certain degree of
interest rate risk. In accepting some interest rate risk, the Bank has been able
to increase its net interest  income in the low interest rate  environment  that
has existed  during  earlier  years.  Should  interest  rates  rise,  management
believes  the Bank's  capital  position  will enable it to  withstand a negative
impact on earnings while the Bank adds higher yielding assets.

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,
                                                        1999 vs 1998                               1998 vs 1997
                                            ----------------------------------------------------------------------------------------
                                                 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)                            $ 691        $   (97)         $ 594         $ (87)        $(317)        $(404)
   Loans receivable, net                      (722)          (209)          (931)        1,066          (137)          929
   Other interest-earning assets (2)           291            (36)           255           (23)           67            44
                                             -----        -------          -----         -----         -----         -----
Total Interest Earning Assets                  260           (342)           (82)          956          (387)          569
                                             -----        -------          -----         -----         -----         -----
Interest-bearing liabilities
   Deposits                                    555           (899)          (344)          185          (307)         (122)
FHLB advances and other borrowings             117           (129)           (12)          204           (51)          153
                                             -----        -------          -----         -----         -----         -----
Total interest-bearing liabilities             672         (1,028)          (356)          389          (358)           31
                                             -----        -------          -----         -----         -----         -----
Net change in net interest income            $(412)        $  686          $ 274        $  567         $ (29)        $ 538
                                             =====         ======          =====        ======         =====         =====
</TABLE>
(1)  Includes investment securities available for sale
(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  average  balance sheet and reflects the average yield
on assets and average  cost of  liabilities  for the periods  indicated  and the
average  yields  earned and rates  paid.  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,
                                 ---------------------------------------------------------------------------------------------------
                                               1999                          1998                           1997
                                 -----------------------------   ----------------------------   ------------------------------------
                                                       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)             $ 54,139    $ 3,276   6.05%     $ 42,769  $ 2,682    6.27%   $ 44,038    $ 3,086   7.01%
  Loans receivable (2) (3)         340,540     26,539   7.79%      349,769   27,470    7.85%    336,509     26,541   7.89%
   Other Interest-earning
    assets(4)                        7,527        460   6.11%        2,475      205    8.28%      3,056        161   5.27%
                                  --------    -------             --------  -------            --------    -------
   Total interest-earning assets   402,206    $30,275   7.53%      395,013  $30,357    7.69%    383,603    $29,788   7.77%
                                              =======             ========  =======                        =======
  Non-interest earning assets       17,232                          12,436                        8,464
                                    ------                          ------                        -----
 Total assets                     $419,438                        $407,449                     $392,067
                                  ========                        ========                     ========
Liabilities and Equity
 Interest-bearing Liabilities
  NOW accounts                    $ 25,198     $  473   1.88%     $ 22,545   $  397    1.76%   $ 20,244     $  357   1.76%
  Statement & regular
   savings accounts                 26,553        582   2.19%       25,861      663    2.56%     25,160        655   2.60%
  Money funds accounts               8,343        307   3.68%        9,342      343    3.67%      9,696        346   3.57%
  Certificates of Deposit          215,157     11,206   5.21%      207,722   11,509    5.54%    206,273     11,676   5.66%
                                  --------    -------             --------  -------            --------    -------
    Total Deposits                 275,251     12,568   4.57%      265,470   12,912    4.86%    261,373     13,034   4.99%
  FHLB advances and other           70,401      3,788   5.38%       68,306    3,800    5.56%     64,685      3,647   5.64%
                                  --------    -------             --------  -------            --------    -------
 Total interest-bearing
  liabilities                      345,652    $16,356   4.73%      333,776  $16,712    5.01%    326,058    $16,681   5.12%
                                              =======                       =======                        =======
  Non-interest-bearing
  liabilities                       22,954                          17,488                       13,351
                                   -------                         -------                      -------
Total liabilities                  368,606                         351,264                      339,409
Stockholders' Equity                50,832                          56,185                       52,658
                                   -------                         -------                      -------
Total liabilities and
 Stockholders' Equity             $419,438                        $407,449                     $392,067
                                  ========                        ========                     ========
Net interest income/interest
 rate spread (5)                              $13,919   2.80%               $13,645    2.68%               $13,107   2.65%
                                              =======                       =======                        =======
Net interest margin (6)                                 3.46%                          3.45%                         3.42%
Interest-earning assets/
  Interest bearing liabilities                        116.36%                        118.35%                       117.65%
</TABLE>

(1)  Includes  securities  available  for sale  and  unamortized  discounts  and
     premiums 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  $102,000  in 1999,
     $86,000 in 1998 and $106,000 in 1997.
(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, 1998 to September 30, 1999

General.  Total assets  increased  $25.4  million,  or 6.2% to $434.3 million at
September  30, 1999 from $ 408.8  million at September  30, 1998, as a result of
continued  branch  expansion and the purchase of property for  construction of a
central operations center.

Loans Receivable, Net. The Bank's net loans receivable decreased $2.2 million or
0.6% to $343.0  million from $345.2  million at September 30, 1998 due primarily
to reduced loan volume and  repayments.  Of all real estate loans  originated in
fiscal 1999, approximately 46% had adjustable rates.

Securities.  Securities  available for sale increased  $26.7 million,  as excess
liquidity  was invested  during the year in fixed and  adjustable  rate mortgage
backed securities and collateralized mortgage obligations.

Deposits. The Bank's deposits, after interest credited,  increased $23.8 million
or 8.5% to $ 303.1  million  at  September  30,  1999  from  $279.3  million  at
September 30, 1998.

Advances From FHLB.  Advances from the Federal Home Loan Bank of Dallas ("FHLB")
increased  $11.0  million,  or 16.2% to $78.7 million at September 30, 1999 from
$67.7 million at September 30, 1998, primarily due to the purchase of Investment
Securities.

Stockholders' Equity.  Stockholders' equity decreased $3.8 million, or 7.3% from
$52.5 million at September 30, 1998 to $48.7 million at September 30, 1999,  due
primarily to the  repurchase  of common  stock for the treasury  pursuant to the
Company's stock repurchase program.

Comparison of Operating  Results for Years ended  September  30, 1999,  1998 and
1997.

Analysis of Net Income

General.  The Bank  reported net income of $3.5  million,  $3.8 million and $3.9
million for fiscal 1999, 1998 and 1997. The decreases of $304,000 or 8.0% during
fiscal  1999 and  $59,000  or 1.4%  during  fiscal  1998 were  primarily  due to
increased non interest expense as well as reduced gains on sales of securities.

