---



**CONTENTS**

PageTo Our Shareholders
    1Financial Highlights
    3Management's Discussion and Analysis of Financial
Condition and Results of Operation
    5Independent Auditor's Report
    14Consolidated Statements of Financial Condition
    15Consolidated Statements of Income
    16Consolidated Statements of Changes in
Stockholders' Equity
    18Consolidated Statements of Cash Flows
    19Notes to the Consolidated Financial Statements
    21






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FPBFinancial
Corp.Post Office Box 99 - Hammond, Louisiana 70404
Phone (504) 345-1880 - Fax (504) 345-1586



To Our Shareholders**:**

With the completion of our second
full year as a public company, we are pleased to present this annual report to
the shareholders of FPB Financial Corp.

Our subsidiary, Florida Parishes
Bank, which has operated continuously for 79 years, experienced record earnings
and continued growth in 2001. Total assets increased by 15% over 2000 ending the
year in excess of $70 million. Similar increases were recorded in loans,
deposits, shareholder equity, and earnings per share.

This past year, with the
unfortunate tragedy of September 11th, is a reminder that events outside our
control can change the national and local economy, and our way of life. These
events only strengthen our goals to increase earnings and shareholder value
while maintaining the financial strength and stability required to safeguard our
depositors, and to take advantages of opportunities that present themselves when
change inevitably occurs.

In December, we mourned the death
of John L. McGee. Mr. McGee served Florida Parishes Homestead Association,
Florida Parishes Bank, and FPB Financial Corp. for over 40 years as a director
until his death and President of the Homestead until his retirement in 1997. Mr.
Johnny was instrumental in Florida Parishes's successes and accomplishments,
while helping customers with financial and common sense advice. I, and all who
knew him will miss his wit and wisdom.

We look forward to the future with
the technological advances of internet banking, and operating in our new main
office facility scheduled for a 2003 completion, and we appreciate the support
and loyalty of our customers, employees, and shareholders. As shareholders,
please continue to encourage your friends, neighbors, and business associates to
invest and bank with us. We all prosper from expanded relationships.

We are pleased to present this
report for your review and invite you to attend the annual shareholders meeting
on April 24, 2002.

| | Sincerely,          
| | --------------------
|
|
| | Fritz W. Anderson II
| | President & CEO     





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IN MEMORIAM

JOHN L. MCGEE

1919 - 2001

Mr. McGee began his service to our Bank, formerly Florida Parishes Homestead
Association, in 1961 serving as President until his retirement in 1997.  He
continued to serve on the Board of Directors for both Florida Parishes Bank and
FPB Financial Corp. until his death.

Mr. McGee was instrumental in the successes of Florida Parishes Bank, while
helping customers with both their personal and financial needs. He will be
missed by not only his wife and family, but also by the customers and employees
of the Bank, the local community, and bankers across Louisiana.



2

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SELECTED CONSOLIDATED FINANCIAL DATA



Year Ended December 31,2001
      2000
      1999
      1998
      1997(Dollars In Thousands Except Per Share Data)Selected FinancialCondition and Other Data:Total assets
      $70,635
      $61,442
      $52,472
      $41,058
      $33,260Cash and cash equivalents(1)
      3,650
      3,436
      4,784
      2,351
      4,236Securities available for sale
      4,233
      8,579
      4,001
      993
      1,000Securites held to maturity
      1,201
      1,766
      2,166
      2,924
      4,184Loans receivable, net
      59,282
      46,595
      40,789
      34,152
      23,292Deposits
      52,102
      46,047
      39,454
      34,065
      29,295FHLB advances
      11,200
      8,200
      6,200
      3,200
      400Total stockholders' equity
      7,004
      6,779
      6,605
      3,570
      3,330Full service offices
      1
      1
      1
      1
      1Earnings per share
      1.33
      1.17
      1.14
      NA
      NABook value per share
      21.88
      20.63
      19.94
      NA
      NADividends paid per share
      .275
      .225
      .10
      NA
      NA




|                                    | Year Ended December 31,
|----------------------------------- | -----------------------
|                                    |                        
|                                    | 2001                   
|                                    |                        
|                                    | (Dollars In Thousands) 
|Selected Operating Data:            |                        
|Total interest income               | $    4,604             
|Total interest expense              | 2,774                  
|                                    |                        
|Net interest income                 | 1,830                  
|Provision for loan losses           | --                     
|                                    |                        
|Net interest income after provision |                        
|for losses                          | 1,830                  
|Noninterest income                  | 182                    
|Noninterest expenses                | 1,417                  
|                                    |                        
|Income before income taxes          | 595                    
|Income tax expense                  | 208                    
|                                    |                        
|Net income                          | $       387            
|                                    |                        
|                                    |                        



(Footnotes on next page)



3

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CONSOLIDATED FINANCIAL RATIOS



|                         | Year Ended December 31,
|------------------------ | -----------------------
|                         |                        
|                         | 2001                   
|                         |                        
|Selected
      Ratios(2) |                        

|Return on average assets (net income                 |        |        |        |        |       
|---------------------------------------------------- | ------ | ------ | ------ | ------ | ------
|divided by average total assets)                     | .60%   | .61%   | .74%   | .64%   | .70%  
|                                                     |        |        |        |        |       
|Return on average equity (net income                 |        |        |        |        |       
|divided by average equity)                           | 5.62   | 5.25   | 6.73   | 6.77   | 6.62  
|                                                     |        |        |        |        |       
|Dividend payout ratio (dividends declared divided by |        |        |        |        |       
|net income)                                          | 22.49  | 21.09  | 9.48   | --     | --    
|                                                     |        |        |        |        |       
|Average equity to average assets                     | 10.64  | 11.67  | 10.97  | 9.51   | 10.52 
|                                                     |        |        |        |        |       
|Equity to assets at end of period                    | 9.92   | 11.03  | 12.60  | 8.70   | 10.04 
|                                                     |        |        |        |        |       
|Interest rate spread (average yield on assets        |        |        |        |        |       
|minus average rate on liabilities)                   | 2.24   | 2.09   | 2.36   | 2.43   | 2.30  
|                                                     |        |        |        |        |       
|Net interest margin (net interest income             |        |        |        |        |       
|divided by average interest-earning assets)          | 2.90   | 2.79   | 2.94   | 2.94   | 2.84  
|                                                     |        |        |        |        |       
|Ratio of average interest-earning assets             |        |        |        |        |       
|to average interest-bearing liabilities              | 114.97 | 114.70 | 113.97 | 111.03 | 111.38
|                                                     |        |        |        |        |       
|Ratio of noninterest expense to average              |        |        |        |        |       
|total assets                                         | 2.19   | 1.98   | 1.91   | 1.81   | 1.70  
|                                                     |        |        |        |        |       
|Efficiency ratio (noninterest expense                |        |        |        |        |       
|divided by total of net interest income              |        |        |        |        |       
|and noninterest income)                              | 70.43  | 67.97  | 62.84  | 60.11  | 60.44 
|                                                     |        |        |        |        |       
|Allowance for loan losses to total                   |        |        |        |        |       
|non-accruing loans                                   | 52.58  | 109.00 | 97.70  | 84.23  | 50.61 
|                                                     |        |        |        |        |       
|Net interest income after provision                  |        |        |        |        |       
|for loan losses to total                             |        |        |        |        |       
|noninterest expenses                                 | 129.22 | 136.94 | 152.98 | 151.12 | 163.48
|                                                     |        |        |        |        |       
|Nonperforming assets to total assets at              |        |        |        |        |       
|end of period                                        | .41    | .25    | .34    | .49    | .53   
|                                                     |        |        |        |        |       
|Nonperforming loans to total loans at                |        |        |        |        |       
|end of period                                        | .49    | .33    | .43    | .59    | .75   

---

(1)    Includes cash and due from banks as well as
interest-earning deposits in other institutions.
(2)    With the exception of end of period ratios, all ratios are
based on average monthly balances.





4



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**The Company**

**General**







**Our Forward-Looking Statements Are Subject to Change**



**Our Exposure to Changes in Interest Rates**



****



5

---

However, the OTS has indicated that no institution will be
required to deduct capital for interest rate risk until further notice. In March
2001, the OTS issued a notice of proposed rulemaking to eliminate this interest
rate risk deduction. The OTS proposes to instead rely upon a requirement that
each savings institution adopt interest rate risk management procedures, and a
separate provision that includes interest rate risk among the factors to be
considered in establishing individual minimum capital requirements. Because a
200 basis point increase in interest rates would have resulted in the Bank's NPV
declining by more than 2% of the estimated market value of the Bank's assets as
of December 31, 2001, the Bank would have been subject to a capital deduction of
$97,000 as of December 31, 2001 if the regulation had been effective as of such
date.

The following table presents the Bank's NPV as of December 31,
2001, as calculated by the OTS, based on information provided to the OTS by the
Bank.

Net Portfolio ValueChange in
      Interest Rates
      in Basis Points
      (Rate Shock)
    Amount
    $ Change
    % Change
    NPV
 as % of
Portfolio Value
      of Assets
    Change inNPV as % of
      Portfolio Value
      of Assets(1)(Dollars in Thousands)300bp
    $4,796
    $(2,816)
    (37)%
    7.04%
    (3.8)%200bp
    5,709
    (1,903)
    (25)
    8.18
    (2.6)100bp
    6,659
    (954)
    (13)
    9.31
    (1.3)0
    7,612
    --
    --
    10.38
    --(100)bp
    8,079
    467
    6
    10.81
    0.6(200)bp
    0
    0
    0
    0
    0(300)bp
    0
    0
    0
    0
    0(400)bp
    0
    0
    0
    0
    0


_______

(1) Based on the portfolio value of the Bank's assets
assuming no change in interest rates.

As shown by the table above, increases in interest rates will
result in declines in the Bank's net portfolio value based on OTS calculations
as of December 31, 2001, primarily due to the Bank's significant holdings of
long-term fixed-rate loans.

**Qualitative
Analysis.**Of our total loan portfolio at December 31, 2001, $58.1****million,
or 98.0%, have fixed interest rates. Our fixed-rate loans help our profitability
if interest rates are stable or declining, since these loans have yields that
exceed our cost of funds. However, when interest rates increase, we have to pay
more on our deposits and new borrowings, which adversely affects our interest
rate spread. We attempt to minimize our risk to increasing interest rates as
follows:

- Originating primarily fixed-rate mortgages with terms of 10 to 20 years;
- Originating three- to five-year
    balloon mortgages;
- Increasing our originations of
    consumer loans;
- Using fixed-rate, long-term
    borrowings to fund a portion of our fixed-rate assets;
- Increasing the amount of deposits
    in transaction accounts; and
- Purchasing short-term
    adjustable-rate securities.



6

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**Changes in Financial Condition**

****





Non-accruing loans totaled $291,000 and $156,000 at
December 31, 2001 and 2000, respectively, or .49% and .33% of the total
loan portfolio at such dates. The non-accruing loans at December 31, 2001
consisted of one- to four-family residential loans and consumer loans. All of
the non-accruing loans at December 31, 2000 consisted of one-to-four-family
residential loans. We had no real estate owned or troubled debt restructurings
at such dates. At December 31, 2001, our allowance for loan losses amounted to
$153,000, or .26% of the total loan portfolio and 52.6% of total non-accruing
loans.



