<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-K


[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                            OF 1934 [FEE REQUIRED]

                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

                                      OR

[ ]              TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                   FOR THE TRANSITION PERIOD FROM       TO
                                                  ------  -------------

                           COMMISSION FILE NO: 1-14364

                            ACADIANA BANCSHARES, INC.
             ------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                LOUISIANA                           72-1317124
            ---------------------------         ------------------------
            (STATE OR OTHER JURISDICTION           (I.R.S. EMPLOYER
            OF INCORPORATION OR ORGANIZATION)   IDENTIFICATION NUMBER)

            101 WEST VERMILION STREET
            LAFAYETTE, LOUISIANA                               70501
            ----------------------------------------        ------------
            (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)        (ZIP CODE)

      REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (318) 232-4631

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                     COMMON STOCK (PAR VALUE $.01 PER SHARE)
                     ---------------------------------------
                                (TITLE OF CLASS)

   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NOT APPLICABLE

Indicate by check mark whether Registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes   X   No
    -----    ----


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S_K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K   [X]


As of March 20, 1998, the aggregate market value of the 2,333,066 shares of
Common Stock of the Registrant issued and outstanding on such date, which
excludes 242,184 shares held by all directors and officers of the Registrant as
a group, was approximately $51.6 million. This figure is based on the closing
sale price of $22.125 per share of the Registrant's Common Stock on March 20,
1998.

Number of shares of Common Stock outstanding as of December 31, 1997:
2,581,250

                     DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents incorporated by reference and the Part of
the Form 10-K into which the document is incorporated.

(1) Portions of the Annual Report to Stockholders for the fiscal year ended
    December 31, 1997 are incorporated into Part II, Items 5 through 8 of this
    Form 10-K.

(2) Portions of the definitive proxy statement for the 1997 Annual Meeting of
    Stockholders to be filed within 120 days of Registrant's fiscal year end are
    incorporated into Part III, Items 9 through 13 of this Form 10-K.



                                       1
<PAGE>   2




PART I.




ITEM 1.  BUSINESS.

GENERAL

      Acadiana Bancshares, Inc., ("the Company") is a Louisiana corporation
organized in February 1996 by LBA Savings Bank (the "Bank", or the "Savings
Bank") for the purpose of acquiring all of the capital stock of the Bank to be
issued by the Bank in the conversion (the "Conversion") of the Bank to stock
form, which was completed on July 16, 1996. The only significant assets of the
Company are the capital stock of the Bank, the Company's loan to an employee
stock ownership plan, and the net conversion proceeds retained by the Company.
The Company's common stock trades on the AMEX under the symbol "ANA". At
December 31, 1997, the Company had total assets of $277.1 million, total
deposits of $193.4 million, and stockholders' equity of $44.6 million.

      The Bank is a Savings Association Insurance Fund ("SAIF") -insured,
Louisiana chartered, stock savings Company conducting business from its main
office and three branch offices, located in Lafayette, Louisiana, one branch
office located in New Iberia, Louisiana and one loan production office in
Eunice, Louisiana.

      The Company's principal business has been, and continues to be, attracting
deposits from its customers and investing such funds in residential real estate
loans and other loans through its continuing operation of the Bank. At December
31, 1997, the Company's loan portfolio totaled $212.8 million, or 76.8% of the
Company's assets. In addition to its lending activities, the Company also
invests in mortgage-backed securities and investment securities. The Company's
mortgage-backed securities portfolio totaled $30.7 million, or 11.1% of the
Company's total assets at December 31, 1997, and its investment securities
portfolio amounted to $11.9 million, or 4.3% of total assets at such date.
Traditionally, the Company's principal source of funds has come from deposits.
At December 31, 1997, the Company had total deposits of $193.4 million, of which
$49.9 million, or 25.8%, consisted of core deposits which include passbook,
money market deposits ("MMDA"), negotiable order of withdrawal ("NOW") and
noninterest-bearing accounts and $143.5 million, or 74.2%, consisted of
certificates of deposit, including $36.8 million of deposit accounts equal to or
exceeding $100,000.

      The Company, as a bank holding company, is subject to regulation and
supervision by the Board of Governors of the Federal Reserve System ("Federal
Reserve Board" or "FRB"). The Bank is subject to examination and comprehensive
regulation by the Office of Financial Institutions of the State of Louisiana
("OFI"), which is the Bank's chartering authority and primary regulator. The
Bank is also subject to regulation by the FDIC, as the administrator of the
SAIF, and to certain reserve requirements established by the FRB. The Bank is a
member of the Federal Home Loan Bank ("FHLB") of Dallas which is one of twelve
regional banks comprising the FHLB System.

      The Company's executive office is located at 101 West Vermilion Street,
Lafayette, Louisiana, 70501, and its telephone number is (318) 232-4631.



                                      2
<PAGE>   3


LENDING ACTIVITIES

       Loan Portfolio Composition. The following table sets forth the
composition of the Company's loan portfolio by type of loan at the dates
indicated.

<TABLE>
<CAPTION>
                                                                             At December 31,
                                         -----------------------------------------------------------------------------------
                                             1997                       1996                         1995
                                         --------------------------- -------------------------- ----------------------------
                                                          Percent                    Percent                      Percent
                                           Balance       of Total     Balance       of Total       Balance       of Total
                                         -------------- ------------ ------------- ------------ --------------- ------------
<S>                                         <C>             <C>        <C>             <C>          <C>             <C>
Type of loan:
     Real estate loans:
       Residential single family            $  169,637       79.70%    $  142,833       78.24%      $  127,656       80.96%
       Construction                              9,301        4.37%        10,565        5.78%           7,304        4.63%
       Multi-family residential                    546        0.26%           862        0.47%           1,202        0.76%
       Commercial and other real estate          9,363        4.40%        12,873        7.05%          13,370        8.48%
                                         -------------- ------------ ------------- ------------ --------------- ------------
Total real estate loans                        188,847       88.73%       167,133       91.47%         149,532       94.83%
                                         -------------- ------------ ------------- ------------ --------------- ------------
     Non-real estate loans:
       Consumer                                 16,355        7.67%        16,859        9.23%          13,704        8.69%
       Commercial business                      15,400        7.24%         7,363        4.03%           1,358        0.86%
                                         -------------- ------------ ------------- ------------ --------------- ------------
Total non-real estate loans                     31,755       14.91%        24,222       13.26%          15,062        9.55%
                                         -------------- ------------ ------------- ------------ --------------- ------------
Total loans                                    220,602      103.64%       191,355      104.73%         164,594      104.38%
Less:
     Undisbursed loan funds                      4,629        2.17%         5,899        3.23%           4,292        2.72%
     Unearned discounts                           (162)      -0.08%          (331)      -0.18%            (206)      -0.13%
     Allowance for loan losses                   2,760        1.30%         2,592        1.42%           2,329        1.48%
     Net deferred fees (cost)                      535        0.25%           471        0.26%             488        0.31%
                                         -------------- ------------ ------------- ------------ --------------- ------------
Total loans, net                            $  212,840      100.00%    $  182,724      100.00%      $  157,691      100.00%
                                         ============== ============ ============= ============ =============== ============
</TABLE>

<TABLE>
<CAPTION>
                                                                 At December 31,
                                          --------------------------------------------------------
                                              1994                         1993
                                          --------------------------- ----------------------------
                                                           Percent                      Percent
                                            Balance       of Total       Balance       of Total
                                          -------------- ------------ --------------- ------------
<S>                                          <C>             <C>         <C>              <C>
Type of loan:
     Real estate loans:
       Residential single family             $  120,483       79.71%      $  115,308       75.22%
       Construction                               6,908        4.57%           5,339        3.48%
       Multi-family residential                   1,638        1.08%           2,049        1.34%
       Commercial and other real estate          13,505        8.93%          15,973       10.42%
                                          -------------- ------------ --------------- ------------
Total real estate loans                         142,534       94.29%         138,669       90.46%
                                          -------------- ------------ --------------- ------------
     Non-real estate loans:
       Consumer                                  12,749        8.43%          17,793       11.61%
       Commercial business                        1,479        0.98%           1,394        0.91%
                                          -------------- ------------ --------------- ------------
Total non-real estate loans                      14,228        9.41%          19,187       12.52%
                                          -------------- ------------ --------------- ------------
Total loans                                     156,762      103.70%         157,856      102.98%
Less:
     Undisbursed loan funds                       3,593        2.37%           2,929        1.91%
     Unearned discounts                             498        0.33%             600        0.39%
     Allowance for loan losses                    1,087        0.72%           1,015        0.66%
     Net deferred fees (cost)                       423        0.28%              28        0.02%
                                          -------------- ------------ --------------- ------------
Total loans, net                             $  151,161      100.00%      $  153,284      100.00%
                                          ============== ============ =============== ============
</TABLE>



                                       3
<PAGE>   4


       Contractual Maturities. The following table sets forth the time to
contractual maturity of the Company's loan portfolio at December 31, 1997.


<TABLE>
<CAPTION>
                                                        Over One
                                            Less than  Through Five  Over Five
                                             One Year      Years       Years        Total
                                            ----------- ----------- -----------  ----------
                                                        (Dollars in Thousands)

<S>                                           <C>        <C>         <C>          <C>
Residential single-family mortgage loans      $ 5,451    $  25,209    $ 138,977    $ 169,637
Multi-family residential                           44          223          279          546
Commercial and other real estate                  610        2,888        5,865        9,363
Construction loans                              9,301            -            -        9,301
Commercial business loans                       5,109        5,216        5,075       15,400
All Other loans                                 5,068        8,127        3,160       16,355
                                              -------    ---------    ---------    ---------
Total                                         $25,583    $  41,663    $ 153,356    $ 220,602
                                              =======    =========    =========    =========
</TABLE>

      The following table sets forth the dollar amount at December 31, 1997 of
all loans maturing after December 31, 1998 by fixed and adjustable interest
rates.


<TABLE>
<CAPTION>
                                                           Fixed     Adjustable
                                                           Rates       Rates
                                                        ----------  ------------
                                                            (In thousands)

<S>                                                       <C>         <C>
Loans secured by 1-4 family residential property          $ 76,325    $ 87,861
All other loans secured by real estate                       1,732       7,523
All other loans                                             17,392       4,185
                                                         ---------- -----------
                                                          $ 95,450    $ 99,569
                                                         ========== ===========
</TABLE>

      Scheduled amortization does not reflect the expected term of the Company's
loan portfolio. The average life of loans is substantially less than their
contractual terms because of prepayments and due-on-sale clauses, which give the
Company the right to declare a conventional loan immediately due and payable in
the event, among other things, that the borrower sells the real property subject
to the mortgage and the loan is not repaid. The average life of mortgage loans
tends to increase when current mortgage loan rates are higher than rates on
existing mortgage loans and, conversely, decrease when rates on existing
mortgage loans are lower than current mortgage loan rates (due to refinancing of
adjustable-rate and fixed-rate loans at lower rates). Under the latter
circumstances, the weighted average yield on loans decreases as higher-yielding
loans are repaid or refinanced at lower rates.




                                       4
<PAGE>   5




      Loan Origination and Sales Activity. The table below sets forth the
Company's total loan origination and loan reduction experience during the
periods indicated. The Company historically has not made any loan purchases.

<TABLE>
<CAPTION>
                                                                    Years Ended December 31,
                                                 ---------------------------------------------------------------
                                                        1997                  1996                  1995
                                                 -------------------   --------------------  -------------------
<S>                                                <C>                    <C>                  <C>
Loans receivable, net beginning of period          $        182,724       $        157,691     $        151,161
Loan originations:
     Residential single-family                               36,688                 27,612               16,172
     Construction loans                                      17,375                 20,059                7,810
     Multi-family residential                                     -                      -                    -
     Commercial and other real estate                             -                     15                  870
     Commercial business loans                               18,803                  7,334                  723
     Consumer loans                                          10,762                 13,078               10,162
                                                 -------------------   --------------------  -------------------
         Total loan originations                             83,628                 68,098               35,737
                                                 -------------------   --------------------  -------------------
Loan reductions:
     Loan sales                                                (878)                (6,460)              (1,551)
     Principal repayments                                   (53,168)               (34,611)             (26,219)
     Other changes, net(1)                                      534                 (1,994)              (1,437)
                                                 -------------------   --------------------  -------------------
         Total loan reductions                              (53,512)               (43,065)             (29,207)
                                                 -------------------   --------------------  -------------------
Loans receivable, net end of period                $        212,840       $        182,724     $        157,691
                                                 ===================   ====================  ===================
</TABLE>


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

(1)   Includes changes in net deferred loan fees, allowance for loan losses,
unearned discounts and loans in process.