Interest  Income.  Interest income amounted to $30.3 million,  $30.4 million and
$29.8 million for the years ended 1999, 1998 and 1997, respectively. The $82,000
or 0.3%  decrease  in  fiscal  1999 was  primarily  due to  decreased  yields on
interest  earning  assets,  offset  somewhat by  increased  average  balances of
securities.  The $0.6 million or 1.9%  increase in fiscal 1998 was primarily due
to increased  average home equity loan  balances,  offset  somewhat by decreased
yields on mortgage loans and securities.

Interest  Expense.  Interest  expense  totaled $16.4 million,  $16.7 million and
$16.7 million for the years ended September  1999, 1998 and 1997,  respectively.
Interest expense remained  relatively stable with an increase in average deposit
balances somewhat offset by a general decrease in rates paid on deposits.

Net  Interest  Income.  Net interest  income  amounted to $13.9  million,  $13.6
million and $13.1 million for the years ended September 30, 1999, 1998 and 1997.
The $0.3  million,  or 2.0%  increase  in fiscal  1999 was  primarily  due to an
increase in average home equity  balances.  The increase of $0.5 million or 4.1%
from fiscal 1997 to fiscal 1998 was  primarily  due to  increased  average  loan
balances.

Provision for Loan Losses. The Bank provided $150,000,  $180,000 and $240,000 to
the reserve for loan losses for the years ended  September  30,  1999,  1998 and
1997, respectively.  The allowance for loan losses was $3,515,000 at 1998 fiscal
year end and  $3,537,000 at 1999 fiscal year end. The decrease in the provisions
for loan losses in 1999 and 1998  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,
1999,  1998 and 1997  amounted to $4.5  million,  $3.5  million and $2.6 million
respectively.  The increases in both fiscal 1999 and fiscal 1998 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 $12.8 million, $11.2 million and $9.9 million during the years
ended  September 30, 1999,  1998 and 1997. The increases in both fiscal 1999 and
1998 were primarily 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 due  primarily  to the  expansion  of the branch
network. Other operating expenses increased from $1.6 million to $1.7 million to
$2.1  million  for  the  years  ended   September  30,  1997,   1998  and  1999,
respectively.

In the first quarter of 2000, the Bank expects to break ground on a $3.8 million
retail banking,  operations and administrative center in New Iberia as well as a
new drive-thru  branch office in Franklin.  When completed,  the facility in New
Iberia will house all  administrative  offices  and  consolidate  various  other
departments  of the bank.  The cost of the  facility  and the new branch will be
amortized as a charge against earnings over approximately 35 years.

On January 1, 1996,  Teche became  subject to the  Louisiana  Shares Tax and the
Louisiana  Franchise Tax. This amounted to an expense of $680,000,  $541,000 and
$493,000 in the years ended September 30, 1999, 1998 and 1997, respectively.

Gain on Sale of  Securities.  In the years ended  September  30, 1999,  1998 and
1997, gains on the sale of securities amounted to $14,000, $274,000 and $91,000,
respectively.

Income Tax Expense.  For the years ended  September 30, 1999, 1998 and 1997, the
Bank  incurred  income  tax  expense of $1.9,  $2.1  million  and $2.0  million,
respectively.  The varying  amounts were caused  primarily by the varied pre-tax
income of the Bank.

Year 2000 Readiness

The Year 2000 problem  exists  because many computer  programs use only the last
two  digits to refer to a year.  This  convention  could  affect  date-sensitive
calculations  that treat "00" as the year 1900,  rather than 2000. An additional
issue is that 1900 was not a leap  year,  whereas  the year 2000 is.  Therefore,
some programs may not properly provide for February 29, 2000. This anomaly could
result in miscalculations  when processing critical  date-sensitive  information
after December 31, 1999.

The following  discussion of the  implications  of the Year 2000 problem for the
Bank, contains numerous forward looking statements based on inherently uncertain
information.  The cost of the  project  and the date on which the Bank  plans to
complete the internal Year 2000  modifications  are based on  management's  best
estimates,  which are derived utilizing a number of assumptions of future events
including the continued  availability of internal and external resources,  third
party modifications and other factors.  However,  there can be no guarantee that
these  statements  will be achieved and actual  results could differ.  Moreover,
although management believes it will be able to make the necessary modifications
in advance,  there can be no guarantee  that failure to modify the systems would
not have a material adverse effect on the Bank.

Year 2000 issues expose the Company to a number of risks,  any one of which,  if
realized,  could have a material adverse effect on the Bank's business,  results
of operations or financial condition.  These risks include the possibility that,
to the extent certain vendors fail to adequately  address Year 2000 issues,  the
Bank may suffer  disruptions  in important  services on which the Bank  depends,
such as  telecommunications,  electrical  power, and data processing.  Year 2000
issues could affect the Bank's liquidity if customer withdrawals in anticipation
of the Year 2000 are greater than  expected or if the Bank's  lenders are unable
to  provide  the Bank with funds  when and as needed by the  Company.  Year 2000
issues also create  additional credit risk to the Company insofar as the failure
of the Company's  customers and the  counterparties  to adequately  address Year
2000  issues  could   increase  the   likelihood   that  these   customers   and
counterparties  become  delinquent or default on the obligations to the Bank. In
addition to increasing the Bank's risk exposure to problem loans,  credit losses
and liquidity  problems,  Year 2000 issues expose the Bank to increased  risk of
litigation losses and expenses  relating to the foregoing.  There are other Year
2000 risks besides those  described  above that may impact the Bank's  business,
results of operations and financial condition.

The Bank places a high degree of reliance on computer  systems of third parties,
such as customers, suppliers, and other financial and governmental institutions.
Although  the Bank is  assessing  the  readiness  of  these  third  parties  and
preparing contingency plans, there can be no guarantee that the failure of these
third  parties to modify their systems in advance of December 31, 1999 would not
have a material adverse effect on the Bank.
8
<PAGE>

The Bank has a Year 2000 committee that is addressing potential year 2000 issues
with its internal and external software and computer systems.  The committee has
assessed the Bank's  automated  systems and has contacted third party vendors to
provide appropriate  assurances regarding their ability to address any Year 2000
issues.

Most of the critical  data  processing  of the Bank is provided by a third party
national service bureau. This service bureau began renovations to their software
applications  in the early 1990's to address Year 2000 issues.  The Bank and its
service bureau completed internal core system testing in December 1998. The Bank
is currently testing its internal systems compatibility with that of the service
bureau in live data tests.