7

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****

****

****

**Results of Operations**

****









8

---



****

2001
  
      2000Average Balance
  
      Interest
  
      Yield/ Rate
  
      Average Balance
  
      Interest
  
      Yield/ Rate(Dollars In Thousands)Interest-earning assets:Loans
      receivable(2)
      $   52,039
      $     3,994
      7.68%
      $   44,097
      $     3,363
      7.63%Mortgage-backed
      securities
      1,489
      101
      6.78
      1,978
      130
      6.57Investment
      securities(3)
      5,767
      326
      5.65
      8,142
      557
      6.84Interest-earning
      deposits
      3,881
      184
      4.74
      1,673
      131
      7.83Total
      interest-earning assets
      63,176
      4,604
      7.29
      55,890
      4,181
      7.48Noninterest-earning assets
      1,404
      
      
      1,502Total
      assets
      $64,580
      
      
      $57,392Interest-bearing liabilities:Deposits
      $   46,060
      2,242
      4.87
      $    41,219
      2,170
      5.26FHLB advances
      8,892
      532
      5.98
      7,508
      454
      6.05Total interest-bearing liabilities
      54,952
      2,774
      5.05
      48,727
      2,625
      5.39Noninterest-bearing liabilities
      2,850
      
      
      1,967Total liabilities
      57,802
      
      
      50,694Stockholders' equity
      6,883
      
      
      6,698Total liabilities and
        stockholders' equity
      $    64,685
      
      
      $   57,392Net interest income; average
          
        interest rate spread
      
      $      1,830
      2.24%
      
      $    1,556
      2.09%Net interest margin(4)
      
      
      2.90%
      
      
      2.79%Average interest-earning assets
          
        to average interest-bearing
          
        liabilities
      
      
      114.97%
      
      
      114.70%


---

(1) At December 31, 2001, the weighted average yields
  earned and rates paid were as follows: loans receivable, 7.17%;
  mortgage-backed securities, 6.85%; investment securities, 6.75%;
  interest-earning deposits, 1.47%, total interest-earning assets, 6.87%;
  deposits, 3.73%; FHLB advances, 5.69%; total interest-bearing liabilities,
  4.10%; and average interest rate spread, 2.77%.
  (2) Includes non-accruing loans.
  (3) Includes FHLB stock.
  (4) Equals net interest income divided by average
  interest-earning assets.





9

---



**Rate/Volume Analysis**. The following table
  shows the extent to which changes in interest rates and changes in volume of
  interest-related assets and liabilities affected our interest income and
  expense during the periods indicated. For each category of interest-earning
  assets and interest-bearing liabilities, information is provided on changes
  attributable to (a) changes in volume (change in volume multiplied by prior
  year rate), and (b) changes in rate (change in rate multiplied by prior
  year volume). The combined effect of changes in both rate and volume has been
  allocated proportionately to the change due to rate and the change due to
  volume.



|                                   | Year Ended December 31,
        2001 vs. 2000
|---------------------------------- | ---------------------------------------------
|                                   | Increase(Decrease)Due to                     
|                                   | Rate                                         
|                                   | (In Thousands)                               
|                                   |                                              
|Interest-earning assets:           |                                              
|Loans receivable                   | $     
        25                            
|Mortgage-backed securities         | 3                                            
|Investment securities(1)           | (69)                                         
|Interest-earning deposits          | (120)                                        
|                                   |                                              
|Total interest-earning assets      | (161)                                        
|                                   |                                              
|Interest-bearing liabilities:      |                                              
|Deposits                           | (183)                                        
|FHLB advances                      | (6)                                          
|                                   |                                              
|Total interest-bearing liabilities | (189)                                        
|                                   |                                              
|Increase in net interest income    | $    
        28                             
|                                   |                                              

______________

(1) Includes FHLB stock.

**Interest Income.** Interest and fees on
  loans increased by $631,000, or 18.8%, in 2001 over 2000. The increase was
  primarily due to an increase in the average loan portfolio of $7.9 million, or
  17.9%, in 2001. The increase in the average balance was primarily due to
  increases in one- to four-family residential loans, land loans and commercial
  real estate loans. The increase in the average loan portfolio resulted from an
  increase in loan personnel, and favorable market conditions for the loans
  offered by the Bank. The rate environment resulted in an increase in the
  average loan yield to 7.68% in 2001 from 7.63% in 2000.

Interest on mortgage-backed securities decreased by
  $29,000, or 22.3%, in 2001 from 2000. The decrease was due to a decline of
  $489,000, or 24.7%, in the average balance and partially offset by an increase
  in the average yield to 6.78% in 2001 from 6.57% in 2000. Mortgage-backed
  securities have declined in recent years due to normal repayments and
  prepayments. We did not purchase any mortgage-backed securities in 2001 or
  2000. We expect our mortgage-backed securities portfolio to continue to
  decline, as the Bank is emphasizing the origination of loans.

Interest and dividends on investment securities, which
  consist of U.S. Government agency securities, FHLB stock, stock in other
  thrift holding companies, and mutual funds at December 31, 2001,
  decreased by $231,000, or 41.5%, in 2001 over 2000. The mutual funds invest in
  adjustable-rate mortgages and U.S. equities. The decrease was due to a
  decrease of $2.4 million, or 29.6%, in the average balance and a decrease in
  the average yield. A total of $7.5 million in agency securities matured and/or
  were called in 2001, which was offset by an increase of $2.0 million in mutual
  funds.



10

---



Interest on interest-earning deposits in other institutions
  increased by $53,000, or 40.0% in 2001 from 2000.The
  increase was due to an increase of $2.2 million, or 129.4%, in the average
  balance in 2001. The average yield decreased to 4.74% in 2001 from 7.83% in
  2000 due to lower interest rates.

Total interest income increased by $423,000, or 10.1%, in
  2001 over 2000. The increase was primarily due to an increase in the average
  loan portfolio. The average yield on total interest-earning assets decreased
  in 2001 to 7.29% from 7.48% in 2000 due to the lower interest rate
  environment.

**Interest Expense.** Interest on deposits
  increased by $71,000, or 3.3% in 2001 over 2000. The increase was due to a
  $4.8 million, or 11.7%, increase in average deposits in 2001, and was offset
  by a decrease in the average rate paid to 4.87% in 2001 from 5.26% in 2000.
  The average balance of total deposits, including transaction accounts and
  certificates of deposit, increased in 2001, and the average rate paid on each
  type of deposits decreased in 2001 from 2000. While transaction accounts
  increased in 2001, certificates of deposit represent over 65% of total
  deposits at December 31, 2001. At December 31, 2001, $19.3 million, or 55.3%,
  of the Bank's total certificates of deposit are due in one year or less. Based
  upon historical experience, the Bank expects to retain a significant portion
  of these deposits. Noninterest-bearing checking accounts amounted to $3.0
  million, or 5.8% of total deposits at December 31, 2001, compared to $1.3
  million, or 2.8% of total deposits at December 31, 2000.

FHLB advances totaled $11.2 million at December 31,
  2001 compared to $8.2 million at December 31, 2000. The Bank increased
  its FHLB advances in 2001 both to fund increased loan demand and to help
  minimize its interest rate risk. All of the FHLB advances are fixed-rate
  borrowings and $8.7 million have original maturities in excess of five years.
  The Bank believes that the term of its FHLB advances approximates the average
  life of many of its fixed-rate loans, and the Bank expects to further increase
  its long-term FHLB advances in the prevailing interest rate environment.
  Interest on FHLB advances was $532,000 in 2001 compared to $454,000 in 2000.

Total interest expense increased by $149,000, or 5.7%, in
  2001 over 2000, as the average balance of total interest-bearing liabilities
  increased by $6.2 million, or 12.7%, in 2001. The average rate paid decreased
  to 5.05% in 2001 from 5.39% in 2000 due to a decline in interest rates.

**Net Interest Income.** Net interest income
  increased by $274,000, or 17.6%, in 2001 over2000,
  primarily due to an increase in net average interest-earning assets of $1.1
  million, or 15.3%, in 2001 over 2000. In addition,the
  average interest rate spread increased to 2.24% in 2001 from 2.09% in 2000.
  The increased spread was due to a slight decrease in the average yield on
  interest-earning assets offset by a decrease in the average rate paid on
  interest-bearing liabilities.

**Provision for Loan Losses.** Our provisions
  for loan losses were $0 in 2001 and 2000. The allowance for loan losses
  amounted to $153,000 at December 31, 2001, representing .26% of the total loan
  portfolio and 52.6% of total non-accruing loans on that date. At December 31,
  2000, the allowance for loan losses was $170,000, or .36% of the total loan
  portfolio and 109.0% of total non-accruing loans. During 2001, construction,
  commercial real estate and land loans increased by an aggregate of $2.6
  million, or 78.8%.

One- to four-family residential loans increased by $10.2
  million, or 26.9%, in 2001, and total non-accruing one- to four-family
  residential loans increased by $120,000, or 76.9%, from December 31, 2000
  to December 31, 2001. We had $20,000 in charge-off loans in 2001 with
  $4,000 in recoveries. These loans consisted of two consumer automobile loans
  and two consumer unsecured loans.

At December 31, 2001 and 2000, the Company believes that
  our allowance for loan losses is adequate. This is due to low historical
  losses, high collateral ratios for our mortgage loans, and modest levels of
  non-accruing and past due loans.



11

---



**Noninterest Income.** The Bank earns
  insurance commissions on the sale of credit life and mortgage life insurance.
  The Bank acts as an agent for two different insurance companies. Insurance
  commissions were $7,300 in 2001 and $7,400 in 2000.

Service charges on deposits increased to $34,400 in 2001
  from $23,800 in 2000, primarily due to an increase in transaction accounts.

Other miscellaneous income, which primarily consists of
  fees for certified checks, non sufficient funds, travelers' checks, stop
  payment orders, and late charges on loans, increased by $55,000, or 65.5%, in
  2001 over 2000.

FPB Insurance & Investments Inc., a bank owned
  subsidiary, was formed in 2000 and earns commissions from the sale of
  insurance and investment products, primarily mutual funds. Total revenue in
  2001 was $5,000 and $0 in 2000.

Total noninterest income increased by $66,000, or 56.9%, in
  2001 over 2000, primarily due to the increase in service charges on deposit
  accounts and non sufficient fund fees.

**Noninterest Expense**. Compensation and
  benefits increased by $140,000, or 22.5%, in 2001 over 2000. The increase in
  2001 was due to the hiring of additional staff, normal salary increases,
  benefits, stock award benefits, and staff members reaching their one-year
  anniversary and becoming eligible to participate in the Bank's incentive bonus
  plan.

Data processing expense increased by
  $30,000, or 35.3%, in 2001 over 2000 primarily due to the costs of servicing a
  larger more transaction oriented customer base. Professional fees increased in
  2001 by $5,000, or 7.4%, primarily due to increased legal and accounting fees
  as a result of being a public company and preparing and filing various public
  reports.

Advertising expense decreased by
  $5,000, or 9.3%, in 2001 over 2000.

The Bank incurred $78,000 of State of Louisiana shares tax
  for 2001 compared to $46,000 in 2000. This was due to a late 2000 tax notice
  delivered in 2001 that covered $14,000 of the tax due for 2000.

Deposit insurance premiums were $8,800 in 2001 compared to
  $8,400 in 2000.

Other noninterest expense, which includes examination fees,
  check handling and processing, office supplies, telephone, postage, printing
  and other miscellaneous expenses, increased by $63,000, or 33.0%, in 2001 over
  2000. This expense increase was attributed to increases in several categories
  of operating expenses.

Total noninterest expense increased by $280,000, or 24.6%,
  in 2001 over 2000, due to increases in most categories of noninterest expense.

**Federal Income Tax Expense**. The federal
  income tax expenseincreased in
  2001 to $208,000 from $184,000 in 2000. Pre-tax income increased by $59,000,
  or 11.0%, in 2001 from 2000.For additional
  information, see Notes to Consolidated Financial Statements.

