SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                                  FORM 10-KSB

 _X_  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE  ACT OF 1934

                  For the fiscal year ended December 31, 1998

 ___  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
      ACT  OF 1934

                 For the transition period from ________  to ________

                   Commission File Number:  0-20911

                             ALGIERS BANCORP, INC.
          (Name of small business issuer as specified in its charter)

LOUISIANA                                               72 - 1317594
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                          Identification No.)

#1 WESTBANK EXPRESSWAY, NEW ORLEANS, LOUISIANA          70114
(Address of principal executive offices)                (Zip Code)

                   Issuer's telephone number: (504) 367-8221

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

                                     None

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

                    Common Stock (par value $.01 per share)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.       Yes_ X_  No__

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B  contained in this form, and no disclosure will be contained, to
the  best  of Issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB.   _ X_

Issuer's revenues for the fiscal year ended December 31, 1998 were $3.3 million

As of April  20,  1999,  the  aggregate  market  value of the 453,817 shares of
Common Stock of the Issuer held by non-affiliates, which excludes 63,431 shares
held by all directors, executive officers and employee  benefit  plans  of  the
Issuer,   was approximately  $4.7 million.  This figure is based on the average
of the bid and asked  prices of $10.25 per share of the Issuer's Common Stock
on April 20, 1999.

Number of shares of Common Stock outstanding on April 20, 1999:  517,248

                      DOCUMENTS INCORPORATED BY REFERENCE

      Portions of the definitive proxy statement for the 1999 Annual Meeting of
Stockholders have been incorporated into Part III of this Form 10-KSB.

Transitional Small Business Disclosure Format (check one): Yes_____  No _ X_
<PAGE>
                             ALGIERS BANCORP, INC.
                       ANNUAL REPORT ON FORM 10-KSB FOR
                    THE FISCAL YEAR ENDED DECEMBER 31, 1998

                               TABLE OF CONTENTS


                                                                        PAGE

PART I

      Item 1. Description of Business                                     1
      Item 2. Description of Properties                                  33
      Item 3. Legal Proceedings                                          33
      Item 4. Submission of Matters to a Vote of Security Holders        33

PART II

      Item 5. Market for Common Equity and Related Stockholder Matters   33
      Item 6. Management's Discussion and Analysis or Plan of Operation  34
      Item 7. Financial Statements                                       43
      Item 8. Changes in and Disagreements with Accountants
              on Accounting and Financial Disclosure                     82

PART III

      Item 9. Directors, Executive Officers, Promoters and Control
              Persons; Compliance with Section 16(a)
              of the Exchange Act                                        82
      Item 10. Executive Compensation                                    82
      Item 11. Security Ownership of Certain Beneficial Owners
               and Management                                            82
      Item 12. Certain Relationships and Related Transactions            82
      Item 13. Exhibits and Reports on Form 8-K                          82

PART I.

ITEM 1. DESCRIPTION OF BUSINESS.


GENERAL

      Algiers   Bancorp,  Inc.  (the  "Company")  is  a  Louisiana  corporation
organized in February  1996  by Algiers Homestead Association ("Algiers" or the
"Association") for the purpose  of  becoming  a  unitary holding company of the
Association.  The only significant assets of the Company  are the capital stock
of  the  Association, the Company's loan to its Employee Stock  Ownership  Plan
(the "ESOP"),  and the remainder of the net proceeds retained by the Company in
connection with  the conversion of the Association from mutual to stock form on
July 8, 1996 (the  "Conversion").   The  business and management of the Company
primarily  consists of the business and management  of  the  Association.   The
Company neither  owns  nor leases any property, but  instead uses the premises,
equipment and furniture  of  the  Association.   The Company does not intend to
employ  any  persons other than officers of the Association,  and  the  Company
utilizes the support  staff  of  the Association from time to time.  Additional
employees will be hired as appropriate  to  the  extent  the Company expands or
changes its business in the future.

      The  Association  is  a  Louisiana-chartered  stock  savings   and   loan
association  that  was  originally  formed  in 1926.  The Association currently
conducts business from its main office in New  Orleans,  Louisiana and a branch
office in Terrytown, Louisiana, with a third branch opening  during  the  first
quarter  of 1999.  At December 31, 1998, the Company had $48.6 million of total
assets,  $40.0  million  of  total  liabilities,  including  $39.5  million  of
deposits, and $8.6 million of total stockholders' equity (representing 17.6% of
total assets).

      The  Association  is  primarily  engaged  in attracting deposits from the
general public through its offices and using those  and other available sources
of funds to purchase mortgage-backed securities and to  originate loans secured
primarily  by  one-  to  four-family  residences  located in the  New  Orleans,
Louisiana metropolitan area.  The Association sells  into  the secondary market
the majority of the loans which it originates.  The Company  had  $27.4 million
of mortgage-backed securities at December 31, 1998, representing 56.3%  of  the
Company's  total  assets.   At  December  31,  1998,  the  Company's  net loans
receivable  totalled  $9.3  million  or  19.1%  of  the Company's total assets.
Conventional first mortgage, one- to four-family residential  loans  (excluding
construction  loans)  amounted to $7.8 million or 79.6% of the Company's  total
loan portfolio at December  31,  1998.   To  a  lesser extent, the Company also
originates consumer loans, construction loans and commercial real estate loans.
The Company had $5.3 million of investment securities (excluding FHLB stock) at
December 31, 1998, representing 10.9% of total assets.   Of the $5.3 million of
investment securities, $117,000 or 2.2% mature within five  years  of  December
31, 1998.

      The   Association  is  a  community-oriented  savings  institution  which
emphasizes customer  service  and  convenience.   It  generally  has  sought to
enhance  its  net  income  by,  among  other  things,  maintaining strong asset
quality.   In pursuit of these goals, the Association has  adopted  a  business
strategy that emphasizes the purchase of mortgage-backed securities, as well as
lending and  deposit  products  and  services  traditionally offered by savings
institutions.   Certain  results  of the implementation  of  the  Association's
business strategy, briefly noted below,  have  enabled  the  Association  to be
profitable and to exceed regulatory capital requirements.

      *   Capital Position.  As of December 31, 1998, the Association had total
stockholder's equity of $7.6 million and exceeded all of its regulatory capital
requirements, with tangible, core and risk-based capital ratios of 15.6%, 15.6%
and 53.3%,  respectively, as compared to the minimum requirements of 1.5%, 3.0%
and 8.0%, respectively.

      *  Profitability.   The  Company  has been profitable in each of the last
three years.  Net income decreased from $211,000  in  1997 to $161,000 in 1998,
including a net loss of $29,000 sustained by the Company's 70% owned subsidiary
Jefferson Community Lending, LLC ("Jefferson Lending").   Net  income increased
in 1997 to $211 ,000 from $157,000 in 1996.

      *   Asset  Quality.   Management  believes  that  good  asset quality  is
important  to  the  Company's  long-term  profitability.   The Company's  total
nonperforming assets, which consist of non-accruing loans and   net real estate
owned ("REO"), together with troubled debt restructurings, amounted to $805,000
or  1.7% of total assets at December 31, 1998, compared to $636,000  or 1.4% of
total  assets at December 31, 1997 due to the delinquency of a commercial  loan
with a balance  of  $500,000.  See   "-Asset  Quality-Classified  Assets."   At
December 31, 1998, the Company's allowance for loan losses amounted to $506,000
or 5.1% of the total loan portfolio.

      *   Interest  Rate  Risk.  The Company attempts to manage its exposure to
interest  rate  risk  by  maintaining  a  high  percentage  of  its  assets  in
adjustable-rate   mortgages  ("ARMs")   and   adjustable-rate   mortgage-backed
securities.  At December  31,  1998,  ARMs amounted to $7.1 million or 71.9% of
the total loan portfolio.  In addition, of the $27.4 million of mortgage-backed
securities  at  December  31, 1998, $22.8  million  or  83.2%  have  adjustable
interest rates.

      *  Community Orientation.   The  Association  is committed to meeting the
financial needs of the communities in which  it  operates.  Management believes
the Association is large enough to provide a full  range  of personal financial
services, yet small enough to be able to provide services on a personalized and
efficient basis.  At December 31, 1998, most of the Association's loans were to
residents of its primary market area.  The Association intends  to continue its
practice  of  investing in loans in its primary market area in accordance  with
its underwriting standards, subject to economic conditions and the availability
of reasonable investment alternatives.

      The Association is subject to examination and comprehensive regulation by
the  Louisiana  Office   of   Financial  Institutions  ("OFI"),  which  is  the
Association's chartering authority,  and  by  the  Office of Thrift Supervision
("OTS"), which is the Association's primary federal regulator.  The Association
is  also regulated by the Federal Deposit Insurance Corporation  ("FDIC"),  the
administrator   of  the  Savings  Association  Insurance  Fund  ("SAIF").   The
Association is also  subject to certain reserve requirements established by the
Board of Governors of the Federal Reserve System ("FRB") and is a member of the
Federal Home Loan Bank  ("FHLB")  of  Dallas,  which  is one of the 12 regional
banks comprising the FHLB System.

      The  executive office for the Company and the Association   is located at
1  Westbank Expressway, New Orleans, Louisiana 70114, and its telephone  number
is (504) 367-8221.

MARKET AREA

      The  Company's market area consists of Orleans, Jefferson and Plaquemines
Parishes in  the  New  Orleans,  Louisiana  metropolitan statistical area.  The
traditional components of the area's economic  base  have consisted of tourism,
the port of New Orleans and related shipbuilding, and  the  petroleum industry.
Slowdowns  in  the  petroleum  industry had a material negative impact  on  the
area's economy in the early 1980s,  which  were  compounded  by defense-related
cutbacks  in recent years.  The area's economy has stabilized in  recent  years
due to development  of  tourism  and convention activities and related service-
oriented companies, as well as the  gaming  industry.   In  addition,  the  New
Orleans  economic  base has diversified into areas such as health services, the
aerospace industry and  research  and  technology.   However,  there is still a
significant degree of volatility in the local economy due to a continued  heavy
reliance on the same industries that led to the decline in the 1980s, and there
has  been  a  decline in the population since the early 1980s.  Competition for
deposits  and  lending  in  Orleans,  Jefferson  and  Plaquemines  Parishes  is
substantial, with most of the current competition being from commercial banks.

LENDING ACTIVITIES

      LOAN PORTFOLIO COMPOSITION.  At December 31, 1998, the Company's net loan
portfolio totalled  $9.3   million,  representing  approximately  19.2% of  the
Company's  $48.6  million of total assets at that date.  The principal  lending
activity of the Company  is  the origination of one- to four-family residential
loans.  At December 31, 1998,  conventional first mortgage, one- to four-family
residential loans (excluding construction  loans)  amounted  to $7.8 million or
79.6% of the total loan portfolio, before net items.  To a lesser  extent,  the
Company  originates  construction  loans,  commercial  real  estate  loans  and
consumer  loans.   At  December  31,  1998,  there  were no construction loans,
commercial  real  estate  loans totalled $686,000 or 6.9%  of  the  total  loan
portfolio, and consumer loans  amounted  to  $1.3 million or 13.5% of the total
loan portfolio, in each case before net items.

      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>
                                                         DECEMBER 31
                                  ------------------------------------------------------------
                                        1998                 1997               1996
                                  ----------------     ------------------    -----------------
                                   Amount      %        Amount       %       Amount        %
                                  --------   -----     -------     ------    -------     -----
                                                   (Dollars in Thousands)
<S>                               <C>        <C>       <C>         <C>       <C>         <C>

Real estate loans:
  One-to four-family
residential:
     Conventional                 $  7,816    79.3%    $ 8,018       79.3%   $ 8,134      82.9%
     FHA and VA                         27      .3          41        0.4         51       0.5
     Construction                       -       -           43        0.4         89       0.9
  Commercial real estate               686     6.9         738        7.3        668       6.8
                                  --------   -----     -------     ------    -------     -----
     Total real estate loans         8,529    86.5       8,840       87.4      8,942      91.1
                                  --------   -----     -------     ------    -------     -----

Consumer loans:
  Second mortgage                      360     3.7         189        1.9        175       1.8
  Other consumer loans                 400     4.1         325        3.2          -         -
  Loans on deposits                    566     5.7         758        7.5        694       7.1
                                  --------   -----     -------     ------    -------     -----
     Total consumer loans            1,326    13.5       1,272       12.6        869       8.9
                                  --------   -----     -------     ------    -------     -----
     Total loans                     9,855   100.0%     10,112      100.0%     9,811     100.0%
                                  ========   =====     =======     ======    =======     =====
Less:
  Unearned discounts and interest       -                   73                     7
  Undisbursed portion of loans          -                  301                     7
  Deferred loan fees                    52                  55                    47
  Allowance for loan losses            506                 485                   530
                                  --------             -------               -------
            Net loans             $  9,297             $ 9,198               $ 9,220
                                  ========             =======               =======
</TABLE>


     CONTRACTUAL TERMS TO FINAL MATURITIES.  The following table sets forth
certain information as  of December 31, 1998 regarding the dollar amount of
loans maturing in the Association's  portfolio,  based  on  the contractual
date  of  the  loan's  final  maturity, before giving effect to net  items.
Demand loans and loans having no  stated  schedule  of  repayments  and  no
stated maturity are reported as due in one year or less.  The amounts shown
below  do not reflect normal principal amortization; rather, the balance of
each loan outstanding at December 31, 1998 is shown in the appropriate year
of the loan's final maturity.


<TABLE>
<CAPTION>
                                          One-to
                                        four family                    Commercial
                                        Residentail   Construction    Real Estate    Consumer  Total                    
                                        -----------   ------------    -----------    --------  -----
                                                                    (In Thousands)
<S>                                     <C>           <C>             <C>            <C>       <C>
Amounts due after December 31, 1998 in:
  One year or less                      $  3,827      $    -          $   13         $    337  $   4,177
  After one year through two years             -           -               -                -          -
  After two years through three years         24           -               -               19         43
  After three years through five years        34           -               -               37         71
  After five years through ten years         956           -             668               77      1,701
  After ten years through fifteen years    1,527           -               5              288      1,820
  After fifteen years                      1,475           -               -              568      2,043
                                        --------      --------        ------         --------  ---------
     Total <F1>                         $  7,843      $    -          $  686         $  1,326  $   9,855
                                        ========      ========        ======         ========  =========
<FN>
<F1>  Gross of loans in process, deferred loan fees, unearned discounts and
      interest, and allowance for loan losses.
</FN>
</TABLE>

      The following table sets forth the dollar amount of all loans, before
net items, due after one year from December 31, 1998 as shown in the
preceding table, which have fixed interest rates or which have floating or
adjustable interest rates.

<TABLE>
<CAPTION>
                                                 Floating or
                                 Fixed-Rate     Adjustable-Rate    Total
                                 ----------     ---------------    -----
                                                 (In Thousands)
<S>                              <C>            <C>                <C>
One-to four-family residential   $ 1,701        $ 2,315            $ 4,016
Commercial real estate                 -            673                673
Consumer                             471            518                989
                                 -------        -------            -------
     Total                       $ 2,172        $ 3,506            $ 5,678
                                 =======        =======            =======
</TABLE>

      Scheduled  contractual maturities of loans do not necessarily reflect
the actual term of  the  Company's  loan  portfolio.   The  average life of
mortgage  loans is substantially less than their average contractual  terms
because of  loan  prepayments and enforcement of due-on-sale clauses, which
give the Company the right to declare a 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, however, when current mortgage loan rates
substantially  exceed  rates  on  existing mortgage loans and,  conversely,
decrease when rates on existing mortgage loans substantially exceed current
mortgage loan rates.

      ORIGINATION OF LOANS.  The lending  activities of the Association are
subject  to  the  written  underwriting  standards   and  loan  origination
procedures  established  by  the  Association's  Board  of  Directors   and
management.   Loan  originations are obtained through a variety of sources,
including  referrals  from  real  estate  brokers,  builders  and  existing
customers.  Written loan  applications  are taken by lending personnel, and
the  loan  department  supervises  the  procurement   of   credit  reports,
appraisals   and  other  documentation  involved  with  a  loan.   Property
valuations are  performed by independent outside appraisers approved by the
Association's Board of Directors or a committee thereof.

      Under the Association's  real  estate  lending policy, either a title
opinion signed by an approved attorney or a title  insurance policy must be
obtained for each real estate loan.  The Association also requires fire and
extended  coverage casualty insurance, in order to protect  the  properties
securing its real estate loans.  Borrowers must also obtain flood insurance
policies when  the  property is in a flood hazard area as designated by the
Department of Housing  and Urban Development.  Borrowers may be required to
advance funds on a monthly  basis  together  with each payment of principal
and interest to a mortgage loan account from which  the  Association  makes
disbursements  for  items  such  as  real  estate  taxes,  hazard insurance
premiums and private mortgage insurance premiums as they become due.

      The  Association's  loan approval process is intended to  assess  the
borrower's ability to repay  the  loan,  the viability of the loan  and the
adequacy  of the value of the property that  will  secure  the  loan.   The
Association's  lending policies require that most loans to be originated by
the Association  be  approved  in advance by the Board of Directors, except
that the President and the Chief  Operating  Officer are each authorized to
approve second mortgage loans not to exceed $5,000.

      The following table shows total loans originated  and  repaid  during
the periods indicated.