      The lending activities of the Company are subject to written underwriting
standards and loan origination procedures established by the Company's Board of
Directors and management. Applications for residential mortgage loans are taken
by one of the Company's mortgage officers, while the Company's designated
consumer lenders have primary responsibility for taking consumer loan
applications, and its commercial lending officers have primary responsibility
for taking commercial business and commercial real estate loan applications. The
Company's loan originators will take loan applications at any of the Company's
offices and, on occasion, outside of the Company's offices at the customer's
convenience. The process of underwriting loans and obtaining appropriate
documentation, such as credit reports, appraisals and other documentation is
centralized in the Company's main office. The Company's commercial loan officers
are responsible for overseeing the underwriting of all commercial business and
commercial real estate loans. The Company generally requires that a property
appraisal be obtained in connection with all new mortgage loans. Property
appraisals generally are performed by an independent appraiser from a list
approved by the Company's Board of Directors. LBA Savings requires that title
insurance or a title opinion (other than with respect to home equity loans) and
hazard insurance be maintained on all security properties and that flood
insurance be maintained if the property is within a designated flood plain.

      Residential mortgage loan applications are primarily developed from
advertising, referrals from real estate brokers and builders, existing
customers and walk-in customers. Commercial real estate and commercial business
loan applications are obtained primarily from previous borrowers, direct
solicitations by Company personnel, as well as referrals. Consumer


                                       5

<PAGE>   6


loans originated by the Company are obtained primarily from advertising, and
through existing and walk-in customers.

      Applications for real estate mortgage loans, construction loans and
commercial business loans must be reviewed and approved by the Loan Committee of
the Company's Board of Directors. Unsecured consumer loans in amounts up to
$25,000 and secured consumer loans in amounts up to $50,000 may be approved by
designated senior loan officers of the Company. The Company's Commercial Lending
Manager has authority to approve secured commercial business loans in amounts up
to $100,000. The Company's President and Chief Executive Officer has authority
to approve loans in amounts up to $250,000. Loans exceeding the above described
amounts but which are less than $500,000 must be approved by the Loan Committee
of the Company's Board of Directors. Loans in excess of $500,000 must be
reviewed and approved by the full Board of Directors of the Company.

      Single-Family Residential Loans. Substantially all of the Company's
single-family residential mortgage loans consist of conventional loans.
Conventional loans are loans that are neither insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the Department of Veterans
Affairs ("VA"). The vast majority of the Company's single-family residential
mortgage loans are secured by properties located in Lafayette, Louisiana and the
Louisiana parishes immediately contiguous to Lafayette Parish, and are
originated under terms and documentation which permit their sale to the Federal
Home Loan Mortgage Corporation ("FHLMC"), the FHA, or the Federal National
Mortgage Association ("FNMA"). Sales of residential mortgage loans have been
insignificant to date. As of December 31, 1997, $169.6 million, or 79.7%, of the
Company's total loans consisted of single-family residential mortgage loans.

      The Company's residential mortgage loans have either fixed rates of
interest or interest rates which adjust periodically during the term of the
loan. Fixed-rate loans generally have maturities ranging from 15 to 30 years and
are fully amortizing with monthly loan payments sufficient to repay the total
amount of the loan with interest by the end of the loan term. The Company's
fixed-rate loans generally are originated under terms, conditions, and
documentation which permit them to be sold to U.S. Government-sponsored
agencies, such as the FNMA and the FHLMC, and other investors in the secondary
market for single-family residential mortgages. At December 31, 1997, $80.0
million, or 47.2%, of the Company's single-family residential mortgage loans
were fixed-rate loans. At December 31, 1997, the weighted average remaining term
to maturity of the Company's fixed-rate, single-family residential mortgage
loans was approximately 15 years. Substantially all of the Company's fixed-rate,
single family residential mortgage loans contain due-on-sale clauses, which
permit the Company to declare the unpaid balance to be due and payable upon the
sale or transfer of any interest in the property securing the loan. The Company
enforces such due-on-sale clauses.

      The adjustable-rate loans currently offered by the Company have interest
rates which adjust on an annual basis from the closing date of the loan or an
annual basis commencing after an initial fixed-rate period of one, three, five,
seven or ten years in accordance with a designated index (the primary index
utilized by the Company is the Eleventh District Cost of Funds for SAIF-Insured
Institutions), plus a stipulated margin. The Company's adjustable-rate
single-family residential real estate loans generally have a cap of 2% on any
increase or decrease in the interest rate at any adjustment date, and include a
specified cap on the

                                      6

<PAGE>   7

maximum interest rate over the life of the loan, which cap generally is 4% to
6% above the initial rate. The Company's adjustable-rate loans require that any
payment adjustment resulting from a change in the interest rate of an
adjustable-rate loan be sufficient to result in full amortization of the loan
by the end of the loan term and, thus, do not permit any of the increased
payment to be added to the principal amount of the loan, or so-called negative
amortization. From time-to-time, based on prevailing market conditions, the
Company may offer adjustable-rate loans with "teaser" rates, i.e., initial
rates below the fully indexed rate. At December 31, 1997, $89.6 million or
52.8%, of the Company's single-family residential mortgage loans were
adjustable-rate loans.

      Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
increase, the loan payment by the borrower increases to the extent permitted by
the terms of the loan, thereby increasing the potential for default. Moreover,
as with fixed-rate loans, as interest rates increase, the marketability of the
underlying collateral property may be adversely affected by higher interest
rates. The Company believes these risks, which have not had a material adverse
effect on the Company to date because of the generally declining or flat
interest rate environment in recent years, generally are less than the risks
associated with holding fixed-rate loans in an increasing interest rate
environment.

      For conventional residential mortgage loans held in the portfolio and also
for those loans originated for sale in the secondary market, the Company's
maximum loan-to-value ("LTV") ratio is 80%, and is based on the lesser of sales
price or appraised value. Generally on loans with a LTV ratio of over 80%,
private mortgage insurance ("PMI") is required on the amount of the loan in
excess of 80% of value. However, the Loan Committee may approve loans with LTV
ratios of up to 89.5% without PMI.

      Commercial and Other Real Estate Loans and Multi-Family Residential Loans.
At December 31, 1997, the Company had $9.4 million in outstanding loans secured
by commercial and other real estate. Such commercial and other real estate
loans, which comprised 4.4% of the Company's total loan portfolio at December
31, 1997, are secured primarily by office and other commercial buildings, retail
and manufacturing properties and church properties. None of the Company's
commercial and other real estate loans were non-performing loans at such date.

      The Company's commercial real estate loans generally are one-year
adjustable loans indexed to the New York Prime Rate, as quoted in The Wall
Street Journal, plus a margin. Generally, fees of 50 basis points to 2% of the
principal loan balances are charged to the borrower upon closing. Although terms
for multi-family residential and commercial real estate loans may vary, the
Company's underwriting standards generally provide for terms of up to ten years,
with amortization of principal over the term of the loan and LTV ratios of not
more than 75%. Generally, the Company obtains personal guarantees of the
principals as additional security for any commercial real estate and
multi-family residential loans.

      At December 31, 1997, the Company had $0.5 million of multi-family
residential real estate loans. The Company has not originated any new
multi-family residential loans during the past three years, and does not
anticipate becoming an active originator of multi-family residential loans.

                                      7

<PAGE>   8

      The Company evaluates various aspects of commercial and multi-family
residential real estate loan transactions in an effort to mitigate risk to the
extent possible. In underwriting these loans, consideration is given to the
stability of the property's cash flow history, future operating projections,
current and projected occupancy, position in the market, location and physical
condition. In recent periods, the Company has also generally imposed a debt
coverage ratio (the ratio of net cash from operations before payment of debt
service to debt service) of not less than 150%. The underwriting analysis also
includes credit checks and a review of the financial condition of the borrower
and guarantor, if applicable. An appraisal report is prepared by a
state-licensed or certified appraiser (generally Master Appraisal Institute
("MAI") certified) commissioned by the Company to substantiate values for every
commercial real estate and multi-family loan transaction. All appraisal reports
are reviewed by the Company prior to the approval of the loan. On occasion the
Company also retains a second independent appraiser to review an appraisal
report.

      Commercial real estate and multi-family residential lending entails
different and significant risks when compared to single-family residential
lending because such loans often involve large loan balances to single borrowers
and because the payment experience on such loans is typically dependent on the
successful operation of the project or the borrower's business. These risks can
also be significantly affected by supply and demand conditions in the local
market for apartments, offices, warehouses or other commercial space. The
Company attempts to minimize its risk exposure by limiting such lending to
proven businesses, only considering properties with existing operating
performance which can be analyzed, requiring conservative debt coverage ratios,
and periodically monitoring the operation and physical condition of the
collateral.

      Construction Loans. Substantially all of the Company's construction loans
have consisted of loans to construct single-family residences. As of December
31, 1997, the Company's construction loans amounted to $9.3 million, or 4.4% of
the Company's total loan portfolio.

      The Company makes construction loans both to individuals and to builders.
Construction loans made to individuals for one-to-four family residences
normally are construction/permanent loans which provide for the payment of
interest during the construction period, after which the loan converts to a
permanent loan at fixed or adjustable interest rates with monthly amortization
of principal and interest. Construction loans to individuals for single-family
residential properties generally have a maximum LTV ratio of 80% of the sales
price or appraised value of the property, whichever is less. Higher ratios
require PMI. The Company originated $14.1 million of single-family construction
loans to individuals during the year ended December 31, 1997.

      The Company's policies permit loans to builders constructing single-family
residential properties on a speculative basis; however, such policies generally
limit a builder to two such loans. Other builder loans are made to finance
construction of residences which have been pre-sold prior to loan closing. Loans
made to builders generally require the payment of interest during the
construction period and the payment of the principal in full at the end of the
construction period. Construction loans to builders made on a speculative basis
are generally limited to 85% of the appraised value of the property. The Company
originated $3.3 million in single family construction loans to builders during
the year ended December 31, 1997.



                                       8

<PAGE>   9
      Prior to making a commitment to fund a construction loan, the Company
requires an appraisal of the property by an independent state-licensed or
qualified appraiser approved by the Board of Directors. In addition, during the
term of the construction loan, the project periodically is inspected by an
independent inspector.

      Construction financing is generally considered to involve a higher degree
of risk of loss than long-term financing on improved, owner-occupied real
estate. Risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction or development and the estimated cost (including interest) of
construction. During the construction phase, a number of factors could result
in delays and cost overruns. If the estimate of value proves to be inaccurate,
the Company may be confronted, at or prior to maturity of the loan, with a
project, when completed, having a value which is insufficient to assure full
repayment. Loans on lots may run the risk of adverse zoning changes,
environmental or other restrictions on future use. As of December 31, 1996,
none of the Company's construction loans were considered non-performing.

      Consumer Loans. The Company offers consumer loans in order to provide a
full range of retail financial services to its customers. At December 31, 1997,
$16.4 million, or 7.7% of the Company's total loan portfolio was comprised of
consumer loans. The Company originates substantially all of such loans in its
primary market area.

      Origination of consumer loans by the Company amounted to $10.8 million in
1997 compared to $13.1 million and $10.2 million in 1996 and 1995, respectively.
The primary reason for the increase in consumer loans originated in 1996 and
1995 were the result of the Company's determination to increase its portfolio of
automobile loans due to their generally higher yields and shorter terms to
maturity compared to mortgage loans. During 1996, the Company discontinued its
indirect automobile loan origination program which it had initiated during 1995.
Indirect automobile loans originated accounted for approximately 43.6% and 39.3%
of the Company's total consumer loans originated during 1996 and 1995,
respectively. Although applications for such loans were taken by employees of
the dealer, the loans were made pursuant to the Company's underwriting standards
using the Company's documentation, and all such indirect loans had to be
approved by a loan officer of the Company before disbursement of loan proceeds.