**Liquidity and Capital Resources**

In 2001, the OTS deleted the requirement that each savings
  institution maintain an average daily balance of liquid assets of at least 4%
  of its liquidity base. The OTS now requires savings institutions to maintain
  sufficient liquidity to ensure their safe and sound operation.



12

---



Cash was generated by our operating activities in 2001 and
  2000 primarily as a result of net income in each period. The adjustments to
  reconcile net income to net cash provided by operations during the periods
  presented consisted primarily of the provisions for depreciation, the FHLB
  stock dividends, and increases or decreases in various receivable and payable
  accounts. Our primary investing activities are the origination of loans, which
  are primarily funded with the proceeds from repayments and prepayments on
  existing loans and mortgage-backed securities. Investing activities used net
  cash in 2001 and 2000, primarily due to increases in the net loan portfolio
  and, in 2000, the purchase of $4.5 million in investment securities. The
  primary financing activities consist of deposits and FHLB advances. Financing
  activities provided net cash in 2001 and 2000 due to increases in both
  deposits and FHLB advances. Total cash and cash equivalents increased by
  $213,000 in 2001 and decreased by $1.4 million in 2000. Total cash and cash
  equivalents amounted to $3.6 million at December 31, 2001.

At December 31, 2001, the Bank had outstanding commitments
  to originate $833,000 of one- to four-family residential loans, $200,000 of
  non-mortgage loans and $76,000 of undisbursed construction loans. In addition,
  as of December 31, 2001, the total amount of certificates of deposit
  which were scheduled to mature in the following 12 months was $19.3 million.
  The Bank believes that it has adequate resources to fund all of its
  commitments and that it can adjust the rate on certificates of deposit to
  retain deposits in changed interest rate environments. If the Bank requires
  funds beyond its internal funding capabilities, $12.9 million of advances from
  the FHLB of Dallas are available as are brokered deposits as an additional
  source of funds.

If the Bank would experience unexpected withdrawal of
  deposits and require funds in addition to amounts available through brokered
  funds or the FHLB, the Bank would have several options available to raise
  funds by; selling either investment securities or loans or both; pledging
  investment securities or fixed assets or both as collateral for funds; sale
  and lease-back of fixed assets; issuing trust-preferred securities or common
  and or preferred stock.

The Bank is required to maintain regulatory capital
  sufficient to meet tangible, core and risk-based capital ratios of at least
  1.5%, 4.0% and 8.0%, respectively. At December 31, 2001, the Bank exceeded
  each of its capital requirements, with tangible, core and risk-based capital
  ratios of 8.14%, 8.14%, and 15.86%, respectively. See Notes to Consolidated
  Financial Statements.

The Company's ratio of equity to assets is 9.9% at
  December 31, 2001. The Bank's ratio is 8.2% at December 31, 2001. In
  addition, the Bank is considered well-capitalized.

**Impact of Inflation and Changing Prices**

The financial statements and related financial data
  presented herein have been prepared in accordance with generally accepted
  accounting principles, which generally require the measurement of financial
  position and operating results in terms of historical dollars, without
  considering changes in relative purchasing power over time due to inflation.
  Unlike most industrial companies, virtually all of our assets and liabilities
  are monetary in nature. As a result, interest rates generally have a more
  significant impact on our performance than does the effect of inflation.
  Interest rates do not necessarily move in the same direction or in the same
  magnitude as the prices of goods and services, since such prices are affected
  by inflation to a larger extent than interest rates.

**Recent Accounting Standards**

For a discussion of recently published accounting
  standards, none of which are expected to have a material effect on FPB
  Financial, see Notes to Consolidated Financial Statements.



13

---



LaPorte, Sehrt, Romig & Hand



To the Board of DirectorsFPB Financial Corp. and Subsidiary

Independent Auditor's Report

We have audited the accompanying consolidated balance sheets
of FPB FINANCIAL CORP. AND SUBSIDIARY as of December 31, 2001 and 2000
and the related consolidated statements of income, comprehensive income, changes
in stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of FPB
FINANCIAL CORP. AND SUBSIDIARY at December 31, 2001 and 2000, and the
results of its operations and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.





/s/ LaPorte, Sehrt, Romig & Hand

A Professional Accounting Corporation



January 18, 2002
Metairie, Louisiana



A Professional Accounting Corporation
110 Veterans Memorial Blvd, Suite 200, Metairie, LA 70005-4958
724 East Boston Street, Covington, LA 70043



14

---



FPB FINANCIAL CORP. AND
      SUBSIDIARYCONSOLIDATED BALANCE SHEETSASSETSDecember 31,2001
    
    2000Cash and Non-Interest Earning
      Deposits
    $      
      432,258
    
    $      
      379,998Interest-Earning Deposits in
      Other Depository Institutions
    3,217,356
    
    3,056,175Total Cash and Cash
      Equivalents
    3,649,614
    
    3,436,173Securities -
      Available-for-Sale
    4,232,558
    
    8,579,101Securities - Held-to-Maturity
    1,200,668
    
    1,766,261Federal Home Loan Bank Stock -
      At Cost
    564,000
    
    429,900Loans, Net of Allowance for
      Loan Losses of $153,326 in 2001and $170,000 in 2000
    59,282,011
    
    46,595,147Accrued Interest Receivable
    201,810
    
    253,486Premises and Equipment, Net
    1,387,967
    
    309,894Other Assets
    116,615
    
    72,249$ 
      70,635,243
    
    $ 
      61,442,211LIABILITIES AND
      STOCKHOLDERS' EQUITYDepositsNon-Interest Bearing
      Demand
    $   
      3,029,372
    
    $   
      1,287,010Interest Bearing
    49,073,114
    
    44,759,870Total Deposits
    52,102,486
    
    46,046,880Interest Payable on Deposits
    68,881
    
    117,223Federal Home Loan Bank
      Advances
    11,200,000
    
    8,200,000Other Liabilities
    260,179
    
    298,685Total Liabilities
    63,631,546
    
    54,662,788STOCKHOLDERS' EQUITYPreferred Stock $.01 Par
      Value, 2,000,000 SharesAuthorized, None Issued
    -
    
    -Common Stock - $.01 Par
      Value, 5,000,000 SharesAuthorized, 331,355 Shares
      Issued and Outstanding
    3,314
    
    3,314Additional Paid-in
      Capital
    2,986,660
    
    2,981,758Unearned ESOP Stock
    (203,908)
    
    (224,298)Unearned MRP Trust Stock
    (131,243)
    
    (136,602)Treasury Stock, at Cost
      (11,200 Shares in 2001 and 2,700 Shares in 2000)
    (132,421)
    
    (28,354)Retained Earnings
    4,468,431
    
    4,168,372Accumulated Other
      Comprehensive Income (Loss)
    12,864
    
    15,233Total Stockholders' Equity
    7,003,697
    
    6,779,423Total Liabilities and
      Stockholders' Equity
    $
      70,635,243
    
    $ 
      61,442,211


The accompanying notes are an integral part of these
financial statements.

15

---





FPB FINANCIAL CORP. AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      INCOMEFor
      The Years EndedDecember 31,2001
    
    2000INTEREST INCOMEMortgage Loans and Fees
    $
      3,674,467
    
    $
      3,138,227Loans on Deposits
    83,356
    
    75,953Consumer Loans
    235,885
    
    148,749FHLB Stock and Other
      Investment Securities, Available-for-Sale
    326,064
    
    556,963Investment Securities,
      Held-to-Maturity
    100,841
    
    130,006Demand Deposits
    183,675
    
    131,124Total Interest Income
    4,604,288
    
    4,181,022INTEREST EXPENSEDeposits
    2,241,496
    
    2,170,136Federal Home Loan Bank
      Advances
    532,151
    
    454,320Total Interest Expense
    2,773,647
    
    2,624,456Net Interest Income
    1,830,641
    
    1,556,566PROVISION FOR LOAN LOSSES
    -
    
    -Net Interest Income
      afterProvision for Loan
      Losses
    1,830,641
    
    1,556,566NON-INTEREST INCOMEInsurance Commissions
    7,318
    
    7,373Service Charges on Deposits
    34,483
    
    23,849Other
    139,617
    
    84,450Total Non-interest
      Income
    181,418
    
    115,672NON-INTEREST EXPENSECompensation and Employee
      Benefits
    762,489
    
    622,831Occupancy and Equipment
    75,676
    
    60,912Data Processing
    114,863
    
    84,755Professional Fees
    73,558
    
    68,382Advertising
    49,209
    
    54,275State Shares Tax
    78,171
    
    45,999Federal Insurance Expense
    8,800
    
    8,386Other
    254,386
    
    191,145Total Non-interest
      Expense
    1,417,152
    
    1,136,685INCOME BEFORE INCOME TAXES
    594,907
    
    535,553INCOME TAXES EXPENSE
    207,806
    
    184,199NET INCOME
    $  
      387,101
    
    $  
      351,354EARNINGS PER SHARE - BASIC
    $        
      1.33
    
    $        
      1.17EARNINGS PER SHARE -
      DILUTED
    $        
      1.33
    
    $        
      1.17




The accompanying notes are an integral part of these financial
statements.





16

---



FPB FINANCIAL CORP. AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      COMPREHENSIVE INCOMEFor The Years
      EndedDecember 31,2001
    
    2000NET INCOME
    $  
      387,101
    
    $  
      351,354OTHER COMPREHENSIVE INCOME,
      NET OF TAXUnrealized Holding Gains
      Arising During the Period
    4,922
    
    47,737Reclassification Adjustment
      for (Gains) included inNet Income
    (7,291)
    
    (8,210)Total Other Comprehensive
      Income
    (2,369)
    
    39,527COMPREHENSIVE INCOME
    $  
      384,732
    
    $  
      390,881


The accompanying notes are an integral part of these
financial statements.





17

---



|FPB FINANCIAL CORP. AND
      SUBSIDIARY                        
|----------------------------------------------------------------
|CONSOLIDATED STATEMENTS OF
      CHANGES IN STOCKHOLDERS' EQUITY
|For The Years Ended
      December 31, 2001 and 2000            
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|                                                                
|BALANCE - January 1, 2000                                       
|                                                                
|Net Income 2000                                                 
|                                                                
|Common Stock Acquired by
      Management                       
|Retention Plan Trust                                            
|                                                                
|Purchase of Treasury Stock                                      
|                                                                
|Other Comprehensive Income
      (Loss),                        
|2000, Net of Tax                                                
|Unrealized Gain (Loss) on
      Investment                      
|Securities -
      Available-for-Sale                           
|                                                                
|Dividends Declared and Paid                                     
|                                                                
|ESOP Shares Released for
      Allocation                       
|                                                                
|BALANCE - December 31, 2000                                     
|                                                                
|Net Income 2001                                                 
|                                                                
|Common Stock Acquired by
      Management                       
|Retention Plan Trust                                            
|                                                                
|Distribution of Stock for
      Management                      
|Retention Plan Trust                                            
|                                                                
|Purchase of Treasury Stock                                      
|                                                                
|Other Comprehensive Income
      (Loss),                        
|2001, Net of Tax                                                
|Unrealized Gain (Loss) on
      Investment                      
|Securities -
      Available-for-Sale                           
|                                                                
|Dividends Declared and Paid                                     
|                                                                
|ESOP Shares Released for
      Allocation                       
|                                                                
|BALANCE - December 31, 2001                                     
|                                                                

The accompanying notes are an integral part of these
financial statements.