Total costs associated with required  modifications to existing systems have not
been  material  to the  Company's  financial  position.  No  additional  outside
personnel  are  expected  to be needed to resolve  any Year 2000  issues at this
time.  The  estimated  costs to replace some  hardware and software  systems was
approximately  $250,000,  some of which was capitalized and is being depreciated
over approximately  three years. The Bank does not separately track the internal
costs incurred for the Year 2000 project  because such costs are principally the
related payroll costs.

The Bank has  contacted all material  customers,  vendors,  and  non-information
technology  suppliers  (i.e.  utility  systems,  telephone  systems and security
systems)  regarding  their  Year  2000  state  of  readiness.  Testing  has been
completed on  significant  vendor  applications,  except the  utilities as noted
below.  The Bank has developed and tested  contingency  plans and  procedures if
unforseen Year 2000 problems occur.

We are unable to test the Year 2000  readiness of our  significant  suppliers of
utilities.  We are  relying  on the  utility  companies'  internal  testing  and
representations  to provide the required  services  that drive our data systems.
Any failure of the  utilities to  adequately  address the Year 2000 issues could
result in the Bank being unable to service its customers on a timely basis.  The
Bank has  installed a  generator  at a central  location  which  should  provide
electric power in the event any local electric utilities experience problems.

As a practical matter, mortgage, consumer and commercial loan customers were not
contacted  regarding their Year 2000  readiness.  It was deemed to be beyond the
scope of our testing  parameters to contact these  borrowers.  Further,  most of
these are individuals with adequate collateral for their loans.

The most likely worst case Year 2000 scenario is that data  processing  would be
temporarily  interrupted  (as much as 2 to 3 days) which would increase the time
necessary  to  service  customers  and may  prevent  some  customers  from being
serviced  until the  problem is  corrected.  The Bank  believes  that  completed
modifications  to its  internal  systems  will allow it to be ready for the Year
2000.  However,  factors  outside of the Bank's control and  unexpected  service
bureau and other third party problems could impact the Bank's ability to process
data which could have a significant  adverse  impact on the financial  condition
and results of operations of the Bank.

Despite the best efforts of management to address this issue, the vast number of
external entities that have direct and indirect business  relationships with the
Bank, such as customers,  vendors, payment systems providers and other financial
institutions, makes it impossible to assure that a failure to achieve compliance
by one or more of these entities would not have a material adverse impact on the
operations 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, 1999 was four percent.  The Bank's average liquidity ratio was approximately
14.0 % during  September  1999. 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 investment securities. The Bank also borrows funds from
time to time from 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

                                                                               9
<PAGE>

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  advances  and the ability to borrow  against  mortgage-backed  and
other  securities.  On September 30, 1999, the Bank had total FHLB borrowings of
$78.7 million, or 18.1% of the Bank's assets.

Management  believes  the Bank has  sufficient  resources  available to meet its
foreseeable  funding   requirements.   At  September  30,  1999,  the  Bank  had
outstanding  loan  commitments of $15.4  million,  and  certificates  of deposit
scheduled  to mature  within one year of $150.2  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 1.50 percent of total adjusted assets;
minimum  core  capital  equal to 4.00  percent  of total  adjusted  assets;  and
risk-based capital equal to 8.0% of total risk-weighted assets. At September 30,
1999, Teche Federal exceeded all regulatory capital requirements. See Note 18 to
the Consolidated Financial Statements.

Impact of Inflation and Changing Prices

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

10
<PAGE>
Deloitte &
    Touche
------------   -----------------------------------------------------------------
      [LOGO]   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,  1999 and 1998,  and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  1999.  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  generally   accepted  auditing
standards.  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  signficant  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,  1999  and  1998,  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
September 30, 1999 in conformity with generally accepted accounting principles.


DELOITTE & TOUCHE LLP
November 9, 1999


---------------
Deloitte Touche
Tohmatsu
---------------

                                                                              11
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1999 AND 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>

                                                                                               1999                1998
<S>                                                                                         <C>                 <C>
ASSETS
Cash and cash equivalents                                                                    $ 10,292            $ 10,680
Certificates of deposit                                                                            --                 658
Securities available-for-sale, at estimated market
  value (amortized cost of $64,832 in 1999 and $36,239 in 1998)                                63,460              36,769
Loans receivable, net of allowance for loan losses of
  $3,537 in 1999 and $3,515 in 1998                                                           342,986             345,172
Accrued interest receivable                                                                     2,159               2,065
Investment in Federal Home Loan Bank stock, at cost                                             4,229               3,884
Real estate owned, net                                                                            178                 331
Prepaid expenses and other assets                                                                 621                 500
Premises and equipment, at cost, less accumulated depreciation                                 10,340               8,764
                                                                                             --------            --------
TOTAL ASSETS                                                                                 $434,265            $408,823
                                                                                             ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits                                                                                     $303,084            $279,265
Advances from Federal Home Loan Bank                                                           78,682              67,721
Borrowings for common stock repurchase                                                              -               5,178
Advance payments by borrowers for taxes and insurance                                           1,578               1,644
Accrued interest payable                                                                          432                 485
Accounts payable and other liabilities                                                          1,504               1,223
Deferred income taxes                                                                             285                 780
                                                                                             --------            --------
      Total liabilities                                                                       385,565             356,296

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                                                                   42,153              42,037
  Retained earnings                                                                            30,928              28,757
  Unearned ESOP shares                                                                         (1,754)             (2,086)
  Unearned compensation - Management Stock Plan                                                  (390)               (790)
  Treasury stock - 1,496,000 and 1,138,000 shares, at cost                                    (21,387)            (15,783)
  Unrealized gain (loss) on securities available-for-sale, net
    of deferred income taxes                                                                     (892)                350
                                                                                             --------            --------
      Total stockholders' equity                                                               48,700              52,527
                                                                                             --------            --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                   $434,265            $408,823
                                                                                             ========            ========
</TABLE>

See notes to consolidated financial statements.