      Consumer finance loans generally involve more credit risk than mortgage
loans because of the type and nature of the collateral and, in certain cases,
the absence of collateral. In addition, consumer lending collections are
dependent on the borrower's continuing financial stability, and thus are more
likely to be adversely affected by job loss, divorce, illness and personal
bankruptcy. In many cases, any repossessed collateral for a defaulted consumer
financial loan will not provide an adequate source of repayment of the
outstanding loan balance because of improper repair and maintenance of the
underlying security. The remaining deficiency often does not warrant further
substantial collection efforts against the borrower. As of December 31, 1997,
$99,000, or 2.2% of the Company's consumer loans from indirect origination
activities were considered non-performing. As of December 31, 1997, $129,000, or
0.6% of the Company's total consumer loans were considered non-performing.

      Commercial Business Loans. At December 31, 1997, the Company's commercial
business loans amounted to $15.4 million, or 7.2% of the Company's gross loan
portfolio. Prior to 1996, the Company had not been an active originator of
commercial business loans.


                                       9

<PAGE>   10

      The Company concentrates its commercial lending activities among small- to
mid-size businesses in Lafayette, Louisiana and contiguous parishes in a manner
consistent with its current underwriting standards. Commercial business lending
generally involves more credit risk than traditional, single-family residential
mortgage lending. Origination of commercial business loans by the Company
amounted to $18.8 million in 1997, compared to $9.2 million, and $723,000
thousand in 1996 and 1995, respectively.

      Loans-to-One Borrower Limitations. The Louisiana Savings Bank Act of 1990
(the "LSBA") imposes limitations on the aggregate amount of loans that a
Louisiana chartered savings bank can make to any one borrower. Under the LSBA,
the permissible amount of loans-to-one borrower may not exceed 15% of a savings
bank's total net worth. In addition, a savings bank may make loans in an amount
equal to an additional 10% of a savings bank's net worth if the loans are 100%
secured by readily marketable collateral. A savings bank's net worth shall be
calculated based on its last quarterly call report and consists of (i)
outstanding and unimpaired common stock; (ii) outstanding and unimpaired
perpetual preferred stock; (iii) unimpaired capital surplus, undivided profits,
capital reserves, minus intangible assets; (iv) purchased mortgage servicing
rights; or (v) mandatory convertible debt up to 20% of categories (i) through
(iv). Readily marketable collateral consists of financial instruments or
bullion which are salable under ordinary circumstances with reasonable
promptness at fair market value or on an auction or a similarly available daily
bid and ask price market. At December 31, 1997, the Company's limit on
loans-to-one borrower under LSBA was approximately $5.1 million. At December
31, 1997, the Company's five largest loans or groups of loans-to-one borrower
ranged from $1.1 million to $2.2 million, and all such loans were performing in
accordance with their terms.

ASSET QUALITY

      General. As part of the Company's efforts to improve its asset quality, it
has developed and implemented an asset classification system. All of the
Company's assets are subject to review under the classification system. All
assets of the Company are periodically reviewed and the classifications are
reviewed by the Audit Committee of the Board of Directors on at least a
quarterly basis.

      When a borrower fails to make a required payment on a loan, the Company
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made 16 days after a payment is due. In most cases,
deficiencies are cured promptly. If a delinquency continues, late charges are
assessed and additional efforts are made to collect the loan. While the Company
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Company institutes foreclosure or other
proceedings, as necessary, to minimize any potential loss.

      Loans are placed on non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on non-accrual
status, previously accrued but unpaid interest is deducted from interest income.
As a matter of policy, the Company does not accrue interest on loans past due 90
days or more.

      Real estate acquired by the Company as a result of foreclosure or by
deed-in-lieu of foreclosure are classified as real estate owned until sold.
Pursuant to Statement of Procedure


                                       10

<PAGE>   11
("SOP") 92-3 issued by the American Institute of Certified Public Accountants
("AICPA") in April 1992, which provides guidance on determining the balance
sheet treatment of foreclosed assets in annual financial statements for periods
ending on or after December 15, 1992, there is a refutable presumption that
foreclosed assets are held for sale and such assets are recommended to be
carried at the lower of fair value minus estimated costs to sell the property,
or cost (generally the balance of the loan on the property at the date of
acquisition). After the date of acquisition, all costs incurred in maintaining
the property are expensed and costs incurred for the improvement or development
of such property are capitalized up to the extent of their net realizable
value. The Company's accounting for its real estate owned complies with the
guidance set forth in SOP 92-3.

      Under GAAP, the Company is required to account for certain loan
modifications or restructurings as "troubled debt restructurings". In general,
the modification or restructuring of a debt constitutes a troubled debt
restructuring if the Company, for economic or legal reasons related to the
borrower's financial difficulties, grants a concession to the borrower that the
Company would not otherwise consider under current market conditions. Debt
restructurings, however, and troubled debt restructurings do not necessarily
result in non-accrual loans. The Company had $515,000 of loans deemed to be
troubled debt restructurings as of December 31, 1997.

      Delinquent Loans. The following table sets forth information concerning
delinquent loans at December 31, 1997, in dollar amounts and as a percentage of
each category of the Company's loan portfolio. The amounts presented represent
the total outstanding principal balances of the related loans, rather than the
actual payment amounts which are past due.

<TABLE>
<CAPTION>
                                                                          At December 31, 1997
                                               ---------------------------------------------------------------------------
                                                              30-59 Days                            60-89 Days
                                               -----------------------------------------  --------------------------------
                                                                        Percent of                          Percent of
                                                     Amount            Loan Category         Amount        Loan Category
                                               -------------------  --------------------  --------------  ----------------
                                                                         (Dollars in Thousands)
Mortgage loans:
     Residential:
<S>                                                <C>                            <C>       <C>                     <C>
       Single family                               $          342                 0.39%     $       157             0.13%
       Multi-family                                           114                 0.00%               -             0.00%
       Commercial and other real estate                         -                 0.22%               -             0.00%
       Construction                                             -                 0.00%               -             0.00%
       Consumer                                               174                 1.92%              46             0.31%
       Commercial business                                      -                 0.00%               -             0.00%
                                               -------------------  --------------------  --------------  ----------------
             Total                                 $          630                 2.53%     $       203             0.44%
                                               ===================  ====================  ==============  ================
</TABLE>





                                       11

<PAGE>   12




      Non-Performing Assets and Troubled Debt Restructurings. The following
table sets forth information with respect to non-performing assets identified by
the Company, including non-accrual loans, other real estate owned, and
non-performing investments in real estate at the dates indicated.


<TABLE>
<CAPTION>
                                                                                     At December 31,
                                                          -----------------------------------------------------------------------
                                                              1997           1996          1995           1994          1993
                                                          -------------   -----------  -------------   -----------   ------------
                                                                                  (Dollars in Thousands)
<S>                                                            <C>           <C>            <C>           <C>            <C>
Accruing loans 90 days or more past due:
      Residential single-family                                $     -       $     -        $     -       $   377        $ 1,543
      Construction                                                   -             -              -             -              -
      Multi-family residential                                       -             -              -             -             76
      Commercial and other real estate                               -             -              -             -            240
      Consumer                                                       -             -              -            96            152
      Commercial business                                            -             -              -             -              -
                                                          -------------   -----------  -------------   -----------   ------------
        Total accruing loans                                         -             -              -           473          2,011
                                                          -------------   -----------  -------------   -----------   ------------
Non-accrual loans:
      Residential single-family                                    285           632            527            72            229
      Construction                                                   -             -              -             -              -
      Multi-family residential                                       -             -              -             -              -
      Commercial and other real estate                               -           145            197             -            452
      Consumer                                                     129            96             16            21            105
      Commercial business                                            -             -              -             -              -
                                                          -------------   -----------  -------------   -----------   ------------
        Total non-accrual loans                                    414           873            740            93            786
                                                          -------------   -----------  -------------   -----------   ------------
Total non-performing loans                                         414           873            740           566          2,797
                                                          -------------   -----------  -------------   -----------   ------------
Other real estate owned, and repossessed assets                    204            75            845         2,449          2,693
                                                          -------------   -----------  -------------   -----------   ------------
Total non-performing assets                                        618           948          1,585         3,015          5,490
                                                          =============   ===========  =============   ===========   ============

Performing troubled debt restructurings                        $   515       $   536        $   878       $   954        $   996
                                                          =============   ===========  =============   ===========   ============
Total non-performing assets and troubled debt
    restructurings                                             $ 1,133       $ 1,484        $ 2,463       $ 3,969        $ 6,486
                                                          =============   ===========  =============   ===========   ============


Non-performing assets to total loans                             0.29%         0.52%          0.96%         1.92%          3.48%

Non-performing assets to total assets                             0.22          0.36           0.70          1.35           2.35

Non-performing loans to total loans                               0.19          0.48           0.45          0.36           1.77

Non-performing loans to total assets                              0.15          0.33           0.33          0.25           1.20

Total non-performing assets and troubled debt
     restructurings to total assets                               0.41          0.56           1.09          1.78           2.78
</TABLE>



      Other Classified Assets. Federal regulations require that the Company
classify its assets on a regular basis. In addition, in connection with
examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them in their reports of
examination. There are three classifications for problem assets:
"substandard,", "doubtful" and "loss." Substandard assets have one or more
defined weaknesses and are characterized by the distinct possibility that the
insured institution will sustain some loss if the deficiencies are not
corrected. Doubtful assets have the weaknesses of substandard assets with the
additional characteristic that the weaknesses make collection or liquidation in
full, on the basis of currently existing facts, conditions and values
questionable,


                                      12

<PAGE>   13

and there is a high possibility of loss. An asset classified as loss is
considered uncollectible and of such little value that continuance as an asset
of the institution is not warranted.

      At December 31, 1997, the Company had $2.1 million of assets classified
substandard and no assets classified as doubtful or loss. At such date, the
aggregate of the Company's classified assets amounted to .8% of total assets.

      Potential Problem Loans. The Company has identified a group of residential
mortgage loans which were originated under its discontinued program of making
loans to facilitate the sale of real estate owned, and which, at December 31,
1997, totaled $5.0 million, or 2.3% of the Company's gross loan portfolio. Loans
in this portfolio were originated at 90% to 100% of collateral value, without
credit enhancements such as private mortgage insurance. Although the portfolio
is not currently demonstrating credit problems evidenced by delinquent loan
payments, the Company recognizes that these loans are secured primarily by
residential real estate which generally became severely depressed during the
most recent economic downturn. In that regard, the Company has serious concerns
that the collateral values would again become severely adversely affected in the
next economic downturn. Accordingly, the Company believes the relative credit
risk with regard to this group of loans to be higher than that of its other
residential mortgage loans, taken as a whole.

      Also, during 1995, the Company commenced a program of originating
automobile loans indirectly through a network of approximately 12 new and used
automobile dealers located in Lafayette, Louisiana, and in nearby parishes.
Although the Company determined to discontinue this program ( see "Business -
Consumer Loans") in 1996, the outstanding portfolio totaled $4.5 million at
December 31, 1997, or 2.1% of the Company's net loans. This group of loans has
demonstrated much higher delinquency ratios than that of the Company's other
secured consumer loans. Several of the loans in this portfolio demonstrated
serious credit problems such as first payment default. Also, the Company's
experience indicates that the collateral values securing those loans which
became delinquent are generally insufficient to cover the amounts due the
Company. Accordingly, the Company believes this indirect loan portfolio has
higher relative credit risks than that of its other consumer loans, taken as a
whole.

      Allowance for Loan Losses. The Company's policy is to establish reserves
for estimated losses on loans when it determines that losses are expected to be
incurred on such loans. The allowance for losses on loans is maintained at a
level believed adequate by management to absorb potential losses in the
portfolio. Management's determination of the adequacy of the allowance is based
on an evaluation of the portfolio, past loss experience, current economic
conditions, volume, growth, and composition of the portfolio, and other relevant
factors. The allowance is increased by provisions for loan losses which are
charged against income. As shown in the table below, at December 31, 1997, the
Company's allowance for loan losses amounted to 297.09% and 1.25% of the
Company's non-performing loans and troubled debt restructurings, and gross
loans, respectively.