18

---





FPB FINANCIAL CORP. AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      CASH FLOWSFor The Years
      EndedDecember 31,2001
    
    2000CASH FLOWS FROM OPERATING
      ACTIVITIESNet Income
    $   
      387,100
    
    $   
      351,354Adjustments to Reconcile Net
      Income to Net CashProvided by Operating
      ActivitiesDepreciation
    38,024
    
    31,791Deferred Tax Provision
      (Credit)
    29,283
    
    (11,422)ESOP Contribution
    25,292
    
    25,476RRP Expense
    16,926
    
    12,529Stock Dividends on Federal
      Home Loan Bank Stock
    (18,600)
    
    (31,500)Discount Accretion of
      Investments - Available-for-Sale
    (11,045)
    
    (12,439)Premium Amortization on
      Investment Securities -Held-to-Maturity
    4,846
    
    3,466Changes in Operating Assets
      and LiabilitiesAccrued Interest Receivable
    51,676
    
    (138,211)Other Assets
    (44,366)
    
    (27,262)Interest Payable on Deposits
    (48,342)
    
    70,078Other Liabilities
    (66,570)
    
    108,136Deferred Loan Origination and
      Commitment Costs
    (36,964)
    
    (19,282)Total Adjustments
    (59,840)
    
    11,360Net Cash Provided by
      Operating Activities
    327,260
    
    362,714CASH FLOWS FROM INVESTING
      ACTIVITIESLoan Originations and
      Principal Collections, Net
    (12,649,900)
    
    (5,787,202)Additions to Premises and
      Equipment
    (1,116,097)
    
    (136,509)Purchase of Federal Home Loan
      Bank Stock
    (115,500)
    
    (31,200)Purchase of Investment
      Securities - Available-for-Sale
    (3,146,000)
    
    (4,505,325)Maturities of Investment
      Securities - Available-for-Sale
    7,500,000
    
    -Principal Payments from
      Investment Securities - Held-to-Maturity
    560,747
    
    395,948Net Cash Used in Investing
      Activities
    (8,966,750)
    
    (10,064,288)CASH FLOWS FROM FINANCING
      ACTIVITIESPurchase of Treasury Stock
    (104,067)
    
    (28,354)Purchase of Stock for
      Management Retention Plan
    (11,567)
    
    (136,602)Net Increase in Deposits
    6,055,606
    
    6,593,167Advances from Federal Home
      Loan Bank
    3,000,000
    
    2,000,000Dividends Paid on Common Stock
    (87,041)
    
    (74,083)Net Cash Provided by
      Financing Activities
    8,852,931
    
    8,354,128NET INCREASE (DECREASE) IN
      CASH AND CASH EQUIVALENTS
    213,441
    
    (1,347,446)CASH AND CASH EQUIVALENTS -
      BEGINNING OF YEAR
    3,436,173
    
    4,783,619CASH AND CASH EQUIVALENTS -
      END OF YEAR
    $
      3,649,614
    
    $
      3,436,173


The accompanying notes are an integral part of these
financial statements.





19

---



FPB FINANCIAL CORP. AND
      SUBSIDIARYCONSOLIDATED STATEMENTS OF
      CASH FLOWS (Continued)For The Years
      EndedDecember 31,2001
    
    2000SUPPLEMENTAL DISCLOSURE OF
      CASH FLOW INFORMATIONCash Paid During the Year for:Interest
    $
      2,821,989
    
    $
      2,554,378Income Taxes
    198,600
    
    132,127Market Value Adjustment for
      Gain (Loss) on Securities Available-for-Sale
    (3,588)
    
    59,889


The accompanying notes are an integral part of these
financial statements.



20

---



FPB FINANCIAL CORP. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A

> SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
> NATURE OF OPERATIONS

FPB
  Financial Corp. (the Company) is a Louisiana bank holding company in Hammond,
  Louisiana. The Company's subsidiary is Florida Parishes Bank (the Bank) which
  has been in continuous operation since 1922 and represents virtually all of
  the operations and net income of the Company. During 2000, the Bank
  established and incorporated FPB Insurance and Investments, Inc., (FPBII)
  which is wholly-owned by the Bank.

The
  Bank provides a variety of deposit products and a mixture of fixed and
  adjustable rate mortgages, primarily first mortgages on single-family
  residences, and various types of consumer loans. It operates from a single
  location in Hammond, Louisiana, and all of its mortgages are secured by
  properties located in Tangipahoa Parish and the surrounding areas. Its
  depositors are also primarily residents of Tangipahoa Parish and the
  surrounding areas.

FPBII
  was created to conduct securities brokerage and investment advisor activities
  and insurance activities through a contractual agreement with a third-party
  financial services corporation.

BASIS OF PRESENTATION
  AND CONSOLIDATION

The
  accompanying consolidated financial statements include the accounts of the
  Company and its subsidiary, Florida Parishes Bank and its subsidiary, FPB
  Insurance and Investments, Inc. All significant intercompany balances and
  transactions have been eliminated.

USE OF ESTIMATES

In preparing consolidated financial statements in
  conformity with generally accepted accounting principles, management is
  required to make estimates and assumptions that affect the reported amounts of
  assets and liabilities as of the date of the balance sheet and reported
  amounts of revenues and expenses during the reporting period. Actual results
  could differ from those estimates.

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

CASH AND CASH
  EQUIVALENTS

For
  purposes of the consolidated statements of cash flows, cash and cash
  equivalents include cash and balances due from banks, federal funds sold and
  securities purchased under agreements to resell, all of which mature within
  ninety days.

INVESTMENT SECURITIES
  - AVAILABLE-FOR-SALE

Investment
  securities include U.S. Government Agency bonds, a mutual fund that invests in
  adjustable rate mortgages, a stock market index mutual fund, and common stock
  in a local bank. They are classified as available-for-sale and are
  consequently carried at fair market value. Realized gains and losses on the
  sale of investment securities are recorded on the trade date and are
  determined using first-in, first-out or weighted average methods. Unrealized
  gains and losses are recognized as other comprehensive income or loss.



21

---



FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE A

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

> INVESTMENT SECURITIES -
>     HELD-TO-MATURITY

Debt
  securities that management has the positive intent and ability to hold to
  maturity are classified as "held-to-maturity" and recorded at
  amortized cost. At December 31, 2001 and 2000, investment securities
  classified as "held-to-maturity" consisted of participation
  certificates issued by the Government National Mortgage Association (GNMA).

LOANS

The Company, through its
  subsidiary bank, grants mortgage, commercial and consumer loans to customers.
  A substantial portion of the loan portfolio is represented by mortgage loans
  throughout Tangipahoa parish.

Loans are reported at their outstanding unpaid principal
  balances less the allowance for loan losses, and any deferred fees or costs on
  originated loans. Interest income is accrued on the unpaid principal balance.

The Company discontinues the
  accrual of interest income when a loan becomes 90 days past due as to
  principal or interest. At that time, uncollected interest previously recorded
  is reversed. If the delinquent interest is subsequently collected, it is
  credited to income in the period collected. Interest on impaired loans is
  discontinued when, in management's opinion, the borrower may be unable to meet
  payments as they become due.

ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses
  is established as losses are estimated to have occurred through a provision
  for loan losses charged to earnings. Loan losses are charged against the
  allowance when management believes the uncollectibility of a loan balance is
  confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular
  basis by management and is based upon management's periodic review of the
  Bank's past loan loss experience, known and inherent risks in the portfolio,
  adverse situations that may affect the borrower's ability to pay, the
  estimated value of any underlying collateral, and prevailing economic
  conditions. This evaluation is inherently subjective, as it requires estimates
  that are susceptible to significant revision as more information becomes
  available.

A loan is considered impaired when, based on current
  information and events, it is probable the Bank will be unable to collect the
  scheduled payments of principal or interest when due according to the
  contractual terms of the loan agreement. Factors considered by management in
  determining impairment include payment status, collateral value, and the
  probability of collecting scheduled principal and interest payments when due.
  Impairment is measured on a loan by loan basis by either the present value of
  expected future cash flows discounted at the loan's effective interest rate,
  the loan's obtainable market price, or the fair value of the collateral if the
  loan is collateral dependent.



22

---



FPB FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A

> SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
> (Continued)

FORECLOSED REAL ESTATE

Real estate properties
  acquired through, or in lieu of, loan foreclosure are initially recorded at
  the lower of the related loan balance or fair value less estimated cost to
  sell at the date of foreclosure. Management periodically performs valuations,
  and an allowance for losses will be established to reduce the net carrying
  value to net realizable value if necessary. Costs related to improvement of
  the property are capitalized, whereas costs related to holding the property
  are charged to operations.

PREMISES AND EQUIPMENT

Land is carried at cost.
  Buildings and equipment are carried at cost, less accumulated depreciation
  computed on the straight-line and accelerated methods over the estimated
  useful lives of the assets.

> LOAN ORIGINATION AND
>   COMMITMENT FEES AND RELATED COSTS

Loan
  origination and commitment fees, as well as certain direct origination costs,
  are deferred and amortized as a yield adjustment over the lives of the related
  loans using the level yield method. Amortization of net deferred loan fees or
  costs is discontinued when a loan is placed on nonaccrual status.

INCOME TAXES

The
  Company and its wholly-owned subsidiary file a consolidated Federal income tax
  return. Each entity will pay its pro rata share of income taxes in accordance
  with a written-tax sharing agreement.

Deferred
  income tax assets and liabilities are determined using the liability (or
  balance sheet) method. Under this method, the net deferred tax asset or
  liability is determined based on the tax effects of the temporary differences
  between the book and tax bases of the various balance sheet assets and
  liabilities and gives current recognition to changes in tax rates and laws.

ADVERTISING COSTS

Advertising
  costs are charged to operations as incurred. Advertising costs were $46,882
  and $54,275 for the years ended December 31, 2001 and 2000, respectively.

COMPREHENSIVE INCOME

Accounting
  principles generally require that recognized revenue, expenses, gains and
  losses be included in net income. Although certain changes in assets and
  liabilities, such as unrealized gains and losses on available-for-sale
  securities, are reported as a separate component of the equity section of the
  balance sheet, such items, along with net income, are components of
  comprehensive income.



23

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A

SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)

RECENT ACCOUNTING
  PRONOUNCEMENTS

Statement
  of Financial Accounting Standards No. 140 (SFAS 140), Accounting for
  Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
  is a replacement of SFAS 125. This statement provides accounting and reporting
  standards for transfers and servicing of financial assets and extinguishments
  of liabilities. Those standards are based on consistent application of a
  financial-components approach that focuses on control. Under this approach,
  after a transfer of financial assets, an entity recognizes the financial and
  servicing assets it controls and the liabilities it has incurred, derecognizes
  financial assets when control has been surrendered, and derecognizes
  liabilities when extinguished. This statement provides consistent standards
  for distinguishing transfers of financial assets that are sales from transfers
  that are secured borrowings. This statement is effective for transfers and
  servicing of financial assets and extinguishments of liabilities occurring
  after March 31, 2001 and for recognition and reclassification of collateral
  and for disclosures relating to securitization transactions and collateral for
  years ending after December 15, 2000. The adoption of this pronouncement had
  no effect on the financial position and results of operations of the Company.

Statement
  of Financial Accounting Standards No. 144 (SFAS 144), Accounting for the
  Impairment and Disposal of Long-Lived Assets, is a replacement of SFAS
  121. This statement provides accounting and reporting standars for the
  recognition and measurment of the impairment of long-lived assets to be held
  and used and the measurement of long-lived assets to be disposed of by
  abandonment or sale. This statement requires that long-lived assets (excluding
  goodwill) to be held and used by an entity be reviewed for impairment whenever
  events or changes in circumstances indicate that the carrying amount of an
  asset may not be recoverable and requires a probability-weighted cash flow
  estimation approach, and introduces a "primary-asset" approach to
  determine the cash flow estimation period. In addition, this statement
  requires that long-lived assets to be disposed of be reported at the lower of
  carrying amount or fair value less cost to sell, and includes accounting
  guidance for disposal of a segment of a business that is considered to be a
  discontinued operation. This statement is effective for financial statements
  issued for fiscal years beginning after December 15, 2001.