<TABLE>
<CAPTION>
                                              Year Ended December 31,
                                        ---------------------------------
                                        1998         1997            1996
                                        ----         ----            ----
                                                (In Thousands)
<S>                                     <C>          <C>             <C>

Loan originations:
   One-to four-family residential       $  1,709     $ 1,167         $   802
   Construction                              405          43              89
   Commercial real estate                      -          28             108
   Consumer                                  804       1,105           1,166
                                        --------     -------         -------
     Total loan originations:              2,918       2,343           2,165
Loan principal repayments                 (2,714)     (2,042)         (2,844)
Increase (decrease) due to other
  items, net <F1>                           (105)       (323)            216
                                        --------     -------         -------
Net increase (decrease) in
  loan portfolio                        $     99     $   (22)        $  (463)
                                        ========     =======         =======

<FN>
<F1>  Other items consist of loans in process, deferred loan fees
      unearned discounts and interest,  and allowance for loan losses.
</FN>
</TABLE>

      REAL ESTATE LENDING STANDARDS  AND  UNDERWRITING POLICIES.  Effective
March  19, 1993, all financial institutions  were  required  to  adopt  and
maintain  comprehensive  written  real  estate  lending  policies  that are
consistent  with  safe and sound banking practices.  These lending policies
must reflect consideration  of  the  Interagency Guidelines for Real Estate
Lending Policies adopted by the federal  banking  agencies,  including  the
OTS,  in  December  1992  ("Guidelines").  The Guidelines set forth uniform
regulations prescribing standards  for  real  estate  lending.  Real estate
lending is defined as extensions of credit secured by liens on interests in
real  estate  or  made for the purpose of financing the construction  of  a
building or other improvements to real estate, regardless of whether a lien
has been taken on the property.

      An  institution's   lending   policy  must  address  certain  lending
considerations set forth in the Guidelines, including loan-to-value ("LTV")
limits, loan administration procedures,  underwriting  standards, portfolio
diversification  standards,  and  documentation,  approval  and   reporting
requirements.   The  policy  must  also  be  appropriate to the size of the
institution  and  the  nature  and  scope of its operations,  and  must  be
reviewed and approved by the institution's  board  of  directors  at  least
annually.   The  LTV  ratio  framework,  with the LTV ratio being the total
amount of credit to be extended divided by  the appraised value or purchase
price  of  the  property  at the time the credit  is  originated,  must  be
established for each category  of  real  estate  loans.   If  a loan is not
secured  by  a  first  lien, the lender must combine all senior liens  when
calculating this ratio.   The Guidelines, among other things, establish the
following supervisory LTV limits:  raw  land (65%); land development (75%);
construction (commercial, multi-family and  nonresidential) (80%); improved
property and one- to four-family residential  construction  (85%); and one-
to four-family (owner occupied) and home equity (no maximum ratio; however,
any  LTV  ratio  in  excess of 90% should require appropriate insurance  or
readily marketable collateral).

      Certain institutions  can  make real estate loans that do not conform
with the established LTV ratio limits up to 100% of the institution's total
capital.  Within this aggregate limit,  total  loans  for  all  commercial,
agricultural,  multi-family  and  other  non-one-to-four family residential
properties should not exceed 30% of total  capital.   An  institution  will
come  under  increased  supervisory  scrutiny  as  the  total of such loans
approaches  these  levels.   Certain loans are exempt from the  LTV  ratios
(e.g., those guaranteed by a government  agency,  loans  to  facilitate the
sale of real estate owned, loans renewed, refinanced or restructured by the
original lender(s) to the same borrower(s) where there is no advancement of
new funds, etc.).

      The Association is in compliance with the above standards.

      Although   Louisiana  laws  and  regulations  permit  state-chartered
savings institutions,  such  as  the Association, to originate and purchase
loans secured by real estate located  throughout  the  United  States,  the
Association's  present  lending is done primarily within its primary market
area, which consists of Orleans,  Jefferson  and  Plaquemines  Parishes  in
Louisiana.   Subject to the Association's loans-to-one borrower limitation,
the Association  is  permitted  to invest without limitation in residential
mortgage loans and up to 400% of  its  capital  in  loans  secured  by non-
residential or commercial real estate.  The Association may also invest  in
secured  and unsecured consumer loans in an amount not exceeding 35% of the
Association's  total  assets.   This  35%  limitation  may  be exceeded for
certain  types  of  consumer  loans,  such  as  home  equity  and  property
improvement  loans secured by residential real property.  In addition,  the
Association  may  invest  up  to  10%  of  its  total assets in secured and
unsecured  loans  for  commercial,  corporate,  business   or  agricultural
purposes.   At December 31, 1998, the Association was well within  each  of
the above lending limits.

      A savings  institution  generally  may not make loans to one borrower
and  related entities in an amount  which exceeds  15%  of  its  unimpaired
capital and surplus, although loans in an amount equal to an additional 10%
of unimpaired  capital  and  surplus may be made to a borrower if the loans
are fully secured by readily marketable  securities.  At December 31, 1998,
the Association's  limit on loans-to-one borrower was $500,000 and its five
largest  loans  or groups of loans-to-one borrower,  including  persons  or
entities related to the borrower, amounted to $500,000, $434,000, $265,000,
$225,000 and $210,000,  respectively,  at such date. The $500,000 borrowing
relationship consists of a $500,000 commercial  real  estate  loan which is
treated  as  a  classified asset at December 31, 1998.  All of these  loans
were current at December  31,  1998,  except the $500,000 loan treated as a
classified asset.  See  "-Asset Quality-Classified Assets."

      LOANS ON EXISTING RESIDENTIAL PROPERTIES.   The  primary  real estate
lending  activity  of  the  Company is the origination of loans secured  by
first mortgage liens on one-  to  four-family  residences.  At December 31,
1998, $7.8 million or 79.6% of the Company's total  loan  portfolio, before
net  items,  consisted  of conventional first mortgage, one-to  four-family
residential loans (excluding construction loans).

      The loan-to-value ratio,  maturity  and other provisions of the loans
made by the Association  generally have reflected the policy of making less
than  the  maximum  loan  permissible  under  applicable   regulations,  in
accordance with sound lending practices, market conditions and underwriting
standards  established  by  the  Association.  The  Association's   lending
policies on one- to four-family residential mortgage loans generally  limit
the maximum loan-to-value ratio to 95% of the lesser of the appraised value
or  purchase  price  of  the  property,  and  generally one- to four-family
residential loans in excess of an 80% loan-to-value  ratio  require private
mortgage insurance.  Residential mortgage loans are amortized  on a monthly
basis  with  principal and interest due each month and customarily  include
"due-on-sale"  clauses,  which  are  provisions giving the Association  the
right  to declare a loan immediately due  and  payable  in  the  event  the
borrower  sells  or  otherwise disposes of the real property subject to the
mortgage or the loan is  not  repaid.  The Association enforces due-on-sale
clauses to the extent permitted under applicable laws.

      Various legislative and regulatory changes have given the Association
the authority to originate and  purchase  mortgage  loans which provide for
periodic  interest  rate adjustments subject to certain  limitations.   The
Association has been  actively  marketing  ARMs  in  order  to decrease the
vulnerability of its operations to changes in interest rates.   At December
31, 1998, one- to four-family residential ARMs represented $6.1 million  or
61.9% of the total loan portfolio, before net items.

      The  Association's  one-  to  four-family  residential ARMs are fully
amortizing  loans with contractual maturities of up  to  30  years.   These
loans have interest  rates  which  are  scheduled to adjust periodically in
accordance with a designated index.  The Association  currently offers ARMs
on which the interest rate adjusts every year based upon the monthly median
cost of funds for SAIF-insured institutions,  plus a specified margin.  The
margin above the cost of funds index is generally 2.65%.  There is a 2% cap
on the rate adjustment per period and a 6% cap  on the rate adjustment over
the  life  of the loan.  The Association has originated  ARMs  using  other
indexes in the  past.   The adjustable-rate loans in the Association's loan
portfolio are not convertible by their terms into fixed-rate loans, are not
assumable without the Association's  consent,  do  not  contain  prepayment
penalties and do not produce negative amortization.

      The  Association  qualifies  borrowers  based on the initial interest
rate on the ARM rather than the fully indexed rate.   In  a rising interest
rate environment, the interest rate on the ARM will increase  on  the  next
adjustment  date,  resulting  in  an  increase  in  the  borrower's monthly
payment.  To the extent the increased rate adversely affects the borrower's
ability  to repay his loan, the Association is exposed to increased  credit
risk.  As  of December 31, 1998, the Association's non-accruing residential
loans were $237,000.  See "-Asset Quality."

      The demand  for  adjustable-rate  loans  in the Association's primary
market area has been a function of several factors,  including the level of
interest rates, and the difference between the interest  rates  offered  by
competitors  for  fixed-rate  loans  and adjustable-rate loans.  Due to the
generally lower rates of interest prevailing  in recent periods, the market
demand for adjustable-rate loans has decreased  as  consumer preference for
fixed-rate  loans  has increased.  The Association currently  offers  fixed
rate products with maturities up to 30 years.

      CONSTRUCTION LOANS.  At December 31, 1998, construction loans are not
being actively marketed  and are offered primarily as a service to existing
customers.  There are no construction  loans in the Association's portfolio
at December 31, 1998.

      Construction lending is generally  considered  to  involve  a  higher
degree of risk of loss than long-term financing on improved, owner-occupied
real  estate  because  of  the uncertainties of construction, including the
possibility of costs exceeding the initial estimates and the need to obtain
a tenant or purchaser if the  property  will  not  be  owner-occupied.  The
Company    generally  attempts  to  mitigate  the  risks  associated   with
construction  lending  by,  among  other  things,  lending primarily in its
market  area,  using  conservative  underwriting  guidelines,  and  closely
monitoring the construction process.

      COMMERCIAL REAL ESTATE LOANS.  The Company's  commercial  real estate
loan  portfolio  primarily  consists  of loans secured by office buildings,
retail establishments, churches and multi-family  dwellings  located within
the  Company's primary market area.  Commercial real estate loans  amounted
to $686,000  or 6.9% of the total loan portfolio at December 31, 1998.  The
largest commercial  real  estate  loan  at  December  31, 1998 was $500,000
(gross of a $261,000 reserve), and the  balance of such  loan  at  December
31,  1998  was $500,000. See "-Asset Quality - Nonperforming Assets."   The
remaining commercial  real  estate  loan  portfolio  at  December  31, 1998
consisted of five loans with an average balance of $37,000.

      Nonresidential  real  estate loans may have terms up to 30 years  and
generally have adjustable rates  of interest.  As part of its commitment to
loan quality, the Company's senior  management  reviews each nonresidential
loan prior to approval by the Board of Directors.   All  loans are based on
the  appraised  value of the secured property and loans are  generally  not
made in amounts in  excess  of  70%  of  the appraised value of the secured
property.   All  appraisals  are  performed  by  an  independent  appraiser
designated by the Company and are reviewed by  management.   In originating
nonresidential  loans,  the Company considers the quality of the  property,
the credit of the borrower,  the  historical and projected cash flow of the
project, the location of the real estate  and  the  quality of the property
management.  The Company originated no commercial real estate loans in 1998
and $28,000 in 1997.

      Commercial real estate lending is generally considered  to  involve a
higher degree of risk than single-family residential lending.  Such lending
typically involves large loan balances concentrated in a single borrower or
groups  of  related  borrowers  for  rental  or  business  properties.   In
addition,  the  payment  experience  on  loans  secured by income-producing
properties is typically dependent on the success  of  the  operation of the
related project and thus is typically affected by adverse conditions in the
real estate market and in the economy.  The Company generally  attempts  to
mitigate the risks associated with commercial real estate lending by, among
other things, lending primarily in its market area and using low LTV ratios
in the underwriting process.

      CONSUMER  LOANS.   The  Company's  consumer loans consist of loans on
deposits, boat, automobile and second mortgage  loans.   The consumer loans
are not being actively marketed and are offered primarily  as  a service to
existing  customers.   At December 31, 1998, loans on deposits amounted  to
$566,000, representing 49.2%  of total consumer loans and 5.7% of the total
loan portfolio, before net items.   Loans  secured  by deposit accounts are
generally offered with an interest rate equal to 2% above  the  rate on the
deposit account.

      The Company's second mortgage loans amounted to $360,000 or  3.7%  of
the  total  loan  portfolio at December 31, 1998.  The second mortgages are
secured by one- to  four-family  residences,  are  for a fixed amount and a
fixed term, and are made to individuals for a variety of purposes.

      The Company's other consumer loans consisted of  eleven  loans in the
aggregate  amount  of  $400,000  or  4.1%  of  the total loan portfolio  at
December 31, 1998.  The largest of these loans in the amount of $225,000 or
2.3% of the total loan portfolio at December 31,  1998 is secured by a boat
and other collateral.

      The Association is considering expanding the types of loans it offers
to include equity lines of credit.  The Association  has  received approval
as an FHA Lender.  This designation authorizes the Association  to make all
types  of  government loans for sale in the secondary market.  In addition,
the Association  offers FHA Title I home improvement loans.  As of December
31, 1998, the Association  had  two commissioned loan originator and a loan
processor on its staff.  Loans which  meet  the  Association's underwriting
criteria will be kept in the Association's loan portfolio.   Loans  that do
not  meet  the  Association's  underwriting  criteria  will  be sold in the
secondary  market  to investors who have committed to the purchase  of  the
loan prior to the loan closing.

      LOAN FEES AND  SERVICING  INCOME.   In addition to interest earned on
loans, the Company receives income through  the servicing of loans and loan
fees charged in connection with loan originations  and  modifications, late
payments, prepayments, changes of property ownership and  for miscellaneous
services  related to its loans.  Income from these activities  varies  from
period-to-period with the volume and type of loans made.

      Loan  origination  fees or "points" are a percentage of the principal
amount of the mortgage loan  and  are charged to the borrower in connection
with the origination of the loan.   The Company's loan origination fees are
offset against direct loan origination  costs, and the resulting net amount
is deferred and amortized as interest income  over  the contractual life of
the related loans as an adjustment to the yield of such loans.  At December
31, 1998, the Company had approximately $52,000 of loan fees which had been
deferred.  The deferred loan fees are being recognized  as  income over the
lives of the related loans.


ASSET QUALITY

      DELINQUENT LOANS.  The following table sets forth information
concerning delinquent loans at December 31, 1998, in dollar amounts and as
a percentage of the Company's total 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>
                                                                     DECEMBER 31,1998
                                         ---------------------------------------------------------------------------
                                                  30-59                      60-89                 90 or more Days
                                              Days Overdue               Days Overdue                  Overdue
                                         ----------------------      --------------------        -------------------
                                                       Percent                     Percent                   Percent
                                                       of Total                    of Total                 of Total
                                         Amount         Loans        Amount         Loans        Amount       Loans
                                         ------        --------      ------        --------      ------     --------
                                                                   (Dollars in Thousands)
<S>                                      <C>            <C>          <C>            <C>          <C>          <C>
One-to four-family residential real
     estate loans                        $    834       8.46%        $   183        1.86%        $   431       4.37%
Commercial real estate loans                    -          -               -           -             508       5.15
Consumer loans                                 88       0.89              14        0.14             429       4.35
                                         --------       ----         -------        ----         -------      -----
     Total delinquent loans              $    922       9.35%        $   197        2.00%        $ 1,368      13.87%
                                         ========       ====         =======        ====         =======      =====
</TABLE>

      NONPERFORMING ASSETS.  When a borrower fails to make a  required loan
payment,  the  Company  attempts  to  cause  the  default  to  be cured  by
contacting the borrower.  In general, contacts are made after a  payment is
more  than 15 days past due.  A significant portion of the Company's  loans
provide  for a 45 day grace period, and no late charge is assessed on these
loans until  the  payment is 46 days past due.  Defaults are cured promptly
in most cases.  If  the  delinquency on a mortgage loan exceeds 90 days and
is not cured through the Company's  normal  collection  procedures,  or  an
acceptable  arrangement  is  not  worked out with the borrower, the Company
will commence foreclosure action.

      If foreclosure is effected, the property is sold at a sheriff's sale.
If the Company is the successful bidder,  the acquired real estate property
is then included in  the Company's "real estate  owned" account until it is
sold.  The Association is permitted under applicable regulations to finance
sales of real estate owned by "loans to facilitate"  which may involve more
favorable interest rates and terms than generally would  be  granted  under
the  Association's  underwriting  guidelines.   At  December  31, 1998, the
Association had one loan to facilitate.

      The  Company  generally places loans on non-accrual status  when  the
payment of interest becomes  more  than  90  days past due or when interest
payments are otherwise deemed uncollectible.

      The  following  table  sets  forth  the  amount   of   the  Company's
nonperforming assets at the dates indicated.