      Effective December 21, 1993, the FDIC, in conjunction with the Office of
the Comptroller of the Currency, the Office of Thrift Supervision ("OTS") and
the Federal Reserve Board, issued the Policy Statement regarding an
institution's allowance for loan and lease losses. The Policy Statement, which
reflects the position of the issuing regulatory agencies and does not
necessarily constitute GAAP, includes guidance (i) on the responsibilities of
management for the assessment and establishment of an adequate allowance and
(ii) for the agencies'


                                       13

<PAGE>   14

examiners to use in evaluating the adequacy of such allowance and the policies
utilized to determine such allowance. The Policy Statement also sets forth
quantitative measures for the allowance with respect to assets classified
substandard and doubtful and with respect to the remaining portion of an
institution's loan portfolio. Specifically, the Policy Statement also sets
forth quantitative measures which examiners may use to determine the
reasonableness of an allowance; (i) 50% of the portfolio that is classified
doubtful; (ii) 15% of the portfolio that is classified substandard; and (iii)
for the portions of the portfolio that have not been classified (including
loans designated special mention), estimated credit losses over the upcoming 12
months based on facts and circumstances available on the evaluation date. While
the Policy Statement sets forth this quantitative measure, such guidance is not
intended as a "floor" or "ceiling." The review of the Policy Statement did not
result in a material adjustment to the Company's policy for establishing loan
losses.

      The following table describes the activity related to the Company's
allowance for possible loan losses for the periods indicated.



<TABLE>
<CAPTION>
                                                                          Years Ended December 31,
                                            --------------------------------------------------------------------------------------
                                                 1997                1996              1995              1994            1993
                                            ----------------   -----------------  ----------------  ---------------  -------------
                                                                           (Dollars in Thousands)
<S>                                            <C>                 <C>               <C>              <C>               <C>
Balance, beginning of period                   $      2,592        $      2,329      $      1,087     $      1,015      $   2,760
Provision for loan losses                               180                 355             1,274               63            235
Charge-offs:
      Residential single-family                         (14)                  -               (70)             (37)           (42)
      Construction                                        -                   -                 -                -              -
      Multi-family residential                            -                   -                (7)               -              -
      Commercial and other real estate                    -                 (67)                -                -              -
      Commercial business                                 -                   -                 -              (11)             -
      Consumer                                         (221)               (210)              (50)            (135)          (211)
                                            ----------------   -----------------  ----------------  ---------------  -------------
        Total charge-offs                              (235)               (277)             (127)            (183)          (253)
                                            ----------------   -----------------  ----------------  ---------------  -------------
Recoveries:
      Residential single-family                          76                  87                10               72             29
      Construction                                        -                   -                 -                -              -
      Multi-family residential                            -                   -                 -                -              -
      Commercial and other real estate                   56                  10                 -               55              -
      Commercial business                                 -                   -                 -                -              -
      Consumer                                           91                  88                85               65             23
                                            ----------------   -----------------  ----------------  ---------------  -------------
        Total recoveries                                223                 185                95              192             52
                                            ----------------   -----------------  ----------------  ---------------  -------------
Net (charge-offs) / recoveries                          (12)                (92)              (32)               9           (201)
                                            ----------------   -----------------  ----------------  ---------------  -------------
Balance, end of period                                2,760               2,592             2,329            1,087          2,794
                                            ================   =================  ================  ===============  =============
Allowance for loan losses to
      total non-performing loans
      and troubled debt restructurings
      at end of period                              297.09%             183.96%           143.94%           71.51%         26.76%
                                            ================   =================  ================  ===============  =============
Allowance for loan losses to
      total loans at end of period                    1.25%               1.35%             1.41%            0.69%          0.64%
                                            ================   =================  ================  ===============  =============
</TABLE>








                                       14



<PAGE>   15


      The following table presents an allocation of the allowance for losses on
loans by the categories indicated and the percentage that loans in each category
bear to the total loans. This allocation is used by management to assist in its
evaluation of the Company's loan portfolio. It should be noted that allocations
are no more than estimates and are subject to revisions as conditions change.
Based upon historical loss experience and the Company's assessment of its loan
portfolio, all of the Company's allowances for losses on loans have been
allocated to the categories indicated. Allocations of these loans are based
primarily on the creditworthiness of each borrower. In addition, general
allocations are also made to each category based upon, among other things, the
current and future impact of economic conditions on the loan portfolio taken as
a whole. Losses on loans made to consumers are reasonably predictable based on
the prior loss experience and a review of current economic conditions.


<TABLE>
<CAPTION>
                                                                                  At December 31,
                                             ------------------------------------------------------------------------------------
                                                             Percent                     Percent                      Percent
                                                             of Loans                    of Loans                    of Loans
                                                 1997        to Gross       1996         to Gross        1995        to Gross
                                                Amount        Loans        Amount         Loans         Amount         Loans
                                             ------------- ------------- ------------  ------------- ------------- --------------
<S>                                              <C>            <C>        <C>              <C>         <C>              <C>
Real estate loans:
       Residential single family                 $  1,739        76.90%     $  1,565         74.64%      $  1,773         77.55%
       Construction                                    64         4.22%           58          5.52%            22          4.44%
       Multi-family residential                         5         0.25%            7          0.45%            80          0.73%
       Commercial and other real estate               350         4.24%          460          6.73%           331          8.13%
                                             ------------- ------------- ------------  ------------- ------------- --------------
Total real estate loans                             2,158        85.61%        2,090         87.34%         2,206         90.85%
                                             ------------- ------------- ------------  ------------- ------------- --------------
Non-real estate loans:
       Commercial business                            274         6.98%          163          3.85%            26          0.82%
       Consumer                                       328         7.41%          339          8.81%            97          8.33%
                                             ------------- ------------- ------------  ------------- ------------- --------------
Total non-real estate loans                           602        14.39%          502         12.66%           123          9.15%
                                             ------------- ------------- ------------  ------------- ------------- --------------
Total allowance for loans                        $  2,760       100.00%     $  2,592        100.00%      $  2,329        100.00%
                                             ============= ============= ============  ============= ============= ==============
</TABLE>


<TABLE>
<CAPTION>
                                                                 At December 31,
                                             ---------------------------------------------------------
                                                               Percent                     Percent
                                                              of Loans                     of Loans
                                                  1994        to Gross          1993       to Gross
                                                 Amount         Loans          Amount       Loans
                                              ------------- --------------   ----------- -------------
<S>                                             <C>               <C>        <C>              <C>
Real estate loans:
       Residential single family                 $     597         76.86%     $     542        73.05%
       Construction                                     15          4.41%            15         3.38%
       Multi-family residential                         30          1.04%            33         1.30%
       Commercial and other real estate                277          8.62%           245        10.12%
                                              ------------- --------------   ----------- -------------
Total real estate loans                                919         90.93%           835        87.85%
                                              ------------- --------------   ----------- -------------
Non-real estate loans:
       Commercial business                               -          0.94%             -         0.88%
       Consumer                                        168          8.13%           180        11.27%
                                              ------------- --------------   ----------- -------------
Total non-real estate loans                            168          9.07%           180        12.15%
                                              ------------- --------------   ----------- -------------
Total allowance for loans                         $  1,087        100.00%      $  1,015       100.00%
                                              ============= ==============   =========== =============
</TABLE>



                                       15

<PAGE>   16


      Management of the Company presently believes that its allowance for loan
losses is adequate to cover any potential losses in the Company's loan
portfolio. However, future adjustments to this allowance may be necessary, and
the Company's results of operations could be adversely affected if circumstances
differ substantially from the assumptions used by management in making its
determinations in this regard.

INVESTMENT ACTIVITIES

      General. Interest income from mortgage-backed securities and investment
securities generally provides the second largest source of income to the Company
after interest on loans. The Company's Board of Directors has authorized
investments in U.S. Government and agency securities, obligations of the FHLB,
and mortgage-backed securities issued by FNMA and FHLMC. The Company's objective
is to use such investments to reduce interest rate risk, enhance yields on
assets and provide liquidity. On December 31, 1997, the Company's
mortgage-backed securities and investment securities portfolio amounted to $30.7
million and $11.0 million, respectively. At such date, the Company had an
unrealized gain of $450,000, net of deferred taxes, with respect to its
securities available for sale.

      Mortgage-Backed Securities. As of December 31, 1997, the Company's
mortgage-backed securities amounted to $30.7 million, or 11.1%, of total assets.
The Company's mortgage-backed securities portfolio provides a means of investing
in housing-related mortgage instruments without the costs associated with
originating mortgage loans for portfolio retention and with limited credit risk
of default which arises in holding a portfolio of loans to maturity.
Mortgage-backed securities (which also are known as mortgage participation
certificates or pass-through certificates) represents a participation interest
in a pool of single-family or multi-family mortgages. The servicer, through
intermediaries (generally U.S. Government agencies and government-sponsored
enterprises) pool and repackage the participation interests in the form of
securities, to investors such as the Company. Such U.S. Government agencies and
government sponsored enterprises, which guarantee the payment of principal and
interest to investors, primarily include the FHLMC, the FNMA and the Government
National Mortgage Association ("GNMA").

      The FHLMC is a public corporation chartered by the U.S. Government and
owned by the 12 FHLBs and federally insured savings institutions. The FHLMC
issues participation certificates backed principally by conventional mortgage
loans. The FHLMC guarantees the timely payment of interest and the ultimate
return of principal on participation certificates. The FNMA is a private
corporation chartered by the U.S. Congress with a mandate to establish a
secondary market for mortgage loans. The FNMA guarantees the timely payment of
principal and interest on FNMA securities. FHLMC and FNMA securities are not
backed by the full faith and credit of the United States, but because the FHLMC
and FNMA are U.S. Government-sponsored enterprises, these securities are
considered to be among the highest quality investments with minimal credit
risks. The GNMA is a government agency within the Department of Housing and
Urban Development which is intended to help finance government-assisted housing
programs. GNMA securities are backed by FHA-insured and VA-guaranteed loans, and
the timely payment of principal and interest on GNMA securities are guaranteed
by the GNMA and backed by the full faith and credit of the U.S. Government.
Because the FHLMC, the FNMA and the GNMA were established to provide support for
low- and middle-income housing, there are limits to the maximum size of loans
that qualify for these programs, which limit is currently $227,150.


                                       16

<PAGE>   17

      Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages, (i.e., fixed rate or adjustable rate) as well as
prepayment risk, are passed on to the certificate holder. The life of a
mortgage-backed pass-through security thus approximates the life of the
underlying mortgages. The Company's mortgage-backed securities portfolio
includes investments in mortgage-backed securities backed by adjustable rate
mortgages ("ARMs") or securities which otherwise have an adjustable rate
feature.

      The Company's mortgage-backed securities include interests in
collateralized mortgage obligations ("CMOs"). CMOs have been developed in
response to investor concerns regarding the uncertainty of cash flows associated
with the prepayment option of the underlying mortgagor and are typically issued
by governmental agencies, governmental sponsored enterprises and special purpose
entities, such as trusts, corporations or partnerships, established by financial
institutions or other similar institutions. A CMO can be collateralized by loans
or securities which are insured or guaranteed by the FNMA, the FHLMC or the
GNMA. In contrast to pass-through mortgage-backed securities, in which cash flow
is received pro rata by all security holders, the cash flow from the mortgages
underlying a CMO is segmented and paid in accordance with a predetermined
priority to investors holding various CMO classes. By allocating the principal
and interest cash flows from the underlying collateral among the separate CMO
classes, different classes of bonds are created, each with its own stated
maturity, estimated average life, coupon rate and prepayment characteristics.
The regular interests of some CMOs are like traditional debt instruments because
they have stated principal amounts and traditionally defined interest rate
terms. Purchasers of certain other CMOs are entitled to the excess, if any, of
the issuer's cash inflows, including reinvestment earnings, over the cash
outflows for debt service and administrative expenses. These CMOs may include
instruments designated as residual interests, which represent an equity
ownership interest in the underlying collateral, subject to the first lien of
the investors in the other classes of the CMO. Certain residual CMO interests
may be riskier than many regular CMO interests to the extent that they could
result in the loss of a portion of the original investment. Moreover, cash flows
from residual interests are very sensitive to prepayments and thus contain a
high degree of interest rate risk. At December 31, 1997, the Company's
investment in CMOs amounted to $11.2 million, all of which consisted of regular
interests. As of December 31, 1997, the Company's CMOs did not include any
residual interests or interest-only or principal-only securities. As a matter of
policy, the Company does not invest in residual interests of CMOs or
interest-only and principal-only securities.