24

---



FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



> NOTE B
>   SECURITIES -
>   AVAILABLE-FOR-SALE
>   
>   The
>   amortized costs and fair values of securities - available-for-sale, with gross
>   unrealized gains and losses, follows:

Securities
      Available-For-SaleGross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    MarketDecember
      31, 2001
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Government Agency Bonds
    $   
      998,414
    
    $     
      16,895
    
    $              
      -
    
    $
      1,015,309Mutual Funds:Adjustable Rate Mortgage
      Portfolio
    3,000,000
    
    2,054
    
    -
    
    3,002,054Stock Market Index Fund
    63,027
    
    -
    
    6,682
    
    56,345Marketable Equity Securities
    151,625
    
    8,225
    
    1,000
    
    158,850$
      4,213,066
    
    $
      27,174
    
    $
      7,682
    
    $
      4,232,558Securities
      Available-For-SaleGross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    MarketDecember
      31, 2000
    Cost
    
    Gains
    
    Losses
    
    ValueU.S. Government Agency Bonds
    $
      7,487,237
    
    $     
      29,052
    
    $              
      -
    
    $
      7,516,289Mutual Fund:Adjustable Rate Mortgage
      Portfolio
    1,000,000
    
    -
    
    10,009
    
    989,991Stock Market Index Fund
    30,527
    
    -
    
    2,706
    
    27,821Marketable Equity Securities
    38,125
    
    6,875
    
    -
    
    45,000$
      8,555,889
    
    $     
      35,927
    
    $     
      12,715
    
    $
      8,579,101


> The
>   following is a summary of maturities of debt securities - available-for-sale
>   as of December 31, 2001:

Amortized
        
        FairCost
        
        ValueDue in One Year or Less
        
        $   
          998,414
        
        $
          1,015,309Due From One to Five Years
        
        -
        
        -Due From Five to Ten Years
        
        -
        
        -Due After Ten Years
        
        -
        
        -$   
          998,414
        
        $
          1,015,309


> At
>   December 31, 2001, a Federal Home Loan Bank bond with a carrying value of
>   $619,052 was pledged to secure public deposits in excess of $100,000.

25

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C

SECURITIES - HELD-TO-MATURITY

The
  amortized costs and fair values of securities - held-to-maturity, with gross
  unrealized gains and losses, follows:

Securities
      Held-to-MaturityGross
    
    Gross
    
    EstimatedAmortized
    
    Unrealized
    
    Unrealized
    
    MarketDecember
      31, 2001
    
    
    Cost
    
    Gains
    
    Losses
    
    ValueGNMA Participation
      Certificates
    
    
    $
      1,200,668
    
    $     
      24,338
    
    $               
      -
    
    $
      1,225,006December
      31, 2000GNMA Participation
      Certificates
    
    
    $
      1,766,261
    
    $     
      11,363
    
    $       
      5,945
    
    $
      1,771,679


> The following is a
>   summary of maturities of securities - held-to-maturity as of December 31,
>   2001:

Amortized
    
    FairCost
    
    ValueDue in One Year or Less
    
    $       
      4,061
    
    $        
      4,137Due From One to Five Years
    
    -
    
    -Due From Five to Ten Years
    
    -
    
    -Due After Ten Years
    
    1,196,607
    
    1,220,869$
      1,200,668
    
    $
      1,225,006




> The
>   amortized costs and fair value of mortgage-backed securities -
>   held-to-maturity are presented by contractual maturity in the preceding
>   tables. Expected maturities will differ from contractual maturities because
>   borrowers may have the right to call or prepay obligations without call or
>   prepayment penalties.
>   One
>   of the adjustable rate GNMA participation certificates with a carrying value
>   of $131,641 and a market value of $133,743 as of December 31, 2001 is pledged
>   to secure a local public entity's deposits in excess of $100,000.

26

---

> FPB FINANCIAL CORP. AND SUBSIDIARY
>   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D

> LOANS
>   
>   Loans
>   receivable at December 31, 2001 and 2000 are summarized as follows:

December 31,2001
      
      2000Loans Secured by First
        Mortgages on Real EstateSecured by One-to-Four
        Family Residences
      $
        48,068,251
      
      $
        37,914,560Construction (1)
      261,500
      
      1,500,627Commercial Real Estate
      3,835,000
      
      2,375,000Land
      2,001,000
      
      898,000Total First Mortgage
        Loans
      54,165,751
      
      42,688,187Consumer LoansLoans Secured by Savings
      1,287,532
      
      1,049,109Second Mortgages and Home
        Equity Loans
      1,064,000
      
      1,648,000Automobile
      1,387,778
      
      899,000Unsecured
      414,061
      
      288,698Other
      263,326
      
      184,000Total Consumer Loans
      4,416,697
      
      4,068,807Commerical LoansSecured, Other than
        Mortgages
      357,000
      
      277,000Unsecured
      450,000
      
      107,000Total Commercial Loans
      807,000
      
      384,00059,389,448
      
      47,140,994Loans in Process
      (76,111)
      
      (460,883)Allowance for Loan Losses
      (153,326)
      
      (170,000)Net Deferred Loan
        Origination Costs
      122,000
      
      85,036Loans, Net
      $
        59,282,011
      
      $
        46,595,147


> (1) Consists solely
>   of one-to-four family residential construction loans.





27

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D

> LOANS (Continued)

The following is a classification of loans by rate and
  maturity (in thousands):

2001
      
      2000Fixed Rate Loans:Maturing in One Year or Less
      
      $     4,378
      
      $    
        4,469Maturing Between One and
        Five Years
      
      13,238
      
      9,159Maturing Between Five and
        Ten Years
      
      24,179
      
      8,171Maturing After Ten Years
      
      16,348
      
      23,591Total Fixed Rate
        Loans
      
      58,143
      
      45,390Variable Rate Loans:Maturing in One Year or Less
      
      -
      
      -Maturing Between One and
        Five Years
      
      47
      
      42Maturing Between Five and
        Ten Years
      
      647
      
      66Maturing After Ten Years
      
      552
      
      1,643Total Variable Rate
        Loans
      
      1,246
      
      1,751Total Loans
      
      $  
        59,389
      
      $  
        47,141




> Activity in the allowance for loan losses is summarized as
>   follows for the years ended December 31:

2001
      
      2000Balance at Beginning of Year
      
      $
        170,000
      
      $
        170,000Provision Charged to Income
      
      -
      
      -Losses Charged-off
      
      (20,424)
      
      -Recoveres Credited to
        Allowance
      
      3,750
      
      -Balance at End of Year
      
      $
        153,326
      
      $
        170,000




Loans for which impairment had been recognized totaled
    $291,287 and $155,839 at December 31, 2001 and 2000, respectively. The
    valuation allowance related to impaired loans amounted to $14,214 and $7,792
    at December 31, 2001 and 2000, respectively. The amount of interest income
    that would have been recorded on impaired loans at December 31, 2001 and
    2000 was $8,566 and $3,653, respectively.

The Bank is not committed to lend additional funds to
    debtors whose loans are on nonaccrual status, or loans that have been
    modified in troubled debt restructurings, at December 31, 2001.





28

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE D

> LOANS (Continued)
>   
>   Loans receivable includes activity and account balances for
>   the years ended December 31, 2001 and 2000 to directors, executive
>   officers, and their immediate families as follows:

Year EndedDecember 31,2001
      
      2000Balance at Beginning of Year
      $
        340,395
      
      $
        678,864Additional Borrowings
      726,936
      
      199,674Loan Repayments
      (324,464)
      
      (538,143)Balance at End of Year
      $
        742,867
      
      $
        340,395


Related party loans are primarily first mortgage real estate loans.



NOTE E

> ACCRUED INTEREST RECEIVABLE
> 
> Accrued interest receivable at December 31, 2001 and 2000 consists of the
> following:

2001
      
      2000Loans Receivable
      $
        183,630
      
      $
        129,217Investment Securities,
        Held-to-Maturity
      6,930
      
      11,047Investment Securities,
        Available-for-Sale
      11,250
      
      113,222$
        201,810
      
      $
        253,486




NOTE F

> PREMISES AND EQUIPMENT
> 
> Premises and equipment at
> December 31, 2001 and 2000 are summarized as follows:



2001
      
      2000Costs:Land
      $
        1,167,991
      
      $    
        67,652Building
      405,456
      
      405,456Furniture, Fixtures and
        Equipment
      282,530
      
      266,1551,855,977
      
      739,263Less: Accumulated
        Depreciation
      (468,010)
      
      (429,369)$
        1,387,967
      
      $
        309,894


Depreciation expense for the years ended December 31, 2001 and 2000 was
    $38,024 and $31,791, respectively.





29

---



FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE G

> DEPOSITS
> 
> Deposits at December 31, 2001 and 2000 are summarized as follows:

2001
    
    2000Amount
    
    %
    
    Amount
    
    %Passbook Savings - Year End
      Interest Rateof 1.49% in 2001 and 2.00% in
      2000
    
    
    $
      1,281,123
    
    2.46
    
    $
      898,140
    
    1.95Money Market Accounts -
      Regular - Year EndYear End Interest Rates of
      2.00% in 2001and 3.00% in 2000
    
    
    1,485,680
    
    2.85
    
    1,259,136
    
    2.73Money Market Accounts - Super
      - Year EndYear End Interest Rates of
      2.05% in 2001and 4.00% in 2000
    
    
    973,115
    
    1.87
    
    782,714
    
    1.702,458,795
    
    4.72
    
    2,041,850
    
    4.43Checking Accounts -
      Interest-Bearing NOWAccounts - Year End Interest
      Rates of1.00% in 2001 and 2.25% in
      2000
    
    
    1,722,725
    
    3.31
    
    1,476,227
    
    3.21Interest-Max Accounts - Year
      End WeightedAverage Interest Rates of
      2.13% in 2001and 5.52% in 2000
    
    
    8,714,370
    
    16.73
    
    5,819,244
    
    12.64Non-Interest Bearing Accounts
    
    
    3,029,372
    
    5.81
    
    1,287,010
    
    2.7913,466,467
    
    25.85
    
    8,582,481
    
    18.64Certificates of Deposit - Year
      End WeightedAverage Interest Rates of
      4.64% in 2001and 6.19% in 2000
    
    
    34,896,101
    
    66.98
    
    34,524,409
    
    74.98$
      52,102,486
    
    100.00
    
    $
      46,046,880
    
    100.00




> The weighted average interest rate on all deposit
>     accounts at December 31, 2001 and 2000 was 3.56% and 5.49%, respectively.
>     The aggregate amount of jumbo certificates of deposit
>     with a minimum balance of $100,000 was approximately $8,073,000 and
>     $7,526,000 at December 31, 2001 and 2000, respectively. Deposits in excess
>     of $100,000 are not federally insured.



30

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE G

DEPOSITS (Continued)

At December 31, 2001, scheduled maturities of certificates
  of deposit are as follows:



Year Ended
      December 31,2002
    $
    19,250,7482003
    
    9,216,5952004
    
    3,191,9472005
    
    366,9812006
    
    2,267,130After 2006
    
    602,700Total
    $
    34,896,101


> The Company held deposits of $550,902 and $646,906 for
>     related parties at December 31, 2001 and 2000, respectively.



