EXHIBIT 13


<PAGE>
                                      1997
                                  ANNUAL REPORT

                                  TECHE HOLDING
                                     COMPANY
                               FRANKLIN, LOUISIANA

<PAGE>


Teche Holding Company
211 Willow Street
Franklin, LA 70538

Teche Federal Savings Bank
211 Willow Street
Franklin, LA 70538
Telephone: (318)828-3212
LA WATS (800)256-1500
FAX (318)828-0110

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

Bayou Vista
1003 Southeast Boulevard
Bayou Vista, LA 70380
(504)395-5244

New Iberia
529 N. Lewis
New Iberia, LA 70560
(318)367-2516

New Iberia
142 W. St. Peter St.
New Iberia, LA 70560
(318)364-5145

Lafayette
1001 Johnston
Lafayette, LA 70501
(318)232-6463

Lafayette
2306 W. Pinhook
Lafayette, LA 70508
(318)232-3419

Lafayette
Loan Origination Office
606 Lee Avenue
Lafayette, LA 70501

Breaux Bridge
601 E. Bridge St.
Breaux Bridge, LA 70517
(318)332-2149

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

<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                                                      31

General Information                                                         31


<PAGE>


                                 TECHE HOLDING
                                    COMPANY

President's Message
--------------------------------------------------------------------------------
     On behalf of the Board of Directors,  management and staff of Teche Holding
Company  and Teche  Federal  Savings  Bank,  I am pleased to present  our Annual
Report for the fiscal year ending September 30, 1997.

     In our second full year of operations  since the  successful  completion of
the conversion of Teche Federal Savings Bank from a federally  chartered  mutual
savings  association  to a  federally  chartered  stock  savings  bank  we  have
continued  to grow  while  maintaining  a  strong  financial  condition.  We saw
increases in deposits, loans, stockholders equity and earnings.

     This past year was also a painful  one as we lost our friend  and  Advisory
Director,  Chris Ibert.  Devoted to his family,  his church and his work,  Chris
will not only be missed by the  directors,  officers and staff of Teche,  but by
the entire Franklin area community.

     We have both  implemented new products and expanded  existing  lines.  Last
year we made over $67 million in mortgage  loans to 867 local  families and over
$16 million in consumer loans to 1,433 local customers.  Teche customer response
to ATMCheck Cards was  overwhelming.  Furthermore,  24 hour banking continues to
grow in popularity.

     The year 1997 was  marked by several  large  conglomerate  banks  acquiring
local community  banks.  Each time a local community bank closes,  many of their
former  customers  turn to  Teche  Federal  Savings  Bank  for  their  financial
services.   Local  customers  appreciate  the  services,  local  management  and
independence of Teche.

     The Bank serves the Parishes of St. Mary, Iberia, Lafayette, St. Martin and
Terrebonne through 9 full service locations and 16 ATMs.

     This year will continue to bring change to Teche Federal. The completion of
the Bayou Vista  renovation  is just around the corner and we expect to complete
construction on two new locations,  one in Franklin and another in the Broadmoor
area in Lafayette.

     We will also  continue our  commitment to the  community,  as our dedicated
staff of 160 tellers, loan officers, check processors,  receptionists and others
join in numerous  efforts to support  local  community  efforts  throughout  our
market area.

     Our goal is to provide value to our shareholders through earnings including
a lower cost of doing  business  and higher  returns.  We are  pleased  that our
annual  dividend  rate of  $0.50  per  share,  which we have  declared  and paid
consistently since our conversion, is the highest in the area.

     Wishing you a Merry Christmas and a prosperous New Year!


                                                Sincerely,



                                                /s/ Patrick O. Little
                                                Patrick O. Little

                                                                               1
<PAGE>
<TABLE>
<CAPTION>
SELECTED FINANCIAL AND OTHER DATA (dollars in thousands)
------------------------------------------------------------------------------------
                                        At or for the Year Ended September 30,
                                  --------------------------------------------------
                                     1997       1996      1995       1994      1993
<S>                               <C>        <C>       <C>        <C>       <C>     
Assets                            $404,097   $379,590  $323,852   $284,570  $245,737
Loans Receivable, Net              346,875    316,216   257,869    233,554   207,384
Securities-Available for Sale       37,854     44,496     5,413     19,866
Securities-Held to Maturity                              44,209     16,210    25,942
Cash and cash equivalents            5,868      7,072     6,400      6,604     5,337
Savings Deposits                   280,302    254,723   233,805    236,736   212,996
FHLB Advances                       65,398     66,900    24,200     23,800    12,200
Shareholders' Equity                54,359     52,282    61,908     20,963    17,448

Summary of Operations
Interest Income                    $29,788   $ 26,591  $ 23,380   $ 20,770  $ 19,985
Interest Expense                    16,681     14,003    12,053      9,708     9,171
                                   -------------------------------------------------
Net Interest Income                 13,107     12,588    11,327     11,062    10,814
Provision for Loan Losses              240        300       360        577       183
                                   -------------------------------------------------
 Net Interest Income after
 provision for Loan Losses          12,867     12,288    10,967     10,485    10,631
Non-Interest Income                  2,590      1,852     1,029        844       992
SAIF Special Assessment                         1,824
Non-Interest Expenses                9,867      8,616     6,405      5,414     4,812
                                   -------------------------------------------------
 Income Before Gains(Losses) on 
  Sales of Securities and 
  Income Taxes                       5,590      3,700     5,591      5,915     6,811
Gain (Loss)on Sale of Securities       274         91      (819)        --        --
Income Tax Expense                   1,997      1,270     1,635      1,970     2,190
                                    ------------------------------------------------
Net Income
   Actual                           $3,867    $ 2,521   $ 3,137    $ 3,945   $ 4,621
                                    ======    =======   =======    =======   =======
   Before Special Assessment                  $ 3,725
                                              =======



Selected Financial Ratios
Ratio of Equity to Assets              13.5%      13.8%     19.1%     7.4%      7.1%
Book Value/Common Share              $15.81     $14.76    $14.63      N/A(1)     N/A(1)
Dividends declared per Share          $0.50      $0.50     $0.25      N/A(1)     N/A(1)
Primary Income per Common Share
   Actual                             $1.21      $0.68     $0.46      N/A(1)     N/A(1)
   Before SAIF Special Assessment                $1.00
Fully diluted income per common 
  share
   Actual                             $1.16      $0.68     $0.46       N/A(1)     N/A(1)
   Before SAIF Special Assessment                $1.00
Annualized Return on Average Assets
   Actual                              0.99%      0.72%     1.04%     1.51%      1.96%
   Before SAIF Special Assessment                 1.07%
Annualized Return on Average Equity
   Actual                              7.00%      4.29%     7.87%    20.19%     31.13%
   Before SAIF Special Assessment                 6.33%
Net Interest Margin                    3.42%      3.68%     3.84%     4.35%      4.76%
Other Non-Interest Exp/Avg Assets
   Actual                              2.52%      3.00%     2.12%     2.07%      2.04%
   Before SAIF Special Assessment                 2.48%
Other Non-Interest Inc/Average Assets  0.66%     0.53%     0.34%      0.32%      0.42%
Non-Performing Loans/Loans (2)         0.32%      0.17%     0.26%     0.35%      0.16%
Allowance for Loan Losses/Loans(2)     0.96%     1.00%     1.14%      1.18%      1.05%
Dividend Payout Ratio
   Actual                             41.32%     73.52%    54.35%      N/A(1)     N/A(1)
   Before SAIF Special Assessment                50.00%
</TABLE>

2         (1)   There were no shares outstanding prior to April 17, 1995
          (2)   Total loans before allowance for loan losses

<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 nine full service offices
in the  Louisiana  Parishes  of St.  Mary,  Iberia,  Lafayette,  St.  Martin and
Terrebonne. 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>
                                                         1997                                   1996
                                        -------------------------------------------------------------------------------
                                        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                         $7,307    $7,332   $7,486      $7,663     $6,210   $6,480   $6,780    $7,121
Interest Expense                         4,078     4,068    4,199       4,336      3,235    3,288    3,582     3,898
Net interest Income                      3,229     3,264    3,287       3,327      2,975    3,192    3,198     3,223
Provisions for Loan Losses                  60        60       60          60         75       75       75        75
Income (Loss) Before Income Taxes        1,338     1,726    1,384       1,416      1,388    1,332    1,515      (444)
Net Income (Loss)                          883     1,143      911         930        910      879      990      (258)
Primary income (loss) per common share
  Actual                                  0.27      0.36     0.29        0.29       0.23     0.23     0.27     (0.08)
  Before Special Assessment                                                                                     0.28
Fully Diluted Income (Loss)
 per common share
  Actual                                  0.27      0.36     0.28        0.28       0.23     0.23       0.27   (0.08)
  Before Special Assessment                                                                                     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, 1995           $14.625   $13.250         $13.500            $0.125               December 20, 1995
March 31, 1996              $14.250   $13.000         $13.625            $0.125               February 22, 1996
June 30, 1996               $13.625   $12.625         $13.125            $0.125               May 15, 1996 
September 30, 1996          $13.625   $12.000         $13.500            $0.125               August 28, 1996
December 31, 1996           $14.375   $13.000         $14.375            $0.125               December 17, 1996
March 31, 1997              $16.375   $14.375         $16.375            $0.125               February 19, 1997
June 30, 1997               $19.375   $15.500         $19.000            $0.125               May 19, 1997
September 30, 1997          $20.625   $17.500         $20.625            $0.125               August 20, 1997
</TABLE>
                                                                
                                                                               3
<PAGE>



According  to the  records  of the  Company's  transfer  agent,  there  were 703
registered  stockholders  of record at November 24,  1997.  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 17 and 18 of notes to  Consolidated  Financial
Statements.  The Bank's total capital at September 30, 1997 exceeded the amounts
of its liquidation account and regulatory capital requirements.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
--------------------------------------------------------------------------------

General

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,  mortgage-backed  securities and investment securities  portfolios,
and the interest expense paid on its savings deposits and other borrowings.  Net
interest income is affected not only by the difference between the yields earned
on   interest-earning   assets  and  the  costs  incurred  on   interest-bearing
liabilities,  but also by the relative amounts of such  interest-earning  assets
and interest-bearing liabilities.