12
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>

                                                                                     1999           1998            1997
<S>                                                                                <C>            <C>             <C>
INTEREST INCOME:
  Interest and fees on loans                                                        $26,539        $27,470         $26,541
  Interest and dividends on securities                                                3,276          2,682           3,086
  Other interest income                                                                 460            205             161
                                                                                    -------        -------         -------
                                                                                     30,275         30,357          29,788
                                                                                    -------        -------         -------
INTEREST EXPENSE:
  Deposits                                                                           12,568         12,912          13,034
  Advances from Federal Home Loan Bank                                                3,676          3,800           3,647
  Other borrowed money                                                                  112             --              --
                                                                                    -------        -------         -------
                                                                                     16,356         16,712          16,681
                                                                                    -------        -------         -------
NET INTEREST INCOME                                                                  13,919         13,645          13,107
PROVISION FOR LOAN LOSSES                                                               150            180             240
                                                                                    -------        -------         -------
NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                                                    13,769         13,465          12,867
                                                                                    -------        -------         -------
NON-INTEREST INCOME:
  Service charges                                                                     4,246          3,033           2,278
  Gain on sale of real estate owned                                                      79             13              94
  Other income                                                                          127            429             218
                                                                                    -------        -------         -------
    Total non-interest income                                                         4,452          3,475           2,590
                                                                                    -------        -------         -------
GAIN ON SALE OF SECURITIES                                                               14            138             274
                                                                                    -------        -------         -------
NON-INTEREST EXPENSE:
  Compensation and employee benefits                                                  5,955          5,697           5,093
  Occupancy, equipment and data processing expense                                    2,804          2,377           1,819
  Marketing                                                                           1,031            737             602
  SAIF deposit insurance premiums                                                       168            172             225
  Louisiana shares tax                                                                  680            541             493
  Other operating expenses                                                            2,199          1,674           1,635
                                                                                    -------        -------         -------
    Total non-interest expense                                                       12,837         11,198           9,867
                                                                                    -------        -------         -------
INCOME BEFORE INCOME TAXES                                                            5,398          5,880           5,864
INCOME TAXES                                                                          1,889          2,067           1,997
                                                                                    -------        -------         -------
NET INCOME                                                                          $ 3,509        $ 3,813         $ 3,867
                                                                                    =======        =======         =======
BASIC INCOME PER COMMON SHARE                                                        $ 1.32         $ 1.23          $ 1.26
                                                                                     ======         ======          ======
DILUTED INCOME PER COMMON SHARE                                                      $ 1.29         $ 1.17          $ 1.23
                                                                                     ======         ======          ======
</TABLE>

See notes to consolidated financial statements.
                                                                              13
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
(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, 1996            $42     $41,436    $24,250    $(2,751)    $(1,900)     $ (9,149)     $ 354      $52,282
Contribution to ESOP                            206                   332                                               538
Amortization of MSP                                                               642                                   642
Purchase of common stock
  for treasury                                                                               (1,403)                 (1,403)
Dividends declared -
  $.50 per share                                        (1,581)                                                      (1,581)
Comprehensive income:
  Net income                                             3,867                                                        3,867
  Change in unrealized gains on
    securities available-for-sale, net                                                                      14           14
                                                                                                                    -------
   Total comprehensive income                                                                                         3,881
                                    ---     -------    -------    -------     -------      --------      -----      -------
BALANCE, September 30, 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
                                    ===     =======    =======    =======     =======      ========     ======      =======
</TABLE>

See notes to consolidated financial statements.

14
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                     1999            1998            1997
<S>                                                                                <C>            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                        $ 3,509        $ 3,813         $ 3,867
  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                                     (73)            12            (207)
    Provision for loan losses                                                           150            180             240
    ESOP expense                                                                        436            617             509
    MSP expense                                                                         400            468             642
    Deferred income taxes (credit)                                                      175            (75)            797
    Gain on sale of securities                                                          (14)          (138)           (274)
    Gain on sale of real estate owned                                                   (79)           (13)            (94)
    Depreciation                                                                        926            704             513
    Accretion of deferred loan fees and other                                            (3)           (86)           (106)
    Accretion of discount on loans                                                     (325)          (272)           (212)
    Change in accrued interest receivable                                               (94)           (14)           (183)
    Change in prepaid expenses and other assets                                        (121)             1             282
    Change in accrued interest payable                                                  (53)           176              26
    Change in accounts payable and other liabilities                                    281            100            (472)
    SAIF special assessment payable                                                      --             --          (1,824)
    Other - net                                                                         244           (174)             96
                                                                                    -------        -------         -------
      Net cash provided by operating activities                                       5,359          5,299           3,600
                                                                                    -------        -------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities of investment securities available-for-sale                   20          3,000           7,550
  Proceeds from sale of investment securities available-for-sale                        484            413             881
  Purchase of investment securities available-for-sale                              (40,908)       (12,856)         (8,389)
  Principal repayments on mortgaged-backed securities available-for-sale             11,888         10,627           7,102
  Net (increase) decrease in certificates of deposit                                    658            (24)            280
  Net loan repayments (origination)                                                   2,364          1,881         (30,581)
  Investment in FHLB stock                                                             (345)            43            (224)
  Other                                                                                  --             --              40
  Purchase of premises and equipment                                                 (2,502)        (3,114)         (2,375)
                                                                                    -------        -------         -------
      Net cash used in investing activities                                         (28,341)           (30)        (25,716)
                                                                                    -------        -------         -------
</TABLE>


                                                                     (Continued)

                                                                              15
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                      1999           1998            1997

<S>                                                                               <C>            <C>             <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                                                     (1,338)        (1,592)         (1,581)
  Net increase (decrease) in deposits                                                23,819         (1,037)         25,579
  Net increase (decrease) in FHLB advances                                           10,961          2,323          (1,502)
  Cash paid for purchase of common stock for treasury                               (10,435)          (400)         (1,403)
  Borrowings under loan agreement                                                     6,767            347              --
  Repayment of borrowings under loan agreement                                       (7,114)            --              --
  Decrease in advance payments by borrowers for taxes and insurance                     (66)           (98)           (181)
                                                                                    -------        -------         -------
      Net cash (used in) provided by financing activities                            22,594           (457)         20,912
                                                                                    -------        -------         -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                   (388)         4,812          (1,204)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                                         10,680          5,868           7,072
                                                                                    -------        -------         -------
CASH AND CASH EQUIVALENTS, END OF YEAR                                              $10,292        $10,680         $ 5,868
                                                                                    =======        =======         =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                                            $16,504        $16,810         $16,655
                                                                                    =======        =======         =======

  Income taxes paid                                                                 $ 1,932        $ 1,877         $ 1,515
                                                                                    =======        =======         =======

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.

16
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1999, 1998 AND 1997
(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, 1999 or 1998.