NOTE H

> BORROWINGS
>   
>   Pursuant to collateral agreements with the Federal Home Loan Bank (FHLB),
>   advances are secured by a blanket floating lien on first mortgage loans. Total
>   interest expense recognized in 2001 and 2000 was $532,151 and $454,320,
>   respectively.
>   Advances consisted of the following at December 31, 2001 and 2000,
>   respectively:

Contract Rate
    
    Advance Total2001
    
    20004.00% to 4.99%
    $
    3,100,000
    $
    100,0005.00% to 5.99%
    
    4,550,000
    
    4,550,0006.00% to 6.99%
    
    2,050,000
    
    2,050,0007.00% to 7.99%
    
    1,500,000
    
    1,500,000$
    11,200,000
    $
    8,200,000


> Maturities of Advances at December 31, 2001 for each of
>     the five years and thereafter follows:

|Year Ended   |   |           
|------------ | - | ----------
|December 31, |   | Amount    
|             |   |           
|2002         | $ | 2,000,000 
|2003         |   | 500,000   
|2004         |   | 1,700,000 
|2005         |   | 2,400,000 
|2006         |   | 4,200,000 
|After 2006   |   | 400,000   
|             |   |           
|Total        | $ | 11,200,000
|             |   |           



31

---



FPB FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE I

> INCOME TAXES
>   
>   The provision for income taxes for 2001 and 2000 consists
>   of the following:

2001
    
    2000Current
    $
    178,304
    $
    172,559Deferred (Benefit)
    
    29,502
    
    11,640$
    207,806
    $
    184,199


The components of the net deferred tax liability at December 31, 2001 and
    2000 are as follows:

2001
    
    2000Deferred Tax Assets:Management Recognition Plan
    $
    3,456
    $
    4,260Employee Stock Ownership Plan
    
    1,986
    
    997Allowance for Loan Losses
    
    52,131
    
    57,800Accrued Interest on Deposits
    
    23,420
    
    39,855Deferred Buy Down Fees
    
    11,034
    
    -Total Deferred Tax Assets
    
    92,027
    
    102,912


Deferred Tax Liabilities:FHLB Stock Dividends
    
    (71,400)
    
    (65,076)Bad Debt Adjustment
    
    (17,421)
    
    (26,132)Deferred Loan Costs/Fees
    
    (41,480)
    
    (28,912)Other
    
    (23,595)
    
    (15,159)Net Unrealized Gain on SecuritiesAvailable-for-Sale
    
    (6,628)
    
    (7,847)Total Deferred Tax Liabilities
    
    (160,524)
    
    (143,126)Net Deferred Tax Liability
    $
    (68,497)
    $
    (40,214)




The provision for Federal income taxes differs from that computed at the
    statutory 34% corporate tax rate, as follows:



Years Ended
          December 312001
          
          2000Amount
          
          Effective
 Rate %
          
          Amount
          
          Effective
          Rate %Tax at Statutory Rate
          $202,268
          
          34.00
          
          $182,088
          
          34.00Other
          5,538
          
          0.93
          
          2,111
          
          0.39$207,806
          
          34.93
          
          $184,199
          
          34.39




32

---





FPB FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE I

INCOME TAXES (Continued)

Included in retained earnings at December 31, 2001 and 2000
  is $502,945 in bad debt reserves for which no deferred Federal income tax
  liability has been recorded. These amounts represent allocations of income to
  bad debt deductions for tax purposes only. Reduction of these reserves for
  purposes other than tax bad debt losses or adjustments arising from carryback
  of net operating losses would create income for tax purposes, which would be
  subject to the then-current income tax rate. The unrecorded deferred liability
  on these amounts was approximately $171,000 for December 31, 2001 and 2000,
  respectively.



NOTE J

COMPREHENSIVE INCOME

Comprehensive income was comprised of changes in the
  Company's unrealized holding gains and losses on securities available-for-sale
  during 2001 and 2000. The components of comprehensive income and related tax
  effects are as follows:

|                                       |   | 2001     |   | 2000    
|-------------------------------------- | - | -------- | - | --------
|Unrealized Holding Gains (Losses) on   |   |          |   |         
|Securities Available-for-Sale          | $ | 7,457    | $ | 72,328  
|Reclassification Adjustment for Losses |   |          |   |         
|(Gains) Realized in Income             |   | (11,047) |   | (12,439)
|Net Unrealized Gains (Losses)          |   | (3,590)  |   | 59,889  
|Tax (Expense) Benefit                  |   | 1,221    |   | (20,362)
|Net of Tax Amount                      | $ | (2,369)  | $ | 39,527  
|                                       |   |          |   |         



NOTE K

EMPLOYEE STOCK OWNERSHIP PLAN
(ESOP)

During
    1999, the Company established an employee stock ownership plan. The FPB
    Financial Corp. Employee Stock Ownership Plan enables eligible employees of
    the Bank to share in the growth of the Company through the acquisition of
    stock. Employees are generally eligible to participate in the ESOP after
    completion of one year of service and attaining age 21.

The
  ESOP acquired 26,508 shares of FPB Financial Corp. stock at $10 a share in the
  FPB Financial Corp.'s initial public offering. The acquisition was funded by a
  loan from FPB Financial Corp., which bears interest at 7.75% and will be paid
  principally from company contributions to the ESOP over a period of thirteen
  years. The loan agreement requires quarterly principal payments of $5,098 plus
  accrued interest. The loan is secured by the pledge of the common stock
  purchased. Contributions to the ESOP must be sufficient for debt service, but
  the Company may, in any plan year, make additional discretionary contributions
  for the benefit of plan participants in the form of cash or shares of common
  stock.







33

---



FPB FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE K

> EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) (Continued)

In the event of plan or participant termination, or upon
  the participant's death, disability or retirement, the Company may be required
  to purchase, subject to certain limitations, the shares from the participants
  at the then fair market value.

Shares purchased by the ESOP with the proceeds of the loan
  will be held in a suspense account and released to participants on a pro-rata
  basis as debt service payments are made. As the Company makes contributions to
  the ESOP sufficient to meet the principal and interest requirements on the
  loan, shares are released from collateral.

The Company accounts for its ESOP in accordance with
  Statement of Position 93-6. Accordingly, the debt of the ESOP is not recorded
  as a note receivable by FPB Financial Corp., but the shares pledged as
  collateral are reported as unearned ESOP shares on the balance sheets. As
  shares are released from collateral, the Company reports compensation equal to
  the fair market value of the shares. ESOP compensation expense was $26,040 and
  $25,476 for the years ended December 31, 2001 and 2000, respectively. Any
  excess or deficit of fair value over or under the cost of the ESOP shares
  released is recorded in the equity section of the balance sheets as additional
  paid-in-capital. The cost of all unallocated shares held by the ESOP is
  reflected on the balance sheets as a contra equity account.

The ESOP shares as of December 31, 2001 and 2000 were as
follows:

|                                |   | 2001    |   | 2000   
|------------------------------- | - | ------- | - | -------
|Allocated Shares                |   | 4,654   |   | 2,051  
|Shares Committed to be Released |   | 2,496   |   | 2,603  
|Unreleased Shares               |   | 19,658  |   | 21,854 
|Total ESOP Shares               |   | 26,808  |   | 26,508 
|Fair Value of Unreleased Shares | $ | 275,212 | $ | 248,589
|                                |   |         |   |        

Additional shares were acquired by the ESOP through dividends received
    from the Company.

NOTE L

MANAGEMENT RECOGNITION AND
RETENTION PLAN

On
  April 25, 2000, the shareholders of the Company approved the establishment of
  the Management Recognition and Retention Plan (the Plan) as an incentive to
  retain personnel of experience and ability in key positions. As shares are
  acquired for the Plan, the purchase price of these shares is recorded as a
  contra equity account. As the shares are distributed, the contra equity
  account is reduced.

34

---



FPB FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE L

> MANAGEMENT RECOGNITION
> AND RETENTION PLAN (Continued)

Plan
  shares are earned by recipients at a rate of 20% of the aggregate number of
  shares covered by the Plan, with the first 20% to be vested on the one-year
  anniversary of the date of grant. If the employment of an employee or service
  as a non-employee director is terminated prior to the fifth anniversary of the
  date of grant of Plan share award for any reason, the recipient shall forfeit
  the right to any shares subject to the award that have not been earned. The
  cost associated with the plan is based on a share price of $10.50, which
  represents the market price of the stock as of the date on which the plan
  shares were granted. This cost is being recognized over five years. For the
  years ended December 31, 2001 and 2000, compensation expense pertaining to the
  plan was $16,727 and $12,529, respectively.

A summary of the changes in stock pertaining to the Plan
follows:

|                             | Unawarded | Awarded
|---------------------------- | --------- | -------
|                             | Shares    | Shares 
|Balance at January 1, 2000   | -         |        
|Purchased by Plan            | 12,250    | -      
|Granted                      | (7,954)   | 7,954  
|Forfeited                    | -         | -      
|Earned and Issued            | -         | -      
|Balance at December 31, 2000 | 4,296     | 7,954  
|Purchased by Plan            | 1,000     | -      
|Granted                      | -         | -      
|Forfeited                    | -         | -      
|Earned and Issued            | -         | (1,591)
|Balance at December 31, 2001 | 5,296     | 6,363  
|                             |           |        



NOTE M

> PENSION PLAN

During
    1999, the Company adopted a Simple IRA Plan (the Pension Plan) effective
    January 1, 1999. The Pension Plan was subsequently terminated in 2001. The
    Pension Plan covered all employees who earned at least $5,000, during the
    year. The maximum employee contribution was 100% of compensation up to
    $6,000. The Company's contribution was based on matching 100% of the first
    3% of salary deferral elected by each eligible employee. For the years ended
    December 31, 2001 and 2000, expense attributable to the Pension Plan
    amounted to $-0- and $11,806.





35

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE N

STOCK OPTION PLAN

During
    2000, the Company adopted a stock option plan for the benefit of directors,
    officers, and other key employees. The number of shares of common stock
    reserved for issuance under the stock option is 33,134 shares, which is
    equivalent to 10% of the total number of shares of common stock sold in the
    Company's initial public offering of its common stock. Both incentive stock
    options and non-qualified stock options may be granted under the plan. The
    exercise price of each option cannot be less than the fair value of the
    underlying common stock as of the date the option is granted. Incentive
    stock options and nonqualified stock options granted under this plan become
    vested and exercisable at the rate of 20% per year over five years,
    commencing one year from the date of the grant with an additional 20%
    vesting on each successive annual anniversary of the date the option was
    granted.

The
  Company accounts for the stock option plan under the guidance of Accounting
  Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
  Employees. No compensation costs has been recognized in the financial
  statements of the Company since the exercise option price cannot be less than
  the fair value of the underlying common stock at the date of the grant.
  However, SFAS No. 123, Accounting for Stock-Based Compensation,
  requires the disclosure of the compensation cost for stock-based incentives
  granted after January 31, 1995 based on the fair value at grant date for
  awards. Applying SFAS 123 would result in pro forma net income and earnings
  per share amounts as follows:

|                          | 2001        |  | 2000        
|------------------------- | ----------- |  | ------------
|Net Income (In thousands) |             |  |             
|As Reported               | $   387,101 |  | $    351,354
|Pro forma                 | 364,818     |  | 340,528     
|Earnings per Share        |             |  |             
|As Reported               |             |  |             
|Basic                     | 1.33        |  | 1.17        
|Diluted                   | 1.33        |  | 1.17        
|Pro Forma                 |             |  |             
|Basic                     | 1.25        |  | 1.14        
|Diluted                   | 1.25        |  | 1.14        



The fair value of each option grant is estimated on the
    date of grant using the Black-Scholes option-pricing model with the
    following weighted-average assumptions used for grants in 2000 and 2001,
    respectively: dividend yield of 2.40% for both years; expected volatility of
    38.1% and 11.7%; risk-free interest rate of 6.50% and 4.50%; and expected
    lives of 10.0 years for all options.