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

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

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

Management Strategy

Management's  strategy has been to maximize earnings and  profitability  through
steady growth while maintaining  asset quality.  The Bank's lending strategy has
historically  focused on the  origination  of  traditional  one- to  four-family
mortgage  loans with the primary  emphasis on single  family  residences  in the
Bank's  primary  market  area.  This focus,  because  home  mortgage  lending is
typically  considered  to be one of the safer forms of  lending,  is designed to
reduce the risk of loss on the Bank's loan portfolio. However, the relative lack
of  diversification  in its loan  portfolio  structure  does increase the Bank's
portfolio  concentration  risk by making the value of the  portfolio  relatively
more  susceptible to declines in real estate values in its market area. The Bank
supplements its lending  operations with 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.

4
<PAGE>

The ability to maximize net interest income is largely  dependent upon achieving
a positive  interest rate spread that can be sustained  during  fluctuations  in
prevailing interest rates. The Bank is exposed to interest rate risk as a result
of  the  difference  in  the  maturity  of   interest-bearing   liabilities  and
interest-earning assets and the volatility of interest rates. 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.

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 mortgage-backed securities and other 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, 1997,  the weighted  average
term to repricing of Teche  Federal's  ARM loan and  mortgage-backed  securities
portfolio was approximately 26 months. In contrast, $134.4 million of the Bank's
certificate  accounts and $66.0 million of the Bank's regular  deposit  accounts
(e.g. NOW, money market, savings) out of $280.3 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 $37.6 million in short-term  borrowings
and $28.7 million in adjustable rate mortgage-backed securities and $3.0 million
in short-term government 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 was able to
increase  its net  interest  income in the low interest  rate  environment  that
existed during earlier years.  Should interest rates rise,  management  believes
the Bank's capital  position will enable it to withstand such 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,
                                            1997 vs 1996                     1996 vs 1995
                                    ---------------------------------------------------------------
                                      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)                      $  (636)   $   (21)   $  (657)   $   519    $    75    $   594
  Loans receivable, net                4,116       (277)     3,839      3,089       (474)     2,615
  Other interest-earning assets(2)       (14)        29         15         21        (19)         2
                                     -------    -------    -------    -------    -------    -------
Total Interest Earning Assets        $ 3,466    $  (269)   $ 3,197    $ 3,629    $  (418)   $ 3,211
                                     =======    =======    =======    =======    =======    =======

Interest-bearing liabilities
  Deposits                             1,085        290      1,375        (57)       751        694
  FHLB advances                        1,255         48      1,303      1,303        (47)     1,256
                                     -------    -------    -------    -------    -------    -------
Total interest-bearing liabilities     2,340        338      2,678      1,246        704      1,950
                                     -------    -------    -------    -------    -------    -------
Net change in net interest income    $ 1,126    $  (607)   $   519    $ 2,383    $(1,122)   $ 1,261
                                     =======    =======    =======    =======    =======    =======
                                                                                                    
</TABLE>

(1)   Includes  investment and  mortgage-backed  securities held to maturity and
      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  actual and average  balance  sheet and  reflects the
actual and average  yield on assets and actual and average  cost of  liabilities
for the periods  indicated  and the actual and 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 month-end balances. Management does
not believe that the use of month-end balances instead of daily average balances
has caused any material differences in the information presented.
<TABLE>
<CAPTION>
                                                                          Year Ended September 30,
                                  --------------------------------------------------------------------------------------------------
                                                1997                               1996                            1995
                                  -------------------------------    --------------------------------   ----------------------------
                                                          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)              $ 44,038    $  3,086      7.01%     $ 53,072    $  3,743     7.05     $ 45,702  $  3,149    6.89%
 Loans receivable (2)(3            336,509      26,541      7.89%      283,962      22,702     7.99%     245,567     20,087    8.18%
  Other Interest-earning
  assets(4)                          3,056         161      5.27%        4,724         146     3.09%       4,072        144    3.54%
                                  --------    --------                --------    --------               -------  ---------         
  Total interest-earning assets    383,603      29,788      7.77%      341,758      26,591     7.78%     295,341     23,380    7.92%
                                                ======                              ======                           ======         
 Non-interest earning assets         8,464                               6,543                             7,385
                                   -------                             -------                           -------
Total assets                      $392,067                            $348,301                          $302,726
                                  ========                            ========                          ========

Liabilities and Equity
 Interest-bearing Liabilities
 NOW accounts                     $ 20,244         357      1.76%     $ 20,347    $    320     1.57%    $ 19,235   $    202    1.05%
 Statement & regular
  savings account                   25,160         655      2.60%       25,815         708     2.74%      32,901        900    2.74
 Money funds accounts                9,696         346      3.57%       10,615         391     3.68%      12,847        479    3.73
 Certificates of Deposit           206,273      11,676      5.66%      182,518      10,240     5.61%     175,571      9,384    5.34
                                  --------    --------                --------    --------               -------  ---------         
  Total Deposits                   261,373      13,034      4.99%      239,295      11,659     4.87%     240,554     10,965    4.56
 FHLB advances                      64,685       3,647      5.64%       42,405       2,344     5.53%      18,842      1,088    5.77
                                  --------    --------                --------    --------               -------  ---------         
 Total interest-bearing
  liabilities                      326,058      16,681      5.12%      281,700      14,003     4.97%     259,396     12,053    4.65
                                                ======                              ======                           ======         
 Non-interest-bearing
  liabilities                       13,351                               7,801                             3,493
                                   -------                             -------                           -------
Total liabilities                  339,409                             289,501                           262,889
Stockholders' Equity                52,658                              58,800                            39,837
                                   -------                             -------                           -------
Total liabilities and
 Stockholders' Equity             $392,067                            $348,301                          $302,726
                                  ========                            ========                          ========

 Net interest income/interest
 rate spread (5)                              $ 13,107      2.65%                 $ 12,588     2.81%               $ 11,327   3.27%
                                              ========                            ========                         ========    

 Net interest margin (6)                                    3.42%                              3.68%                          3.84%
 Interest-earning assets/
 Interest bearing liabilities                             117.65%                            121.32%                        113.86%
</TABLE>

(1)   Includes Securities held to maturity and 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  $106,000 in 1997,
$87,000 in 1996, and $180,000 in 1995.
(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 and the cost of average interest bearing liabilities.


6
<PAGE>
Changes in Financial Condition From September 30, 1996 to September 30, 1997

General.  Total assets  increased $ 24.5 million,  or 6.5% to $ 404.1 million at
September  30,  1997 from $ 379.6  million at  September  30,  1996,  reflecting
increases in loans and deposits..

Loans Receivable,  Net. The Bank's net loans receivable increased $ 30.7 million
or 9.7% to $ 346.9  million  from $ 316.2  million  at  September  30,  1996 due
primarily to  originations  of $88.6  million in fiscal 1997 caused by increased
demand for loans in Teche Federal's  primary market.  Sixty-six  percent of real
estate mortgage loan originations were adjustable.

Deposits. The Bank's deposits, after interest credited, increased $ 25.6 million
or 10.0% to $ 280.3  million  at  September  30,  1997 from $ 254.7  million  at
September  30, 1996  primarily  due to  increases in  certificates  and checking
account balances offset somewhat by a decrease in money market account balances.

Advances From FHLB. Advances from the Federal Home Loan Bank of Dallas decreased
$ 1.5 million to $ 65.4 from $ 66.9  million at  September  30, 1996 as the Bank
was able to fund loan growth from deposits and other sources.

Stockholders' Equity.  Stockholders' equity increased $ 2.1 million, from $ 52.3
million at  September  30, 1996 to $ 54.4 million at  September  30,  1997,  due
primarily to net income of $ 3.9 million offset by dividends and the purchase of
common  stock  for the  treasury  pursuant  to the  Company's  stock  repurchase
program.