<TABLE>
<CAPTION>
                                                   DECEMBER 31,
                                     ------------------------------------
                                       1998           1997          1996
                                     -------         ------        ------
                                           (Dollars In Thousands)
<S>                                  <C>            <C>            <C>
Total nonperforming assets:
  Non-accruing loans                 $  737         $   636        $   52
  Real estate owned, net <F1>            62               -            45
                                     ------         -------        ------
  Total nonperforming assets         $  799         $   636        $   97
                                     ======         =======        ======
Troubled debt restructurings         $    6         $    18        $    -
                                     ======         =======        ======

Total nonperforming loans and
  troubled debt restructurings
  as a percentage of total loans       8.20%           6.47%         0.53%

Total nonperforming loans and
  troubled debt restructurings
  as a percentage of total assets      1.70%           1.44%         0.20%
                                     =======        ========       =======

<FN>
<F1> Net of related loss allowances as of each date shown, which allowances
     at  December   31, 1998  and  1997  amounted  to $35,000 and  $90,000,
     respectively, for real estate owned.
</FN>
</TABLE>

      The $737,000 of non-accruing  loans at December 31, 1998 consisted of
two one-to four- family residential loans  for  $237,000 and one commercial
real estate loan for $500,000.  The largest non-accruing   loan at December
31,  1998  consisted of a $500,000 adjustable-rate commercial  real  estate
loan secured by a furniture store and a warehouse, on which the Company has
established  reserves of $261,000 at December 31, 1998.  The collateral was
previously foreclosed upon by the Association, and the borrower repurchased
the real estate  owned  property  rom  the  Association in June 1991 at the
Association's  total carrying value.  Until recently,  the  loan  had  been
performing in accordance  with  its  terms since June 1992, and the reserve
was established solely because the appraised  value  of  the  collateral in
April  1992 was less than the principal balance of the loan.  In  1998,  an
appraisal   of  the  property  indicated  a  value  of  $469,000.   It  was
management's  decision  to leave the reserve at $261,000 until the property
is disposed of.  The entire  $500,000  balance  at  December  31,  1998 was
classified  as substandard.  The Company's management is closely monitoring
this loan and  has  placed  the loan in the hands of the Company's attorney
for  foreclosure.   It  is the opinion  of  management  that  the  property
securing this loan has a  value  adequate  to  cover  the net amount of the
loan.

      The Company's real estate owned has steadily declined  over  the last
three  years,  and  at  December  31,  1998 the Company's real estate owned
consisted of one one- to four-family residential  property  and  unimproved
land.   The $62,000 of real estate owned at December 31, 1998 is net  of  a
$35,000 allowance  for loss.  See Note H of Notes to Consolidated Financial
Statements.

      CLASSIFIED ASSETS.   All  loans are reviewed on a regular basis under
the Company's asset classification  policy.  The Company's total classified
assets at December 31, 1998 (excluding  loss  assets  specifically reserved
for  amounted  to  $1,005,000, of which $38,000 was classified  as  special
mention and $967,000 was classified as substandard.  The largest classified
asset  at  December 31,  1998  consisted  of  a  $500,000,  adjustable-rate
commercial real  estate  loan secured by a furniture store and a warehouse,
on which the Company has established  reserves  of  $261,000.  See  "-Asset
Quality-Classified Assets."

      The  remaining $467,000 of substandard assets at  December  31,  1998
consisted of  (1)  residential  mortgage loans totalling $232,000, of which
the largest loan had a balance of  $107,000  at  December 31, 1998, (2) one
commercial loan with a balance of $10,000 which is  fully  reserved and (3)
one  consumer  loan  with  a  balance  of $225,000 secured by a boat.   The
$107,000 substandard residential mortgage loan is secured by a duplex and a
$20,000 certificate of deposit at the Association.   See  "Regulation - The
Association - Classified Assets."

      ALLOWANCE  FOR  LOAN  LOSSES.   At  December 31, 1998, the  Company's
allowance for loan losses amounted to $506,000  or  5.1%  of the total loan
portfolio.   The  Company's loan portfolio consists primarily  of  one-  to
four-family residential  loans  and,  to  a  lesser extent, commercial real
estate  loans,  construction  loans  and consumer  loans.   The  loan  loss
allowance is maintained by management  at  a  level  considered adequate to
cover possible losses that are currently anticipated based  on  prior  loan
loss  experience,  known  and  inherent  risks  in  the  portfolio, adverse
situations that may affect the borrower's ability to repay,  the  estimated
value of any underlying collateral, general economic conditions, and  other
factors  and  estimates  which  are  subject to change over time.  Although
management believes that it uses the best  information  available  to  make
such determinations, future adjustments to allowances may be necessary, and
net  income  could  be  significantly  affected,  if  circumstances  differ
substantially   from   the   assumptions   used   in   making  the  initial
determinations.

      The  following  table  summarizes changes in the allowance  for  loan
losses and other selected statistics for the periods presented:

<TABLE>
<CAPTION>
                                                   AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                     1998         1997         1996
                                                   --------     --------      --------
                                                         (Dollars in Thousands)
<S>                                                <C>          <C>           <C>

Total loans outstanding                            $  9,885     $ 10,112      $  9,811
                                                   ========     ========      ========
Allowance for loan losses, beginning of period     $    482     $    527           531
Provision (credit) for loan losses                       24          (45)           (4)
Loans charged-off (recovered) <F1>                        -            -             -
                                                   --------     --------      --------
Allowance for loan losses, end of period           $    506     $    482      $    527
                                                   ========     ========      ========
Allowance for loan losses as a percent of
  total loans outstanding                              5.10%        4.80%         5.37%
Allowance for loan losses as a percent of
  nonperforming loans and troubled debt
  restructurings                                       68.1%       74.16%     1,011.54%

<FN>
<F1>   There were no loan charge-off or recoveries in 1998, 1997 and 1996.
</FN>
</TABLE>

      The  following  table  presents   the  allocation  of  the  Company's
allowance for loan losses by type of loan at each of the dates indicated.

<TABLE>
<CAPTION>
                                                                      December 31,
                                  ----------------------------------------------------------------------------------
                                              1998                       1997                         1996
                                  --------------------------    ------------------------     -----------------------
                                                     Loan                          Loan                       Loan
                                                   Category                      Category                   Category
                                      Amount       as a % of     Amount         as a % of     Amount       as a % of
                                        of          Total          of              Total        of           Total
                                     Allowance      Loans       Allowance         Loans      Allowance       Loans
                                  -------------   ---------     ---------       --------     ---------      --------
<S>                               <C>             <C>           <C>             <C>          <C>            <C>
One-to four-family residential    $   214            81.4%      $   211             79.7%        299            83.4%
Construction                            -               -             -              0.4           3             0.9
Commercial real estate                272             6.9           271              7.3         229             6.8
Consumer                               20            11.7             -             12.6           -             8.9
                                  -------         --------      -------         ---------    -------        ---------
Total                             $   506           100.0%      $   482            100.0%    $   531           100.0%
                                  =======         ========      =======         =========    =======        =========
</TABLE>

MORTGAGE-BACKED SECURITIES

      The Company has invested in a portfolio of mortgage-backed securities
that  are  insured  or  guaranteed  by  the  Federal   Home  Loan  Mortgage
Corporation  ("FHLMC"), the Federal National Mortgage Association  ("FNMA")
or the Government  National Mortgage Association ("GNMA").  Mortgage-backed
securities (which also  are known as mortgage participation certificates or
pass-through certificates)  represent a participation interest in a pool of
one- to four-family or multi-family  residential  mortgages,  the principal
and  interest  payments  on which are passed from the mortgage originators,
through intermediaries (generally  U.S.  government agencies and government
sponsored enterprises) that pool and repackage  the participation interests
in the form of securities, to investors such as the  Company.   FHLMC  is a
public  corporation  chartered  by  the  U.S. government and guarantees the
timely payment of interest and the ultimate  return  of  principal.   FHLMC
mortgage-backed  securities are not backed by the full faith and credit  of
the United States,  but  because  FHLMC  is  a  U.S.  government  sponsored
enterprise,  these securities are considered high 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.   The  GNMA  guarantees  the
timely payment of principal and interest, and GNMA securities are backed by
the full faith  and credit of the U.S. Government.  The FNMA guarantees the
timely payment of  principal and interest, and FNMA securities are indirect
obligations of the U.S. government.

      The $27.4 million  of mortgage-backed securities at December 31, 1998
were accounted for as available  for  sale  and  are thus carried at market
value.   For  additional  information relating to the  Company's  mortgage-
backed  securities,  see  Note   F  of   Notes  to  Consolidated  Financial
Statements.

      Mortgage-backed securities generally  yield  less than the loans that
underlie  such  securities,  because of the cost of payment  guarantees  or
credit  enhancements that result  in  nominal  credit  risk.  In  addition,
mortgage-backed  securities  are more liquid than individual mortgage loans
and may be used to collateralize  obligations  of the Company.  In general,
mortgage-backed pass-through securities are weighted  at  no  more than 20%
for risk-based capital purposes, compared to an assigned risk weighting  of
50% to 100% for whole residential mortgage loans.  As a result, these types
of securities allow the Company to optimize regulatory capital to a greater
extent  than non-securitized whole loans.  While mortgage-backed securities
carry a reduced  credit  risk  as  compared to whole loans, such securities
remain subject to the risk that a fluctuating  interest  rate  environment,
along  with  other  factors  such  as  the  geographic distribution of  the
underlying mortgage loans, may alter the prepayment  rate  of such mortgage
loans and so affect both the prepayment speed and value of such securities.

         The  following  table sets forth the composition of the  Company's
mortgage-backed securities at each of the dates indicated.

<TABLE>
<CAPTION>
                                                          December 31,
                                                -------------------------------
                                                  1998       1997        1996
                                                --------   --------    --------
                                                        (In Thousands)
<S>                                             <C>        <C>         <C>
Mortgage-backed securities held to maturity:
   FNMA                                         $    -     $ 15,256    $ 16,684
   FHLMC                                             -        3,773       3,927
   GNMA                                              -        2,801       3,199
                                                --------   --------    --------
     Subtotal                                        -       21,830      23,810
                                                --------   --------    --------
Mortgage-backed securities available for sale:
   FNMA                                           16,476      4,963       5,415
   FHLMC                                           3,941      1,142       2,761
   GNMA                                            6,975        510         901
                                                --------   --------    --------
     Subtotal                                     27,392      6,615       9,077
                                                --------   --------    --------
Total                                           $ 27,392   $ 28,445    $ 32,887
                                                ========   ========    ========
</TABLE>

      Information regarding the contractual maturities and weighted average
yield of the Company's mortgage-backed securities portfolio at December 31,
1998 is presented below.   Due  to  repayments of the underlying loans, the
actual maturities of mortgage-backed securities generally are substantially
less than the scheduled maturities.

<TABLE>
<CAPTION>
                                        Amounts at December 31, 1998 Which Mature in
                           -----------------------------------------------------------------------
                                                               After Five
                              One Year      After One to           to           Over 10
                               Or Less       Five Years         10 Years         Years      Total
                           -------------  ---------------   --------------   ------------  -------
                                                   (Dollars In Thousands)
<S>                        <C>            <C>               <C>              <C>           <C>
Held to maturity:
   FNMA                    $   -          $     -           $    -           $     -       $    -
   GHLMC                       -                -                -                 -            -
   GNMA                        -                -                -                 -            -
                           -------        ---------         -------          ---------     --------
Total                      $   -          $     -           $    -           $     -       $    -
                           =======        =========         =======          =========     ========
 Weighted average yield        -  %             -  %             - %               -  %         -  %
                           =======        =========         =======          =========     ========
Available for sale:
   FNMA                    $    53        $   1,435         $    28          $  14,960     $ 16,476
   FHLMC                       -                 12              62              3,867        3,941
   GNMA                        -                162              12              6,801        6,975
                           -------        ---------         -------          ---------     --------
Total                      $    53        $   1,609         $   102          $  25,628     $ 27,392
                           =======        =========         =======          =========     ========
 Weighted average yield       6.61%            6.97%           9.41%              6.49%        6.53%
                           ========       ==========        ========         ==========    ========

Total mortgage-backed
 securities
   FNMA                    $    53        $   1,435         $    28          $  14,960    $  16,476
   FHLMC                       -                 12              62              3,867        3,941
   GNMA                        -                162              12              6,801        6,975
                           -------        ---------         -------          ---------
Total                      $    53        $   1,609         $   102          $  25,628    $  27,392
                           =======        =========         =======          =========     ========
 Weighted average yield       6.61%            6.97%           9.41%              6.49%        6.53%
                           =======        =========         =======          =========     ========
</TABLE>

      The following table sets forth  the  purchases,  sales  and principal
repayments  of the Company's mortgage-backed securities during the  periods
indicated.
<TABLE>
<CAPTION>
                                                At or For the
                                            Year ended December 31,
                                 -------------------------------------------
                                    1998            1997              1996
                                 ---------       ----------        ---------
                                           (Dollars in Thousands)
<S>                              <C>             <C>               <C>
Mortgage-backed securities
  at beginning of period         $  28,445       $  32,918         $ 28,149
Purchases                            5,538             969            8,360
Repayments                          (5,578)         (3,769)          (3,719)
Sales                               (1,136)         (1,650)             -
Mark to market adjustment              197              54              -
Amortizations of premiums and
  discounts, net                       (74)            (77)             128
                                 ---------       ---------         --------
Mortgage-backed securities at
  end of period                  $  27,392       $  28,445         $ 32,918
                                 =========       =========         ========
Weighted average yield at
  end of period                       6.53%           6.58%            6.59%
                                 =========       =========         =========
</TABLE>


INVESTMENT SECURITIES

      The investment  policy  of  the  Company, which is established by the
Board  of Directors, is designed to maintain  liquidity  within  regulatory
limits,  maintain  a  balance of high-quality investments to minimize risk,
provide  collateral  for   pledging   requirements,   provide   alternative
investments  when  loan  demand  is  low, maximize returns while preserving
liquidity and safety, and manage interest  rate  risk.   The Association is
required to maintain certain liquidity ratios and does so  by  investing in
securities  that  qualify  as  liquid  assets under OTS regulations.   Such
securities include obligations issued or  fully  guaranteed  by  the United
States Government and certain federal agency obligations.

      Investment securities (excluding  FHLB  stock) totalled $5.3  million
or  10.9%  of  total  assets  at  December  31,  1998.  All $5.3 million of
investment  securities,  which  consists  of  U.S.  Government  and  agency
securities,  are  accounted for as available for sale and  are  carried  at
market value.  Of the  $5.3  million  of investment securities, $117,000 or
2.2% mature within five years of December 31, 1998.

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

<TABLE>
<CAPTION>
                                                                        December 31,
                                  ------------------------------------------------------------------------------
                                           1998                          1997                       1996
                                  ----------------------       ----------------------     ---------------------
                                   Carrying       Market       Carrying       Market      Carrying      Market
                                    Value         Value         Value         Value        Value        Value
                                  ---------       ------       --------       ------      --------      ------
                                                                        (In Thousands)
<S>                               <C>           <C>            <C>           <C>          <C>          <C>
Available for Sale:
  U.S. Treasury                   $    -        $    -         $    -        $    -       $    -       $    -
  FHLB notes                         2,749         2,749          2,787         2,785        1,999        1,992
  FNMA notes                           734           734            200           200          325          325
  FHLMC notes                        1,454         1,454          1,100         1,100          150          151
  Other                                367           367            -             -            -            -
  Southeast Texas Housing Finance
     Authority <F1>                    -             -              -             -             43           43
  Louisiana Agricultural Finance
     Authority <F1>                    -             -              -             -             19           19
                                  --------      --------       --------      --------     --------     --------   
 Subtotal                            5,304         5,304          4,087         4,085        2,536        2,530

Less:
  Allowance for loss                   -             -              -             -             62           62
  Discount on securities               -             -              -             -              2            2
                                  --------      --------       --------      --------     --------     --------   
Total available for sale             5,304         5,304          4,087         4,085        2,472        2,466
                                  --------      --------       --------      --------     --------     --------   
Held to maturity
  Louisiana Public Facility
      Authority                        -             -              -             -            -            -
      FHLB notes                       -             -              -             -            425          425
  Federal Farm Credit Bank             -             -              -             -            200          200
  Certificates of deposit              -             -              -             -            -            -
  Sallie Mae                           -             -              -             -            200          200
  FHLB stock                           512           512            483           483          455          455
                                  --------      --------       --------      --------     --------     --------   
Total held to maturity                 512           512            483           483        1,280        1,280
                                  --------      --------       --------      --------     --------     --------   
   Total                          $  5,816      $  5,816       $  4,570      $  4,568     $  3,752     $  3,746
                                  ========      ========       ========      ========     ========     ========

<FN>
<F1>  Gross of a related allowance for loss.
</FN>
</TABLE>

      The  following  table  sets forth the amount of investment securities
which mature during each of  the periods indicated and the weighted average
yields for each range of maturities  at  December  31, 1998.  No tax-exempt
yields have been adjusted to a tax-equivalent basis.