      Mortgage-backed securities generally yield less than the loans which
underlie such securities because of their payment guarantees or credit
enhancements which offer nominal credit risk. In addition, mortgage-backed
securities issued or guaranteed by the FNMA or the FHLMC (except interest-only
securities or the residual interests in CMOs) are weighted at no more than 20.0%
for risk-based capital purposes, compared to a weight of 50.0% to 100.0% for
residential loans.

      As of December 31, 1997, $12.8 million of the Company's mortgage-backed
securities were classified as held to maturity and $17.8 million were
classified as available for sale. Mortgage-backed securities which are held to
maturity are carried at cost, adjusted for the amortization of premiums and the
accretion of discounts using a method which approximates a level yield.
Mortgage-backed securities classified as available for sale are carried at fair
value.


                                       17

<PAGE>   18
Unrealized gains and losses on available for sale mortgage-backed securities
are recognized as direct increases or decreases in equity, net of applicable
income taxes.

      During 1995, the Company reviewed its entire portfolio of mortgage-backed
securities, all of which previously had been classified as held to maturity, and
designated all of its fixed-rate mortgage-backed securities as available for
sale. The designation of such mortgage-backed securities as available for sale
provides the Company with additional flexibility to sell such securities if
deemed appropriate in response to, among other things, changes in interest
rates.

      At December 31, 1997, the weighted average contractual maturity of the
Company's fixed-rate mortgage-backed securities was approximately 10.5 years.
The actual maturity of a mortgage-backed security may be less than its stated
maturity due to prepayments of the underlying mortgages. Prepayments that are
faster than anticipated may shorten the life of the security and adversely
affect its yield to maturity. The yield is based upon the interest income and
the amortization of any premium or discount related to the mortgage-backed
security. In accordance with GAAP, premiums and discounts are amortized over the
estimated lives of the loans, which decrease and increase interest income,
respectively. The prepayment assumptions used to determine the amortization
period for premiums and discounts can significantly affect the yield of the
mortgage-backed security, and these assumptions are reviewed periodically to
reflect actual prepayments. Although prepayments of underlying mortgages depend
on many factors, including the type of mortgages, the coupon rate, the age of
mortgages, the geographical location of the underlying real estate
collateralizing the mortgages and general levels of market interest rates, the
difference between the interest rates on the underlying mortgages and the
prevailing mortgage interest rates generally is the most significant determinant
of the rate of prepayments.

      During periods of rising mortgage interest rates, if the coupon rates of
the underlying mortgages are less than the prevailing market interest rates
offered for mortgage loans, refinancings generally decrease and slow the
prepayment of the underlying mortgages and the related securities. Under such
circumstances, the Company may be subject to reinvestment risk because to the
extent that the Company's mortgage-related securities amortize or prepay faster
than anticipated, the Company may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate. At December 31, 1997, of the
$30.7 million of mortgage-backed securities, an aggregate of $17.8 million were
secured by fixed-rate securities and classified as available for sale, and an
aggregate of $12.7 million were secured by adjustable-rate securities and
classified as held to maturity.







                                       18

<PAGE>   19
The following table sets forth certain information regarding the Company's
mortgage-backed securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                           December 31,
                                   -----------------------------------------------------------------------------------------------
                                       1997                               1996                          1995
                                   ---------------------------------  -----------------------------  -----------------------------
                                      Held to          Available         Held to        Available     Held to        Available
                                     Maturity           for Sale        Maturity        for Sale      Maturity       for Sale
                                   ---------------   ---------------  --------------   ------------  -----------  ----------------
                                                                      (Dollars in Thousands)
<S>                                 <C>                   <C>            <C>             <C>            <C>             <C>
Mortgage-backed securities:
       FHLMC                        $         750         $   5,463      $      822      $   6,853      $   936         $   8,361
       FNMA                                   206            10,487             232         12,449          259            15,185
       GNMA                                 1,121             1,399           1,320          1,776        1,585             1,981
       FNMA CMO                             4,736               497           4,733            488        4,733               495
       FHLMC CMO                            5,993                 -           5,980              -        5,979                 -
                                   ---------------   ---------------  --------------   ------------  -----------  ----------------
Total mortgage-backed securities           12,806            17,846          13,087         21,566       13,492            26,022
                                   ===============   ===============  ==============   ============  ===========  ================
</TABLE>


      Investment Securities. The Company's investments in investment securities
consist primarily of securities issued by the U.S. Treasury and federal
government agency obligations. As of December 31, 1997, the Company's entire
portfolio of investment securities was classified available for sale and
amounted to $11.0 million, net of gross unrealized gains of $121,000. The
Company attempts to maintain a high degree of liquidity in its investment
securities portfolio and generally does not invest in securities with terms to
maturity exceeding ten years. As of December 31, 1997, the estimated weighted
average life of the Company's investment securities portfolio was 3.6 years.

      The following table sets forth certain information regarding the
Company's investment securities at the dates indicated.

<TABLE>
<CAPTION>
                                                                            December 31,
                                     --------------------------------------------------------------------------------------------
                                         1997                           1996                            1995
                                     -----------------------------  -----------------------------   -----------------------------
                                       Carrying         Market        Carrying         Market         Carrying         Market
                                        Value           Value          Value           Value           Value           Value
                                     -------------   -------------  -------------   -------------   -------------   -------------
                                                                       (Dollars in Thousands)
<S>                                     <C>             <C>            <C>             <C>            <C>             <C>
U.S. Government and federal
       agency obligations               $  11,021       $  11,021      $  20,524       $  20,524      $    4,018      $    4,018
Equity securities                             826             826             --              --              --              --
Marketable equity securities                   23              23             15              15              12              12
                                     -------------   -------------  -------------   -------------   -------------   -------------
       Total                               11,870          11,870         20,539          20,539           4,030           4,030
                                     =============   =============  =============   =============   =============   =============
</TABLE>

      The following table sets forth certain information regarding the
maturities of the Company's investment securities at December 31, 1997.


<TABLE>
<CAPTION>
                                                                     Contractually Maturing
                             -----------------------------------------------------------------------------------------------------
                                          Weighted                   Weighted                  Weighted                 Weighted
                              Under 1      Average        1-5        Average        6-10        Average     Over 10      Average
                               Year         Yield        Years        Yield        Years         Yield       Years        Yield
                             -----------  ---------- -------------  ----------- ------------- ------------  ---------  -----------
                                                                   (Dollars in Thousands)
<S>                           <C>           <C>        <C>             <C>        <C>             <C>                      <C>
U.S. Government and federal
        agency obligations    $     -       0.00%      $    9,016      7.08%      $  2,005        7.38%          -         0.00%
</TABLE>




                                       19

<PAGE>   20
      In addition, as a member of the FHLB of Dallas, the Bank is required to
maintain an investment in stock of the FHLB of Dallas equal to the greater of 1%
of the Bank's outstanding home mortgage related assets or 5% of its outstanding
advances from the FHLB of Dallas. As of December 31, 1997, the Bank's investment
in stock of the FHLB of Dallas amounted to $1.9 million. During the year ended
December 31, 1997, the Bank received $109,000 in dividends on its FHLB stock. No
ready market exists for such stock, which is carried at par value.

SOURCES OF FUNDS

      General. The Company's principal source of funds for use in lending and
for other general business purposes has traditionally come from deposits
obtained through the Company's branch offices and advances from the FHLB of
Dallas. The Company also derives funds from amortization and prepayments of
outstanding loans and mortgage-related securities and from maturing investment
securities. Loan repayments are a relatively stable source of funds, while
deposit inflows and outflows are significantly influenced by general interest
rates and money market conditions.

      Deposits. The Company's current deposit products include passbook
accounts, NOW accounts, MMDA, certificates of deposit ranging in terms from 90
days to ten years and noninterest-bearing personal and business checking
accounts. The Company's deposit products also include Individual Retirement
Accounts ("IRA") certificates and Keogh accounts.

      The Company's deposits are obtained primarily from residents in its
Primary Market Area. The Company attracts local deposit accounts by offering a
wide variety of accounts, competitive interest rates and convenient branch
office locations and service hours. The Company utilizes traditional marketing
methods to attract new customers and savings deposits, including print and
broadcast advertising and direct mailings. However, the Company does not solicit
funds through deposit brokers nor does it pay any brokerage fees if it accepts
such deposits. The Company operates two automated teller machines ("ATMs") and
participates in the regional ATM network known as CIRRUS(R).

      The Company has been competitive in the types of accounts and in interest
rates it has offered on its deposit products but does not necessarily seek to
match the highest rates paid by competing institutions. With the significant
decline in interest rates paid on deposit products, the Company, in recent
years, has experienced disintermediation of deposits into competing investment
products.






                                       20

<PAGE>   21
      The following table sets forth certain information relating to the
Company's Deposits.



<TABLE>
<CAPTION>
                                                                                  December 31,
                                                  --------------------------------------------------------------------------
                                                                  1997                                  1996
                                                  ------------------------------------   -----------------------------------
                                                                         Percent of                            Percent of
                                                       Amount          Total Deposits         Amount         Total Deposits
                                                  ------------------   ----------------  ------------------  ----------------
                                                          (Dollars in Thousands)               (Dollars in Thousands)

<S>                                                    <C>                      <C>           <C>                     <C>
NOW accounts                                            $     8,177              4.23%         $    11,528             5.96%
Money market accounts                                         9,436              4.88%               5,101             2.64%
Noninterest-bearing checking accounts                         8,941              4.62%               4,954             2.56%
                                                  ------------------   ----------------  ------------------  ----------------
     Total demand deposits                                   26,554             13.73%              21,583            11.16%
                                                  ------------------   ----------------  ------------------  ----------------
Passbook savings deposits                                    23,343             12.07%              25,071            12.96%
                                                  ------------------   ----------------  ------------------  ----------------
Certificate of Deposit accounts:
     Less than 6 months                                      41,898             21.66%              44,256            22.88%
     6-11 months                                             25,020             12.94%              31,148            16.10%
     12-35 months                                            59,246             30.63%              53,329            27.57%
     More than 35 months                                     17,361              8.98%              18,063             9.34%
                                                  ------------------   ----------------  ------------------  ----------------
     Total certificates                                     143,525             74.20%             146,796            75.88%
                                                  ------------------   ----------------  ------------------  ----------------
Total Deposits                                         $    193,422            100.00%        $    193,450           100.00%
                                                  ==================   ================  ==================  ================
</TABLE>


      The following table sets forth by various interest rate categories the
certificates of deposit with the Company at the dates indicated. The Company had
no "brokered" deposits during any of the periods reported below and has no
intention to utilize brokered deposits in the future.

<TABLE>
<CAPTION>
                                                         December 31,
                               ------------------------------------------------------------------
                                      1997                  1996                   1995
                               -------------------   --------------------  ----------------------
                                                    (Dollars in Thousands)

<S>                              <C>                    <C>                      <C>
0.00% to 2.99%                   $            226       $            100         $           323
3.00% to 3.99%                                  -                      -                       -
4.00% to 4.99%                             13,474                 17,031                  14,845
5.00% to 5.99%                             79,702                 71,021                  54,116
6.00% to 6.99%                             34,172                 34,364                  51,650
7.00% to 8.99%                             15,056                 23,434                  36,600
9.00% and over                                895                    846                     895
                               -------------------   --------------------  ----------------------
                                 $        143,525       $        146,796        $        158,429
                               ===================   ====================  ======================
</TABLE>



      The following table sets forth information relating to the Company's
deposit flows during the periods shown and total deposits at the end of the
periods shown.

<TABLE>
<CAPTION>
                                                                     At or for the year ended December 31,
                                                       ------------------------------------------------------------------
                                                              1997                   1996                   1995
                                                       --------------------  ---------------------  ---------------------
                                                                            (Dollars in Thousands)

<S>                                                          <C>                    <C>                    <C>
Total deposits, beginning of period                          $     193,450          $     206,343          $     204,088
Net increase (decrease) before interest credited                    (6,143)               (19,616)                (4,331)
Interest credited                                                    6,115                  6,723                  6,586
                                                       --------------------  ---------------------  ---------------------
Total deposits, end of period                                $     193,422          $     193,450          $     206,343
                                                       ====================  =====================  =====================
</TABLE>





                                       21

<PAGE>   22



      The following table sets forth the amount and maturities of the Company's
certificates of deposit at December 31,1997.