Comparison of Operating  Results for Years ended  September  30, 1995,  1996 and
1997.

Analysis of Net Income

General.  The Bank  reported net income of $3.9  million,  $2.5 million and $3.1
million for fiscal  1997,  1996 and 1995,  respectively.  The increase of $1.346
million or 53.4% during fiscal 1997 compared to fiscal 1996 was primarily due to
the one time  special  assessment  of $1.8 million  ($1.2  million net of income
taxes) as a result of legislation  enacted on September 30, 1996 to recapitalize
the Savings Association Insurance Fund ("SAIF"), which was not present in fiscal
1997.  The decrease of $616,000 or 19.6% during  fiscal 1996  compared to fiscal
1995 was  primarily  due to the one time  special  assessment  in  fiscal  1996,
discussed above.

Interest  Income.  Interest income amounted to $29.8 million,  $26.6 million and
$23.4 million for the years ended 1997,  1996 and 1995,  respectively.  Both the
$3.2  million or 12.0%  increase  in fiscal  1997 and the $3.2  million or 13.7%
increase in 1996 were primarily due to increased loans.

Interest  Expense.  Interest  expense  totaled $16.7 million,  $14.0 million and
$12.1 million for the years ended September  1997, 1996 and 1995,  respectively.
Interest expense increased $2.7 million or 19.1% in fiscal 1997 primarily due to
increased  certificate  account balances coupled with an increase in the average
cost of interest bearing liabilities. Interest expense increased $2.0 million or
16.2% in fiscal  1996 due  primarily  to  increased  balances  and rates paid on
deposits  coupled  with an  increase in the  average  cost of  interest  bearing
liabilities.

Net  Interest  Income.  Net interest  income  amounted to $13.1  million,  $12.6
million and $11.3 million for the years ended September 30, 1997, 1996 and 1995,
respectively.  Both the  increase  of $0.5  million or 4.1% from  fiscal 1996 to
fiscal  1997 and the  increase  of $1.3  million  or 11.1% in  fiscal  1996 were
primarily  due to  increased  loan  balances  during the year  despite a general
decline in the Bank's net interest rate spread and margins during these periods.

Provision for Loan Losses. The Bank provided $240,000, $300,000 and $360,000 for
the years ended September 30, 1997, 1996 and 1995,  respectively.  The allowance
for loan losses was  $3,182,000  at 1996 fiscal year end and  $3,355,000 at 1997
fiscal  year end.  The  decrease  in the  provision  for loan  losses in 1997 as
compared to 1996  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.

                                                                               7
<PAGE>

Non-Interest  Income.  Non-interest  income during the years ended September 30,
1997,  1996 and 1995 amounted to $2.59 million,  $1.85 million and $1.03 million
respectively.  The increase in fiscal 1997 was  primarily  due to an increase in
transaction accounts. The increase in fiscal 1996 was primarily due to increased
fee income and the sale of an unused office site.

Non-Interest  Expense.  Absent the one-time  SAIF special  assessment  in fiscal
1996,  non-interest expense increased steadily over the three periods,  totaling
$9.9 million,  $8.6 million and $6.4 million,  during the years ended  September
30, 1997,  1996 and 1995. The increases in both fiscal 1997 and 1996 were due to
continued   expansion  of  office  facilities,   increased  marketing  expenses,
increased investment in new technology and increased costs due to being a public
company and higher  compensation  expense,  including  the cost of stock benefit
plans  adopted in  connection  with the Bank's  mutual to stock  conversion  and
company growth. It is expected that the ESOP will be expensed over 10 years. The
principal component of non-interest expense, compensation and employee benefits,
increased in each of the last three years.  Other operating  expenses  increased
from $1.4  million to $1.6  million for the years ended  September  30, 1996 and
1997, respectively.

The  Bank's  deposits  are  insured  up to the  legal  maximum  by the  SAIF  as
administered  by the  FDIC.  In the past,  SAIF  members  have  paid and  annual
insurance  premium of between  0.23% and 0.31% of total  deposits  held.  On the
other hand, a vast majority of the members of the Bank  Insurance  Fund ("BIF"),
primarily commercial banks, paid insurance premiums at or near the legal minimum
of $2,000 per year.  Legislation  passed on September 30, 1996 required the FDIC
to  impose  a  one-time  assessment  on all  members  of the  SAIF in  order  to
recapitalize  the SAIF to its federally  mandated level of 1.25%. The assessment
equaled  approximately  0.65% of an institution's  domestic deposits as of March
31,  1995 and was  approximately  $1.2  million net of taxes for the Bank in the
year ended 1996. SAIF premiums have been lower since the first quarter of fiscal
1997 due to the recapitalization of SAIF.

On January 1, 1996,  Teche became  subject to the  Louisiana  Shares Tax and the
Louisiana  Franchise  Tax. This amounted to an expense of $493,000 and $ 387,000
in the years ended September 30, 1997 and September 30, 1996, respectively.

Year 2000. A great deal of information  has been  disseminated  about the global
computer year 2000. Many computer  programs that can only  distinguish the final
two digits of the year entered (a common programming  practice in earlier years)
are  expected  to read  entries  for the year 2000 as the year 1900 and  compute
payment,  interest or delinquency  based on the wrong date or are expected to be
unable to compute  payment,  interest or  delinquency.  Rapid and accurate  data
processing  is essential to the operation of the Bank.  Date  processing is also
essential to most other financial institutions and many other companies.  All of
the material data  processing of the Bank that could be affected by this problem
is provided by a third party service bureau.  The service bureau of the Bank has
advised the Bank that it expects to be year 2000 compliant prior to December 31,
1999. However, if the service bureau is unable to resolve this potential problem
in time, the Bank would likely  experience  significant data processing  delays,
mistakes  or  failures.   These  delays,  mistakes  or  failures  could  have  a
significant  adverse impact on the financial  condition and results of operation
of the Bank.

Gain on Sale of Securities. In the years ended September 30, 1997 and 1996, gain
on the sale of  securities  amounted to $274,000 and $91,000,  respectively.  In
fiscal 1995,  the Bank sold $14.7  million of  securities  available for sale as
part of management's effort to restructure its balance sheet to help control the
Bank's interest rate risk, which sale resulted in a loss of $819,000.

Income Tax Expense.  For the years ended  September 30, 1997, 1996 and 1995, the
Bank incurred income tax expense of $2.0 million, $1.3 million and $1.6 million,
respectively.  The varying  amounts were caused  primarily by the varied pre-tax
income of the Bank.

8
<PAGE>

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, 1997 was five percent. Recent OTS action has lowered the requirement to four
percent. The Bank's average liquidity ratio was approximately 6.0 percent during
September 1997. The Bank manages its average liquidity ratio to meet its funding
needs,  including:  deposit  outflows;  disbursement of payments  collected from
borrowers for taxes and insurance;  repayment of Federal Home Loan Bank advances
and other borrowings;  and loan principal disbursements.  The Bank also monitors
its  liquidity  position  in  accordance  with  its  asset/liability  management
objectives.

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

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

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

The Bank has other sources of liquidity if a need for  additional  funds arises,
such  as  FHLB  of  Dallas   advances   and  the   ability  to  borrow   against
mortgage-backed and other securities.  On September 30, 1997, the Bank had total
FHLB borrowings of $65.4 million, or 16.2% of the Bank's assets.

Management  believes  the Bank has  sufficient  resources  available to meet its
foreseeable  funding   requirements.   At  September  30,  1997,  the  Bank  had
outstanding  loan  commitments of $13.6  million,  and  certificates  of deposit
scheduled  to mature  within one year of $134.4  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 3.00  percent  of total  adjusted  assets;  and
risk-based  capital  equal to 8.00  percent of total  risk-weighted  assets.  At
September 30, 1997, Teche Federal exceeded all regulatory capital  requirements.
See Note 17 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.

                                                                               9
<PAGE>

Proposed Legislation

Bills have been introduced to U.S.  Congress that would consolidate the OTS with
the Office of the  Comptroller  of the Currency  ("OCC").  The resulting  agency
would regulate all federally chartered commercial banks and thrift institutions.
In the event that the OTS is consolidated  with the OCC, it is possible that the
thrift charter could be eliminated and all thrifts,  such as the Bank,  could be
forced to convert to  commercial  banks.  Under current law and  regulations,  a
unitary savings and loan holding  company,  such as the Company,  which has only
one thrift  subsidiary that meets the qualified thrift lender ("QTL") test, such
as the Bank, has essentially  unlimited  investment  authority.  Legislation has
also been  proposed  which,  if  enacted,  would limit the  non-banking  related
activities of the savings and loan holding company to those activities permitted
for bank  holding  companies.  It is not  possible  to predict the final form of
legislation, if any.