<TABLE>
<CAPTION>
                                                  Amounts at December 31, 1998 Which Mature in
                               -------------------------------------------------------------------------------------
                                                                Over One
                                                 Weighted         Year          Weighted        Over     Weighted
                                  One Year        Average        Through         Average        Five      Average
                                   Or Less         Yield       Five Years         Yield         Years      Yield
                               -------------- -------------- --------------  -------------  ----------- ------------
                                                         (Dollars in thousands)
<S>                            <C>            <C>            <C>             <C>            <C>          <C>
Bonds and other debt securities
  available for sale:
   FHLB notes                  $     -               -       $     -              -         $    2,749        6.45%
   FNMA notes                        -               -             -              -                735        6.96
   FHLMC notes                       -               -             -              -              1,453        6.52
   Other                             -               -             -              -                250        6.75
                               ---------      -----------    ----------      ---------      ----------  ------------
  Subtotal                           -               -             -              -              5,187        6.56

Equity securities:                   -               -             -              -                -          -
Other                                117             -             -              -                -          -
FHLB stock <F1>                      -               -             -              -                512        6.00
                               ---------      -----------    ----------      ---------      ----------  ------------
     Total                     $     117             -  %    $     -              -  %      $    5,699        6.51%
                               =========      ===========    ==========      =========      ==========   ==========

<FN>
<F1>     As a member of the FHLB of Dallas, the Association  is required to
         maintain  its  investment  in  FHLB  stock,  which  has  no stated
         maturity.
</FN>
</TABLE>

      At December 31, 1998, the Company did not have investments in any one
issuer  which  exceeded  more than 10% of the Company's total stockholders'
equity, except for FHLB notes  which had both a carrying value and a market
value of $2.7 million at December 31, 1998 and FHLMC notes which had both a
carrying value and a market value of $1.5 million at December 31, 1998

SOURCES OF FUNDS

      GENERAL.   Deposits are the primary source of the Company's funds for
lending  and  other investment purposes.   In  addition  to  deposits,  the
Company derives  funds  from  principal  and interest payments on loans and
mortgage-backed 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.   Borrowings may be
used on a short-term basis to compensate for reductions in the availability
of funds from other sources.  They may also be used on a longer-term  basis
for general business purposes.

      DEPOSITS.    The  Company's  deposits  are attracted principally from
within the Company's primary market area through  the  offering  of a broad
selection  of deposit instruments, including negotiable order of withdrawal
("NOW") accounts, money market deposit accounts ("MMDA's"), regular savings
accounts, and  term  certificate  accounts.   Included  among these deposit
products  are  individual retirement account certificates of  approximately
$4.3 million or  10.9%  of  total  deposits  at December 31, 1998.  Deposit
account  terms  vary,  with  the principal differences  being  the  minimum
balance required, the time periods the funds must remain on deposit and the
interest rate.

      The large variety of deposit  accounts offered by the Association has
increased the Association's ability to retain deposits and allowed it to be
more competitive in obtaining new funds,  but has not eliminated the threat
of  disintermediation (the flow of  funds away  from  savings  institutions
into   direct   investment   vehicles  such  as  government  and  corporate
securities).  During periods of  high interest rates, deposit accounts that
have  adjustable interest rates have  been  more  costly  than  traditional
passbook  accounts.   In addition, the Association is subject to short-term
fluctuations in deposit  flows because funds in transaction accounts can be
withdrawn at any time and  because  58.6% of the certificates of deposit at
December 31, 1998 mature in one year or less.  The Association's ability to
attract and maintain deposits is affected  by the rate consciousness of its
customers  and  their  willingness  to  move  funds   into  higher-yielding
accounts.  The Association's cost of funds has been, and  will  continue to
be, affected by money market conditions.

      The  following  table  shows the distribution of , and certain  other
information relating to, the Company's  deposits  by type of deposit, as of
the dates indicated.

<TABLE>
<CAPTION>
                                                                        December 31,
                                   -----------------------------------------------------------------------------
                                             1998                        1997                      1996
                                  -----------------------      ----------------------     ----------------------
                                     Amount          %            Amount        %            Amount       %
                                  ------------   --------      -----------   --------     -----------  ---------
                                                               (Dollars in Thousands)
<S>                                <C>           <C>           <C>           <C>          <C>          <C>
Certificate accounts:
  2.00% - 2.99%                    $     -            - %      $     -            - %     $     94         0.3%
  3.00% - 3.99%                          -            -              33           -             -           -
  4.00% - 4.99%                          -            -              -            -          6,957        19.0
  5.00% - 5.99%                      24,873         63.0         23,644         66.6        13,347        36.4
  6.00% - 6.99%                       5,942         15.0          2,293          6.5         5,544        15.1
  7.00% - 7.99%                         -             -           1,068          3.0         1,990         5.4
  8.00% or more                         -             -              -            -             -           -
                                   --------      --------      --------      --------      -------     --------
     Total certificate accounts      30,815         78.0         27,038         76.1        27,932        76.2
                                   --------      --------      --------      --------      -------     --------
Transaction accounts:
  Passbook savings                    5,128         13.0          5,483         15.4        5,774          15.8
  MMDAs                                 802          2.0          1,915          5.4        1,216           3.3
  Demand and NOW accounts             2,750          7.0          1,098          3.1        1,713           4.7
                                   --------      --------      --------      --------      -------     --------
     Total transaction accounts       8,680         22.0          8,496         23.9        8,703          23.8
                                   --------      --------      --------      --------      -------     --------
Total deposits                     $ 39,495        100.0%      $ 35,534        100.0%      $36,635       100.0%
                                   ========      ========      ========      ========      =======     ========
</TABLE>

      The  following table presents the average balance  of  each  type  of
deposit and  the  average rate paid on each type of deposit for the periods
indicated.

<TABLE>
<CAPTION>
                                                                  Year Ended December 31,
                                   -------------------------------------------------------------------------------
                                             1998                         1997                      1996
                                   --------------------------   ------------------------   -----------------------
                                                    Average                     Average                   Average
                                      Average        Rate         Average        Rate        Average       Rate
                                      Balance        Paid         Balance        Paid        Balance       Paid
                                   ------------   -----------   -----------   ----------   ----------   ----------
                                                                   (Dollars in Thousands)
<S>                                <C>                <C>       <C>               <C>      <C>               <C>

Passbook savings accounts          $  5,295           2.63%     $  5,602          2.60%    $ 6,856           2.56%
Demand and NOW accounts               1,413           2.10         1,893          2.20       1,716           2.20
MMDAs                                   993           2.55         1,210          2.40       1,475           2.41
Certificates of deposit              32,054           5.50        27,242          5.53      28,706           5.47
                                   ------------   -----------   -----------   ----------   ----------   ----------
  Total interest-bearing deposits  $ 39,755           4.92%     $ 35,947          4.79%    $38,753           4.69%
                                   ============   ===========   ===========   ==========   ==========   ==========
</TABLE>

      The following  table  sets  forth  the  savings  flows of the Company
during the periods indicated.

<TABLE>
<CAPTION>
                                                       Year Ended December 31,
                                                  --------------------------------
                                                    1998          1997      1996
                                                  ---------    ---------  --------
                                                            (In Thousands)
<S>                                               <C>          <C>        <C>
Increase (decrease) before interest credited <F1>     2,077    $ (2,657)  $(3,001)
Interest credited                                     1,471       1,556     1,433
                                                  ---------    ---------  --------
  Net increase (decrease) in deposits             $   3,548    $ (1,101)  $(1,568)
                                                  =========    =========  ========
<FN>
<F1>  The  information   provided  is net of deposits and  withdrawals
      because the gross amount of deposits  and  withdrawals is not readily
      available.
</FN>
</TABLE>

      The Association attempts to control the flow  of  deposits by pricing
its   accounts   to  remain  generally  competitive  with  other  financial
institutions in its market area, but does not necessarily seek to match the
highest  rates  paid   by  competing  institutions.   The  Association  has
generally not taken a position  of  price leadership in its markets, except
when there has been an opportunity to market longer term deposits.

      The principal methods used by the  Association  to  attract  deposits
include   the  offering  of  a  wide  variety  of  services  and  accounts,
competitive interest rates and convenient office locations.

      The Association  does  not  advertise  for  deposits  outside  of its
primary market area.  At December 31, 1998, the Association had no deposits
that  were  obtained  through  deposit  brokers.   The Association does not
actively solicit broker deposits and does not pay fees to such brokers.

      The  following table presents, by various interest  rate  categories,
the amount of  certificates  of  deposit  at December 31, 1998 which mature
during the periods indicated.

<TABLE>
<CAPTION>
                                                         Balance at December 31, 1998
                                                Maturing in the 12 Months Ending December 31,
                                                ---------------------------------------------
Certificates of Deposit           1999              2000               2001           THEREAFTER          TOTAL
-----------------------         --------         ---------           --------         ----------          -----
                                                                  (In Thousands)
<S>                            <C>               <C>                 <C>             <C>                <C>

3.00% - 3.99%                  $     35          $      -                 -          $     -            $     35
4.00% - 4.99%                     4,535               238                350              33               5,156
5.00% - 5.99%                    13,302             5,624                901             867              20,694
6.00% - 6.99%                       127               512                426           2,941               4,006
7.00% - 7.99%                        58               461                167             238                 924
                               --------          --------            -------         -------            --------
  Total certificate accounts   $ 18,057          $  6,835            $ 1,844         $ 4,079            $ 30,815
                               ========          ========            =======         =======            ========
</TABLE>

      The  following  table  sets  forth the maturities  of  the  Company's
certificates of deposit of $100,000  or  more  at December 31, 1998 by time
remaining to maturity.

<TABLE>
<CAPTION>
Maturing During Quarter Ending:                         Amounts
-------------------------------                         -------
                                                     (In Thousands)
<S>                                                  <C>
March 31, 1999                                       $       206
June 30, 1999                                                305
September 30, 1999                                           221
December 31, 1999                                            203
After December 31, 1999                                    1,628
   Total certificates of deposit with                ------------
   balances of $100,000 or more                      $     2,563

</TABLE>


BORROWINGS.

      The Association may obtain advances from the  FHLB of Dallas upon the
security  of  the  common  stock it owns in that bank and  certain  of  its
residential  mortgage  loans,  investment  securities  and  mortgage-backed
securities, provided certain  standards  related  to credit worthiness have
been  met.   See  "Regulation - The Association - Federal  Home  Loan  Bank
System."  Such advances  are made pursuant to several credit programs, each
of which has its own interest  rate and range of maturities.  Such advances
are generally available to meet  seasonal  and other withdrawals of deposit
accounts and to permit increased lending.  The Association did not have any
advances  from the FHLB at December 31, 1998.

SUBSIDIARY

      The  Association is a wholly-owned subsidiary  of  the  Company.   At
December 31,  1998,  the  Association had no subsidiaries.  Under Louisiana
law, a state-chartered association  may  invest  up to 10% of its assets in
service organizations or corporations.

      On  December  23,  1996,  the  Company  acquired a  70%  interest  in
Jefferson Community Lending, which was engaged  in the business of mortgage
lending.  During 1998, the Company continued a restructuring plan to reduce
costs  and  increase  future operating efficiencies  by  consolidating  the
operations of Jefferson Community Lending into  those  of  the  Association
and commencing the dissolution of Jefferson Community Lending.

      In January 1998, the Company  formed  Algiers.Com, Inc.  Algiers.Com,
Inc. owns a 51% interest in Planet Mortgage,  L.L.C.  ("Planet  Mortgage"),
which   was  formed  during  1998.   Planet  Mortgage  is  engaged  in  the
solicitation   of   mortgage   loans   through   its   internet   site   at
www.planetmortgage.com.

COMPETITION

      The   Company   faces  significant  competition  both  in  attracting
deposits and in making loans.  Its most direct competition for deposits has
come historically from  commercial  banks,  credit unions and other savings
institutions  located  in  its primary market area,  including  many  large
financial institutions which have greater financial and marketing resources
available to them.  Some of  the  Company's  major competitors include Bank
One,  Hibernia  National Bank, Whitney National  Bank  and  Fifth  District
Savings and Loan.   In  addition,  the Company faces additional significant
competition for investors' funds from  short-term money market mutual funds
and issuers of corporate and government  securities.   The Company competes
for  deposits  principally  by  offering  depositors a variety  of  deposit
programs.  The Company does not rely upon any  individual  group  or entity
for  a  material  portion of its deposits.  The Company estimates that  its
market share of total  deposits  in  Orleans  parish  and Jefferson parish,
Louisiana is less than 1.0%.

      The  Company's  competition  for real estate loans comes  principally
from   mortgage  banking  companies,  commercial   banks,   other   savings
institutions and credit unions.  The Company competes for loan originations
primarily  through  the  interest  rates  and loan fees it charges, and the
efficiency and quality of services it provides  borrowers  and  real estate
brokers.   Factors  which  affect  competition  include  general  and local
economic  conditions,  current  interest rate levels and volatility in  the
mortgage markets.

EMPLOYEES

      The  Company  and its subsidiaries  had  17  full-time  employees  at
December 31, 1998, and has added three additional employees since that date
to staff the Association's new branch location which opened March 18, 1999.
None of these employees  are  represented by a collective bargaining agent,
and the Company believes that it enjoys good relations with its personnel.

                                REGULATION 
THE COMPANY

      GENERAL.  The Company, as  a  registered  savings  and  loan  holding
company  within  the  meaning  of  the  Home  Owners'  Loan Act, as amended
("HOLA"),  is  subject  to  OTS regulations, examinations, supervision  and
reporting requirements.  As a  subsidiary  of  a  savings  and loan holding
company, the Association is subject to certain restrictions in its dealings
with the Company and affiliates thereof.

      ACTIVITIES RESTRICTIONS.  There are generally no restrictions  on the
activities  of  a  savings  and  loan  holding company which holds only one
subsidiary  savings institution.  However,  if  the  Director  of  the  OTS
determines that  there is reasonable cause to believe that the continuation
by a savings and loan  holding company of an activity constitutes a serious
risk to the financial safety,  soundness  or  stability  of  its subsidiary
savings  institution, the Director may impose such restrictions  as  deemed
necessary to address such risk, including limiting (i) payment of dividends
by  the  savings   institution;   (ii)  transactions  between  the  savings
institution and its affiliates; and  (iii)  any  activities  of the savings
institution  that might create a serious risk that the liabilities  of  the
holding  company   and  its  affiliates  may  be  imposed  on  the  savings
institution.  Notwithstanding  the  above  rules as to permissible business
activities of unitary savings and loan holding  companies,  if  the savings
institution  subsidiary  of  such  a holding company fails to meet the  QTL
test, as discussed under "-The Association - Qualified Thrift Lender Test,"
then  such  unitary  holding  company also  shall  become  subject  to  the
activities restrictions applicable  to  multiple  savings  and loan holding
companies and, unless the savings institution requalifies as  a  QTL within
one  year  thereafter,  shall  register  as,  and  become  subject  to  the
restrictions  applicable to, a bank holding company.  See "-The Association
- Qualified Thrift Lender Test."

      If  the  Company   were   to   acquire  control  of  another  savings
institution, other than through merger  or  other business combination with
the Association, the Company would thereupon  become a multiple savings and
loan holding company.  Except where such acquisition  is  pursuant  to  the
authority   to   approve  emergency  thrift  acquisitions  and  where  each
subsidiary savings  institution meets the QTL test, as set forth below, the
activities of the Company  and  any  of  its  subsidiaries  (other than the
Association  or other subsidiary savings institutions) would thereafter  be
subject to further  restrictions.   Among other things, no multiple savings
and loan holding company or subsidiary  thereof  which  is  not  a  savings
institution  shall  commence or continue for a limited period of time after
becoming a multiple savings  and loan holding company or subsidiary thereof
any business activity, except  upon prior notice to and no objection by the
OTS, other than: (i) furnishing  or  performing  management  services for a
subsidiary  savings  institution;  (ii)  conducting an insurance agency  or
escrow business; (iii) holding, managing, or liquidating assets owned by or
acquired from a subsidiary savings institution;  (iv)  holding  or managing
properties used or occupied by a subsidiary savings institution; (v) acting
as  trustee  under  deeds  of  trust;  (vi) those activities authorized  by
regulation as of March 5, 1987 to be engaged  in  by  multiple  savings and
loan  holding  companies;  or  (vii)  unless  the  Director  of  the OTS by
regulation prohibits or limits such activities for savings and loan holding
companies,  those activities authorized by the FRB as permissible for  bank
holding companies.   Those activities described in (vii) above also must be
approved by the Director of the OTS prior to being engaged in by a multiple
savings and loan holding company.

      LIMITATIONS ON TRANSACTIONS  WITH  AFFILIATES.   Transactions between
savings institutions and any affiliates are governed by  Sections  23A  and
23B  of  the  Federal  Reserve  Act and OTS regulations.  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, such
provisions (i) limit the extent  to  which  the  savings institution or its
subsidiaries may engage 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  such  provisions,  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  and  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.  At
December  31,  1998,  the  Association  was  in  compliance  with the above
restrictions.

      RESTRICTIONS  ON  ACQUISITIONS.   Except under limited circumstances,
savings and loan holding companies are prohibited  from  acquiring, without
prior approval of the Director of the OTS, (i) control of any other savings
institution  or savings and loan holding company or substantially  all  the
assets thereof  or  (ii)  more  than  5%  of the voting shares of a savings
institution or holding company thereof which  is  not a subsidiary.  Except
with the prior approval of the Director of the OTS,  no director or officer
of a savings and loan holding company or person owning  or  controlling  by
proxy  or  otherwise  more  than  25%  of such company's stock, may acquire
control  of  any  savings  institution, other  than  a  subsidiary  savings
institution, or of any other savings and loan holding company.