<TABLE>
<CAPTION>
                                  Over Six         Over One           Over Two          Over Three
                                   Months            Year               Years             Years            Over
                 Six Months       Through          Through             Through           Through           Five
                  and Less        One Year         Two Years          Three Years       Five Years         Years        Total
                ------------  ---------------  -----------------   ----------------   --------------   -----------  --------------
                                                               (Dollars in Thousands)

<S>             <C>            <C>                <C>                  <C>           <C>            <C>             <C>
0.00% to 2.99%   $      226    $           -      $           -        $         -    $         -    $          -    $        226
3.00% to 3.99%            -                -                  -                  -              -               -               -
4.00% to 4.99%        8,852            3,438              1,184                  -              -               -          13,474
5.00% to 5.99%       27,327           22,264             20,815              6,539          2,076             681          79,702
6.00% to 6.99%        3,420            1,778             11,597             11,270          2,062           4,045          34,172
7.00% to 8.99%        2,073            1,468              2,292                941          6,849           1,433          15,056
9.00% and over            -               25                870                  -              -               -             895
                ------------  ---------------  -----------------   ----------------  -------------   -------------  --------------
                 $   41,898    $      28,973      $      36,758        $    18,750    $    10,987    $      6,159    $    143,525
                ============  ===============  =================   ================  =============  ==============  ==============
</TABLE>


      As of December 31, 1997, the aggregate amount of outstanding time
certificates of deposit in amounts greater than or equal to $100,000 was
approximately $36.8 million. The following table presents the maturity of these
time certificates of deposit at such dates.

<TABLE>
<CAPTION>
                        Over Three           Over Six
      Three               Months              Months               Over
     Months               Through            Through              Twelve
    and Less            Six Months        Twelve Months           Months              Total
------------------   ------------------  -----------------   ------------------  ----------------
                                     (Dollars in Thousands)


<S>                    <C>                 <C>                  <C>                  <C>
  $         4,953      $         3,580     $        7,363       $       20,937       $    36,833
==================   ==================  =================   ==================  ================
</TABLE>



      Borrowings. The Company may obtain advances from the FHLB of Dallas upon
the security of the common stock it owns in that Company and certain of its
residential mortgage loans and securities held to maturity, provided certain
standards related to creditworthiness have been met. Such advances are made
pursuant to several credit programs, each of which has its own interest rate and
range of maturities.


                                       22

<PAGE>   23
      The following table sets forth the amount of the Company's borrowings and
the weighted average rates for the periods indicated.


<TABLE>
<CAPTION>
                                                                       At December 31,
                              ----------------------------------------------------------------------------------------------------
                                  1997                              1996                               1995
                              --------------------------------  --------------------------------   -------------------------------
                                                   Percent                          Percent                           Percent
                                 Amount             Rate           Amount             Rate            Amount            Rate
                              ---------------   --------------  --------------   ---------------   --------------  ---------------
                                                                    (Dollars in Thousands)

<S>                             <C>                     <C>      <C>                      <C>           <C>                 <C>
FHLB advances                   $    36,378             5.82%    $    22,250              5.50%         $   250             8.70%
                                ===========                      ===========                            =======

Maximum amount
  outstanding at any month-
  end during the period         $    36,378                      $    22,250                            $   250
                                ===========                      ===========                            =======

Average balance outstanding
  during the period             $    29,648                      $    10,388                            $   250
                                ===========                      ===========                            =======

Weighted average interest
  rates on average balance
  during the period                                     5.67%                             5.59%                             8.70%
                                                        ====                              ====                              ====
</TABLE>




SUBSIDIARIES

      The Bank is a wholly owned subsidiary of the Company. The Company has no
other subsidiaries. The Bank currently has no subsidiaries. A former subsidiary,
Lafayette Land and Management, which held one parcel of real estate owned, was
liquidated in December 1995.


LEGAL PROCEEDINGS

      The Company is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition of the Company.

COMPETITION

      The Company faces strong competition both in attracting deposits and
making loans. Its most direct competition for deposits has historically come
from other savings institutions, credit unions and commercial banks located in
its market area including many large financial institutions, which have greater
financial and marketing resources available to them. In addition, during times
of high interest rates, the Company has faced additional significant
competition for investors' funds from short-term money market securities,
mutual funds and other corporate and government securities. The ability of the
Company to attract and retain savings deposits depends on its ability to
generally provide a rate of return, liquidity and risk comparable to that
offered by competing investment opportunities.

      The Company experiences strong competition for real estate loans,
commercial business loans and consumer loans, principally from other savings
institutions, commercial banks and mortgage banking companies. The Bank
competes for loans principally through the

                                       23

<PAGE>   24
interest rates and loan fees it charges, the efficiency and quality of services
it provides borrowers and the convenient locations of its branch office
network. Competition may increase as a result of the continuing reduction of
restrictions on the interstate operations of financial institutions.

EMPLOYEES

      The Bank had 83 full-time employees and 5 part-time employees as of
December 31, 1997. None of these employees is represented by a collective
bargaining agreement. The Bank believes that it enjoys excellent relations with
its personnel. The officers of the Company are officers of the Bank.

REGULATION

      Set forth below is a brief description of certain laws and regulations
which relate to the regulation of the Company and the Bank. The description of
these laws and regulations, as well as descriptions of laws and regulations
contained elsewhere herein, does not purport to be complete and is qualified in
its entirety by reference to applicable laws and regulations.

      The Company. The Company is a registered bank holding company pursuant to
the Bank Holding Company Act of 1956, as amended (the "BCHA"). The Company, as a
bank holding company, is subject to regulation and supervision by the Federal
Reserve Board. The Company is required to file annually a report of its
operations with, and will be subject to examination by, the Federal Reserve
Board.

      BHCA Activities and Other Limitations. The BHCA prohibits a bank holding
company from acquiring direct or indirect ownership or control of more than 5%
of the voting shares of any bank or increasing such ownership or control of
any bank without prior approval of the Federal Reserve Board. The BCHA also
generally prohibits a bank holding company from acquiring any bank located
outside of the state in which the existing bank subsidiaries of the bank holding
company are located unless specifically authorized by applicable state law. No
approval under the BHCA is required, however, for a bank holding company
already owning or controlling 50% of the voting shares of a bank to acquire
additional shares of such bank.

      The BCHA also prohibits a bank holding company, with certain exceptions,
from acquiring more than 5% of the voting share of any company that is not a
bank and from engaging in any business other than banking or managing or
controlling banks. Under the BHCA, the Federal Reserve Board is authorized to
approve the ownership of shares by a bank holding company in any company, the
activities of which the Federal Reserve Board has determined to be so closely
related to banking or to managing or controlling banks as to be a proper
incident thereto. In making such determinations, the Federal Reserve Board is
required to weigh the expected benefit to the public, such as greater
convenience, increased competition or gains in efficiency, against the possible
adverse effects, such as undue concentration of resources, decreased or unfair
competition, conflicts of interest or unsound banking practices.

      The Federal Reserve Board has by regulation determined that certain
activities are closely related to banking within the meaning of the BHCA. These
activities include operating a mortgage company, finance company, credit card
company, factoring company, trust company or savings association; performing
certain data processing operations; providing limited



                                       24

<PAGE>   25
securities brokerage services; acting as an investment or financial advisor;
acting as an insurance agent for certain types of credit-related insurance;
leasing personal property on a full-payout, non-operating basis; providing tax
planning and preparation services; operating a collection agency; and providing
certain courier services. The Federal Reserve Board also has determined that
certain other activities, including real estate brokerage and syndication, land
development, property management, and underwriting of life insurance not
related to credit transactions, are not closely related to banking and a proper
incident thereto.

      Limitation on Transactions with Affiliates. Transaction between savings
institutions and any affiliate are governed by Sections 23A and 23B of the
Federal Reserve Act. An affiliate of a savings institution is any company or
entity which controls, is controlled by, or is under common control with the
savings institution. In a holding company context, the parent holding company of
a savings institution (such as the Company) and any companies which are
controlled by such parent holding company are affiliates of the savings
institution. Generally, Sections 23A and 23B (i) limit the extent to which the
savings institution or its subsidiaries may engaged in "covered transactions"
with any one affiliate to an amount equal to 10% of such institution's capital
stock and surplus, and contain an aggregate limit on all such transactions with
all affiliates to an amount equal to 20% of such capital stock and surplus and
(ii) require that all such transactions be on terms substantially the same, or
at least as favorable, to the institution or subsidiary as those provided to a
non-affiliate. The term "covered transaction" includes the making of loans,
purchase of assets, issuance of a guarantee and other similar transactions. In
addition to the restrictions imposed by Sections 23A and 23B, no savings
institution may (i) loan or otherwise extend credit to an affiliate, except for
any affiliate which engages only in activities which are permissible for bank
holding companies, or (ii) purchase or invest in any stocks, bonds, debentures,
notes or similar obligations of any affiliate, except for affiliates which are
subsidiaries of the savings institution.

      In addition, Sections 22(h) and (g) of the Federal Reserve Act place
restrictions on loans to executive officers, directors and principal
stockholders. Under Section 22(h), loans to a director, an executive officer
and to a greater than 10% stockholder of a savings institution, and certain
affiliated interests of either, may not exceed, together with all other
outstanding loans to such person and affiliated interests, the savings
institution's loans to one borrower limit (generally equal to 15% of the
institution's unimpaired capital and surplus). Section 22(h) also requires
that loans to directors, executive officers and principal stockholders be made
on terms substantially the same as offered in comparable transactions to other
persons unless the loans are made pursuant to a benefit or compensation program
that (i) is widely available to employees of the institution and (ii) does not
give preference to any director, executive officer or principal stockholder, or
certain affiliated interests of either, over other employees of the savings
institutions. Section 22(h) also requires prior board approval for certain
loans. In addition, the aggregate amount of extensions of credit by a savings
institution to all insiders cannot exceed the institution's unimpaired capital
and surplus. Furthermore, Section 22(g) places additional restrictions on loans
to executive officers.

      Capital Requirements. The Federal Reserve Board has adopted capital
adequacy guidelines pursuant to which it assesses the adequacy of capital in
examining and supervising a bank holding company and in analyzing applications
to it under the BHCA. The Federal Reserve Board capital adequacy guidelines
generally require bank holding companies to maintain total capital equal to 8%
of total risk-adjusted assets, with at least one-half of that amount consisting
of Tier I or core capital and up to one-half of that amount consisting of Tier
II

                                       25

<PAGE>   26
or supplementary capital. Tier I capital for bank holding companies generally
consists of the sum of common stockholders' equity and perpetual preferred stock
(subject in the case of the latter to limitations on the kind and amount of such
stocks which may be included as Tier I capital), less goodwill and, with certain
exceptions, intangibles. Tier II capital generally consists of hybrid capital
instruments; perpetual preferred stock which is not eligible to be included as
Tier I capital; term subordinated debt and intermediate-term preferred stock;
and, subject to limitations, general allowances for loan losses. Assets are
adjusted under the risk-based guidelines to take into account different risk
characteristics, with the categories ranging from 0% (requiring no additional
capital) for assets such as cash to 100% for the bulk of assets which are
typically held by a bank holding company, including multi-family residential and
commercial real estate loans, commercial business loans and consumer loans.
Single-family residential first mortgage loans which are not past-due (90 days
or more) or non-performing and which have been made in accordance with prudent
underwriting standards are assigned a 50% level in the risk-weighing system, as
are certain privately-issued mortgage-backed securities representing indirect
ownership of such loans. Off-balance sheet items also are adjusted to take into
account certain risk characteristics.

      In addition to the risk-based capital requirements, the Federal Reserve
Board requires bank holding companies to maintain a minimum leverage capital
ratio of Tier I capital to total assets of 3.0%. Total assets for this purpose
does not include goodwill and any other intangible assets and investments that
the Federal Reserve Board determines should be deducted from Tier I capital. The
Federal Reserve Board has announced that the 3.0% Tier I leverage capital ratio
requirement is the minimum for the top-rated bank holding companies without any
supervisory, financial or operational weaknesses or deficiencies or those which
are not experiencing or anticipating significant growth. Other bank holding
companies will be expected to maintain Tier I leverage capital ratios of at
least 4.0% to 5.0% or more, depending on their overall condition. At December
31, 1997, the Company believes it is in compliance with the above-described
Federal Reserve Board regulatory capital requirements.