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.

                                                                              17
<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 $95 in the year ended September 30, 1999.

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  accounted for using
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 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 - The Company  adopted  Statement of Financial  Accounting
Standards No. 130  "Reporting  Comprehensive  Income"  (SFAS No. 130)  effective
October  1, 1998 and has  provided  the  required  information  for all  periods
presented.  SFAS No. 130  establishes  standards  for  reporting  and display of
comprehensive income and its major components. 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.

18
<PAGE>

2. INTEREST RATE RISK

The  Company  is  engaged  principally  in  providing  first  mortgage  loans to
individuals.  At September 30, 1999 the Company had interest  earning  assets of
approximately $416,000, most of which will not mature or be repriced until after
five years. Interest bearing liabilities totaled approximately $367,000, 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, 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>

<TABLE>
<CAPTION>

                                                                                    September 30, 1998
                                                               ------------------------------------------------------------
                                                                 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                                    $4,332             $146             $  --          $ 4,478
  Municipal obligations                                             246                                 --              246
                                                                -------             ----           -------          -------
                                                                  4,578              146                --            4,724
                                                                -------             ----           -------          -------
Mortgage-backed securities:
  Government National Mortgage Corporation                          965               77                --            1,042
  Federal Home Loan Mortgage Corporation                         20,275              225                (1)          20,499
  Federal National Mortgage Association                           9,664               59               (44)           9,679
                                                                -------             ----           -------          -------
                                                                 30,904              361               (45)          31,220
Equity securities                                                   757              104               (36)             825
                                                                -------             ----           -------          -------
                                                                $36,239             $611            $  (81)         $36,769
                                                                =======             ====            ======          =======
</TABLE>
                                                                              19
<PAGE>
The amortized cost and estimated  market value of securities  available-for-sale
at September 30, 1999, by contractual maturity, are shown below (in thousands):
<TABLE>
<CAPTION>
                                                                                                                  Estimated
                                                                                              Amortized            Market
                                                                                                Cost                Value
<S>                                                                                           <C>                   <C>
Investment securities:
  Due in one year or less                                                                     $ 1,034               $ 1,035
  Due after one year through five years                                                         3,529                 3,541
Mortgage-backed securities                                                                     26,437                26,277
CMOs                                                                                           33,293                32,042
Equity securities                                                                                 539                   565
                                                                                              -------               -------
                                                                                              $64,832               $63,460
                                                                                              =======               =======
</TABLE>
Gross gains of $55,  $138 and $274 were  realized on sales of  securities in the
years ended  September 30, 1999, 1998 and 1997 ,  respectively.  Gross losses of
$41 were realized on sales of securities in the year ended September 30, 1999.

At  September  30,  1999  securities  with a cost of  approximately  $4,384 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,
                                                                                             --------------------------------
                                                                                                1999                1998
<S>                                                                                         <C>                  <C>
Residential real estate mortgage loans:
  One-to-four family units                                                                    $294,605             $301,071
  Multi-family                                                                                   1,444                1,934
Land loans                                                                                       1,109                1,604
Construction loans                                                                               7,585               11,867
Non-residential real estate loans                                                                4,601                6,261
Loans on savings accounts                                                                        5,157                5,881
Other consumer loans                                                                            43,690               28,643
                                                                                              --------             --------
                                                                                              358,191              357,261
Less:
  Allowance for loan losses                                                                      3,537                3,515
  Deferred loan fees                                                                               658                  580
  Undisbursed portion of loans in process                                                       11,010                7,994
                                                                                              --------             --------
                                                                                              $342,986             $345,172
                                                                                              ========             ========
</TABLE>
Changes in the allowance for loan losses are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                               Year Ended
                                                                                              September 30,
                                                                           ------------------------------------------------
                                                                             1999                1998                1997

<S>                                                                       <C>                  <C>                 <C>
Beginning balance, October 1                                               $3,515               $3,355              $3,182
Provision charged to operating expense                                        150                  180                 240
Recoveries                                                                     44                   44                   9
Loans charged off                                                            (172)                 (64)                (76)
                                                                           ------               ------              ------
Ending balance, September 30                                               $3,537               $3,515              $3,355
                                                                           ======               ======              ======
</TABLE>
Substantially  all of the  Company's  loans  receivable  are with  customers  in
southern Louisiana.

At  September  30,  1999 and 1998  there  were  unamortized  discounts  on loans
purchased  of  approximately  $560 and $900 ,  respectively.  These  unamortized
discounts have been deducted from the related loan balances in the table above.

20
<PAGE>

The  amount  of  nonaccrual  loans  at  September  30,  1999  and  1998  was not
significant.  The amount of  interest  not accrued on these loans did not have a
significant effect on net income in 1999, 1998 or 1997.

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

5. REAL ESTATE OWNED

Real estate owned consisted of the following (in thousands):
<TABLE>
<CAPTION>
                                                                                                        September 30,
                                                                                ----------------------------------------------------
<S>                                                                                             <C>                 <C>
Real estate acquired through foreclosure                                                         $ 325               $ 443
Less allowance for losses                                                                        (147)               (112)
                                                                                                 -----               -----

Real estate owned, net                                                                           $ 178               $ 331
                                                                                                 =====               =====
</TABLE>

Changes in the  allowance  for losses on real  estate  owned are as follows  (in
thousands):
<TABLE>
<CAPTION>
                                                                                               Year Ended
                                                                                              September 30,
                                                                           ---------------------------------------------------------
<S>                                                                          <C>                 <C>                 <C>
Beginning balance, October 1                                                 $112                $ 112               $ 108
Provision charged to operating expense                                         35                   --                   4
                                                                             ----                -----               -----
Ending balance, September 30                                                 $147                $ 112               $ 112
                                                                             ====                =====               =====

</TABLE>

6. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                                      September 30,
                                                                                ----------------------------------------------------
                                                                                                 1999                1998
<S>                                                                                           <C>                 <C>
Land                                                                                           $ 3,687             $ 3,571
Buildings and improvements                                                                       5,714               4,406
Furniture, fixtures and equipment                                                                5,884               4,851
                                                                                               -------             -------
                                                                                                15,285              12,828
Less accumulated depreciation                                                                   (4,945)             (4,064)
                                                                                               -------             -------
                                                                                              $ 10,340             $ 8,764
                                                                                              ========             =======
</TABLE>

7. DEPOSITS

Deposits are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                                       September 30,
                                                                                ----------------------------------------------------
                                                                                                 1999                1998
<S>                                                                                          <C>                 <C>
NOW accounts                                                                                  $ 47,828            $ 37,000
Passbook and regular savings                                                                    25,867              25,791
Money funds accounts                                                                             7,041               8,711
Certificates of deposit                                                                        222,348             207,763
                                                                                              --------            --------
                                                                                              $303,084            $279,265
                                                                                              ========            ========
</TABLE>

Certificates  of deposit of $100 and over  amounted  to $48,900  and  $46,500 at
September 30, 1999 and 1998, respectively.