      The Director of the OTS  may  only  approve acquisitions resulting in
the formation of a multiple savings and loan holding company which controls
savings institutions in more than one state if (i) the multiple savings and
loan holding company involved controls a savings institution which operated
a  home or branch office located in the state  of  the  institution  to  be
acquired  as  of  March 5, 1987; (ii) the acquirer is authorized to acquire
control of the savings  institution  pursuant  to the emergency acquisition
provisions  of the Federal Deposit Insurance Act  ("FDIA");  or  (iii)  the
statutes of the  state  in  which the institution to be acquired is located
specifically permit institutions  to  be  acquired  by  the state-chartered
institutions  or savings and loan holding companies located  in  the  state
where the acquiring  entity  is  located  (or  by  a  holding  company that
controls such state-chartered savings institutions).

      Under the Bank Holding Company Act of 1956, the FRB is authorized  to
approve  an  application  by a bank holding company to acquire control of a
savings institution.  In addition,  a  bank holding company that controls a
savings institution may merge or consolidate  the assets and liabilities of
the savings institution with, or transfer assets  and  liabilities  to, any
subsidiary  bank which is a member of the Bank Insurance Fund ("BIF")  with
the approval  of  the appropriate federal banking agency and the FRB.  As a
result of these provisions,  there  have  been  a number of acquisitions of
savings institutions by bank holding companies in recent years.

THE ASSOCIATION

      GENERAL.  The OFI is the Association's chartering  authority, and the
OTS is the Association's primary federal regulator.  The OTS  and  the  OFI
have extensive authority over the operations of Louisiana-chartered savings
institutions.  As part of this authority, savings institutions are required
to  file  periodic  reports  with  the  OTS  and the OFI and are subject to
periodic examinations by the OTS, the OFI and the FDIC.  The investment and
lending authority of savings institutions are  prescribed  by  federal laws
and regulations, and such institutions are prohibited from engaging  in any
activities not permitted by such laws and regulations.  Such regulation and
supervision is primarily intended for the protection of depositors.

      The  OTS'  enforcement  authority  over  all savings institutions and
their holding companies includes, among other things, the ability to assess
civil money penalties, to issue cease and desist  or  removal orders and to
initiate injunctive actions.  In general, these enforcement  actions may be
initiated  for  violations  of laws and regulations and unsafe and  unsound
practices.   Other  actions  or   inactions   may  provide  the  basis  for
enforcement actions, including misleading or untimely  reports  filed  with
the OTS.

      INSURANCE  OF  ACCOUNTS.  The deposits of the Association are insured
to the maximum extent  permitted  by the SAIF, which is administered by the
FDIC, and are backed by the full faith  and  credit of the U.S. Government.
As  insurer,  the FDIC is authorized to conduct  examinations  of,  and  to
require reporting  by, FDIC-insured institutions.  It also may prohibit any
FDIC-insured institution  from engaging in any activity the FDIC determines
by regulation or order to pose a serious threat to the FDIC.  The FDIC also
has  the  authority  to  initiate   enforcement   actions  against  savings
institutions, after giving the OTS an opportunity to take such action.

      Under current FDIC regulations, institutions  are  assigned to one of
three   capital  groups  which  are  based  solely  on  the  level  of   an
institution's  capital--"well  capitalized,"  "adequately capitalized," and
"undercapitalized"--which are defined in the same manner as the regulations
establishing  the prompt corrective action system  discussed  below.  These
three groups are  then  divided  into three subgroups which reflect varying
levels  of supervisory concern, from  those  which  are  considered  to  be
healthy to  those  which  are  considered  to be of substantial supervisory
concern.    The  matrix  so  created  results  in  nine   assessment   risk
classifications,  with  rates ranging prior to September 30, 1996 from .23%
for well capitalized, healthy  institutions  to  .31%  for undercapitalized
institutions with substantial supervisory concerns.  The insurance premiums
for  the Association for the first half of 1994 were .26%  (per  annum)  of
insured  deposits  and  for each of the semi-annual periods from the second
half of 1994 through the  first  nine months  of 1996 were .23% (per annum)
of insured deposits.

      The deposits of the Association  are  currently  insured by the SAIF.
Both the SAIF and the 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 achieved a
fully  funded  status first and, therefore, as discussed  below,  effective
January 1, 1996 the FDIC recently substantially reduced the average deposit
insurance premium paid by commercial banks.

      On November  14,  1995,  the  FDIC  approved  a  final rule regarding
deposit  insurance  premiums.   The  final  rule reduced deposit  insurance
premiums for BIF member institutions to zero  basis  points  (subject  to a
$2,000 minimum) for institutions in the lowest risk category, while holding
deposit  insurance  premiums  for SAIF members at their then current levels
(23  basis points for institutions  in  the  lowest  risk  category).   The
reduction  was  effective with respect to the semiannual premium assessment
beginning  January 1, 1996.

      On September  30, 1996, President Clinton signed into law legislation
which eliminated the premium differential between SAIF-insured institutions
and BIF-insured institutions  by  recapitalizing the SAIF's reserves to the
required ratio.  The legislation required  all SAIF member institutions pay
a one-time special assessment to recapitalize  the SAIF, with the aggregate
amount to be 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.

      Implementing FDIC regulations imposed a one-time  special  assessment
equal to 65.7 basis points for all SAIF-assessable deposits as of March 31,
1995, which was accrued as an expense on September 30, 1996.  The  one-time
special  assessment for the Association amount to $241,000.  Net of related
tax benefits,  the one-time special assessment amounted to $159,000 or $.25
per share.  The  payment  of  such  special  assessment  had  the effect of
immediately   reducing   the   Association's   capital   by   such  amount.
Nevertheless,  management  does  not  believe  that  this  one-time special
assessment  had  a  material  adverse  effect on the Company's consolidated
financial condition.

      In the fourth quarter of 1996, the  FDIC lowered the 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
generally range from zero basis  points  to  27  basis  points, except that
during the fourth quarter of 1996, the rates for SAIF members  ranged  from
18 basis points to 27 basis points in order to include assessments paid  to
the  Financing Corporations ("FICO").  From 1998 through 1999, SAIF members
will pay  6.4  basis points to fund the FICO, while BIF member institutions
will pay approximately  1.3  basis  points.   The  Association's  insurance
premiums, which had amounted to 23 basis points, were thus reduced  to  6.4
basis  points  effective  January  1,  1998.  Based on the $36.5 million of
assessable   deposits   at  December  31,  1996,   the   Association   paid
approximately $73,000 less in insurance premiums in 1997.

      The  FDIC  may  terminate   the  deposit  insurance  of  any  insured
depository institution, including the   Association, 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 months to two years, as determined by the FDIC.
Management  is  aware  of  no  existing circumstances which would result in
termination of the Association's deposit insurance.

      REGULATORY   CAPITAL   REQUIREMENTS.    Federally   insured   savings
institutions are required to maintain minimum levels of regulatory capital.
The  OTS  has  established capital  standards  applicable  to  all  savings
institutions.  These  standards  generally  must  be  as  stringent  as the
comparable capital requirements imposed on national banks.  The OTS also is
authorized  to impose capital requirements in excess of these standards  on
individual institutions on a case-by-case basis.

      Current OTS capital standards require savings institutions to satisfy
three different  capital  requirements.   Under  these  standards,  savings
institutions  must  maintain  "tangible" capital equal to at least 1.5%  of
adjusted total assets, "core" capital  equal  to  at least 3.0% of adjusted
total assets and "total" capital (a combination of core and "supplementary"
capital) equal to at least 8.0% of "risk-weighted" assets.  For purposes of
the  regulation,  core capital generally consists of  common  stockholders'
equity (including retained  earnings).   Tangible capital is given the same
definition as core capital but  is reduced by the amount of all the savings
institution's  intangible  assets,  with  only   a  limited  exception  for
purchased mortgage servicing rights.  At December 31, 1998, the Association
had  no  intangible  assets  which are deducted in computing  its  tangible
capital.  Both core and tangible  capital  are further reduced by an amount
equal   to  a  savings  institution's  debt  and  equity   investments   in
subsidiaries engaged in activities not permissible to national banks (other
than subsidiaries  engaged  in activities undertaken as agent for customers
or in mortgage banking activities and subsidiary depository institutions or
their holding companies).  At  December  31,  1998,  the Association had no
subsidiaries.

      In determining compliance with the risk-based capital  requirement, a
savings   institution   is   allowed  to  include  both  core  capital  and
supplementary capital in its total  capital,  provided  that  the amount of
supplementary  capital  included  does not exceed the savings institution's
core  capital.   Supplementary  capital   generally  consists  of   general
allowances  for  loan  losses up to a maximum  of  1.25%  of  risk-weighted
assets,  together with certain  other  items.   In determining the required
amount of risk-based capital, total assets, including  certain  off-balance
sheet items, are multiplied by a risk weight based on the risks inherent in
the  type  of  assets.   The risk weights assigned by the OTS for principal
categories of assets are (i)  0% for cash and securities issued by the U.S.
Government or unconditionally backed  by  the  full faith and credit of the
U.S.  Government; (ii) 20% for securities (other  than  equity  securities)
issued by U.S. Government-sponsored agencies and mortgage-backed securities
issued by, or fully guaranteed as to principal and interest by, the FNMA or
the FHLMC,  except  for  those  classes  with  residual  characteristics or
stripped mortgage-related securities; (iii) 50% for prudently  underwritten
permanent  one- to four-family first lien mortgage loans not more  than  90
days delinquent  and  having  a loan-to-value ratio of not more than 80% at
origination unless insured to such ratio by an insurer approved by the FNMA
or the FHLMC, qualifying residential  bridge  loans  made  directly for the
construction of one- to four-family residences, and qualifying multi-family
residential  loans;  and  (iv)  100%  for  all other loans and investments,
including  consumer  loans,  commercial  loans,  and  one-  to  four-family
residential  real  estate  loans  more than 90  days  delinquent,  and  for
repossessed assets.

      In  August  1993,  the OTS adopted  a  final  rule  incorporating  an
interest-rate risk component into the risk-based capital regulation.  Under
the rule, an institution with  a  greater  than  "normal" level of interest
rate  risk  will  be  subject  to  a  deduction of its interest  rate  risk
component from total capital for purposes  of  calculating  its  risk-based
capital.   As  a  result,  such an institution will be required to maintain
additional  capital  in  order   to  comply  with  the  risk-based  capital
requirement.  An institution with  a  greater  than  "normal" interest rate
risk is defined as an institution that would suffer a loss of net portfolio
value exceeding 2.0% of the estimated economic value of  its  assets in the
event  of  a  200  basis  point  increase  or  decrease (with certain minor
exceptions) in interest rates.  The interest rate  risk  component  will be
calculated, on a quarterly basis, as one-half of the difference between  an
institution's  measured  interest  rate  risk  and  2.0%, multiplied by the
economic value of its assets.  The rule also authorizes the Director of the
OTS, or his designee, to waive or defer an institution's interest rate risk
component on a case-by-case basis.  The final rule was originally effective
as of January 1, 1994, subject however to a two quarter  "lag" time between
the reporting date of the data used to calculate an institution's  interest
rate  risk  and  the  effective  date  of each quarter's interest rate risk
component.  However, in October 1994 the Director of the OTS indicated that
it would waive the capital deductions for  institutions with a greater than
"normal" risk until the OTS published an appeals  process.   On  August 21,
1995, the OTS released Thrift Bulletin 67  which established (i) an appeals
process  to  handle  "requests  for adjustments" to the interest rate  risk
component and (ii) a process by which  "well-capitalized"  institutions may
obtain authorization to use their own interest rate risk model to determine
their  interest  rate  risk component.  The Director of the OTS  indicated,
concurrent with the release  of  Thrift  Bulletin  67,  that  the  OTS will
continue  to delay the implementation of the capital deduction for interest
rate risk pending  the  testing  of the appeals process set forth in Thrift
Bulletin 67.

      At December 31, 1998,  the Association exceeded all of its regulatory
capital requirements, with tangible,  core and risk-based capital ratios of
15.6%, 15.6% and 53.3%, respectively.   The  following table sets forth the
Association's    compliance  with  each  of  the  above-described   capital
requirements as of December 31, 1998.

<TABLE>
<CAPTION>
                                                     Tangible               Core              Risk-Based
                                                      Capital            Capital<F1>          Capital<F2>
                                                   ------------        --------------       --------------
                                                                   (Dollars in Thousands)
<S>                                                <C>                 <C>                  <C>
Capital under GAAP                                 $    7,623          $    7,623           $     7,623
Additional capital items:
  General valuation allowances<F3>                       -                    -                    151
  Net realized gain on securities available
   for sale                                             (207)               (207)                 (207)
                                                   -------------       --------------       --------------
Regulatory capital                                     7,416               7,416                 7,567
Minimum required regulatory capital<F4>                  714               1,428                 1,136
                                                   -------------       --------------       --------------
Excess regulatory capital                          $   6,702           $   5,988            $    6,431
                                                   =============       ==============       ==============
Regulatory capital as a percentage                    15.58%              15.58%                53.28%
Minimum capital required as a percentage<F4>           1.50%               3.00%                 8.00%
                                                   -------------       --------------       --------------
Regulatory capital as a percentage in excess
 of requirements                                      14.08%              12.58%                45.28%
                                                   =============       ==============       ==============
<FN>
<F1>  Does not reflect the 4.0% requirement to be met in order for an
      institution  to  be  "adequately  capitalized."   See " -Prompt
      Corrective Action."
<F2>  Does not reflect the interest-rate risk component in  the risk-
      based capital requirement, the effective date of which has been
      postponed as discussed above.
<F3>  General  valuation  allowances are only used in the calculation
      of risk-based capital.  Such allowances are limited to 1.25% of
      risk-weighted assets.
<F4>  Tangible and core capital  are  computed  as  a  percentage  of
      adjusted  total assets of $47.6 million.  Risk-based capital is
      computed as  a  percentage  of adjusted risk-weighted assets of
      $14.2 million.
</FN>
</TABLE>

      Effective  November  28, 1994, the OTS  revised  its  interim  policy
issued  in August 1993 under  which  savings  institutions  computed  their
regulatory capital in accordance with SFAS No. 115, "Accounting for Certain
Investments  in Debt and Equity Securities."  Under the revised OTS policy,
savings institutions  must value securities available for sale at amortized
cost  for  regulatory capital  purposes.   This  means  that  in  computing
regulatory capital,  savings  institutions  should  add back any unrealized
losses  and  deduct  any  unrealized gains, net of income  taxes,  on  debt
securities reported as a separate  component  of GAAP capital.  This change
in policy decreased the Association's regulatory  capital  at  December 31,
1998 by approximately $207,000.

      Any savings institution that fails any of the capital requirements is
subject  to  possible  enforcement  actions  by the OTS or the FDIC.   Such
actions could include a capital directive, a cease  and desist order, civil
money  penalties,  the establishment of restrictions on  the  institution's
operations, termination of federal deposit insurance and the appointment of
a conservator or receiver.   The OTS' capital regulation provides that such
actions, through enforcement proceedings or otherwise, could require one or
more of a variety of corrective actions.

      PROMPT  CORRECTIVE  ACTION.    Under  the  prompt  corrective  action
regulations  of  the  OTS,  an  institution  is  deemed  to  be  (i)  "well
capitalized" if it has total risk-based  capital  of  10.0%  or more, has a
Tier  1  risk-based  capital  ratio of 6.0% or more, has a Tier 1  leverage
capital ratio of 5.0% or more and  is  not  subject  to  any order or final
capital  directive to meet and maintain a specific capital  level  for  any
capital measure, (ii) "adequately capitalized" if it has a total risk-based
capital ratio of 8.0% or more, a Tier 1 risk-based capital ratio of 4.0% or
more and a  Tier  1  leverage  capital  ratio  of  4.0% or more (3.0% under
certain  circumstances)  and  does  not  meet  the  definition   of   "well
capitalized," (iii) "undercapitalized" if it has a total risk-based capital
ratio  that  is  less  than 8.0%, a Tier 1 risk-based capital ratio that is
less than 4.0% or a Tier  1  leverage  capital ratio that is less than 4.0%
(3.0% under certain circumstances), (iv)  "significantly  undercapitalized"
if it has a total risk-based capital ratio that is less than 6.0%, a Tier 1
risk-based  capital  ratio  that  is  less  than 3.0% or a Tier 1  leverage
capital ratio that is less than 3.0%, and (v) "critically undercapitalized"
if it has a ratio of tangible equity to total  assets  that  is equal to or
less  than  2.0%.  Under specified circumstances, a federal banking  agency
may reclassify a well capitalized institution as adequately capitalized and
may require an  adequately  capitalized  institution or an undercapitalized
institution to comply with supervisory actions  as  if  it were in the next
lower  category  (except  that the FDIC may not reclassify a  significantly
undercapitalized institution as critically undercapitalized).

      An institution generally must file a written capital restoration plan
which meets specified requirements  with  its  appropriate  federal banking
agency within 45 days of the date that the institution receives  notice  or
is  deemed  to  have  notice  that  it  is  undercapitalized, significantly
undercapitalized or critically undercapitalized.   A federal banking agency
must provide the institution with written notice of approval or disapproval
within  60  days  after receiving a capital restoration  plan,  subject  to
extensions by the agency.   An  institution  which  is required to submit a
capital restoration plan must concurrently submit a performance guaranty by
each company that controls the institution.  In addition,  undercapitalized
institutions  are  subject  to  various  regulatory restrictions,  and  the
appropriate  federal  banking  agency  also  may   take   any   number   of
discretionary supervisory actions.