10
<PAGE>
Deloitte & 
Touche LLP
---------------


                    Suite 3700                         Telephone: (504) 581-2727
                    One Shell Square                   Facsimile: (504) 561-7293
                    701 Poydras Street
                    New Orleans, Louisiana 70139-3700



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,  1997 and 1996,  and the related
consolidated statements of income,  stockholders' equity and cash flows for each
of the three years in the period  ended  September  30,  1997.  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  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material  respects,   the  financial  position  of  Teche  Holding  Company  and
subsidiary  as of  September  30,  1997  and  1996,  and the  results  of  their
operations  and their cash flows for each of the three years in the period ended
September 30, 1997 in conformity with generally accepted accounting principles.




/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
November 5, 1997



----------------
Deloitte Touche
Tohmatsu
International
----------------
                                                                              11
<PAGE>

TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<CAPTION>
                                                                     1997         1996

<S>                                                               <C>          <C>      
ASSETS
Cash and cash equivalents                                         $   5,868    $   7,072
Certificates of deposit                                                 634          914
Securities available-for-sale, at estimated market
  value (amortized cost of $37,297 in 1997 and $43,960 in 1996)      37,854       44,496
Loans receivable, net of allowance for loan losses of
  $3,355 in 1997 and $3,182 in 1996                                 346,875      316,216
Accrued interest receivable                                           2,051        1,868
Investment in Federal Home Loan Bank stock, at cost                   3,927        3,703
Real estate owned, net                                                   33           46
Prepaid expenses and other assets                                       501          783
Premises and equipment, at cost less accumulated depreciation         6,354        4,492
                                                                  ---------    ---------
TOTAL ASSETS                                                      $ 404,097    $ 379,590
                                                                  =========    =========
 
LIABILITIES AND STOCKHOLDERS' EQUITY
                                                                  
Deposits                                                          $ 280,302    $ 254,723
Advances from Federal Home Loan Bank                                 65,398       66,900
Advance payments by borrowers for taxes and insurance                 1,742        1,923
Accrued interest payable                                                309          283
Accounts payable and other liabilities                                1,123        1,595
SAIF special assessment                                                  --        1,824
Deferred income taxes                                                   864           60
                                                                  ---------    ---------
      Total liabilities                                             349,738      327,308

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value, 10,000,000 shares authorized;
     4,232,000 shares issued                                             42           42
  Preferred stock, 5,000,000 shares authorized, none issued              --           --
  Additional paid-in capital                                         41,642       41,436
  Retained earnings                                                  26,536       24,250
  Unearned ESOP shares                                               (2,419)      (2,751)
  Unearned Compensation (MSP)                                        (1,258)      (1,900)
  Treasury stock - 795,000 and 691,000 shares, at cost              (10,552)      (9,149)
  Unrealized gain on securities available-for-sale, net
    of deferred income taxes                                            368          354
                                                                  ---------    ---------
      Total stockholders' equity                                     54,359       52,282
                                                                  ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $ 404,097    $ 379,590
                                                                  =========    =========
</TABLE>
See notes to consolidated financial statements.

12
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                         1997       1996       1995

<S>                                                    <C>        <C>       <C>    
INTEREST INCOME:
  Interest and fees on loans                           $26,541    $22,702   $20,087
  Interest and dividends on investment securities          997      1,699     1,814
  Interest on mortgage backed securities                 2,089      2,044     1,335
  Other interest income                                    161        146       144
                                                       -------    -------   -------
                                                        29,788     26,591    23,380
                                                       -------    -------   -------
INTEREST EXPENSE:
  Deposits                                              13,034     11,659    10,965
  Advances from Federal Home Loan Bank                   3,647      2,344     1,088
                                                       -------    -------   -------
                                                        16,681     14,003    12,053
                                                       -------    -------   -------
NET INTEREST INCOME                                     13,107     12,588    11,327
PROVISION FOR LOAN LOSSES                                  240        300       360
                                                       -------    -------   -------
NET INTEREST INCOME AFTER PROVISION
  FOR LOAN LOSSES                                       12,867     12,288    10,967
                                                       -------    -------   -------
NON-INTEREST INCOME:
  Service charges                                        2,278      1,477       895
  Gain on sale of real estate owned                         94         19        37
  Other income                                             218        356        97
                                                       -------    -------   -------
    Total non-interest income                            2,590      1,852     1,029
                                                       -------    -------   -------
GAIN (LOSS) ON SALE OF SECURITIES                          274         91      (819)
                                                       -------    -------   -------
NON-INTEREST EXPENSE:
  Compensation and employee benefits                     5,093      4,272     3,261
  Occupancy, equipment and data processing expense       1,819      1,477     1,141
  Marketing                                                602        488       403
  SAIF deposit insurance premiums                          225        543       532
  SAIF special assessment                                   --      1,824        --
  Louisiana shares tax                                     493        387        --
  Other operating expenses                               1,635      1,449     1,068
                                                       -------    -------   -------
    Total non-interest expense                           9,867     10,440     6,405
                                                       -------    -------   -------
INCOME BEFORE INCOME TAXES                               5,864      3,791     4,772
INCOME TAXES                                             1,997      1,270     1,635
                                                       -------    -------   -------
NET INCOME                                             $ 3,867    $ 2,521    $ 3,137
                                                       =======    =======    =======

PRIMARY INCOME PER COMMON SHARE AND
  COMMON SHARE EQUIVALENT SINCE CONVERSION             $  1.21    $   .68    $   .46
                                                       =======    =======    =======
FULLY DILUTED INCOME PER COMMON SHARE AND
  COMMON SHARE EQUIVALENT SINCE CONVERSION             $  1.16    $   .68    $   .46
                                                       =======    =======    =======
</TABLE>

See notes to consolidated financial statements.

                                                                              13
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(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, 1994        $ --   $    --     $21,393  $      --     $     --   $     --     $  (430)      $20,963
Issuance of common stock          42    41,258                 (3,323)                                           37,977
Contribution to ESOP                        66                    240                                               306
Dividends declared -
  $.25 per share                                      (975)                                                        (975)
Net income                                           3,137                                                        3,137
Change in unrealized gain 
  (losses) on securities 
  available-for-sale, net                                                                             500           500
                                ----   -------     -------  ---------     --------   --------     -------       -------

BALANCE, September 30, 1995       42    41,324      23,555     (3,083)                                 70        61,908
Contribution to ESOP                       112                    332                                               444
Purchase of stock for
  Management Stock Plan 
  ("MSP")                                                                   (2,320)                              (2,320)
Amortization of MSP                                                            420                                  420
Purchase of common stock
  for treasury                                                                         (9,149)                   (9,149)
Dividends declared -
  $.50 per share                                    (1,826)                                                      (1,826)
Net income                                           2,521                                                        2,521
Change in unrealized gains on
  securities available-for-sale
  net                                                                                                 284           284
                                ----   -------     -------  ---------     --------   --------     -------       -------

BALANCE, September 30, 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)
Net income                                           3,867                                                        3,867
Change in unrealized gains on
  securities available-for-sale
  net                                                                                                  14            14
                                ----   -------     -------  -------       --------   --------     -------       -------

BALANCE, September 30, 1997     $ 42   $41,642     $26,536  $(2,419)      $ (1,258)  $(10,552)    $   368       $54,359
                                ====   =======     =======  =======       ========   ========     =======       =======
</TABLE>

See notes to consolidated financial statements.

14
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                          1997       1996        1995
<S>                                                                                    <C>         <C>         <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                           $  3,867    $  2,521    $  3,137
  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                                      (207)       (657)       (667)
      Provision for loan losses                                                             240         300         360
      ESOP expense                                                                          509         432         306
      MSP expense                                                                           642         420          --
      Deferred income taxes                                                                 797        (394)        628
      (Gain) loss on sale of securities                                                    (274)        (91)        819
      Gain on sale of real estate owned                                                     (94)        (19)        (37)
      Gain on sale of other real estate                                                      --        (149)         --
      Depreciation                                                                          513         404         280
      Accretion of deferred loan fees and other                                            (106)        (87)       (179)
      Accretion of discount on loans                                                       (212)       (194)       (319)
    Change in accrued interest receivable                                                  (183)       (116)       (100)
      Change in prepaid expenses and other assets                                           282        (264)         35
      Change in accrued interest payable                                                     26         (44)         80
      Change in accounts payable and other liabilities                                     (472)        859        (255)
      SAIF special assessment payable                                                    (1,824)      1,824          --
      Other - net                                                                            96        (137)         --
                                                                                        -------      ------     -------
        Net cash provided by operating activities                                         3,600       4,608       4,088
                                                                                        -------      ------     -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from maturities of investment securities
     available-for-sale                                                                   7,550      10,300          --
  Proceeds from maturities of investment securities
     held-to-maturity                                                                        --          --       1,000
  Proceeds from sale of investment securities
     available-for-sale                                                                     881       1,100      12,458
  Proceeds from sale of mortgage-backed securities
     available-for-sale                                                                      --          --       1,406
  Purchase of investment securities available-for-sale                                   (3,340)     (1,377)       (200)
  Purchase of mortgage-backed securities
     available-for-sale                                                                  (5,049)    (12,075)         --
  Purchase of investment securities held-to-maturity                                         --          --      (7,865)
  Purchase of mortgage-backed securities held-to-maturity                                    --          --     (22,028)
  Principal repayments on mortgaged-backed securities
     available-for-sale                                                                   7,102       6,385         923
  Principal repayments on mortgage backed securities
     held-to-maturity                                                                        --       1,966       1,364
  Net decrease (increase) in certificates of deposit                                        280        (324)         --
  Loans originated, net of repayments                                                   (30,581)    (58,366)    (24,350)
  Investment in FHLB stock                                                                 (224)     (1,032)       (559)
  Proceeds from sale of real estate                                                          40         424          56
  Purchase of premises and equipment                                                     (2,375)       (761)     (1,557)
                                                                                        -------      ------     -------
        Net cash used in investing activities                                           (25,716)    (53,760)    (39,352)
                                                                                        -------      ------     -------
</TABLE>
                                                                     (Continued)