Certificates of deposits at September 30, 1999 mature as follows (in thousands):

        Less than one year                                  $150,217
        1-2 years                                             46,643
        2-3 years                                             13,937
        3-4 years                                              5,988
        4-5 years                                              4,978
        Over 5 years                                             585
                                                            --------
        TOTAL                                               $222,348
                                                            ========
                                                                              21
<PAGE>

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

At  September  30,  1999,  the Company  was  indebted to the FHLB for $78,682 of
advances  bearing  interest at a weighted average rate of 5.34% which are due as
follows (in thousands):

      Year Ended
     September 30,
        2000                                               $44,300
        2001                                                 1,700
        2002                                                16,518
        2003                                                 8,340
        2004                                                 2,824
        2005                                                 5,000
                                                           -------
                                                           $78,682
                                                           =======


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

Included in the table  above are $35,000 of advances  callable in the year ended
September 30, 2000,  $5,000 callable in the year ended September 30, 2003. These
advances  have been  included  in the above  table  based  upon their call dates
rather than their stated due dates of between December 1999 and May 2003.

At September  30,  1998,  the Company was indebted to the Federal Home Loan Bank
(FHLB) for $67,721 of  advances  bearing  interest at an average  rate of 5.34%,
$36,740 of which were due or  callable  in the year ended  September  30,  1999,
$12,155 in 2000 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. BORROWINGS FOR COMMON STOCK REPURCHASES

The Company borrowed $5,178 at September 30, 1998 in connection with repurchases
of common stock for the treasury. Approximately $4,800 was due to brokers on the
settlement date of such purchases and $347 was due under a loan  agreement.  The
loan agreement  provided maximum  borrowings of $8,000 for dividend payments and
common stock  repurchases  with  interest at 2% above the LIBOR rate and was due
September 30, 1999. This note was repaid in January 1999.

10. INCOME TAXES

The Company is  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 has generally  used the percentage of taxable
income method to calculate  this  addition.  This addition  differs from the bad
debt experience used for financial accounting purposes.  Bad debt deductions for
income tax purposes  are  included in taxable  income of later years only if the
bad debt reserve is used subsequently for purposes other than to absorb bad debt
losses.  Because  the Company  does not intend to use the  reserve for  purposes
other than to absorb bad debt losses,  generally accepted accounting  principles
do not require that  deferred  income  taxes be provided on that  portion  which
existed as of September  30,  1988.  At September  30, 1999,  retained  earnings
included approximately $4,200 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
eliminates  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  requires 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

22
<PAGE>

components of the Company's  deferred tax assets and liabilities as of September
30, 1999 and 1998 are as follows (in thousands):

                                                       1999       1998
 Deferred tax assets:
MSP  expense                                        $   175    $   185
Allowance  for loan losses                              100         90
Unrealized  loss on securities available-for-sale       480       --
Other                                                   170        145
                                                    -------    -------
     Total deferred tax assets                          925        420
                                                    -------    -------
Deferred tax  liabilities:
Deferred  loan fees and costs,  net                     425        319
Tax over book  depreciation                             130        210
Dividends on FHLB stock                                 490        345
Unrealized  gain on securities available-for-sale      --          180
Other                                                   165        146
     Total deferred tax liabilities                   1,210      1,200
                                                    -------    -------
     Net deferred tax liabilities                   $  (285)   $  (780)
                                                    =======    =======


The components of income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                              Year Ended
                                                                                              September 30,
                                                                          ----------------------------------------------------------
                                                                             1999                1998                1997
<S>                                                                       <C>                  <C>                 <C>
Currently payable                                                          $1,714               $2,142              $1,200
Deferred                                                                      175                  (75)                797
                                                                           ------               ------              ------
                                                                           $1,889               $2,067              $1,997
                                                                           ======               ======              ======

</TABLE>

Income  taxes  differ from the amounts  computed  by applying  the U.S.  Federal
income tax rate of 34% to earnings  before income  taxes.  The reasons for these
differences are as follows (in thousands):
<TABLE>
<CAPTION>
                                                                                               Year Ended
                                                                                              September 30,
                                                                          ----------------------------------------------------------
                                                                             1999                1998                1997
<S>                                                                        <C>                  <C>                 <C>
Taxes computed at statutory rates                                          $1,889               $1,999              $1,994
Increase (decrease) in taxes due to
 miscellaneous items                                                           --                   68                   3
                                                                           ------               ------              ------
                                                                           $1,889               $2,067              $1,997
                                                                           ======               ======              ======

Actual tax rate                                                               35%                 35%                  34%
                                                                              ==                  ==                   ==
</TABLE>


11. NON-INTEREST EXPENSE

Occupancy, equipment and data processing expenses consisted of the following:
<TABLE>
<CAPTION>
                                                                                              Year Ended
                                                                                              September 30,
                                                                          ----------------------------------------------------------
                                                                             1999                1998                1997
<S>                                                                       <C>                  <C>                 <C>
Occupancy, including depreciation, insurance,
  rent, utilities, etc.                                                    $  833               $  751              $  610
Equipment, including depreciation, telephone, etc.                          1,408                1,155                 811
Data processing                                                               563                  471                 398
                                                                           ------               ------              ------
                                                                           $2,804               $2,377              $1,819
                                                                           ======               ======              ======
</TABLE>

Other operating expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
                                                                                              Year Ended
                                                                                              September 30,
                                                                          ----------------------------------------------------------
                                                                             1999                1998                1997
<S>                                                                       <C>                  <C>                 <C>
Stationery, printing and postage                                           $  696               $  635              $  591
Other                                                                       1,503                1,039               1,044
                                                                           ------               ------              ------
                                                                           $2,199               $1,674              $1,635
                                                                           ======               ======              ======
</TABLE>



                                                                              23
<PAGE>
12. OTHER COMPREHENSIVE INCOME

Other comprehensive income included in the consolidated statements of changes in
stockholders' equity consists of the following for the years ended September 30,
1999, 1998 and 1997:
<TABLE>
<CAPTION>
                                                                                                  Tax               Net of
                                                                         Before-Tax            (Expense)              Tax
                                                                           Amount               Credit              Amount
<S>                                                                       <C>                   <C>                <C>
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)
                                                                           ======                 ===                =====
1997
----
  Gross change in unrealized gain (loss) on
    securities available-for-sale                                          $  296               $(104)               $ 192
  Less: Reclassification for gain included in net income                      274                 (96)                 178
                                                                          -------               -----              -------
  Net change in unrealized gain (loss) on
    securities available-for-sale                                          $   22                $ (8)              $   14
                                                                           ======                ====               ======
</TABLE>

13. 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,  1999,  1998 and 1997.  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.