      At  December  31, 1998, the Association was deemed a well capitalized
institution for purposes  of  the  above  regulations  and  as  such is not
subject to the above mentioned restrictions.

      SAFETY  AND  SOUNDNESS.   The  OTS and other federal banking agencies
have   established  guidelines  for  safety   and   soundness,   addressing
operational  and  managerial standards, as well as compensation matters for
insured  financial  institutions.    Institutions  failing  to  meet  these
standards  are required to submit compliance  plans  to  their  appropriate
federal regulators.   The  OTS and the other agencies have also established
guidelines  regarding asset quality  and  earnings  standards  for  insured
institutions.   The  Association   believes  that  it is in compliance with
these guidelines and standards.

      LIQUIDITY  REQUIREMENTS.  All savings institutions  are  required  to
maintain an average  daily  balance  of  liquid  assets  equal to a certain
percentage  of  the  sum  of its average daily balance of net  withdrawable
deposit accounts and borrowings payable in one year or less.  The liquidity
requirement may vary from time  to time (between 4% and 10%) depending upon
economic conditions and savings flows  of all savings institutions.  At the
present time, the required minimum liquid  asset  ratio is 4%.  At December
31, 1998, the Association's liquidity ratio was 13.0%.

      CAPITAL DISTRIBUTIONS.  OTS regulations govern  capital distributions
by savings institutions, which include cash dividends, stock redemptions or
repurchases,  cash-out  mergers,  interest payments on certain  convertible
debt and other transactions charged  to  the  capital  account of a savings
institution  to  make  capital  distributions.   Generally, the  regulation
creates  a safe harbor for specified levels of capital  distributions  from
institutions  meeting  at least their minimum capital requirements, so long
as such institutions notify  the  OTS  and  receive  no  objection  to  the
distribution  from the OTS.  Savings institutions and distributions that do
not qualify for  the  safe harbor are required to obtain prior OTS approval
before making any capital distributions.

      Generally, a savings  institution  that before and after the proposed
distribution  meets  or  exceeds its fully phased-in  capital  requirements
(Tier 1 institutions) may  make  capital  distributions during any calendar
year equal to the higher of (i) 100% of net  income  for the calendar year-
to-date  plus 50% of its "surplus capital ratio" at the  beginning  of  the
calendar year  or  (ii) 75% of net income over the most recent four-quarter
period.  The "surplus  capital  ratio" is defined to mean the percentage by
which the institution's tangible, core or risk-based capital  ratio exceeds
its tangible, core or risk-based  capital  requirement.   Failure  to  meet
minimum capital requirements will result in further restrictions on capital
distributions,   including   possible   prohibition  without  explicit  OTS
approval.  See "-Regulatory Capital Requirements."

      In order to make distributions under  these  safe harbors, Tier 1 and
Tier 2 institutions must submit 30 days written notice  to the OTS prior to
making  the  distribution.   The OTS may object to the distribution  during
that 30-day period based on safety  and soundness concerns.  In addition, a
Tier 1 institution deemed to be in need  of more than normal supervision by
the OTS may be downgraded to a Tier 2 or Tier  3 institution as a result of
such a determination.

      At December 31, 1998, the Association was  a  Tier  1 institution for
purposes of this regulation.

      On  December  5,  1994,  the  OTS  published  a  notice  of  proposed
rulemaking  to  amend  its  capital  distribution  regulation.   Under  the
proposal,   institutions   would   be   permitted   to  only  make  capital
distributions that would not result in their capital  being  reduced  below
the  level  required  to  remain "adequately capitalized," as defined above
under "-Prompt Corrective Action."   Because  the  Association  will  be  a
subsidiary of a holding company, the proposal would require the Association
to  provide notice to the OTS of its intent to make a capital distribution.
The Association  does  not  believe that the proposal will adversely affect
its ability to make capital distributions if it is adopted substantially as
proposed.

      LOANS  TO  ONE BORROWER.   The  permissible  amount  of  loans-to-one
borrower now generally  follows  the  national  bank standard for all loans
made by savings institutions.  The national bank  standard  generally  does
not  permit  loans-to-one borrower to exceed the greater of $500,000 or 15%
of unimpaired  capital  and  surplus.   Loans  in  an  amount  equal  to an
additional  10%  of  unimpaired  capital  and surplus also may be made to a
borrower if the loans are fully secured by  readily  marketable securities.
For  information  about  the  largest  borrowers from the Association,  see
"Business  -  Lending  Activities  -  Real  Estate  Lending  Standards  and
Underwriting Policies."

      CLASSIFIED ASSETS.  Federal regulations  require  that  each  insured
savings  institution  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.   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, and there is a high possibility of loss.  An asset
classified loss is considered  uncollectible  and of such little value that
continuance  as  an  asset  of the institution is not  warranted.   Another
category  designated  "special   mention"  also  must  be  established  and
maintained for assets which do not  currently expose an insured institution
to a sufficient degree of risk to warrant  classification  as  substandard,
doubtful or loss.  Assets classified as substandard or doubtful require the
institution to establish general allowances for loan losses.  If  an  asset
or  portion thereof is classified loss, the insured institution must either
establish  specific allowances for loan losses in the amount of 100% of the
portion of the  asset  classified loss, or charge-off such amount.  General
loss allowances established  to  cover  possible  losses  related to assets
classified  substandard  or  doubtful  may  be  included in determining  an
institution's  regulatory  capital  up to certain amounts,  while  specific
valuation allowances for loan losses  do not qualify as regulatory capital.
Federal   examiners   may   disagree   with   an    insured   institution's
classifications  and amounts reserved.  See "Business  -  Asset  Quality  -
Classified Assets."

      BRANCHING  BY  FEDERAL  SAVINGS  INSTITUTIONS.   OTS  policy  permits
interstate branching  to  the  full  extent  permitted by statute (which is
essentially unlimited).  Generally, federal law  prohibits  federal savings
institutions from establishing, retaining or operating a branch outside the
state  in  which  the  federal  institution has its home office unless  the
institution meets the Internal Revenue Service's domestic building and loan
test (generally, 60% of a thrift's  assets  must  be housing-related) ("IRS
Test").   The IRS Test requirement does not apply if:  (i)  the  branch(es)
result(s) from  an  emergency acquisition of a troubled savings institution
(however, if the troubled savings institution is acquired by a bank holding
company, does not have  its  home  office  in the state of the bank holding
company  bank  subsidiary and does not qualify  under  the  IRS  Test,  its
branching is limited to the branching laws for state-chartered banks in the
state where the  savings institution is located); (ii) the law of the state
where the branch would be located would permit the branch to be established
if the federal savings institution were chartered by the state in which its
home office is located;  or  (iii)  the  branch  was operated lawfully as a
branch under state law prior to the savings institution's  conversion  to a
federal charter.

      Furthermore, the OTS will evaluate a branching applicant's record  of
compliance  with  the  Community  Reinvestment  Act  of  1977  ("CRA").  An
unsatisfactory  CRA  record  may  be  the  basis  for denial of a branching
application.

      COMMUNITY  REINVESTMENT  ACT  AND  THE  FAIR LENDING  LAWS.   Savings
institutions have a responsibility under the CRA and related regulations of
the OTS to help meet the credit needs of their  communities, including low-
and  moderate-income  neighborhoods.   In  addition,   the   Equal   Credit
Opportunity  Act  and  the  Fair  Housing  Act (together, the "Fair Lending
Laws") prohibit lenders from discriminating  in  their lending practices on
the basis of characteristics specified in those statutes.  An institution's
failure to comply with the provisions of CRA could, at a minimum, result in
regulatory restrictions on its activities, and failure  to  comply with the
Fair Lending Laws could result in enforcement actions by the  OTS,  as well
as other federal regulatory agencies and the Department of Justice.

      QUALIFIED  THRIFT LENDER TEST.  All savings institutions are required
to  meet a QTL test  in  order  to  avoid  certain  restrictions  on  their
operations.   Under  Section  2303  of  the  Economic Growth and Regulatory
Paperwork Reduction Act of 1996, a savings institution  can comply with the
QTL test by either qualifying as a domestic building and  loan  association
as defined in Section 7701(a)(19) of the Internal Revenue Code of  1986, as
amended  ("Code") or meeting the second prong of the QTL test set forth  in
Section 10(m)  of  the  HOLA.  A savings institution that does not meet the
QTL test must either convert to a bank charter or comply with the following
restrictions on its operations:  (i)  the institution may not engage in any
new activity or make any new investment,  directly  or  indirectly,  unless
such  activity  or  investment is permissible for a national bank; (ii) the
branching powers of the  institution  shall  be  restricted  to  those of a
national  bank;  (iii) the institution shall not be eligible to obtain  any
advances from its  FHLB;  and  (iv) payment of dividends by the institution
shall be subject to the rules regarding  payment of dividends by a national
bank.   Upon  the  expiration of three years  from  the  date  the  savings
institution ceases to meet the QTL test, it must cease any activity and not
retain any investment  not  permissible for a national bank and immediately
repay  any  outstanding FHLB advances  (subject  to  safety  and  soundness
considerations).

      Currently,  the  prong  of the QTL test that is not based on the Code
requires  that  65% of an institution's  "portfolio  assets"  (as  defined)
consist of certain housing and consumer-related assets on a monthly average
basis in nine out of very 12 months.  Assets that qualify without limit for
inclusion as part  of  the  65%  requirement  are  loans  made to purchase,
refinance,  construct, improve or repair domestic residential  housing  and
manufactured  housing; home equity loans; mortgage-backed securities (where
the mortgages are  secured  by domestic residential housing or manufactured
housing); stock issued by the  FHLB  of  Dallas;  and  direct  or  indirect
obligations  of the FDIC.  In addition, the following assets, among others,
may be included  in  meeting the test subject to an overall limit of 20% of
the savings institution's  portfolio  assets:  50%  of residential mortgage
loans originated and sold within 90 days of origination;  100%  of consumer
and educational loans (limited to 10% of total portfolio assets); and stock
issued by the FHLMC or the FNMA.  Portfolio assets consist of total  assets
minus  the  sum  of (i) goodwill and other intangible assets, (ii) property
used by the savings  institution  to conduct its business, and (iii) liquid
assets up to 20% of the institution's  total assets.  At December 31, 1998,
the  qualified  thrift investments of the  Association  were  approximately
81.72% of its portfolio assets.

      FEDERAL HOME  LOAN  BANK  SYSTEM.  The Association is a member of the
FHLB of Dallas, which is one of 12 regional FHLBs that administers the home
financing credit function of savings  institutions.   Each FHLB serves as a
reserve or central bank for its members within its assigned  region.  It is
funded  primarily  from  proceeds  derived  from  the  sale of consolidated
obligations of the FHLB System.  It makes loans to members (i.e., advances)
in  accordance  with policies and procedures established by  the  Board  of
Directors of the FHLB.

      As a member,  the    Association is required to purchase and maintain
stock in the FHLB of Dallas  in  an  amount  equal  to  at  least 1% of its
aggregate  unpaid  residential  mortgage loans, home purchase contracts  or
similar obligations at the beginning  of  each year.  At December 31, 1998,
the Association had $512,000 in FHLB stock,  which  was  in compliance with
this requirement.

      The  FHLBs  are  required  to  provide  funds  for the resolution  of
troubled  savings  institutions  and  to  contribute to affordable  housing
programs through direct loans or interest subsidies  on  advances  targeted
for  community  investment  and  low-and  moderate-income housing projects.
These contributions have adversely affected  the  level  of  FHLB dividends
paid  in  the  past  and  could  continue  to  do  so in the future.  These
contributions also could have an adverse effect on the  value of FHLB stock
in the future.

      FEDERAL RESERVE SYSTEM.  The FRB requires all depository institutions
to maintain reserves against their transaction accounts (primarily  NOW and
Super  NOW  checking  accounts)  and  non-personal  time  deposits.   As of
December  31, 1998, no reserves were required to be maintained on the first
$4.4 million  of  transaction  accounts, reserves of 3% were required to be
maintained against the next $46.3 million of net transaction accounts (with
such dollar amounts subject to adjustment by the FRB), and a reserve of 10%
(which is subject to adjustment  by  the FRB to a level between 8% and 14%,
is  required  against  all  remaining net  transaction  accounts.   Because
required reserves must be maintained  in  the  form  of  vault  cash  or  a
noninterest-bearing  account  at a Federal Reserve Bank, the effect of this
reserve requirement is to reduce an institution's earning assets.

      THRIFT CHARTER.  Congress has been considering legislation in various
forms that would require federal  thrifts,  such  as  the  Association,  to
convert  their  charters  to  national  or  state  bank  charters.   Recent
legislation  required  the  Treasury  Department  to prepare for Congress a
comprehensive study on development of a common charter  for federal savings
institutions  and  commercial  banks;  and,  in the event that  the  thrift
charter was eliminated by January 1, 1999, would  require the merger of the
BIF and the SAIF into a single Deposit Insurance Fund  on  that  date.  The
Association cannot determine whether, or in what form, such legislation may
eventually  be  enacted  and there can be no assurance that any legislation
that is enacted would not  adversely  affect the Association and its parent
holding company.


LOUISIANA REGULATION

      As a Louisiana-chartered savings association, the Association also is
subject  to regulation and supervision by  the  OFI.   The  Association  is
required to  file  periodic  reports   with  and  is  subject  to  periodic
examinations  at least once every three years by the OFI.  The lending  and
investment authority of the Association is prescribed by Louisiana laws and
regulations, as  well  as  applicable federal laws and regulations, and the
Association is prohibited from  engaging in any activities not permitted by
such law and regulations.

      The Association is required  by  Louisiana  law  and  regulations  to
comply  with  certain  reserve  and  capital requirements.  At December 31,
1998, the Association was in compliance  with  all  applicable  reserve and
capital requirements.

      Louisiana   law   and  regulations  also  restrict  the  lending  and
investment  authority of Louisiana-chartered  savings  institutions.   Such
laws and regulations  restrict  the  amount  a  Louisiana-chartered savings
association  can  lend  to  any  one borrower to an amount  which,  in  the
aggregate, does not exceed the lesser  of   (i)  10%  of  the association's
savings  deposits  or  (ii)  the sum of the association's paid-in  capital,
surplus, reserves for losses,  and  undivided profits.  Federal law imposes
more   restrictive   limitations.    See   "Business-Lending   Activities."
Notwithstanding the foregoing, Louisiana and  federal  law permits any such
association  to lend to any one borrower an aggregate amount  of  at  least
$500,000.

      In addition,  Louisiana  law  restricts  the  ability  of  Louisiana-
chartered  savings  associations  to  invest  in,  among  other things, (i)
commercial real estate loans (including commercial construction real estate
loans) up to 40% of  total assets; (ii) real estate investments  for  other
than  the  association's  offices up to 10% of total assets; (iii) consumer
loans, commercial paper and  corporate  debt  securities up to 30% of total
assets; (iv) commercial, corporate, business or  agricultural  loans  up to
10%  of  total  assets;  and  (v)  capital  stock,  obligations  and  other
securities  of  service organizations up to 10% of total assets.  Louisiana
law also sets forth  maximum  loan-to-value  ratios with respect to various
types  of loans.  Applicable federal regulations  impose  more  restrictive
limitations  in  certain  instances.  See "Business-Lending Activities-Real
Estate Lending Standards and Underwriting Policies."

      The investment authority  of Louisiana-chartered savings associations
is broader in many respects than   that  of federally-chartered savings and
loan associations.  However, state-chartered  savings associations, such as
the Association, are generally prohibited from  acquiring  or retaining any
equity investment, other than certain investments in service  corporations,
of  a  type or in an amount that is not permitted for a federally-chartered
savings  association.   This  prohibition  applies to equity investments in
real estate, investments in equity securities  and  any other investment or
transaction  that  is  in  substance  an  equity investment,  even  if  the
transaction  is  nominally  a  loan or other permissible  transaction.   At
December 31, 1998, the Association was in compliance  with such provisions.

      Furthermore, effective January  1,  1990,  a  state-chartered savings
association may not engage as principal in any activity  not  permitted for
federal  associations  unless  the  FDIC  has determined that such activity
would pose no significant risk to the affected  deposit  insurance fund and
the Association is in compliance with the fully phased-in capital standards
prescribed  under  FIRREA.  When certain activities are permissible  for  a
federal association,  the state association may engage in the activity in a
higher amount if the FDIC  has not determined that such activity would pose
a significant risk of loss to  the  affected deposit insurance fund and the
Association meets the fully phased-in capital requirements.  This increased
investment authority does not apply to  investments  in nonresidential real
estate  loans.   At December 31, 1998, the Association had  no  investments
which were affected by the foregoing limitations.

      Under Louisiana  law,  a  Louisiana-chartered savings association may
establish or maintain a branch office  anywhere  in  Louisiana  with  prior
regulatory  approval.  In addition, an out-of-state savings association  or
holding company  may  acquire  a Louisiana-chartered savings association or
holding company if the OFI determines  that  the  laws  of such other state
permit  a  Louisiana-chartered  savings association or holding  company  to
acquire a savings association or  holding company in such other state.  Any
such acquisition would require the  out-of-state entity to apply to the OFI
and receive OFI approval.