      Financial Support of Affiliated Institutions. Under Federal Reserve Board
policy, the Company will be expected to act as a source of financial strength to
the Bank and to commit resources to support the Bank in circumstances when it
might not do so absent such policy. The legality and precise scope of this
policy is unclear, however, in light of recent judicial precedent.

      Federal Securities Laws. The Company's common stock is registered with the
SEC under the Securities Exchange Act of 1934 ("Exchange Act"). The Company is
subject to the information, proxy solicitation, insider trading restrictions and
other requirements under the Exchange Act.

      The Bank. The Bank is subject to extensive regulation and examination by
the OFI and by the FDIC and is also subject to certain requirements established
by the Federal Reserve Board. The federal and state laws and regulations which
are applicable to banks regulate, among other things, the scope of their
business, their investments, their reserves against deposits, the timing of the
availability of deposited funds and the nature, amount of and collateral for
certain loans. There are periodic examinations by the OFI and the FDIC to test
the Bank's compliance with various regulatory requirements. This regulation and
supervision establishes a comprehensive framework of activities in which an
institution can engage and is intended primarily for the protection of the
insurance fund and depositors. The regulatory


                                       26

<PAGE>   27
structure also gives the regulatory authorities extensive discretion in
connection with their supervisory and enforcement activities and examination
policies, including policies with respect to the classification of assets and
the establishment of adequate loan loss reserves for regulatory purposes. Any
change in such regulation, whether by the OFI, the FDIC or the Congress could
have a material adverse impact on the Company, the Bank and their operations.

      FDIC Insurance Premiums. The deposits of the Savings Bank are currently
insured by the SAIF. Both the SAIF and the Bank Insurance Fund ("BIF"), the
federal deposit insurance fund that covers commercial bank deposits, are
required by law to attain and thereafter maintain a reserve ratio of 1.25% of
insured deposits. The BIF fund met its target reserve level in September 1995,
but the SAIF was not expected to meet its target reserve level until at least
2002. Consequently, in late 1995, the FDIC approved a final rule regarding
deposit insurance premiums which, effective with respect to the semiannual
premium assessment beginning January 1, 1996, reduced deposit insurance premiums
for BIF member institutions to zero basis points (subject to an annual minimum
of $2,000) for institutions in the lowest risk category. Deposit insurance
premiums for SAIF members were maintained at their existing levels (23 basis
points for institutions in the lowest risk category).

      On September 30, 1996, President Clinton signed into law legislation
which eliminated the premium differential between SAIF-insured institutions and
BIF-insured institutions by re-capitalizing the SAIF's reserves to the required
ratio. The legislation provided that all SAIF member institutions pay a
one-time special assessment to recapitalize the SAIF, which in the aggregate
was sufficient to bring the reserve ratio in the SAIF to 1.25% of insured
deposits. The legislation also provides for the merger of the BIF and the SAIF,
with such merger being conditioned upon the prior elimination of the thrift
charter.

      Effective October 8, 1996, FDIC regulations imposed a one-time special
assessment of 65.7 basis points on SAIF-assessable deposits as of March 31,
1995, which was collected on November 27, 1996. The Savings Bank's one-time
special assessment amounted to $1.3 million pre-tax. The payment of such
special assessment had the effect of immediately reducing the Savings Bank's
capital by $883,000 after tax.

      On October 16, 1996, the FDIC proposed to lower assessment rates for SAIF
members to reduce the disparity in the assessment rates paid by BIF and SAIF
members. Beginning October 1, 1996, effective SAIF rates would range from zero
basis points to 27 basis points. From 1997 through 1999, SAIF members will pay
6.4 basis points to fund the Financing Corporation while BIF member institutions
will pay approximately 1.3 basis points. The Savings Bank's deposit insurance
premiums, which had amounted to 23 basis points, were reduced to 6.4 basis
points.

      The FDIC may terminate the deposit insurance of any insured depository
institution, including the Savings Bank, if it determines after a hearing that
the institution has engaged or is engaging in unsafe or unsound practices, is in
an unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six


                                       27

<PAGE>   28
months to two years, as determined by the FDIC. Management is aware of no
existing circumstances which would result in termination of the Savings Bank's
deposit insurance.

      Capital Requirements. The FDIC has promulgated regulations and adopted a
statement of policy regarding the capital adequacy of state-chartered banks
which, like the Bank, will not be members of the Federal Reserve System. These
requirements are substantially similar to those adopted by the Federal Reserve
Board regarding bank holding companies, as described above.

      The FDIC's capital regulations establish a minimum 3.0% Tier I leverage
capital requirement for the most highly-rated state-chartered, non-member banks,
with an additional cushion of at least 100 to 200 basis points for all other
state-chartered, non-member banks, which effectively will increase the minimum
Tier I leverage ratio for such other banks to 4.0% to 5.0% or more. Under the
FDIC's regulation, highest-rated banks are those that the FDIC determines are
not anticipating or experiencing significant growth and have well diversified
risk, including no undue interest rate risk exposure, excellent asset quality,
high liquidity, good earnings and, in general, which are considered a strong
banking organization and are rated composite 1 under the Uniform Financial
Institutions Rating System. Leverage or core capital is defined as the sum of
common stockholders' equity (including retained earnings), non-cumulative
perpetual preferred stock and related surplus, and minority interests in
consolidated subsidiaries, minus all intangible assets other than certain
qualifying supervisory goodwill and certain purchased mortgage servicing rights.

      The FDIC also requires that savings banks meet a risk-based capital
standard. The risk-based capital standard for savings banks requires the
maintenance of total capital (which is defined as Tier I capital and
supplementary (Tier 2) capital) to risk weighted assets of 8%. In determining
the amount of risk-weighted assets, all assets, plus certain off balance sheet
assets, are multiplied by a risk-weight of 0% to 100%, based on the risks the
FDIC believes are inherent in the type of asset or item. The components of Tier
I capital are equivalent to those discussed above under the 3% leverage capital
standard. The components of supplementary capital include certain perpetual
preferred stock, certain mandatory convertible securities, certain subordinated
debt and intermediate preferred stock and general allowances for loan and lease
losses. Allowance for loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
At December 31, 1997, the Bank met each of its capital requirements.

      In August 1995, the FDIC and other federal banking agencies published a
final rule modifying their existing risk-based capital standards to provide for
consideration of interest rate risk when assessing capital adequacy of a bank.
Under the final rule, the FDIC must explicitly include a bank's exposure to
declines in the economic value of its capital due to changes in interest rates
as a factor in evaluating a bank's capital adequacy. In addition, in August
1995, the FDIC and the other federal banking agencies published a joint policy
statement for public comment that describes the process the banking agencies
will use to measure and assess the exposure of a bank's net economic value to
changes in interest rates. Under the policy statement, the FDIC will consider
results of supervisory and internal interest rate risk models as one factor in
evaluating capital adequacy. The FDIC intends, at a future date, to incorporate
explicit minimum requirements for interest rate risk in its risk-based capital
standards through


                                       28

<PAGE>   29
the use of a model developed from the policy statement, a future proposed rule
and the public comments received therefrom.

      Activities and Investments of Insured State-Chartered Banks. The
activities and equity investments of FDIC-insured, state-chartered banks are
generally limited to those that are permissible for national banks. Under
regulations dealing with equity investments, an insured state bank generally may
not directly or indirectly acquire or retain any equity investment of a type, or
in an amount, that is not permissible for a national bank. An insured state bank
is not prohibited from, among other things, (i) acquiring or retaining a
majority interest in a subsidiary, (ii) investing as a limited partner in a
partnership the sole purpose of which is direct or indirect investment in the
acquisition, rehabilitation or new construction of a qualified housing project,
provided that such limited partnership investments may not exceed 2% of the
bank's total assets, (iii) acquiring up to 10% of the voting stock of a company
that solely provides or reinsures directors', trustees' and officers' liability
insurance coverage or bankers' blanket bond group insurance coverage for insured
depository institutions, and (iv) acquiring or retaining the voting shares of a
depository institution if certain requirements are met. In addition, an insured
state-chartered bank may not, directly, or indirectly through a subsidiary,
engage as "principal" in any activity that is not permissible for a national
bank unless the FDIC has determined that such activities would pose no risk to
the insurance fund of which it is a member and the bank is in compliance with
applicable regulatory capital requirements. Any insured state-chartered bank
directly or indirectly engaged in any activity that is not permitted for a
national bank must cease the impermissible activity.

      Louisiana Savings Bank Law. As a Louisiana chartered savings bank, the
Bank is subject to regulation and supervision by the OFI under LSBA. The LSBA
contains provisions governing the incorporation and organization, location of
offices, rights and responsibilities of directors, officers and members as well
as the corporate powers, savings, lending, capital and investment requirements
and other aspects of the Bank and its affairs. In addition, the OFI is given
extensive rulemaking power and administrative discretion under the LSBA
including authority to enact and promulgate rules and regulations governing the
conversion of Louisiana chartered savings banks which convert from the mutual
to the stock form.

      The Bank is required under the LSBA to comply with certain capital
requirements established by the OFI. In addition, the LSBA prohibits the Bank
from declaring dividends unless the Bank has a surplus equal to 20% of the
outstanding common stock of the Bank both before and after the dividend is paid.
The LSBA also restricts the amount the Bank can lend to one borrower to an
amount which may not exceed 15% of the Bank's total net worth. The Bank may lend
an amount equal to an additional 10% of the Bank's total net worth to one
borrower if the loans are secured 100% by readily marketable collateral.

      The OFI generally examines the Bank once every year and the current
practice is for the OFI to conduct a joint examination with the FDIC. The OFI
may publish part of an examination of any savings bank which does not take
corrective action to comply with comments received from the examiner within
forty-five days after notice. In addition, the OFI may require corrective action
be taken by directors, officers and employees of any savings bank and issue a
formal order if corrective action is not taken. If the formal order contains a
finding that the business of the savings bank is being conducted in a
fraudulent, illegal, unsafe or unsound manner or could lead to insolvency or
substantial dissipation of assets, earnings or impairment of capital, such


                                       29

<PAGE>   30
order must be complied with immediately and may be enforced by the OFI through
a court of competent jurisdiction.

      Regulatory Enforcement Authority. Applicable banking laws include
substantial enforcement powers available to federal banking regulators. This
enforcement authority includes, among other things, the ability to assess civil
money penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, these enforcement actions may be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities.

FEDERAL AND STATE TAXATION

      GENERAL. The Company and the Savings Bank are subject to the corporate tax
provisions of the Code, as well as certain additional provisions of the Code
which apply to thrift and other types of financial institutions. The following
discussion of tax matters is intended only as a summary and does not purport to
be a comprehensive description of the tax rules applicable to the company and
the Savings Bank.

      METHOD OF ACCOUNTING. The Savings Bank maintains its books and records for
federal income tax purposes using the accrual method of accounting. The accrual
method of accounting generally requires that items of income be recognized when
all events have occurred that establish the right to receive the income and the
amount of income can be determined with reasonable accuracy, and that items of
expense be deducted at the later of (i) the time when all events have occurred
that establish the liability to pay the expense and the amount of such liability
can be determined with reasonable accuracy or (ii) the time when economic
performance with respect to the item of expense has occurred.

      BAD DEBT RESERVES. For tax years beginning after 1995, a small thrift
institution (one with an adjusted basis of assets of less than $500 million),
such as the Savings Bank, is no longer permitted to make additions to its tax
bad debt reserve under the percentage of taxable Income method.  The Bank
experience method must be used. In addition, the institution is required to
recapture (i.e. take into income) over a multi-year period the balance of its
bad debt reserves in excess of the lesser of (i) the balance of such reserves as
of the end of its last taxable year ending before 1988 or (ii) an amount that
would have been the balance of such reserves had the institution always
computed its reserves using the experience method.  The recapture requirement
is suspended for each of two successive taxable years beginning January 1, 1996
in which the Savings Bank originates an amount of certain kinds of residential
loans which in the aggregate are equal to or greater than the average of the
principal amounts of such loans made by the Savings Bank during its six taxable
years preceding 1996.  The amount of reserves of the Savings Bank that is
subject to recapture is not material.