14. 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, 1999, 1998 and
1997:
<TABLE>
<CAPTION>
                                                                                              Year Ended
                                                                                             September 30,
                                                                           ---------------------------------------------------
                                                                             1999                1998                1997
<S>                                                                         <C>                  <C>                 <C>
Weighted average number of common shares
  outstanding - used in computation of basic
  earnings per common share                                                 2,660                3,106               3,060
Effect of dilutive securities:
  Stock options                                                                40                  129                  61
  MSP stock grants                                                             27                   31                  28
                                                                            -----                -----               -----
Weighted  average  number of common shares
  outstanding  plus effect of dilutive
  securities used in computation of diluted
  earnings per common share                                                 2,727                3,266               3,149
                                                                            =====                =====               =====
</TABLE>
24
<PAGE>

15. 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  secured  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 $436, $617 and $509 for the years
ended  September  30,  1999,  1998 and 1997,  respectively.  The  following is a
summary of shares held in the ESOP Trust as of September 30, 1999 and 1998 :
<TABLE>
<CAPTION>
                                                                                                 1999                1998

<S>                                                                                           <C>                 <C>
Shares released for allocation or committed to be released                                     146,101             117,324
Unreleased shares                                                                              175,401             208,635
                                                                                               -------             -------
Total ESOP shares                                                                              321,502             325,959
                                                                                               -------             -------

Market value of unreleased shares                                                              $ 2,653             $ 3,156
                                                                                               =======             =======
</TABLE>

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,  1998 and 1997,  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 1999,  1998 or 1997.  The  following
table summarizes activity relating to the Plans:
<TABLE>
<CAPTION>
                                                                          Available                                Weighted
                                                                             for               Options              Average
                                                                            Grant            Outstanding             Price

<S>                                                                    <C>                   <C>                   <C>
Balance, October 1, 1996                                                       --              432,200               $13.94
  Reserved                                                                 34,000                   --                  --
  Granted                                                                 (10,000)              10,000                15.94
                                                                          -------               ------                -----
Balance, September 30, 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
                                                                            =====              =======               ======

Exercisable at September 30, 1997                                                               96,597               $13.94
                                                                                                ======               ======
Exercisable at September 30, 1998                                                              181,147               $13.95
                                                                                               =======               ======

Exercisable at September 30, 1999                                                              278,007               $14.20
                                                                                               =======               ======
</TABLE>
                                                                              25
<PAGE>

Options  exercisable at September 30, 1999 include  264,397 at $13.94 per share,
2,650 at $15.94 per share and 10,960 at $19.88 per share. Outstanding options at
September 30, 1999 include 432,200 at $13.94 per share with an average remaining
contractual life of 6 years, 8,650 at $15.94 and 7 years, 54,800 at $19.88 and 8
years and 30,682 at $16.31 and 10 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 $400, $468 and $642 for the
years ended September 30, 1999, 1998 and 1997, respectively.
There were 65,005 unvested shares at September 30, 1999.

The Company applies APB Opinion No. 25 and related  interpretation 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,  1998 and 1997 was  $4.53,  $5.22 and $4.41,
respectively.  Applying  SFAS No.  123 would  result in pro forma net income and
income per share amounts as follows:
                                          1999          1998         1997
Net income:
  As reported                           $3,509         $3,813       $3,867
  Pro forma                              3,115          3,428        3,370
Basic income per share:
  As reported                            $1.32          $1.23        $1.26
  Pro forma                               1.17           1.10         1.10
Diluted income per share
  As reported                            $1.29          $1.17        $1.23
  Pro forma                               1.16           1.06         1.09

The fair  value  of each  option  is  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.

16. 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, 1999,  the Company had made various  commitments  to extend
credit  totaling  approximately  $15,400  including  $11,010 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 6.75% to 8.75% at September 30,
1999. The rates on variable rate loan  commitments  range from 5.50% to 8.00% at
September  30,  1999.  As  of  September  30,  1998  such  commitments   totaled
approximately  $13,900  including $7,994 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 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.

26
<PAGE>
17. 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 financial  instruments are as follows
at September 30, 1999 and 1998 (in thousands):
<TABLE>
<CAPTION>
                                                                           1999                              1998
                                                              -----------------------------------------------------------------
                                                               Estimated         Estimated
                                                               Carrying            Fair           Carrying           Fair
                                                                Amount             Value           Amount            Value
<S>                                                           <C>               <C>              <C>              <C>
Financial assets:
  Cash and certificates of deposit                             $ 10,292          $ 10,292         $ 11,338         $ 11,338
  Investments and mortgage-backed securities                     63,460            63,460           36,769           36,769
  Loans                                                         346,523           342,000          348,687          352,000
  Less: allowance for loan losses                                 3,537             3,537            3,515            3,515
                                                               --------          --------         --------         --------
  Loans, net of allowance                                       342,986           338,463          345,172          348,485
                                                               --------          --------         --------         --------
Financial liabilities:
  Deposits                                                      303,084           301,600          279,265          279,800
  Advances from Federal Home Loan Bank                           78,682            78,300           67,721           67,600
  Borrowings for common stock repurchases                            --                --            5,178            5,178
</TABLE>
18. REGULATORY CAPITAL

The Bank's actual capital and its statutorially required capital levels based on
the consolidated  financial  statements  accompanying these notes was as follows
(in thousands):
<TABLE>
<CAPTION>
                                                                        September 30, 1999
                                        --------------------------------------------------------------------------------------------
                                                                                                            To be Well
                                                                                                         Capitalized Under
                                                                            For Capital                  Prompt Corrective
                                                                         Adequacy Purposes               Action Provisions
                                     ---------------------------      --------------------------     -------------------------------
                                                 Actual                      Required                        Required
                                     ---------------------------      --------------------------     -------------------------------
                                         Amount            %            Amount           %            Amount            %