                                  TAXATION

FEDERAL TAXATION

      GENERAL.   The  Company  and  the  Association  are  subject  to  the
generally  applicable  corporate  tax  provisions  of  the  Code,  and  the
Association is subject to certain additional  provisions  of the Code which
apply to thrifts and other types of financial institutions.   The following
discussion  of  federal  taxation  is  intended  only  to summarize certain
pertinent  federal  income  tax  matters  material to the taxation  of  the
Company and the Association and is not a comprehensive  discussion  of  the
tax rules applicable to the Company and the Association.

      YEAR.   The  Company  and  the  Association  file  federal income tax
returns on the basis of a calendar year ending on December  31.   For  1998
and  1999,  the  Company  and the Association intend to file a consolidated
tax return.

      BAD DEBT RESERVES.  In  August  1966,  legislation  was  enacted that
repeals  the  reserve  method  of  accounting (including the percentage  of
taxable income method) previously used  by  many  savings  institutions  to
calculate  their bad debt reserve for federal income tax purposes.  Savings
institutions  with $500 million or less in assets may, however, continue to
use the experience  method.   As  a  result, the Association must recapture
that portion of its reserve which exceeds  the  amount that could have been
taken under the experience method for post-1987 tax years.  At December 31,
1998,   the   Association's   post-1987   excess   reserves   amounted   to
approximately $445,000.  The recapture  will  occur over a six-year period,
the  commencement  of  which  was  delayed  until the  first  taxable  year
beginning  after  December  31, 1998,  since the  Association  met  certain
residential lending requirements.   The  legislation  also requires savings
institutions to account for bad debts for federal income  tax  purposes  on
the  same  basis as commercial banks for tax years beginning after December
31, 1995.  This  change  in  accounting  method and reversal and excess bad
debt reserves is adequately provided for in  the Association's deferred tax
liability.

      At  December  31,  1998,  the  federal income  tax  reserves  of  the
Association included $1.3 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
Association  in  connection with the conversion of the Association to stock
form,  the  retained   earnings   of   the  Association  are  substantially
restricted.

      DISTRIBUTIONS.   If  the  Association  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
Association 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 three taxable years and
forward  to the succeeding 15 taxable years.   This  provision  applies  to
losses incurred  in  taxable  years  beginning after 1986.  At December 31,
1998,  the  Association 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 35%.  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 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   Association.

      The Association's federal income tax  returns for the tax years ended
December 31, 1995 forward 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  Louisiana  taxable  income,  as  well  as  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, beginning in 1998, the Association is subject
to the Louisiana  Shares Tax, which is imposed on the assessed 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  may  also  be  subtracted  in  calculating  a  company's capitalized
earnings.

ITEM 2. DESCRIPTION OF PROPERTY.

      At December 31, 1998, the Company and the Association conducted their
business from the Association's main office and one branch  office  in  the
New  Orleans,  Louisiana area.  The following table sets forth the net book
value (including  furnishings  and equipment) and certain other information
with respect to the offices and other properties of the Company at December
31, 1998.
<TABLE>
<CAPTION>
                                                                  Net Book Value of
DESCRIPTION/ADDRESS                       LEASED/OWNED                PROPERTY
-------------------                       ------------            -----------------
<S>                                         <C>                       <C>
Main Office:(In thousands)
  # 1 Westbank Expressway
  New Orleans, Louisiana 70114              Leased                    $  478
Branch Office:
  2021 Carol Sue Avenue
  Terrytown, Louisiana  70056               Owned                        184
                                                                      --------- 
    Total                                                             $  662
                                                                      =========
</TABLE>


ITEM 3. LEGAL PROCEEDINGS.

      The  Company  and  the Association  are  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 consolidated
financial condition and results of operations of the Company.

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

      None.

PART II.

ITEM 5.   MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

      The  Company's   stock  is  not  listed  on  any  security  exchange.
Therefore, the Company does  not  have exchange data that provides high and
low stock prices.  The most recent sale of the Company's stock was on April
20, 1999 at $10.25 per share.

      The  payment  of  dividends  on  the   common  stock  is  subject  to
determination and declaration by the Board of  Directors  of  the  Company.
The  Board  of  Directors  has  adopted  a  policy of paying quarterly cash
dividends at a rate of $0.05 per share commencing  with the Company's first
dividend  paid in January 1997.  The payment of future  dividends  will  be
subject to  the requirements of applicable law and the determination by the
Board of Directors  that  the  Company's  net income, capital and financial
condition, banking industry trends and general  economic conditions justify
the  payment  of dividends, and it cannot be assured  that  dividends  will
continue to be paid by the Company in the future.


ITEM 6.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL CONDITIONS AND
         RESULTS OF OPERATION

FORWARD-LOOKING STATEMENTS

      The  Company may from time to time  make  written  or  oral  forward-
looking statements, including statements contained in the Company's filings
with  the  Securities   and   Exchange   Commission   and  its  reports  to
stockholders.   Statements  made  in this Annual Report, other  than  those
concerning historical information, should be considered forward-looking and
subject  to  various risks and uncertainties.   Words  such  as  "believe,"
"estimate," "project,"  "expect," "intend" and variations of such words and
similar  expressions  are  intended   to   identify   such  forward-looking
statements.   These  statements  are  made  pursuant  to  the  safe  harbor
provisions  of  the  Private  Securities  Litigation  Reform Act  of  1995.
Forward-looking statements inherently involve risks and  uncertainties that
could cause actual results to differ materially from those reflected in the
forward-looking  statements.   Factors that could cause future  results  to
vary  from  current expectations include,  but  are  not  limited  to,  the
following:   changes  in  economic  conditions  (both  generally  and  more
specifically in  the  markets  in  which  the Company operates); changes in
interest  rates,  deposit  flows,  loan  demand,  real  estate  values  and
competition; changes in accounting principles,  policies  or guidelines and
in government legislation and regulation (which change from  time  to  time
and  over  which  the  Company has no control); and other risks detailed in
this Annual Report and in  the Company's other public filings.  Readers are
cautioned not to place undue  reliance on these forward-looking statements,
which reflect management's analysis  only  as  of  the  date  hereof.   The
Company  undertakes  no obligation to publicly revise these forward-looking
statements to reflect  events  or  circumstances  that arise after the date
hereof.

GENERAL

      The  profitability  of  Algiers  Bancorp,  Inc. (the  "Company")  and
Algiers Homestead Association (the "Association")  depends primarily on net
interest  income,  which  is the difference between interest  and  dividend
income on interest-earning  assets, principally mortgage-backed securities,
loans and investment securities  and  interest  expense on interest-bearing
deposits.   Net interest income is dependent upon  the  level  of  interest
rates and the  extent to which such rates are changing.  Profitability also
is dependent, to  a  lesser extent, on the level of its noninterest income,
provision (credit) for  loan  losses, noninterest expense and income taxes.
Noninterest expense consists of general, administrative and other expenses,
such as compensation and benefits, occupancy and equipment expense, federal
insurance premiums, and miscellaneous other expenses.

ASSET AND LIABILITY MANAGEMENT

      Consistent  net  interest  income   is  largely  dependent  upon  the
achievement  of  a  positive interest rate spread  that  can  be  sustained
during  periods  of   fluctuating  market  interest  rates.  Interest  rate
sensitivity is a measure  of  the  difference  between amounts of interest-
earning assets and interest-bearing liabilities  which  either  reprice  or
mature within a given period of time.  The difference, or the interest rate
repricing  "gap",  provides  an  indication  of  the  extent  to  which  an
institution's  interest rate spread will be affected by changes in interest
rates.  A gap is  considered  positive  when  the  amount  of interest-rate
sensitive  assets  repricing or maturing within a specified period  exceeds
the amount of interest-rate  sensitive  liabilities  repricing  or maturing
within such period, and is considered negative when the amount of interest-
rate sensitive liabilities repricing or maturing within a specified  period
exceeds  the amount of interest-rate sensitive assets repricing or maturing
within such period.  Generally, during a period of rising interest rates, a
negative gap  within shorter maturities would adversely affect net interest
income, while a  positive  gap within shorter maturities would result in an
increase in net interest income,  and  during  a period of falling interest
rates, a negative gap within shorter maturities would result in an increase
in net interest income while a positive gap within shorter maturities would
have the opposite effect.  However, the effects  of  a positive or negative
gap  are  impacted,  to  a  large  extent,  by  consumer  demand   and   by
discretionary pricing by the Association's management.

      The  Association  attempts  to  manage  its  interest  rate  risk  by
maintaining  a  high  percentage of its assets in adjustable-rate mortgage-
backed securities and in  adjustable-rate mortgages ("ARMs").  From 1985 to
1995, the only residential  mortgages  originated  by  the Association were
ARMs.   During 1996, the Association started offering fixed  rate  mortgage
loans.  It  was  the  opinion  of  management  that a mix of fixed rate and
adjustable-rate mortgage product would better insulate the Association from
periods  of  rate  fluctuation.   At December 31, 1998,  the  Association's
fixed-rate mortgage-backed securities  amounted to $4.6 million or  9.5% of
total assets, its ARMs amounted to $7.1  million  or  14.6% of total assets
and  its  adjustable-rate  mortgage-backed  securities  amounted  to  $22.8
million  or  46.9% of total assets.  The interest rate on the  ARMs  and  a
portion of the adjustable-rate mortgage-backed securities, however, adjusts
no more frequently  than once a year, with the amount of the change subject
to annual limitations,  whereas  the  interest rates on deposits can change
more frequently and are not subject to  annual  limitations.   A portion of
the Association's adjustable-rate mortgage-backed securities have  interest
rates which adjust monthly or semi-annually with limitations on the  amount
of the increase.

      Management  also  monitors  and  evaluates  the  potential  impact of
interest  rate  changes  upon  the  market value of the Company's portfolio
equity on a quarterly basis, in an attempt  to  ensure  that  interest rate
risk is maintained within limits established by the Board of Directors.  In
August  1993  the  OTS adopted a final rule incorporating an interest  rate
risk component into  the  risk-based  capital  rules.   Under  the rule, an
institution with a greater than "normal" level of interest rate  risk  will
be  subject  to  a deduction of its interest rate risk component from total
capital for purposes of calculating the risk-based capital requirement.  An
institution with a  greater  than "normal" interest rate risk is defined as
an institution that would suffer  a  loss  of  net  portfolio value ("NPV")
exceeding 2.0% of the estimated market value of its assets  in the event of
a  200  basis  point  increase or decrease in interest rates.  NPV  is  the
difference between incoming and outgoing discounted cash flows from assets,
liabilities, and off-balance sheet contracts.  A resulting change in NPV of
more than 2% of the estimated  market value of an institution's assets will
require the institution to deduct  50%  of  that  excess  change.  The rule
provides  that  the  OTS  will  calculate the interest rate risk  component
quarterly for each institution.   The  OTS  has  recently indicated that no
institution will be required to deduct capital for interest rate risk until
further notice.  Because a 200 basis point increase in interest rates would
have decreased the Company's NPV by less than 2% as  a  percentage  of  the
estimated market value of it assets at December 31, 1998, the Company would
not  have  been subject to any capital deduction as of December 31, 1998 if
the regulation  had  been  effective  as of such date.  The following table
presents the Company's NPV as of December  31,  1998,  as calculated by the
OTS, based on information provided to the OTS by the Association.

<TABLE>
<CAPTION>
                                                              
  Change in                                                   Change in              
Interest Rates            Net Portfolio Value                NPV as % of              NPV as % of
in Basis Points     ----------------------------------     Portfolio Value          Portfolio Value
 (Rate Shock)        Amount     $ Change     % Change         of Assets              of Assets <F1>
---------------     --------   ----------   ----------    ----------------        -----------------
                          (Dollars in Thousands)
<S>                 <C>         <C>             <C>              <C>                    <C>
400                 $ 6,067     $ (1,615)       -21%             13.4                   -2.43%
300                   6,470       (1,211)       -16%             14.1                   -1.79%
200                   6,855         (826)       -11%             14.7                   -1.20%
100                   7,243         (439)        -6%             15.2                   -0.63%
Static                7,682           --         --              15.9                      --
(100)                 8,226          544          7%             16.7                    0.78%
(200)                 8,835        1,153         15%             17.5                    1.64%
(300)                 9,574        1,892         25%             18.5                    2.66%
(400)                10,270        2,588         34%             19.4                    3.56%
<FN>
<F1>  Based on the portfolio value of the Company's  assets assuming no
      change in interest rates.
</FN>
</TABLE>


CHANGES IN FINANCIAL CONDITION

      ASSETS.  Total assets increased to $48.6 million at December 31, 1998
from $45.3 million at December 31, 1997.

      Mortgage-backed securities as a percentage of total  assets decreased
to 56.3% at December 31, 1998 from 62.7% at December 31, 1997.   All of the
Company's  mortgage-backed  securities are either insured or guaranteed  by
the Federal Home Loan Mortgage  Corporation ("FHLMC"), the Federal National
Mortgage   Association  (FNMA")  or  the   Government   National   Mortgage
Association  ("GNMA").   Mortgage-backed securities increase the quality of
the Company's assets by virtue of the guarantees that support them, require
fewer personnel and overhead  costs  than  individual  residential mortgage
loans, are more liquid than individual mortgage loans and  may  be  used to
collateralize   borrowings  or  other  obligations  of  Algiers.   However,
mortgage-backed securities typically yield less than individual residential
montage loans.

      At December  31,  1998, net loans receivable totalled $9.3 million or
19.1% of total assets.  Of  the total loan portfolio, $7.8 million or 79.6%
consisted  of  one-to-four  family   residential   loans.   Consumer  loans
accounted for $1.3 million or 13.5% of the total loan  portfolio,  and 6.9%
of the portfolio consisted of commercial real estate loans.

      Mortgage-backed  securities and investment securities were 56.3%  and
10.9% of total assets, respectively, at December 31, 1998.  Of such amount,
$117,000 or 0.2% of total  assets  mature  within  one year of December 31,
1998.  See Notes C, D and F to the Consolidated Financial Statements.  Cash
and cash equivalents amounted to 10.0% of total assets at such date.

      Non-performing assets have increased from 1.44%  of  total  assets at
December  31,  1997  to  1.7%  of  total assets at December 31, 1998.  Non-
accruing single-family residential loans  represented 29.7% of the $799,000
of total non-performing assets at December  31,  1998.  The balance of non-
performing assets included one commercial loan accounting  for  62.6%.   At
December  31,  1998,  the  Company's  allowance  for  loan  losses equalled
$506,000  or  5.1%  of  total  loans  outstanding.   The  Company's largest
commercial  real  estate  loan with a principal balance of $500,000  and  a
specific reserve of $261,000  as  of December 31, 1998 is not current as of
March 31, 1999.  The Company's management  is closely  monitoring this loan
and  is discussing its status with the borrower.   It  is  the  opinion  of
management  that  the  property  securing this loan has a value adequate to
cover the net amount of the loan.

      The Company's total deposits  increased  during 1998 to $39.5 million
at December 31, 1998 from $35.5 million at December 31, 1997.  Certificates
accounts  increased  by $3.8 million or 14.0% from  December  31,  1997  to
December 31, 1998, while transaction accounts increased by $184,000 or 2.2%
during the period.

      Total stockholders'  equity  was $8.6 million at December 31, 1998, a
decrease of $900,000 from December 31,  1997.   The  decrease  was due to a
$1.2 million purchase of treasury stock, $60,000 purchase of shares for the
MRP  Trust   and  dividends  of  $122,000.   These decreases were partially
offset by increases from net income of $161,000,  a  $72,000  allocation to
the  Employee Stock Ownership Plan, a $12,000 allocation to the  Management
Retention   Plan  Trust  and  a  $177,000  increase  in  Accumulated  Other
Comprehensive Income.

RESULTS OF OPERATIONS

      NET INCOME.   The  Company's net income decreased by $50,000 or 23.7%
in 1998 and increased by $54,000 or 34.4% in 1997.  The decrease in 1998 is
attributable to a decrease  of  $52,000  in  net interest income, a $69,000
increase in the provision for loan losses and a decrease of $99,000 in non-
interest  income related primarily to the recapture  of  an  allowance  for
securities  losses  in  1997.   Also  contributing  to  the reduction was a
decrease  of  $178,000 in non-interest expenses and an increase  in  income
taxes of $55,000  and  an  increase  in  minority  interest  in  loss of an
unconsolidated subsidiary.

      NET INTEREST INCOME.  The primary source of earnings is net  interest
income,  which  is  the  difference between income generated from interest-
earning assets and interest expense from interest-bearing liabilities.  Net
interest income decreased  by  $52,000  or  3.7%  in  1998,  and  increased
$181,000  or 14.8% in 1997.  The decrease in 1998 was due to a decrease  in
the ratio of  average  interest-earning  assets to average interest-bearing
liabilities  and  to  a lesser extent the increase  in  the  interest  rate
spread.  Interest rate spread is the yield on interest-earning assets minus
the costs of interest-bearing liabilities.

      The Company's average  interest  rate  spread  decreased to 2.24% for
1998  from  2.27%  for  1997  after  increasing  from 2.21% for  1996.   In
addition, its ratio of average interest-earning assets to average interest-
bearing liabilities decreased to 119.26% for 1998  from  122.45%  for 1997,
which  represented an increase from the 113.29% for 1996.  The decrease  in
the average  interest  rate  spread  was  due  to  the average rate paid on
interest-bearing  liabilities  increasing,  while  the  average   yield  on
interest-earning assets decreased.