36

---



FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE N

> STOCK OPTION PLAN (Continued)

A summary of the status of the Company's stock option plan
  as of December 31, 2001 and 2000, and changes during the years ending on those
  dates is presented below:

2001
    
    2000Weighted-
    
    
    
    Weighted-Average
    
    
    
    AverageExercise
    
    
    
    ExerciseFixed Options
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding at Beginning of
      Year
    
    26,803
    
    $     
      10.53
    
    -
    
    $             
      -Granted
    
    1,000
    
    14.00
    
    26,803
    
    10.53Exercised
    
    -
    
    -
    
    -
    
    -Forfeited
    
    -
    
    -
    
    -
    
    -Outstanding at End of Year
    
    27,803
    
    10.65
    
    26,803
    
    10.53Options Exercisable at
      Year-end
    
    8,959
    
    
    
    3,574Weighted-Average Fair Value ofOptions Granted During the
      Year
    
    $       2.65
    
    
    
    $       4.59




> The following table summarizes information about fixed
>   stock options outstanding at December 31, 2001:

Options
      Outstanding
    
    Options
      ExercisableWeighted-
    
    
    
    Weighted-Range of
    
    Number
    
    Remaining
    
    Average
    
    Number
    
    AverageExercise
    
    Outstanding
    
    Contractual
    
    Exercise
    
    Exercisable
    
    ExercisePrices
    
    at 12/31/01
    
    Life
    
    Price
    
    at 12/31/01
    
    Price$10.50 to $11.50
    
    26,803
    
    8.4 years
    
    $
      10.53
    
    8,934
    
    $
      10.53$14.00
    
    1,000
    
    9.9 years
    
    14.00
    
    25
    
    14.00




NOTE O

FINANCIAL INSTRUMENTS WITH
OFF-BALANCE SHEET RISK

The
  Company is a party to financial instruments with off-balance sheet risk in the
  normal course of business to meet the financing needs of its customers. These
  financial instruments consist of commitments to extend credit, standby letters
  of credit, and undisbursed lines of credit. These instruments involve, to
  varying degrees, elements of credit and interest rate risk in excess of the
  amounts recognized in the Company's balance sheet.

The
  Company's exposure to credit loss is represented by the contractual amount of
  these commitments. The Company follows the same credit policies in making
  commitments as it does for on-balance sheet instruments.





37

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE O

> FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK (Continued)
>   
>   At December 31, 2001 and 2000, the following financial
>   instruments were outstanding whose contract amounts represent credit risk:

2001
    
    2000Commitments to Grant Loans
    $
    1,498,000
    $
    388,000Undisbursed Construction Loans
    
    76,000
    
    1,040,000Unfunded Commitments UnderLines of Credit
    
    400,000
    
    1,237,000Standby Letters of Credit
    
    64,000
    
    62,000




NOTE P

> COMMITMENTS AND CONTINGENCIES

The
  Chief Executive Officer and the Executive Vice-President of the Company serve
  under employment contracts that due to expire on June 30, 2004. The contracts
  cover compensation and termination.



NOTE Q

> REGULATORY MATTERS

The
    Bank is subject to various regulatory capital requirements administered by
    its primary federal regulator, the Office of Thrift Supervision (OTS).
    Failure to meet the minimum regulatory capital requirements can initiate
    certain mandatory, and possible additional discretionary actions by
    regulators, which if undertaken, could have a direct material effect on the
    Bank and the financial statements. Under the regulatory capital adequacy
    guidelines and the regulatory framework for prompt corrective action, the
    Bank must meet specific capital guidelines involving quantitative measures
    of the Bank's assets, liabilities, and certain off-balance-sheet items as
    calculated under regulatory accounting practices. The Bank's capital amounts
    and classification under the prompt corrective action guidelines are also
    subject to qualitative judgements by the regulators about components, risk
    weightings, and other factors.

Quantitative
  measures established by regulation to ensure capital adequacy require the Bank
  to maintain minimum amounts and ratios of: total risk-based capital and Tier I
  capital to risk-weighted assets (as defined in the regulations), Tier I
  capital to adjusted total assets (as defined), tangible capital to adjusted
  total assets (as defined), and tangible equity to adjusted total assets (as
  defined). As of December 31, 2001, the Bank meets all of the capital
  requirements to which it is subject and is deemed to be well capitalized.

The
  actual and required capital amounts and ratios applicable to the Bank
  represented in the table below, including a reconciliation of capital under
  generally accepted accounting principles (GAAP) to such amounts reported for
  regulatory purposes.





38

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE Q

> REGULATORY MATTERS

To be WellCapitalized forMinimum For
      Capital
    
    Prompt
      CorrectiveActual
    
    Adequacy
      Purposes
    
    Action
      ProvisionsDecember
      31, 2001
    
    
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    AmountTotal Equity, and Ratio to
      Total Assets
    
    
    
    8.15
    
    $
      5,737Unrealized Gains onSecurities
      Available-for-Sale
    
    
    
    
    
    (12)Tangible Capital, and Ratioto Adjusted Total
      Assets
    
    
    
    8.14
    
    $
      5,725
    
    1.5%
    
    $
      1,056Tier 1 (Core) Capital,and Ratio to Adjusted
      Total Assets
    
    
    
    8.14
    
    $
      5,725
    
    3.0%
    
    $
      2,111
    
    5.0%
    
    $
      3,518Tier 1 (Core) Capital,and Ratio to Risk-Weighted
      Assets
    
    
    
    15.48
    
    $
      5,725
    
    
    
    
    
    6.0%
    
    $
      4,222Allowance for Loan Losses
    
    
    
    
    
    153Equity Investment
    
    
    
    
    
    (15)Total Risk-Based Capital, andRatio to Risk-Weighted Assets
    
    
    
    15.86
    
    $
      5,863
    
    8.0%
    
    $
      2,958
    
    10.0%
    
    $
      3,698Total Assets
    
    
    
    
    
    $
      70,380Adjusted Total Assets
    
    
    
    
    
    $
      70,368Risk-Weighted Assets
    
    
    
    
    
    $
      36,975To be WellCapitalized forMinimum For
      Capital
    
    Prompt
      CorrectiveActual
    
    Adequacy
      Purposes
    
    Action
      ProvisionsDecember
      31, 2000
    
    
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio
    
    AmountTotal Equity, and Ratio to
      Total Assets
    
    
    
    8.71
    
    $
      5,299Unrealized Gains onSecurities Available-for-Sale
    
    
    
    
    
    (12)Tangible Capital, and Ratioto Adjusted Total Assets
    
    
    
    8.69
    
    $
      5,287
    
    1.5%
    
    $
      912Tier 1 (Core) Capital,and Ratio to Adjusted Total
      Assets
    
    
    
    8.69
    
    $
      5,287
    
    3.0%
    
    $
      1,825
    
    5.0%
    
    $
      3,041Tier 1 (Core) Capital,and Ratio to Risk-Weighted
      Assets
    
    
    
    18.31
    
    $
      5,287
    
    
    
    
    
    6.0%
    
    $
      3,650Allowance for Loan Losses
    
    
    
    
    
    170Equity Investment
    
    
    
    
    
    (15)Total Risk-Based Capital, andRatio to Risk-Weighted Assets
    
    
    
    18.85
    
    $
      5,442
    
    8.0%
    
    $
      2,310
    
    10.0%
    
    $
      2,887Total Assets
    
    
    
    
    
    $
      60,840Adjusted Total Assets
    
    
    
    
    
    $
      60,828Risk-Weighted Assets
    
    
    
    
    
    $
      28,870


39

---



FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE R

ESTIMATED FAIR VALUE OF
  FINANCIAL INSTRUMENTS

The
      following disclosure is made in accordance with the requirements of SFAS
      No. 107, Disclosures About Fair Value of Financial Instruments.Financial
      instruments are defined as cash and contractual rights and obligations
      that require settlement, directly or indirectly, in cash. In cases where
      quoted market prices are not available, fair values have been estimated
      using the present value of future cash flows or other valuation
      techniques. The results of these techniques are highly sensitive to the
      assumptions used, such as those concerning appropriate discount rates and
      estimates of future cash flows, which require considerable judgement.
      Accordingly, estimates presented herein are not necessarily indicative of
      the amounts the Company could realize in a current settlement of the
      underlying financial instruments. SFAS No. 107 excludes certain financial
      instruments and all nonfinancial instruments from its disclosure
      requirements. These disclosures should not be interpreted as representing
      an aggregate measure of the underlying value of the Company.

The estimated fair value of financial instruments were as
    follows (in thousands):



As of
          December 31,2001
        
        2000Carrying
        
        Estimated
        
        Carrying
        
        EstimatedAmount
        
        Fair Value
        
        Amount
        
        Fair ValueFinancial AssetsCash and Non-Interest
          Earnings Deposits
        $     
          432
        
        $     
          432
        
        $     
          380
        
        $     
          380Interest-Earning Deposits
          in OtherDepository Institutions
        3,217
        
        3,217
        
        3,056
        
        3,056Investment Securities
        5,434
        
        5,458
        
        10,345
        
        10,351Loans Receivable, Net
        59,282
        
        59,317
        
        46,595
        
        46,407FHLB Stock
        564
        
        564
        
        430
        
        430Accrued Interest
          Receivable
        202
        
        202
        
        253
        
        253Other Assets
        15
        
        15
        
        15
        
        15Financial Liabilities:Deposits
        $
          52,102
        
        $
          52,398
        
        $
          46,047
        
        $
          45,954Advances from FHLB
        11,200
        
        11,012
        
        8,200
        
        8,160Interest Payable on
          Deposits
        69
        
        69
        
        117
        
        117


40

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE R

> ESTIMATED FAIR VALUE
>   OF FINANCIAL INSTRUMENTS (Continued)

The following
      significant methods and assumptions were used by the Company in estimating
      the fair value of financial instruments.

Cash and Short-Term
    Investments

The
    carrying value of highly liquid instruments, such as cash on hand and
    amounts due from depository institutions, and interest-earning deposits in
    other institutions, provides a reasonable estimate of their fair value.

Investment Securities

Fair
    value estimates for investment securities are based on quoted market prices,
    where available. If quoted market prices are not available, fair values are
    based on quoted market prices of comparable instruments. The carrying amount
    of accrued interest on securities approximates its fair value.

Loans Receivable, Net

The
    fair values for loans are estimated through discounted cash flow analysis,
    using current rates at which loans with similar terms would be made to
    borrowers of similar credit quality. Appropriate adjustments are made to
    reflect probable credit losses. The carrying amount of accrued interest on
    loans approximated its fair value.

Federal Home Loan
    Bank Stock (FHLB)

The
    value of Federal Home Loan Bank stock is set by the FHLB at $100 per share.

Deposits

SFAS
    No. 107 specifies that the fair value of deposit liabilities with no defined
    maturity is the amount payable on demand at the reporting date, i.e., their
    carrying or book value. These deposits, which include interest and
    non-interest bearing checking, passbook, and money market accounts,
    represented approximately 33% and 25% of total deposits at December 31, 2001
    and 2000, respectively. The fair value of fixed-rate certificates of deposit
    is estimated using a discounted cash flow calculation that applies interest
    rates currently offered on certificates of similar remaining maturities to a
    schedule of aggregate expected cash flows on time deposits.

The
    carrying amount of accrued interest payable on deposits approximates its
    fair value.

Advances from Federal
    Home Loan Bank

The
    fair value of fixed rate borrowings are estimated using discounted cash
    flows, based on current incremental borrowing rates for similar types of
    borrowing arrangements.