                                                                              15

<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                1997        1996        1995
<S>                                                           <C>        <C>         <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from public offering                                --          --      37,977
  Dividends paid                                               (1,581)     (2,313)       (488)
  Net increase (decrease) in deposits                          25,579      20,918      (2,931)
  Net increase (decrease) in FHLB advances                     (1,502)     42,700         400
  Purchase of common stock for MSP                                 --      (2,320)         --
  Purchase of common stock for treasury                        (1,403)     (9,149)         --
  (Decrease) increase in advance payments by borrowers
    for taxes and insurance                                      (181)        (12)        102
                                                              -------     -------     --------
      Net cash provided by financing activities                20,912      49,824      35,060
                                                              -------     -------     --------

NET INCREASE (DECREASE) IN CASH
  AND CASH EQUIVALENTS                                         (1,204)        672        (204)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                             7,072       6,400       6,604
                                                              -------     -------     --------
CASH AND CASH EQUIVALENTS,
  END OF YEAR                                                $  5,868    $  7,072    $  6,400
                                                             ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH
  FLOW INFORMATION:
  Cash paid for interest                                     $ 16,655    $ 14,047    $ 11,973
                                                             ========    ========    ========
  Income taxes paid                                          $  1,515    $  1,690    $  1,135
                                                             ========    ========    ========

  Investing activities not requiring the outflow of cash:
      Reclassification of securities from held-to-maturity
        to available-for-sale                                $     --    $ 42,000    $    --
                                                             ======      ========    =====  
</TABLE>

See notes to consolidated financial statements.
                                                                     (Concluded)

16
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
--------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995

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 is a retail
savings  bank which  attracts  deposits  from the  general  public and uses 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  demand  deposits  with  other   financial   institutions
(approximating  $1,992,000  and  $1,922,000  at  September  30,  1997 and  1996,
respectively),  and  interest  bearing  demand  deposits  with  other  financial
institutions  (approximating $3,876,000 and $5,150,000 at September 30, 1997 and
1996, respectively).

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.  The related income tax expense  (benefit) on securities
gains (losses) was $93,000,  $31,000 and $(281,000) in the years ended September
30, 1997, 1996 and 1995, respectively.

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, 1997 or 1996.

                                                                              17
<PAGE>

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

Periodically during the year management  estimates the likely level of losses to
determine  whether the allowance for loan losses is adequate to absorb  possible
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  possible  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.

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

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

Income Per Share -- Primary  income per share for the years ended  September 30,
1997 and 1996 were calculated by dividing net income for the year by the average
shares  outstanding  during the year,  net of treasury  shares and the  dilutive
effect of common  stock  equivalents.  The  shares  used in the  computation  of
primary  income per share  were  3,192,000  and  3,730,000  for the years  ended
September 30, 1997 and 1996, respectively.  Primary and fully diluted income per
share for the year ended  September 30, 1995 were calculated by dividing the net
income for the period from April 17, 1995 (date of  conversion) to September 30,
1995 of $1,791,000 by the average shares  outstanding during that same period of
3,910,000  shares.  Fully diluted income per share for the years ended September
30, 1997 and 1996 were  calculated  by  dividing  net income for the year by the
average  shares  outstanding  during the years,  net of treasury  shares and the
dilutive effect of common share equivalents  outstanding at year end. The shares
used in this  computation  were  3,334,000  and  3,730,000  for the years  ended
September 30, 1997 and 1996,  respectively.  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.

Reclassifications  --  Certain  reclassifications  have  been  made to the prior
years' financial  statements in order to conform to the classifications  adopted
for reporting in 1997.

                                                                              18
<PAGE>

2.  CONVERSION  FROM MUTUAL  SAVINGS BANK TO STOCK SAVINGS BANK AND FORMATION OF
TECHE  HOLDING  COMPANY 
On April 17, 1995,  the Teche Federal  Savings Bank  converted  from a federally
chartered  mutual  savings bank to a stock  savings  bank  pursuant to a Plan of
Conversion  (the  "Conversion")  via the issuance of common stock. In connection
with the Conversion, Teche Holding Company sold 4,232,000 shares of common stock
which,  after  giving  effect to offering  expenses of $1.0  million and 332,337
shares issued to the Employee Stock  Ownership  Plan  ("ESOP"),  resulted in net
proceeds of $38.0 million.  Pursuant to the  Conversion,  Teche Federal  Savings
Bank  transferred all of its  outstanding  shares to Teche Holding  Company,  in
exchange  for  50% of the net  proceeds.  This  business  combination  has  been
accounted for at historical  cost in a manner similar to the  accounting  method
known as the "pooling of interests" method.

3. INTEREST RATE RISK
The  Company  is  engaged  principally  in  providing  first  mortgage  loans to
individuals.  At September 30, 1997 the Company had interest  earning  assets of
approximately  $395,000,000,  most of which will not mature or be repriced until
after  five  years.   Interest   bearing   liabilities   totaled   approximately
$346,000,000,  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.

4. SECURITIES
The amortized cost and estimated market values of securities  available-for-sale
are as follows (in thousands):
<TABLE>
<CAPTION>
                                                     September 30, 1997
                                          --------------------------------------------
                                                        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                 $ 7,251   $    61    $   --      $ 7,312
 Municipal obligations                          164        --        --          164
                                            -------   -------    ------      -------   
                                              7,415        61        --        7,476
                                            -------   -------    ------      -------   
Mortgage-backed securities:
 Government National Mortgage Corporation     1,163        97        --        1,260
 Federal Home Loan Mortgage Corporation      15,548       284        --       15,832
 Federal National Mortgage Association       13,171       115        --       13,286
                                            -------   -------    ------      -------   
                                             29,882       496        --       30,378
                                            -------   -------    ------      -------
                                            $37,297   $   557    $   --      $37,854
                                            =======   =======    ====        =======
</TABLE>

<TABLE>
<CAPTION>
                                                      September 30, 1996
                                          --------------------------------------------
                                                        Gross       Gross    Estimated
                                          Amortized  Unrealized  Unrealized   Market
                                            Cost       Gains       Losses      Value
<S>                                         <C>       <C>        <C>        <C>    
Investment securities:
 Common stock                               $   568   $   101    $   --     $   669
 Obligations of U.S. government
  corporations and agencies                  11,266       196        --      11,462
 Municipal obligations                          264         2        --         266
                                            -------   -------   -------     -------
                                             12,098       299        --      12,397
                                            -------   -------   -------     -------
 Mortgage-backed securities:
 Government National Mortgage Corporation     1,389        80        --       1,469
 Federal Home Loan Mortgage Corporation       9,891       111        50       9,952
 Federal National Mortgage Association       20,582       259       163      20,678
                                            -------   -------   -------     -------
                                             31,862       450       213      32,099
                                            -------   -------   -------     -------
                                            $43,960   $   749   $   213     $44,496
                                            =======   =======   =======     =======
</TABLE>



                                                                              19

<PAGE>
The amortized cost and estimated  market value of securities  available-for-sale
at September 30, 1997, 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                                      $   2,949     $ 2,961
 Due after one year through five years                            4,466       4,515
Mortgage-backed securities                                       29,882      30,378
                                                              ---------     -------
                                                              $  37,297     $37,854
                                                              =========     =======
</TABLE>

Gross  gains  of  $274,000,  $91,000  and  $25,000  were  realized  on  sales of
securities in the years ended September 30, 1997,  1996 and 1995,  respectively,
and gross losses of $844,000  were  realized on sales of  securities in the year
ended September 30, 1995.

At September 30, 1997 securities with a cost of  approximately  $23,000,000 were
pledged to secure  deposits  and  advances  from the  Federal  Home Loan Bank as
required or permitted by law.