<S>                                   <C>             <C>             <C>             <C>           <C>              <C>
Core capital                             $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%
</TABLE>
                                                                              27
<PAGE>
<TABLE>
<CAPTION>
                                                                        September 30, 1998
                                        --------------------------------------------------------------------------------------------
                                                                                                            To be Well
                                                                                                         Capitalized Under
                                                                            For Capital                  Prompt Corrective
                                                                         Adequacy Purposes               Action Provisions
                                     ---------------------------      --------------------------     -------------------------------
                                                 Actual                      Required                        Required
                                     ---------------------------      --------------------------     -------------------------------
                                         Amount            %            Amount           %            Amount            %

<S>                                    <C>            <C>             <C>             <C>           <C>              <C>
Core capital                             $53,415        13.1%           $16,268         4.0%          $24,402          6.0%
Tangible capital                         $53,415        13.1%           $ 6,100         1.5%              N/A          N/A
Total Risk based capital                 $56,195        25.3%           $17,748         8.0%          $22,185         10.0%
Leverage                                 $53,415        13.1%               N/A         N/A           $20,335          5.0%
</TABLE>

The Federal  Deposit  Insurance  Corporation  Improvement Act of 1991 ("FDICIA")
required 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, 1999 and 1998 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.

19. SUMMARIZED FINANCIAL INFORMATION OF TECHE HOLDING COMPANY
(PARENT COMPANY ONLY)
<TABLE>
<CAPTION>
                                 Balance Sheets
                                                                                                1999                1998
<S>                                                                                           <C>                 <C>
Assets:
  Investment in subsidiary                                                                     $40,277             $53,832
  Cash held by subsidiary                                                                        5,358                  --
  Due from ESOP                                                                                  1,754               2,086
  Other                                                                                          1,311               1,787
                                                                                               -------             -------
                                                                                               $48,700             $57,705
                                                                                               =======             =======
Liabilities and stockholders' equity:
  Borrowings for common stock repurchase                                                         $  --             $ 5,178
  Stockholders' equity                                                                          48,700              52,527
                                                                                               -------             -------
                                                                                               $48,700             $57,705
                                                                                               =======             =======
</TABLE>
                             Statements of Earnings
<TABLE>
<CAPTION>
                                                                                       Year Ended September 30
                                                                        ------------------------------------------------------------
                                                                            1999                1998                1997

<S>                                                                      <C>                  <C>                 <C>
Dividends received from subsidiary                                        $17,000                 $ --                $ --
Equity in earnings of subsidiary greater than
  (less than) dividends received                                          (13,351)               3,871               3,938
Interest income from subsidiary                                               237                  264                 429
Management fees and other expenses allocated
  to the Parent                                                              (252)                (252)               (799)
Other income (expenses), net                                                 (195)                 (38)                312
Income tax (expense) credit                                                    70                  (32)                (13)
                                                                          -------              -------             -------
Net income                                                                $ 3,509              $ 3,813             $ 3,867
                                                                          =======              =======             =======
</TABLE>
28
<PAGE>

                            Statements of Cash Flows
<TABLE>
<CAPTION>
                                                                                       Year Ended September 30
                                                                        ------------------------------------------------------------
                                                                           1999                 1998                1997

<S>                                                                      <C>                 <C>                  <C>
Cash Flows from Operating Activities                                      $16,903             $ 1,273              $ 3,019
                                                                          -------             -------              -------
Cash Flows from Investing Activities:
  Repayment of loan by subsidiary                                             332                 364                  382
                                                                          -------             -------              -------
    Net cash provided by investing activities                                 332                 364                  382
                                                                          -------             -------              -------
Cash Flows from Financing Activities:
  Borrowings under note payable agreement                                   6,767                 347                   --
  Repayment of borrowings under loan agreement                             (7,114)                 --                   --
  Dividends paid                                                           (1,338)             (1,592)              (1,581)
  Cash paid for purchase of common stock for treasury                     (10,435)               (400)              (1,403)
                                                                          -------             -------              -------
    Net cash used in financing activities                                 (12,120)             (1,645)              (2,984)
                                                                          -------             -------              -------
Net increase (decrease) in cash and cash equivalents                        5,115                  (8)                 417
Cash and cash equivalents, beginning of year                                  892                 900                  483
Cash and cash equivalents, end of year                                    $ 6,007              $  892             $    900

</TABLE>

A cash  dividend  of $17,000  was paid by Teche  Federal  Savings  Bank to Teche
Holding Company in the year ended September 30, 1999.

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, 1999 was approximately $15,000.

20. NEW ACCOUNTING STANDARD

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 applies to all entities and is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000.  Earlier  adoption of this Statement
is permitted.  The Company expects to adopt this accounting  standard on October
1, 2000.


                                                                              29
<PAGE>
                                             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
  [PICTURE OMITTED]                          Donelson T. Caffery, Jr.

                                             Henry L. Friedman
                                             Mrs. Virginia Kyle Hine
                                             Dr. Thomas F. Kramer
                                             Robert E. Mouton
                                             Christian L. Olivier, Jr.
                                             W. Ross Little, Jr.

Advisory Directors of
Teche Federal Savings Bank

      Charles H. Davidson
      Nelson D. Henry
      Robert Judice, Jr.
      Maunette B. Risher

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
      One Franklin Square
      1301 K. Street, N.W., Suite 700 East
      Washington, D.C. 20005

REGISTRAR AND STOCK
TRANSFER AGENT
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      Registrar and Transfer Company
      10 Commerce Drive
      Cranford, NJ 07016-3572
      (800) 368-5948
      Fax (908) 497-2312
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      Officers of Teche Federal Savings Bank

      Patrick O. Little              Chairman, President/CEO
      Robert E. Mouton               Executive Vice President
      Scott Sutton                   Senior Vice-President
      Chief Operating Officer
      Faye L. Ibert                  Senior Vice-President
      J.L. Chauvin                   Senior Vice-President/Treasurer
      Chief Financial Officer
      Daryl Broussard                Senior Vice-President
      Chief Lending Officer
      Stanley Plessala               Vice-President
      D. Ross Landry                 Vice-President
      W. Ross Little, Jr.            Vice-President, Secretary
      Nancy Terrell                  Vice-President
      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
      Donna Cheely                   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