      Under the experience method, the deductible annual addition to the
institution's bad debt reserves is the amount necessary to increase the balance
of the reserve at the close of the taxable year to the greater of (a) the amount
which bears the same ratio to loans outstanding at the close of the taxable year
as the total net bad debts sustained during the current and five preceding
taxable years bear to the sum of the loans outstanding at the close of the six
years, or (b) the lower of (i) the balance of the reserve account at the close
of the


                                      30

<PAGE>   31
Savings Bank's "base year," which was its tax year ended December 31, 1987, or
(ii) if the amount of loans outstanding at the close of the taxable year is
less than the amount of loans outstanding at the close of the base year, the
amount which bears the same ratio to loans outstanding at the close of the
taxable year as the balance of the reserve at the close of the base year bears
to the amount of loans outstanding at the close of the base year.

      At December 31, 1997, the federal income tax reserves of the Savings Bank
included $7.1 million for which no federal income tax has been provided. Because
of these federal income tax reserves and the liquidation account established for
the benefit of certain depositors of the Savings Bank in connection with the
conversion of the Savings Bank to stock form, the retained earnings of the
Savings Bank is substantially restricted.

      DISTRIBUTIONS. If the Savings Bank were to distribute cash or property to
its sole stockholder, and the distribution was treated as being from its
accumulated bad debt reserves, the distribution would cause the Savings Bank to
have additional taxable income. A distribution is deemed to have been made from
accumulated bad debt reserves to the extent that (a) the reserves exceed the
amount that would have been accumulated on the basis of actual loss experience,
and (b) the distribution is a "non-qualified distribution." A distribution with
respect to stock is a non-qualified distribution to the extent that, for
federal income tax purposes, (i) it is in redemption of shares, (ii) it is
pursuant to a liquidation of the institution, or (iii) in the case of a current
distribution, together with all other such distributions during the taxable
year, it exceeds the institution's current and post-1951 accumulated earnings
and profits. The amount of additional taxable income created by a non-qualified
distribution is an amount, that when reduced by the tax attributable to it, is
equal to the amount of the distribution.

      MINIMUM TAX. The Code imposes an alternative minimum tax at a rate of 20%.
The alternative minimum tax generally applies to a base of regular taxable
income plus certain tax preferences ("alternative minimum taxable income" or
"AMTI") and is payable to the extent such AMTI is in excess of an exemption
amount. The Code provides that an item of tax preference is the excess of the
bad debt deduction allowable for a taxable year pursuant to the percentage of
taxable income method over the amount allowable under the experience method.
Other items of tax preference that constitute AMTI include (a) tax-exempt
interest on newly issued (generally, issued on or after August 8, 1986) private
activity bonds other than certain qualified bonds and (b) 75% of the excess (if
any) of (i) adjusted current earnings as defined in the Code, over (ii) AMTI
(determined without regard to this preference and prior to reduction by net
operating losses).

      NET OPERATING LOSS CARRYOVERS. A financial institution may carry back net
operating losses ("NOLs") to the preceding two taxable years and forward to
the succeeding 20 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At December 31, 1997, the Savings Bank had
no NOL carryforwards for federal income tax purposes.

      Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital gains are taxed at a maximum rate of 34%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated tax
return, and corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received or accrued on



                                      31

<PAGE>   32
their behalf. However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.

      Other Matters. Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on consumer
loans. Significant increases in tax rates or further restrictions on the
deductibility of mortgage interest could adversely affect the Savings Bank.

      The Savings Bank's federal income tax returns for the tax years ended
1994 and 1995 and 1996 are open under the statute of limitations and are
subject to review by the IRS.

      STATE TAXATION.   The Company is subject to the Louisiana Corporation
Income Tax based on its separate Louisiana taxable income, and it is also
subject to franchise taxes. The Corporation Income Tax applies at graduated
rates from 4% upon the first $25,000 of Louisiana taxable income to 8% on all
Louisiana taxable income in excess of $200,000. For these purposes, "Louisiana
taxable income" means net income which is earned within or derived from sources
within the State of Louisiana, after adjustments permitted under Louisiana law
including a federal income tax deduction and an allowance for net operating
losses, if any. In addition, the Savings Bank is subject to the Louisiana
Shares Tax which is imposed on the assesseds value of its stock. The formula
for deriving the assessed value is to calculate 15% of the sum of (a) 20% of
the company's capitalized earnings, plus (b) 80% of the company's taxable
stockholders equity, and to subtract from that figure 50% of the company's real
and personal property assessment. Various items are also subtracted in
calculating a company's capitalized earnings.


                                      32
<PAGE>   33

ITEM 2.  PROPERTIES.

OFFICES AND PROPERTIES

      At December 31, 1997, the Bank conducted business from its main office and
four branch offices, three of which are located in Lafayette, Louisiana and one
located in New Iberia, Louisiana. The Bank also conducted business from its one
loan production office in Eunice, Louisiana.

      The following table sets forth certain information relating to the
Company's offices at December 31, 1997.


<TABLE>
<CAPTION>
                                                                  Net Book Value of
                                                                    Premises and
                                                 Owned or           Equipment at             Deposits at
                                                  Leased          December 31, 1997       December 31, 1997
                                               --------------   ----------------------  -----------------------
                                                                       (In Thousands)
<S>                                            <C>                   <C>                       <C>
Main Office:

  101 West Vermilion Street                    Owned                 $          1,565                   89,780
  Lafayette, Louisiana  70501

Branch Offices:


  Northside Office                             Owned                              265                   33,108
  2601 Moss Street
  Lafayette, Louisiana  70501


  Southside Office                             Owned                              180                   37,541
  3701 Johnston Street
  Lafayette, Louisiana  70503


  Broadmoor Office                             Owned                              243                   27,136
  5301 Johnston Street
  Lafayette, Louisiana  70503


  New Iberia Office                            Owned                              548                    5,857
  230 West Main Street
  New Iberia, Louisiana  70560


  Eunice Loan Production Office                Leased                               5                        -
                                                                ----------------------  -----------------------
  136 South Third Street
  Eunice, Louisiana  70535

                                                                     $          2,806          $       193,422
                                                                ======================  =======================
</TABLE>




                                      33

<PAGE>   34

ITEM 3.  LEGAL PROCEEDINGS.

      The Company and the Bank are not involved in any pending legal proceedings
other than non-material legal proceedings occurring in the ordinary course of
business.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      On April 1, 1997, the Company commenced a proxy solicitation of its
stockholders with respect to the Annual Meeting of Stockholders held April 30,
1997 ("Annual Meeting"). There were two matters considered at the Annual
Meeting, the election of two directors, and the ratification of the appointment
of Castaing, Hussey & Lolan, L.L.P. as the Company's independent auditors for
the fiscal year ending December 31, 1997.

Proposal to elect Directors of the Company:

                                                  BROKER
                         FOR         WITHHOLD    NON-VOTES
Lawrence Gankendorff    2,415,772    13,982       301,496
Don J. O'Rourke, Sr.    2,415,917    13,837       301,496


Proposal to ratify the appointment by the Board of Directors of Castaing, Hussey
& Lolan, L.L.P. as the Company's independent auditors for the fiscal year ending
December 31, 1997:

                                    BROKER
    FOR      AGAINST   ABSTAIN     NON-VOTES
2,415,836   12,427    1,491      301,496




                                       34

<PAGE>   35



PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      The information required herein, to the extent applicable, is incorporated
by reference from page 51 of the Registrant's 1997 Annual Report to Stockholders
("Annual Report").

ITEM 6.  SELECTED FINANCIAL DATA.

      The Information required herein is incorporated by reference from pages 7
of the Registrant's 1997 Annual Report.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

      The Information required herein is incorporated by reference from pages 8
to 21 of the Registrant's 1997 Annual Report.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

      The Information required herein is incorporated by reference from pages 23
to 49 of the Registrant's 1997 Annual Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.

      Not Applicable.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

      The information required herein is incorporated by reference from the
Registrant's definitive proxy statement for the 1997 Annual Meeting of
Stockholders ("Proxy Statement").

ITEM 11.  EXECUTIVE COMPENSATION.

      The information required herein is incorporated by reference from the
Registrant's Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

            The information required herein is incorporated by reference from
the Registrant's Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

            The information required herein is incorporated by reference from
the Registrant's Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

            The information required herein is incorporated by reference from
the Registrant's Proxy Statement.


                                       35

<PAGE>   36
PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.


(a)  Documents Filed as Part of this Report.

(1)  The following financial statements are incorporated by reference from
     Item 8 hereof (see Exhibit 13):

          Report of Independent Auditors
          Consolidated Balance Sheets as of December 31, 1997 and 1996
          Consolidated Statements of Income for the Fiscal Periods Ended
               December 31, 1997, 1996 and 1995
          Consolidated Statements of Changes in Shareholders' Equity for the
               Fiscal Periods Ended December 31, 1997, 1996 and 1995
          Consolidated Statements of Cash Flows for the Fiscal Periods Ended
               December 31, 1997, 1996 and 1995
          Notes to Consolidated Financial Statements

(2)  All schedules for which provisions is made in the applicable
     accounting regulation of the SEC are omitted because of the absence
     of conditions under which they are required or because the required
     information is included in the consolidated financial statements and
     related notes thereto.

(3)  The following exhibits are filed as part of this Form 10-K and this
     list includes the Exhibit Index.




                                 EXHIBIT INDEX


 3.1*      Articles of Incorporation of Acadiana Bancshares, Inc.
 3.2*      Bylaws of Acadiana Bancshares, Inc.
 4.0*      Form of Stock Certificate of Acadiana Bancshares, Inc.
10.1**     Stock Option Plan
10.2**     1996 Recognition and Retention Plan and Trust Agreement for
              Employees and Non-Employee Directors
10.3***    Employment Agreement between LBS Savings Bank and Gerald G.
              Reaux, Jr.
10.4*      Form of Severance Agreement between Acadiana Bancshares, Inc., LBA
              Savings Bank and Lawrence Gankendorff, James J. Montelaro,
              Mary Anne Bertrand, Brady Como, Thomas F. Debaillon and
              Emile E. Soulier, III
13.0       1997 Annual Report to Stockholders
22.0       Subsidiaries of the Registrant -- Reference is made to "Item 2.
              "Business" for the required information
23.1       Consent of Castaing, Hussey & Lolan LLP
27.0       Financial Data Schedule

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

(*)       Incorporated herein by reference from the Registration statement on
          Form S-1 (Registration No. 333-1396) filed by the Registrant with the
          SEC on February 15, 1996, as subsequently amended.

(**)      Incorporated herein by reference from the definitive proxy statement,
          dated December 16, 1996, filed by the Registrant with the Sec
          (Commission File No. 1-14364)

(***)     Incorporated herein by reference to the Annual Report on Form 10-K
          (File No. 1-14364) filed by the Registrant with the SEC on March 31,
          1997.



                                       36



<PAGE>   37
                                   SIGNATURES



     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                                  ACADIANA BANCSHARES, INC.


March 25, 1998                                    By: /s/ Gerald G. Reaux, Jr.
                                                      ------------------------
                                                      Gerald G. Reaux, Jr.
                                                      President and Chief
                                                      Executive Officer and
                                                      Director



     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.




Name                           Title                             Date
----                           -----                             ----



/s/ Gerald G. Reaux, Jr.       President, Chief Executive        March 25, 1998
------------------------       Officer and Director
Gerald G. Reaux, Jr.


/s/ Lawrence E. Gankendorff    Chairman of the Board             March 25, 1998
--------------------------
Lawrence E. Gankendorff


/s/ Albert W. Beacham          Director                          March 25, 1998
--------------------------
Albert W. Beacham, M.D.


/s/ James J. Montelaro         Executive Vice President          March 25, 1998
--------------------------     and Director
James J. Montelaro


/s/ John H. DeJean             Director                          March 25, 1998
--------------------------
John H. DeJean


/s/ Thomas S. Ortego           Director                          March 25, 1998
--------------------------
Thomas S. Ortego


/s/ William H. Mouton          Director                          March 25, 1998
--------------------------
William H. Mouton


/s/ Donald J. O'Rourke, Sr.    Director                          March 25, 1998
---------------------------
Donald J. O'Rourke, Sr.


/s/ Kaliste J. Saloom, Jr.     Director                          March 25, 1998
---------------------------
Kaliste J. Saloom, Jr.


/s/ Emile E. Soulier, III      Vice President and Chief          March 25, 1998
---------------------------    Financial Officer
Emile E. Soulier, III          (principal financial and
                               accounting officer)