5. LOANS RECEIVABLE

Loans receivable are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                  September 30,
                                                              ----------------------
                                                                 1997          1996
<S>                                                           <C>           <C>     
Residential real estate mortgage loans:
 One-to-four family units                                     $ 310,306     $288,109
 Multi-family                                                     2,839        3,006
Land loans                                                        2,634        2,844
Construction loans                                               11,067       13,740
Non-residential real estate loans                                 6,897        7,346
Loans on savings accounts                                         5,984        5,657
Other consumer loans                                             20,049       10,343
                                                              ---------     --------
                                                                359,776      331,045
Less:
 Allowance for loan losses                                        3,355        3,182
 Deferred loan fees                                                 860        1,122
 Undisbursed portion of loans in process                          8,686       10,525
                                                              ---------     --------
                                                              $ 346,875     $316,216
                                                              =========     ========
</TABLE>


Changes in the allowance for loan losses are as follows (in thousands):
<TABLE>
<CAPTION>
                                                              Year Ended
                                                             September 30,
                                                 -----------------------------------
                                                   1997          1996          1995
<S>                                              <C>          <C>           <C>     
Beginning balance, October 1                     $ 3,182      $  2,966      $  2,778
Provision charged to operating expense               240           300           360
Recoveries                                             9             3            13
Loans charged off                                    (76)          (87)         (185)
                                                 -------      --------      --------
Ending balance, September 30                     $ 3,355      $  3,182      $  2,966
                                                 =======      ========      ========
</TABLE>


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

At  September  30,  1997 and 1996  there  were  unamortized  discounts  on loans
purchased  of  approximately  $1,200,000  and  $1,400,000,  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,  1997  and  1996  was not
significant.  The amount of  interest  not accrued on these loans did not have a
significant effect on net income in 1997, 1996 or 1995.

6. REAL ESTATE OWNED

Real estate owned consisted of the following (in thousands):
<TABLE>
<CAPTION>
                                                                    September 30,
                                                              -----------------------
                                                                 1997          1996
<S>                                                           <C>           <C>     
Real estate acquired through foreclosure                      $    145      $    154
Less allowance for losses                                         (112)         (108)
                                                              --------      --------
Real estate owned, net                                        $     33      $     46
                                                              ========      ========
</TABLE>

Changes in the  allowance  for losses on real  estate  owned are as follows  (in
thousands):
<TABLE>
<CAPTION>
                                                              Year Ended
                                                             September 30,
                                                  -----------------------------------
                                                   1997          1996          1995
<S>                                               <C>         <C>           <C>     
Beginning balance, October 1                      $  108      $    131      $    163
Provision charged to operating expense                 4            --            --
Allowance related to real estate sold                 --           (23)          (32)
                                                  ------      --------      --------
Ending balance, September 30                      $  112      $    108      $    131
                                                  ======      ========      ========
</TABLE>


7. PREMISES AND EQUIPMENT

Premises and equipment are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                    September 30,
                                                              -----------------------
                                                                 1997          1996
<S>                                                           <C>           <C>     
Land                                                          $  2,529      $  1,119
Buildings and improvements                                       3,365         3,124
Furniture, fixtures and equipment                                3,858         3,142
                                                              --------      --------
                                                                 9,752         7,385
Less accumulated depreciation                                   (3,398)       (2,893)
                                                              --------      --------
                                                              $  6,354      $  4,492
                                                              ========      ========
</TABLE>


8. DEPOSITS

Deposits are summarized as follows (in thousands):
<TABLE>
<CAPTION>
                                                                    September 30,
                                                              ----------------------
                                                                 1997          1996
<S>                                                           <C>           <C>     
NOW accounts                                                  $ 31,576      $ 24,222
Passbook and regular savings                                    25,398        25,306
Money funds accounts                                             8,998         9,746
Certificates of deposit                                        214,330       195,449
                                                              --------      --------
                                                              $280,302      $254,723
                                                              ========      ========
</TABLE>

                                                                              21
<PAGE>

Certificates  of  deposit of  $100,000  and over  amounted  to  $47,700,000  and
$46,600,000 at September 30, 1997 and 1996, respectively.

Certificates  of  deposits  at  September  30,  1997,   mature  as  follows  (in
thousands):

Less than one year                              $134,414
1-2 years                                         41,160
2-3 years                                         21,755
3-4 years                                          7,691
4-5 years                                          7,581
over 5 years                                       1,729
                                                --------
TOTAL                                           $214,330
                                                ========


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

At  September  30, 1997 the Company was  indebted to the Federal  Home Loan Bank
(FHLB) for $37,628,000 of advances  bearing  interest at an average rate of 5.6%
which are due in October 1997 and $27,770,000 of advances bearing interest at an
average rate of 6.1% which are due in the year ended  September  30,  2002.  The
advances due in October 1997 were renewed upon maturity on a short term basis.

At September  30, 1996 the Company was indebted to the FHLB for  $64,510,000  of
advances  bearing interest at an average rate of 5.39% which were due October 4,
1996 and  $2,390,000  of advances  bearing  interest at an average rate of 5.36%
which were due between October 1, 1996 and October 8, 1996.

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

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, 1996,  retained  earnings
included  approximately  $4,200,000  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 is
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  $2,800,000  at September 30, 1997 and will be included in taxable
income in annual  installments of approximately  $470,000  beginning  October 1,
1998. As the taxes with respect to this allowance are paid they will be added to
deferred  tax assets and,  therefore,  the payment of these taxes should have no
significant effect upon the Company's results of operations.

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between the carrying  amounts of assets and liabilities for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's  deferred tax assets and  liabilities as of September 30, 1997 and
1996 are as follows (in thousands):

22
<PAGE>

<TABLE>
<CAPTION>
                                                                 1997          1996
<S>                                                           <C>           <C>     
Deferred tax assets:
 SAIF special assessment-deducted in 1997                     $     --      $    620
 MSP expense-deductible in subsequent year                         180           143
 Allowance for loan losses                                          44            --
 Other                                                             160            65
                                                              --------      --------
     Total deferred tax assets                                     384           828
                                                              --------      --------
Deferred tax liabilities:
 Deferred loan fees and costs, net                                 242           136
 Allowance for loan losses                                          --             6
Tax over book depreciation                                         174           114
 Dividends on FHLB stock                                           357           281
 Unrealized gain on securities available-for-sale                  189           182
 Other                                                             286           169
                                                              --------      --------
     Total deferred tax liabilities                              1,248           888
                                                              --------      --------
     Net deferred tax liabilities                             $   (864)     $    (60)
                                                              ========      ======== 
</TABLE>

The components of income taxes are as follows (in thousands):
<TABLE>
<CAPTION>
                                                              Year Ended
                                                             September 30,
                                                ------------------------------------
                                                   1997          1996          1995
<S>                                              <C>          <C>           <C>     
Currently payable                                $ 1,200      $  1,664      $  1,044
Deferred                                             797          (394)          591
                                                 -------      --------      --------
                                                 $ 1,997      $  1,270      $  1,635
                                                 =======      ========      ========
</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,
                                                 -----------------------------------

                                                   1997          1996          1995
<S>                                              <C>          <C>           <C>    
Taxes computed at statutory rates                $ 1,994      $  1,289      $ 1,622
Increase (decrease) in taxes due to
 miscellaneous items                                   3           (19)          13
                                                 -------      --------      -------
                                                 $ 1,997      $  1,270      $ 1,635
                                                 =======      ========      =======

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


11. NON-INTEREST EXPENSE

Occupancy, equipment and data processing expenses consisted of the following:
<TABLE>
<CAPTION>
                                                              Year Ended
                                                             September 30,
                                                 -----------------------------------
                                                   1997          1996          1995
<S>                                              <C>          <C>           <C>     
Occupancy, including depreciation, insurance,
  rent, utilities, etc.                          $   610      $    571      $    425
Equipment, including depreciation, telephone, 
  etc.                                               811           523           396
Data processing                                      398           383           320
                                                 -------      --------      --------
                                                 $ 1,819      $  1,477      $  1,141
                                                 =======      ========      ========
</TABLE>
                                                                              23
<PAGE>

Other operating expenses consisted of the following (in thousands):
<TABLE>
<CAPTION>
                                                              Year Ended
                                                             September 30,
                                                 -----------------------------------
                                                   1997          1996          1995
<S>                                              <C>           <C>          <C>     
Stationary, printing and postage                 $   591       $   392      $    331
Other                                              1,044         1,057           737
                                                 -------       -------      --------
                                                $ 1,635       $ 1,449      $  1,068
                                                 =======       =======      ========
</TABLE>

12. RETIREMENT PLAN

The Company  participates  in a defined benefit  multi-employer  retirement plan
which  covers  substantially  all  employees.  The plan is  administered  by the
Financial  Institutions  Retirement  Fund.  Charges to operations under the plan
include  normal  cost.  There  were no  required  payments  in the  years  ended
September  30,  1997,  1996 and 1995.  The market value of the net assets of the
retirement fund exceeds the liability of the present value of accrued  benefits.
No  separate  information  regarding  the  Company's  share  of the  assets  and
liabilities of this plan is available.