Off-Balance-Sheet
    Instruments

Off-balance-sheet financial
    instruments include commitments to extend credit and undisbursed lines of
    credit. The fair value of such instruments is estimated using fees currently
    charged for similar arrangements in the marketplace, adjusted for changes in
    terms and credit risk as appropriate. The estimated fair value for these
    instruments was not significant at December 31, 2001 and 2000. The
    contract or notional amounts of the Company's financial instruments with
    off-balance-sheet risk are disclosed in Note O.



41

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE S

ADOPTION OF PLAN OF
    CONVERSION

On
    December 8, 1998, the Board of Directors of Florida Parishes Homestead
    Association adopted a Plan of Conversion (the Plan), which proposed the
    conversion of the Association from a Louisiana-chartered mutual savings and
    loan association to a federally-chartered stock savings bank to be known as
    "Florida Parishes Bank" (the Bank, in its mutual or stock form, as
    the sense of the reference requires) and the concurrent issuance of its
    capital stock to FPB Financial Corp. (the newly formed Holding Company). As
    an interim step in the conversion, the Association first converted to a
    federally-chartered mutual savings bank known as "Florida Parishes
    Bank", effective February 23, 1999, in advance of the common stock
    offering.

The
    Plan provided that non-transferable subscription rights to purchase common
    stock of FPB Financial Corp. would be offered first to Eligible Account
    Holders of record as of the close of business on September 30, 1997; then to
    a Tax-Qualified Employee Stock Ownership Plan; then to Supplemental Eligible
    Account Holders of record as of the close of business on March 31, 1999;
    then to Other Members which include other depositors as of a specified date
    and persons who were borrowers as of both February 23, 1999 and the voting
    record date whose loans were secured by real estate; and then to directors,
    officers and employees of the Bank. Shares of common stock remaining unsold
    after the Subscription Offering were offered for sale to the public through
    a Community Offering, as determined by the Boards of Directors of the
    Holding Company and the Bank in their sole discretion. The common stock was
    offered at a price determined by the Board of Directors based upon an
    appraisal - made by an independent appraisal firm. The exact number of
    shares offered was determined by the Board of Directors in conjunction with
    the determination of the price at which shares were sold. The costs of
    issuing the common stock was deducted from the sale proceeds. The Company
    incurred $372,127 issuance costs.

In
    accordance with OTS Regulations, at the time that the Bank converted from a
    mutual savings bank to a stock savings bank, the Bank established a
    liquidation account with an initial balance equal to the Bank's total equity
    as of the date of the latest balance sheet appearing in the prospectus,
    December 31, 1998. The liquidation account will be maintained for the
    benefit of eligible holders who continue to maintain their accounts at the
    Bank after the Conversion. The liquidation account will be reduced annually
    to the extent that the eligible account holders have reduced their
    qualifying deposits. Subsequent increases will not restore an eligible
    account holder's interest in the liquidation account. In the event of a
    complete liquidation of the Bank, and only in such event, each account
    holder will be entitled to receive a distribution from the liquidation
    account in an amount proportionate to the adjusted qualifying account
    balances then held. The Bank may not pay dividends or repurchase its common
    stock if such dividends or repurchases would reduce its equity below
    applicable regulatory capital requirements or the required liquidation
    account amount.



42

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE S

ADOPTION OF PLAN OF
    CONVERSION (Continued)

Under current OTS
    regulations, limitations have been imposed on all "capital
    distributions" by savings institutions, including cash dividends, stock
    repurchases and other transactions charged to the capital account.
    Generally, an institution which is well capitalized both before and after
    the distribution may, after notifying the OTS, make capital distributions in
    any year equal to the sum of the institution's net income for the current
    year and its retained net income for the preceding two years, less any
    capital distributions already made in the current year. Distributions of
    greater amounts and distributions by institutions who are not well
    capitalized would require an application to the OTS. OTS regulations also
    restrict stock repurchases during the first year following the conversion
    unless certain criteria are satisfied.

NOTE T

> DIVIDENDS DECLARED

The
      Company declared and paid dividends of $.275 and $.225 per share during
      2001 and 2000, respectively. Under Federal regulations, the Company may
      not declare or pay cash dividends on its capital stock if the effect
      thereof would cause the Bank's regulatory capital to be reduced below the
      amount required for liquidity.

NOTE U

> EARNINGS PER SHARE

Earnings
      per share are computed using the weighted average number of shares
      outstanding, which was 291,810 in 2001 and 299,515 in 2000.



43

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE V

PARENT COMPANY FINANCIAL
  STATEMENTS

The financial statements for FPB Financial Corp.
      (Parent Company Only) are presented below:



FPB FINANCIAL CORP.CONDENSED FINANCIAL
      CONDITION(Dollar in Thousands)ASSETSDecember 31,2001
    
    2000Cash
    
    $  
      1,017
    
    $     
      883Securities Available -for-Sale
    
    217
    
    575Investment in Bank Subsidiary
    
    5,737
    
    5,299Accrued Interest Receivable
    
    -
    
    10Deferred Taxes
    
    23
    
    13Due from Bank Subsidiary
    
    14
    
    5Total Assets
    
    $  
      7,008
    
    $  
      6,785LIABILITIES AND
      STOCKHOLDERS' EQUITYDeferred Tax Liabilities
    
    $          
      -
    
    $          
      2Other Liabilities
    
    4
    
    4Total Liabilities
    
    4
    
    6Stockholders' Equity
    
    7,004
    
    6,779Total Liabilities and
      Stockholders' Equity
    
    $  
      7,008
    
    $  
      6,785




44

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE V

> PARENT COMPANY FINANCIAL STATEMENTS (Continued)

|FPB FINANCIAL CORP.                                   
|------------------------------------------------------
|CONDENSED STATEMENTS OF
          OPERATIONS          
|(Dollar in Thousands)                                 
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|                                                      
|INTEREST INCOME                                       
|Dividend from Florida
          Parishes Bank         
|Interest on Securities -
          Available-for -Sale
|Interest on ESOP Note                                 
|                                                      
|Total Income                                          
|                                                      
|EXPENSES                                              
|Operating Expenses                                    
|                                                      
|INCOME BEFORE EQUITY IN
          UNDISTRIBUTED       
|NET INCOME OF FLORIDA
          PARISH BANK           
|                                                      
|EQUITY IN UNDISTRIBUTED
          NET INCOME OF       
|FLORIDA PARISHES BANK                                 
|                                                      
|NET INCOME BEFORE
          INCOME TAXES              
|                                                      
|INCOME TAX BENEFIT                                    
|                                                      
|NET INCOME                                            
|                                                      
|                                                      
|                                                      



45

---

FPB FINANCIAL CORP. AND SUBSIDIARY
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE V

> PARENT
> COMPANY FINANCIAL STATEMENTS (Continued)

FPB FINANCIAL CORP.CONDENSED STATEMENTS OF
          CASH FLOWS(Dollar in Thousands)For the
          Years EndedDecember 31,2001
        
        2000CASH FLOWS FROM
          OPERATING ACTIVITIESNet Income
        $     
          387
        
        $     
          351Adjustments to Reconcile
          Net Income to NetCash (Used in) Provided by
          Operating ActivitiesEquity in Undistributed
          Net Income of Subsidiary
        (432)
        
        123Decrease in Accrued
          Interest Receivable
        9
        
        1Decrease (Increase) in
          Prepaid Income Taxes
        5
        
        (5)Increase In Deferred Tax
          Assets
        (10)
        
        (13)Increase in Due from
          Subsidiary
        (14)
        
        -Decrease in Due to
          Subsidiary
        -
        
        (12)Decrease in Income Taxes
          Payable
        -
        
        (5)Increase in Other
          Liabilities
        -
        
        4Net Cash (Used in)
          Provided by Operating Activities
        (55)
        
        444CASH FLOWS FROM
          INVESTING ACTIVITIESPurchase of Mutual Fund
          Stock
        (32)
        
        (31)Purchase of Marketable
          Equity Securities
        (114)
        
        -Proceeds from Maturity of
          Debt Securities
        500
        
        -Payments on ESOP Shares
        21
        
        20Net Cash Provided by (Used
          in) Investing Activities
        375
        
        (11)CASH FLOWS FROM
          FINANCING ACTIVITIESPurchase of Treasury Stock
        (104)
        
        (28)Purchase of Stock for MRP
        (12)
        
        (137)Proceeds Received from
          Subsidiary on MRP Stock Distribution
        17
        
        -Dividends Paid
        (87)
        
        (74)Net Cash Used in Financing
          Activities
        (186)
        
        (239)NET INCREASE IN CASH
        134
        
        194CASH AND CASH
          EQUIVALENTS - BEGINNING OF YEAR
        883
        
        689CASH AND CASH
          EQUIVALENTS - END OF YEAR
        $  
          1,017
        
        $     
          883






46

---

FLORIDA PARISHES BANK

DIRECTORS
        OFFICERS
        STAFFBill Bowden
        Fritz W. Anderson II
        Dana CorkernChairman
        President & CEO
        Barbara WrightWillie IwanczykRichard Inge
        G.Wayne Allen
        Claudette BardwellDirector
        Senior Vice President
        Rhonda JubinPatty DurioWilbert Hutchinson
        Sandra Hendon
        Aneesah RichardsonDirector
        Vice President/Financial &
        Jamie VicaroRegulatory Reporting
        Sharon AddisonDan Durham
        
        Cindy LauderdaleDirector
        Ronnie MoralesVice President/Operations& Compliance
        OFFICE LOCATIONSusan McKneelyDirector
        
        300 West Morris AvenueTerry Tompkins
        Hammond, LA 70403Dean Hughes
        Vice President/Director
        Lending OfficerSUBSIDIARYFritz W. Anderson II
        Walter HutchinsonDirector
        Vice President/
        FPB Insurance & Investments, Inc.Lending OfficerG. Wayne Allen
        
        Dana CorkernDirector
        Donna Beauchamp
        Registered InvestmentAsst. Vice President/
        RepresentativeOn Line CoordinatorDiane VitranoAdministrative Assistant






47

---

FPB FINANCIAL CORP.

DIRECTORS
        OFFICERS
        OFFICE LOCATIONBill Bowden
        Fritz W. Anderson II
        300 West Morris AvenueChairman
        President & CEO
        Hammond, LA 70403Richard Inge
        G.Wayne Allen
        Transfer Agent and RegistrarDirector
        Senior Vice PresidentRegistrar & Transfer CompanyWilbert Hutchinson
        Sandra Hendon
        10 Commerce DriveDirector
        Vice President/Financial &
        Cranford, New Jersey 07016Regulatory ReportingDan DurhamDirector
        Ronnie Morales
        Information RequestsVice President/OperationsSusan McKneely
        & Compliance
        Request for copies of FormDirector
        
        10-QSB or Form 10-KSB shouldbe made to:Diane Vitrano
        Sandra HendonFritz W. Anderson II
        Administrative Assistant
        FPB Financial Corp.Director
        
        300 West Morris AvenueHammond, LA 70403G. Wayne AllenDirector




Stock Information

The company's
        stock is traded on the OTC Bulletin Board under the symbol FPBF. The
        following table presents information regarding the trading range of the
        Company

2001
        2000High
        Low
        Dividend
        High
        Low
        DividendQuarter Ended:March 31
        $11.94
        $11.38
        $0.0625
        $10.50
        $9.50
        $0.05June 30
        $12.00
        $11.75
        $0.0625
        $13.50
        $10.25
        $0.05September 30
        $12.60
        $11.67
        $0.075
        $11.375
        $10.875
        $0.0625December 31
        $14.00
        $12.50
        $0.075
        $11.50
        $11.375
        $0.0625






48

---