13. 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 $509,000,  $432,000 and $$306,000
for the  years  ended  September  30,  1997,  1996 and 1995,  respectively.  The
following is a summary of shares held in the ESOP Trust as of September 30, 1997
and 1996:
<TABLE>
<CAPTION>

                                                                 1997          1996
<S>                                                         <C>           <C>   
Shares released for allocation or committed to be released      90,468        57,234
Unreleased shares                                              241,869       275,103
                                                            ----------    ----------
Total ESOP shares                                              332,337       332,337
                                                            ----------    ----------
Market value of unreleased shares at September 30, 1997     $6,860,000    $4,487,000
                                                            ==========    ==========
</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 year  ended
September 30, 1997, the stockholders of the Company approved the 1997 Plan under
which  options to purchase  34,000 shares were reserved and 10,000 were granted.
The exercise  prices were equal to the market  price  ($13.938 per share for the
1995  Plan and  $15.938  for the 1997  Plan) on the date of grant and 20% of the
options are  exercisable on 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 1997,
1996 or 1995. The following table summarizes activity relating to the Plans:

24
<PAGE>

<TABLE>
<CAPTION>
                                                 Available                   Weighted
                                                    for         Options       Average
                                                   Grant      Outstanding      Price
<S>                                             <C>            <C>          <C>
Balance, October 1, 1997                              --            --      $     --
 Reserved                                        432,200            --        13.938

 Granted                                        (432,200)      432,200            --
                                                --------       -------      --------

Balance, September 30, 1996                           --       432,200        13.938
 Reserved                                         34,000            --            --
 Granted                                         (10,000)       10,000        15.938
                                                --------       -------      --------
Balance, September 30, 1997                       24,000       442,200      $ 13.983
                                                ========       =======      ========

Exercisable at September 30, 1996                                   --            --
                                                               =======      ========
Exercisable at September 30, 1997                               96,597      $ 13.938
                                                               =======      ========
</TABLE>

In the year ended September 30, 1996, the  stockholders of the Company  approved
the  Management  Stock Plan  ("MSP")  under which  restricted  grants of 169,280
shares were made to executive  employees and directors of Teche Federal  Savings
Bank. Teche Federal Savings Bank acquired the Company's stock on the open market
for the benefit of the  recipients.  The recipients vest 20% annually as long as
they remain as Teche Federal  Savings Bank directors or employees.  The Board of
Directors   could  terminate  the  MSP  at  anytime.   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 $642,000, $420,000 and $-0-
for the years ended  September 30, 1997, 1996 and 1995,  respectively.  All such
grants are outstanding at September 30, 1997.

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.  Applying SFAS No. 123 would result in pro forma net income and
income per share amounts as follows:


                                                 1997          1996
Net income:
 As reported                                  $3,867,000    $2,521,000
 Pro forma                                     3,370,000     2,220,000

Primary income per share:
 As reported                                  $     1.21    $      .68
 Pro forma                                          1.06           .60

Fully diluted income per share:
 As reported                                  $     1.16    $      .68
 Pro forma                                          1.02           .60

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 7.0 percent; and expected lives of 8 years for all options.

14. 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, 1997,  the Company had made various  commitments  to extend
credit  totaling   approximately   $13,600,000   including   $8,686,000  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 7.125% to 7.75% at
September  30,  1997.  The

                                                                              25
<PAGE>

rates on variable rate loan  commitments  range from 5.875% to 8.5% at September
30, 1997.  As of September  30, 1996,  such  commitments  totaled  approximately
$18,700,000  including  $10,525,000  of the  undisbursed  portion  of  loans  in
process.  The Company's  management  does not anticipate any material  losses or
gains as a result of these transactions.

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.

15. 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 face value of these  advances is a
reasonable estimate of fair value.

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, 1997 and 1996 (in thousands):
<TABLE>
<CAPTION>
                                                           1997                   1996
                                                    ------------------------------------------
                                                              Estimated              Estimated
                                                    Carrying     Fair      Carrying     Fair
                                                     Amount      Value      Amount      Value
Financial assets:
<S>                                                 <C>        <C>        <C>        <C>     
 Cash and certificates of deposit                   $  6,502   $  6,502   $  7,986   $  7,986
 Investment and mortgage-backed securities            37,854     37,854     44,496     44,496
 Loans                                               350,230    352,000    319,398    316,000
 Less: allowance for loan losses                       3,355      3,355      3,182      3,182
                                                     -------    -------    -------    -------
 Loans, net of allowance                             346,875    348,645    316,216    312,818
                                                     -------    -------    -------    -------
Financial liabilities:
 Deposits                                            280,302    280,500    254,723    254,900
 Advances from Federal Home Loan Bank                 65,398     65,348     66,900     66,900
</TABLE>

16. RELATED PARTY TRANSACTIONS

In the ordinary  course of business,  the Company has granted loans to executive
officers and directors.  These loans were made on substantially  the same terms,
including  interest rates and  collateral,  as those  prevailing at the time for
comparable  transactions with other persons. The amounts of these loans were not
significant at September 30, 1997 or 1996.

26
<PAGE>
The Company has an employment  agreement  with an executive  officer under which
the Company  has agreed to pay the  executive  officer  annual  compensation  of
$142,000 through November 16, 1999.

The Company has severance agreements with certain other executive officers under
which the Company has agreed to aggregate payments of approximately  $835,000 in
the event  services  of the  executives  are  terminated  following a "change in
control" of the Company.

17. SAIF SPECIAL ASSESSMENT AND REGULATORY CAPITAL

On September 30, 1996  legislation  was enacted which  requires that the Company
pay a SAIF special  assessment based upon its deposits as of March 31, 1995. The
$1,824,000  cost of this special  assessment  which was recorded as of September
30, 1996, was paid in the year ended September 30, 1997. SAIF premiums have been
lower since the first quarter of the year ended September 30, 1997.

The Bank's actual capital and its statutory required capital levels based on the
consolidated  financial  statements  accompanying these notes was as follows (in
thousands):
<TABLE>
<CAPTION>
                                              September 30, 1997
                           ------------------------------------------------------------
                                                                        To be Well
                                                                     Capitalized Under
                                                  For Capital        Prompt Corrective
                                               Adequacy Purposes     Action Provisions
                          ------------------  ------------------  --------------------
                                Actual              Required               Excess
                          ------------------  ------------------  --------------------
                           Amount       %       Amount       %       Amount       %

<S>                       <C>         <C>      <C>          <C>     <C>          <C> 
Core capital              $48,221     12.0%    $12,100      3.0%    $24,200      6.0%

Tangible capital          $48,221     12.0%     $6,050      1.5%        N/A      N/A

Total Risk based capital  $50,990     22.5%    $18,160      8.0%    $22,700     10.0%

Leverage                  $48,221     12.0%        N/A     N/A      $20,170      5.0%
</TABLE>

<TABLE>
<CAPTION>
                                                      September 30, 1996
                          ------------------------------------------------------------
                                                                        To be Well
                                                                     Capitalized Under
                                                  For Capital        Prompt Corrective
                                               Adequacy Purposes     Action Provisions
                          ------------------  ------------------  --------------------
                                 Actual             Required              Excess
                          ------------------  ------------------  --------------------
                           Amount       %       Amount       %       Amount       %

<S>                       <C>         <C>      <C>          <C>     <C>          <C> 
Core capital              $42,816     11.3%    $11,360      3.0%    $22,720      6.0%

Tangible capital          $42,816     11.3%     $5,680      1.5%        N/A     N/A

Total Risk based capital  $45,186     21.9%    $16,498      8.0%    $20,620     10.0%

Leverage                  $42,816     11.3%        N/A     N/A      $18,940      5.0%
</TABLE>

The Company's management believes that, under the current regulations,  the Bank
will  continue  to meet its  minimum  capital  requirements  in the  foreseeable
future.  However,  events  beyond the control of the Company,  such as increased
interest  rates  or a  downturn  in the  economy  in the  Company's  area  could
adversely affect future earnings and,  consequently,  the ability of the Bank to
continue to exceed its future minimum capital requirements.

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, 1997 and 1996 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.

                                                                              27
<PAGE>

18. SUMMARIZED FINANCIAL INFORMATION OF TECHE HOLDING COMPANY
(PARENT COMPANY ONLY)
<TABLE>
<CAPTION>
                                 Balance Sheets
                                                                 1997          1996
<S>                                                           <C>           <C>      
Assets:
 Investment in subsidiary                                     $ 48,695*     $ 43,103*
 Due from subsidiary                                             2,450*        5,250*
 Due from ESOP                                                   2,419*        2,751*
 Other                                                           1,207         1,241
                                                              --------      --------
                                                              $ 54,771      $ 52,345
                                                              ========      ========
Liabilities and stockholders' equity:
 Accrued expenses                                             $    412      $     63
 Stockholders' equity                                           54,359        52,282
                                                              --------      --------
                                                              $ 54,771      $ 52,345
                                                              ========      ========
</TABLE>

<TABLE>
<CAPTION>
                             Statements of Earnings

                                                        Year Ended September 30
                                                 -----------------------------------
                                                   1997          1996          1995
<S>                                              <C>           <C>           <C>     
Equity in earnings of subsidiary                 $ 3,938*      $ 2,194*      $ 2,817*
Interest income from subsidiary                      429*          937*          499*
Management fee and other expenses 
  allocated to the Parent                           (799)*        (373)*          --
Other income (expenses)                              312           (62)            7
Income tax expense                                   (13)         (175)         (186)
                                                 -------       -------       -------
Net income                                       $ 3,867       $ 2,521       $ 3,137
                                                 =======       =======       =======
</TABLE>


<TABLE>
<CAPTION>
                           Statements of Cash Flows

                                                        Year Ended September 30
                                                 -----------------------------------
                                                   1997          1996          1995
<S>                                              <C>           <C>         <C>     
Cash Flows from Operating Activities             $ 3,019       $   200     $    239
Cash Flows from Investing Activities:
 Investment in subsidiary                             --            --      (20,733)*
 Loan to subsidiary                                   --            --      (15,500)*
 Repayment of loan by subsidiary                     382*       10,250*          --
                                                 -------       -------     --------
   Net cash provided by (used in) investing 
    activities                                       382       10,250      (36,233)
                                                 -------       -------     --------
Cash Flows from Financing Activities:
 Sale of common stock                                 --            --       37,977
 Dividends paid                                   (1,581)       (2,313)        (488)
 Purchase of common stock for treasury            (1,403)       (9,149)          --
                                                 -------       -------     --------
   Net cash provided by (used in) financing 
    activities                                    (2,984)      (11,462)      37,489
                                                 -------       -------     --------
Net increase (decrease) in cash and cash 
  equivalents                                        417        (1,012)       1,495
Cash and cash equivalents, beginning of year         483         1,495           --
                                                 -------       -------     --------
Cash and cash equivalents, end of year           $   900       $   483     $  1,495
                                                 =======       =======     ========
</TABLE>


*Eliminated in consolidation

28
<PAGE>

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, 1997 was approximately $16,000,000.

19. NEW ACCOUNTING STANDARDS

The  Financial  Accounting  Standards  Board  ("FASB")  has issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of Liabilities" (SFAS No. 125) and SFAS No. 127, "Deferral of the Effective Date
of Certain  Provisions  of FASB  Statement  No.  125" (SFAS No. 125) in June and
December  1996,  respectively.  SFAS No. 125 provides  accounting  and reporting
standards for transfers and servicing of financial assets and extinguishments of
liabilities.  It requires entities to recognize servicing assets and liabilities
for all contracts to service financial assets, unless the assets are securitized
and all servicing is retained.  The servicing assets will be measured  initially
at fair  value and will be  amortized  over the  estimated  useful  lives of the
servicing  assets.  In addition,  the  impairment  of  servicing  assets will be
recognized  through a  valuation  allowance.  SFAS No.  125 also  addresses  the
accounting  and  reporting  standards  for  securities  lending,   dollar-rolls,
repurchase  agreements and similar  transactions.  The Company has prospectively
adopted the required  portions of SFAS No. 125 on January 1, 1997.  However,  in
accordance  with SFAS No. 127, the Company will defer  adoption of the Statement
as it relates to securities  lending,  dollar-rolls,  repurchase  agreements and
similar  transactions  until  January 1, 1998.  The Company  does not expect the
adoption of the remaining portions SFAS No. 125 to have a material impact on its
consolidated financial statements.

In March 1997, the FASB issue SFAS No. 128, "Earnings per Share." This Statement
establishes  standards for computing and  presenting  earnings per share ("EPS")
and applies to all entities with publicly held common stock or potential  common
stock. This Statement replaces the presentation of primary EPS and fully diluted
EPS with a presentation  of basic EPS and diluted EPS,  respectively.  Basic EPS
excludes  dilution  and is  computed by dividing  earnings  available  to common
stockholders by the weighted-average number of common shares outstanding for the
period.  Similar to fully  diluted  EPS,  diluted  EPS  reflects  the  potential
dilution of  securities  that could share in the  earnings.  Restatement  of all
prior  period  EPS data  presented  is  required.  The  Company  will adopt this
Statement in the first  quarter of the year ending  September 30, 1998, as early
adoption is not permitted. Had the provisions of the Statement been in effect as
of September 30, 1997, the Company would have reported basic EPS and diluted EPS
of $1.26 and $1.23 for the year ended September 30, 1997.

In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income,"
effective for fiscal years  beginning  after  December 15, 1997.  This Statement
requires  that all items that are  required to be  recognized  under  accounting
standards  as  components  of  comprehensive  income be  reported in a financial
statement  that is  displayed  with  the  same  prominence  as  other  financial
statements.  This  Statement  does not require a specific  format for  financial
statements  but requires  that a company  display an amount  representing  total
comprehensive income for the period in that financial statement.  This Statement
requires that a company  classify items of other  comprehensive  income by their
nature in a financial  statement.  For example,  other comprehensive  income may
include foreign  currency  items,  minimum pension  liability  adjustments,  and
unrealized  gains  and  losses  on  certain   investments  in  debt  and  equity
securities.  In addition,  the accumulated balance of other comprehensive income
must be displayed  separately  from  retained  earnings and  additional  paid-in
capital  in  the  equity   section  of  a  statement  of   financial   position.
Reclassifications  of financial  statements  for earlier  periods,  provided for
comparative purposes, is required.  The Company cannot determine the impact that
the  adoption  of this new  accounting  standard  will have on its  consolidated
financial  statements until the completion of each reporting period. The Company
presently  expects  to adopt  this  accounting  standard  on  October 1, 1998 as
required.

                                                                              29
<PAGE>

In June 1997,  the FASB issued SFAS No. 131,  "Disclosure  about  Segments of an
Enterprise  and Related  Information,"  which will be effective  for the Company
beginning  October 1, 1998. The Statement  redefines how operating  segments are
determined  and  requires   disclosure  of  certain  financial  and  descriptive
information  about a  Company's  operating  segments.  The  Company  has not yet
completed its analysis to determine which  operating  segments will be reflected
in its financial statements.

20. YEAR 2000

The change in date from 1999 to 2000 poses potential  problems for many computer
systems  around the world.  Certain of the Company's  systems may be affected by
this so called  millennium bug. The Company is investigating the extent to which
its systems are affected and communicating with all of its significant  computer
vendors  concerning timely and completed remedies for those systems that require
modification.  The Company is also  communicating with third parties on which it
relies to assess their progress in evaluating their systems and implementing any
corrective measures.  The Company intends to take all reasonably necessary steps
to protect its operations and assets.

30
<PAGE>



Directors of Teche Holding Company
and/or Teche Federal Savings Bank

    W. Ross Little, Chairman
    Patrick O. Little
    Mrs. Mary Coon Biggs
    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
--------------------------------------------------------------------------------
    Michel H. Claudet
    Charles H. Davidson
    Nelson D. Henry
    Robert Judice, Jr.
    W. Ross Little, Jr.
    Maunette B. Rischer


<PAGE>


INDEPENDENT AUDITORS
    Deloitte and Touche LLP
    One Shell Square
    701 Poydras Street
    New Orleans, LA 70139

LEGAL COUNSEL
--------------------------------------------------------------------------------
    Biggs, Trowbridge, Supple and Cremaldi
    Lawless Building
    Willow Street
    Franklin, LA 70538

SPECIAL COUNSEL
--------------------------------------------------------------------------------
    Malizia, Spidi, Sloane & Fisch, P.C.
    One Franklin Square
    1301 K. Street, N.W., Suite 700 East
    Washington, D.C. 20005

REGISTRAR AND STOCK
TRANSFER AGENT
--------------------------------------------------------------------------------
    Registrar and Transfer Company
    10 Commerce Drive
    Cranford, NJ 07016-3572
    (800) 368-5948
    Fax (908) 497-2310



Officers of Teche Federal Savings Bank
--------------------------------------------------------------------------------
    W. Ross Little..........................Chairman
    Patrick O. Little.......................President/CEO
    Robert E. Mouton........................Executive Vice President
    Faye L. Ibert...........................Senior Vice-President
    J.L. Chauvin............................Vice-President/Treasurer
                                              Chief Financial Officer
    Stanley Plessela........................Vice-President
    D. Ross Landry..........................Vice-President
    Darryl Broussard........................Assistant Vice President, Lending
    James P. Hamilton.......................Assistant Vice-President
    Elaine G. Cockerham.....................Assistant Vice-President
    Lydia B. Hebert.........................Assistant Vice-President
    Carol Nini..............................Assistant Vice-President
    W. Ross Little, Jr......................Secretary/Marketing Director
                                              Staff Attorney
    Eddie LeBlanc...........................Internal Auditor
    Angela Badeaux..........................Assistant Vice-President
    Brenda Henson...........................Assistant Vice-President
    Nancy Terrell...........................Assistant Vice-President
    Karen Verret............................Assistant Vice-President


                                       31