      AVERAGE  BALANCES,  NET INTEREST INCOME, AND YIELDS EARNED AND  RATES
PAID.  The following table  presents  for  the  periods indicated the total
dollar amount of interest income from average interest-earning  assets  and
the  resultant yields, as well as the interest expense on average interest-
bearing  liabilities,  expressed  both  in  dollars  and rates, and the net
interest margin.  Tax-exempt income and yields have not  been adjusted to a
tax-equivalent basis.  All average balances are based on monthly balances.

<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                               ---------------------------------------------------------------------------------------------------
                                           1998                                1997                              1996
                               ------------------------------      -----------------------------     -----------------------------
                                                       Average                            Average                          Average
                               Average                 Yield/      Average                Yield/     Average               Yield/
                               Balance    Interest     Rate<F1>    Balance    Interest    Rate(1)    Balance   Interest    Rate<F1>
                               -------    --------     ------      -------    --------    ------     -------   --------    -------
                                                                 (Dollars in Thousands)
<S>                            <C>         <C>         <C>         <C>         <C>        <C>        <C>        <C>        <C>

Interest-earning assets:
  Loans receivable<F2>......   $ 9,983     $  916       9.18%      $ 9,298       837      9.00%      $ 9,581    $   776     8.10%
  Mortgage-backed securities    27,918      1,747       6.26        30,912     1,993      6.45        30,872      2,008     6.50
  Investment securities<F3>.     4,695        364       7.75         2,576       219      8.50         1,772        166     9.37
  Other interest-earning
   assets...................     2,145        137       6.39         1,796       106      5.90         2,025        109     5.38
                               -------     ------       -----       ------     -----      -----      -------    -------     -----
   Total interest-earning
   assets...................    44,741      3,164       7.07%       44,582     3,155      7.08%       44,250      3,059     6.91%
                               -------     ------       -----       ------     -----      -----      -------    -------     -----
  Noninterest-earning
  assets....................     2,228                               2,346                             1,406
                               -------                              ------                           -------
   Total assets.............   $46,969                             $46,928                           $45,656
                               =======                             =======                           =======

Interest-bearing
liabilities:
  Passbook, NOW and money
      market accounts.......   $ 8,588        196        2.28%      $ 8,705       216      2.48%      $10,047       249      2.48%
  Certificates of deposit...    28,926      1,616        5.59        27,242     1,506      5.53        28,706     1,569      5.47
                               -------      -----        -----      -------     -----      -----       ------    ------      -----
      Total deposits........    37,514      1,812        4.83        35,947     1,722      4.79        38,753     1,818      4.69
  FHLB advances.............       -          -          0.00           462        29      6.28           307        18      5.86
                               -------      -----        -----      -------     -----      -----       ------    ------      -----
      Total interest-bearing
      liabilities...........    37,514      1,812        4.83%       36,409     1,751      4.81%       39,060     1,836      4.70%
                               -------      -----        -----      -------     -----      -----       ------    ------      -----
Noninterest-bearing
liabilities<F4>.............       395                                  851                             1,870
                               -------                              -------                            ------
      Total liabilities.....    37,909                               37,260                            40,930
  Stockholders' equity......     9,060                                9,668                             4,726
                               -------                              -------                            ------
      Total liabililites and
       stockholders'equity..   $46,969                              $46,928                           $45,656
                               =======                              =======                           =======
Net interest-earning assets.   $ 7,227                              $ 8,173                           $ 5,190
                               =======                              =======                           =======
Net interest income; average
   interest rate spread.....               $1,352        2.24%                 $1,404      2.27%                 $1,223      2.21%
                                           ------        -----                 ------      -----                 ------      -----
Net interest margin<F5>.....                             3.02%                             3.15%                             2.76%
                                                         =====                             =====                             =====
Average interest-earning
assets to average
interest-bearing liabilities                           119.26%                           122.45%                           113.29%
                                                       =======                           =======                           =======
<FN>
<F1>  At December 31, 1998, the weighted average yields earned  and  rates paid
      were  as  follows:  loans  receivable, 9.18%; mortgage-backed securities,
      6.26%;  investment  securities,  7.75%;  other  interest-earning  assets,
      6.39%;  total  interest-earning   assets  7.07%;  deposits,  4.83%;  FHLB
      advances 0.00%; and interest rate spread, 2.24%.
<F2>  Includes nonaccrual loans during the  respective periods.  Calculated net
      of deferred fees and discount, loans in   process  and allowance for loan
      losses.
<F3>  Includes   non-accruing  investment  securities  during  the   respective
      periods.
<F4>  Includes noninterest-bearing deposits.
<F5>  Net interest  margin  is net interest income divided by average interest-
      earning assets.
</FN>
</TABLE>

      RATE/VOLUME ANALYSIS.   The following table describes the extent to which
changes in interest rates and changes  in volume of interest-related assets and
liabilities  have affected Algiers' interest  income  and  expense  during  the
periods indicated.   For each category of interest-earning assets and interest-
bearing liabilities, information  is  provided  on  changes attributable to (i)
changes in rate (change in rate multiplied by prior year  volume), (ii) changes
in  volume (change in volume multiplied by prior year rate),  and  (iii)  total
change  in  rate  and  volume.  The combined effect of changes in both rate and
volume has been allocated  proportionately  to  the  change due to rate and the
change due to volume.

<TABLE>
<CAPTION>
                                                1998 VS. 1997                                   1997 VS. 1996
                                  -------------------------------------------        -----------------------------------   
                                                  Increase                                        Increase
                                                 (Decrease)                                      (Decrease)
                                                   Due to                                          Due to
                                  -------------------------------------------        -----------------------------------
                                                                   Total                                        Total
                                                                  Increase                                     Increase
                                   Rate         Volume           (Decrease)          Rate         Volume      (Decrease)
                                   ----         ------           ----------          ----         ------      ----------
                                                (In Thousands)                                (In Thousands)
<S>                              <C>           <C>                <C>                <C>          <C>         <C>
Interest income:
  Loans receivable               $  16         $   63             $  79              $ 71         $ (25)      $  46
  Mortgage-backed securities       (58)          (188)             (246)              (15)            -         (15)
  Investment securities            (17)           162               145               (15)           68          53
  Other interest-earning assets      9             22                31                10           (13)         (3)
                                 ------         ------            ------             -----        ------       -----
     Total interest income         (50)            59                 9                51            30          81
                                 ------         ------            ------             -----        ------       -----
Interest expense:
  Passbook, NOW and
     money market accounts         (18)            (2)              (20)                2           (34)        (32)
  Certificates of deposits          16             94               110                20           (83)        (63)
                                 ------         ------            ------             -----        ------       -----
     Total deposits                 (2)            92                90                22          (117)        (95)
  FHLB advances                    (14)           (15)              (29)                1            10          11
                                 ------         ------            ------             -----        ------       -----
     Total interest expense        (16)            77                61                23          (107)        (84)
                                 ------         ------            ------             -----        ------       -----
Increase (decrease) in net
  interest income                $ (34)         $ (18)            $ (52)             $ 28         $ 137       $ 165
                                 ======         ======            ======             =====        ======      ======
</TABLE>

      INTEREST INCOME.  Interest on loans increased $79,000 or 9.4% in 1998 due
to an increase in the average outstanding balances of  $685,000 and an increase
in  the  weighted average yields on loans receivable to 9.18%  from  9.00%.   A
substantial  portion  of   the  loans  have  adjustable interest rates, and the
change in the average yields reflects the general  change  in  market  interest
rates.

      Interest on mortgage-backed securities decreased by $246,000 or 12.3%  in
1998  from  1997, due to a $3.0 million or 9.7% decrease in the average balance
and a decrease  in  the average yield to 6.26% in 1998 from 6.45% in 1997.  The
average balance decreased as the amount of mortgage-backed securities purchased
in 1998 decreased by  $3.7 million from 1997.  The lower purchases in 1998 were
partially offset by higher  repayments  and  the  sale of $1.2 million in 1998.
The decreased yield was due to the interest rate on  a  large  portion  of  the
adjustable-rate mortgage-backed securities adjusting downward in 1998.

      Interest  on investment securities increased by $145,000 or 66.2% in 1998
from 1997, due to an increase in the average balance of $2.1 million from 1997,
which was partially  offset  by a decrease in the average rate to 7.75% in 1998
from 8.50% in 1997.  During 1998 the Company purchased $4.9 million of callable
notes and bonds issued by various  government agencies which had interest rates
of 5.63% to 6.75%.  These notes and  bonds partially accounted for the increase
in the average yield on investment securities.

      Other interest income, which consists  of  dividends  on  FHLB  stock and
interest  on  overnight deposits at the FHLB, increased by $31,000 or 29.2%  in
1998 over 1997, due to a $300,000 or 16.7% increase in the average balance. The
average yield increased  to  6.39% in 1998 from 5.90% in 1997 due to a decrease
in the rate paid by the FHLB of  Dallas on overnight deposits.  The increase in
the average balance resulted from  the Company purchasing additional FHLB stock
and increasing overnight deposits in 1998.

      Total interest income increased  by $9,000 or 0.3% in 1998 from 1997, due
to a $159,000 or 0.4% increase in the average balance of total interest-earning
assets and a decrease in the average yield to 7.07% in 1998 from 7.08% in 1997.

      INTEREST EXPENSE.  Interest on deposits  increased  by $90,000 or 5.2% in
1998 over 1997, due to a $1.6 million or 4.5% decrease in the  average  balance
and  an increase in the average rate to 4.83% in 1998 from 4.79% in 1997.   The
increase  in  the  average balance was mostly due to an increase in the average
balance of certificates  of  deposit.  The average rate paid on certificates of
deposit increased to 5.59% in  1998  from  5.53%  in  1997,  which increase was
mostly  offset  by  a decrease in the average rate paid by the Company  on  its
transaction accounts to 2.28% in 1998 from 2.48% in 1997.

      Interest on FHLB  advances  decreased  by  $29,000 or 100.0% in 1998 from
1997, primarily due to a decrease in the average balance  of  FHLB  advances of
$462,000 in 1998.

      Total  interest  expense increased by $61,000 or 3.5% in 1998 over  1997,
primarily  due to the increase  in  the  average  balance  of  certificates  of
deposit.

      PROVISION  (CREDIT)  FOR  LOAN  LOSSES.  The Company provided (recovered)
$24,000, ($4,000) and ($24,000) of its  allowance for loan losses in 1998, 1997
and 1996, respectively.  Approximately $7,000  of the credit in 1996 was due to
continued  principal payments on the Company's largest  outstanding  commercial
real estate  loan,  which amounted to $500,000 at December 31, 1998.  A portion
of this loan is classified  substandard  because the carrying value exceeds the
appraised  value of the property securing the  loan,  and  the  amount  of  the
allowance allocated  to this loan ($261,000 at December 31, 1998) is reduced as
principal payments are  made.   The  allowance  for  loan  losses  amounted  to
$506,000 or 5.1% of the total loan portfolio at December 31, 1998.

      NONINTEREST INCOME.  Service charges and fees, which primarily consist of
charges  for  checking  accounts,  overdrafts  and  late payments, increased by
$2,000 or 3.8% in 1998 from 1997.

      The gross carrying value of the Company's Guaranteed Investment Contracts
(the  "GIC  bonds")  was  reduced  in  1997  by $62,000 of principal  payments.
Additionally, the Company recaptured $116,000  of  its  provision  for security
losses related to this investment during 1997 and $5,000 during 1998.  See Note
D of Notes to Consolidated Financial Statements.

      In 1998 the Company sold $1.2 million of mortgage-backed securities which
were  part  of  the  available  for sale portfolio which resulted in a gain  of
$17,000.
      Other noninterest income amounted  to  $14,000  and  $44,000  in 1998 and
1997, respectively.

      Total noninterest income decreased by $99,000 or 44.4% in 1998 from 1997,
primarily due to a decrease of $111,000 in recapture of allowance on  GIC bonds
and  an  increase  of  $34,000  in  gain  on sale of other real estate in 1998.
Algiers considers these items to be non-recurring in nature.

      NONINTEREST EXPENSE.  Compensation and  benefits decreased by $205,000 or
26.8% in 1998 over 1997, due to a reduction in  the Company's workforce related
to the closing of Jefferson Community Lending.

      Occupancy and equipment expenses increased  by  $10,000  or  5.8% in 1998
over  1997,  primarily  due  to  an  increase in the Association's repairs  and
maintenance of its facilities.

      Federal insurance premiums increased  by  $6,000  or  33.3%  in 1998 from
1997,  primarily  due  to an increase in the deposit base.  Federal legislation
passed in 1996 required  all SAIF member institutions to pay a special one-time
assessment to recapitalize  the  SAIF, and the amount of the assessment for the
Association amounted to $241,000,  gross  of related tax benefits in that year.
The payment of such assessment reduced the  Company's  net  income and retained
earnings  in  the  period  ending  September  30,  1996.   However,  after  the
recapitilization  of  the  SAIF,  the  premiums  to  be  paid  by  SAIF-insured
institutions  were  reduced  to  a  level  comparable  to those currently being
assessed BIF-insured institutions, which will result in  the special assessment
being recouped in approximately four years through the lower premiums.

      Computer  expenses  increased  by  $26,000  or 76.5% in 1998  from  1997,
primarily due to a  buy-out of the Association's old computer contract for it's
on-line computer system.

      Professional services decreased $34,000 or 24.6%  in  1998 from 1997, due
to a reduction in legal and accounting fees.

      FHLB service charges decreased $10,000 or 40.0% in 1998 from 1997, due to
a decrease in the number of mortgage-backed securities which  the Company owned
in 1998.

      Beginning in 1996, the Company incurred additional expenses  as  a result
of  becoming a public company.  Such expenses will include, among other things,
increased professional fees and printing expenses associated with the Company's
reporting obligations, and annual listing fees.

      The  Association  provided $45,000 of its allowance for real estate owned
loss in 1997 and $4,000 in  1996.   The allowance for loss on real estate owned
was increased in 1997 by $45,000 for properties held more than five years.  See
Note H of Notes to Consolidated Financial Statements.  The real estate owned at
December 31, 1998 consisted of one one- to four-family residential property and
unimproved land.

      The Association's real estate owned  expense,  net increased by $5,000 in
1998  from  1997, primarily due to the number of real estate  owned  properties
that were owned by the Association at December 31, 1998.

      Other noninterest expense, which primarily consists of insurance and bond
premiums, postage  and  supplies,  and  other  operating  expenses increased by
$69,000  or  32.4% in 1998 from 1997.  The increase was primarily  due  to  the
settlement of  a  lawsuit  in  the  amount  of $30,000 and an increase in other
operating expenses of $39,000.

      Total noninterest expense decreased by  $178,000  or  12.6%  in 1998 from
1997,  primarily  due  to  decreases  of $205,000 in compensation and benefits,
$34,000 in professional services, $45,000 in provision for possible real estate
write-downs, $52,000 in other expenses  and  $10,000  in  FHLB services charges
partially offset by increases of $10,000 in occupancy and equipment, $26,000 of
computer expenses, $6,000 in SAIF assessment and  insurance premiums and $5,000
on  real  estate  owned expenses.  Total noninterest expense as  a  percent  of
average assets was 2.6% in 1998 compared to 2.8% in 1997.

      FEDERAL INCOME  TAX  EXPENSE.   The  Company's federal income tax expense
increased by $55,000 or 114.6% in 1998 from  1997.   The effective tax rate for
1998,  1997 and 1996 was 39.5%, 18.5% and 29.7%, respectively.   The  effective
tax rate  of  18.5%  in  1997 was the result of the tax benefits from the gross
operating loss of $270,000  in  the  Company's  subsidiary  Jefferson Community
Lending for the year ending December 31, 1997.

      The  Company  had a deferred tax valuation reserve of $182,000,  $194,000
and  $194,000  at December  31,  1998,  1997  and  1996,  respectively.   Other
components of the  valuation  reserve consist of allowances for loan losses and
real estate owned losses.  For  additional  information, see Note J of Notes to
Consolidated Financial Statements.

LIQUIDITY AND CAPITAL RESOURCES

      Algiers  is  required under applicable federal  regulations  to  maintain
specified  levels  of   "liquid"   investments  in  qualifying  types  of  U.S.
Government, federal agency and other  investments  having  maturities  of  five
years  or  less.   Current  OTS  regulations require that a savings institution
maintain liquid assets of not less  than 4% of its average daily balance of net
withdrawable deposit accounts and borrowings  payable  in  one year of less, of
which short-term liquid assets must consist of not less than  1%.   At December
31, 1998, Algiers' liquidity was 13.0% or $3.4 million in excess of the minimum
OTS requirement.

      Cash was generated by Algiers' operating activities during 1998  and 1997
primarily  as  a  result  of  net  income  in each period and the provision for
depreciation and amortization.  The adjustments  to reconcile net income to net
cash provided by operations during the periods presented consisted primarily of
the provision for depreciation and amortization, accretion  of  the premiums on
investments, recovery of loan losses, gains and losses on the sale  of  assets,
and  increases  or  decreases  in various receivable and payable accounts.  The
primary investing activities of  Algiers  are  the  purchase of mortgage-backed
securities and the origination of loans, which are primarily  funded  with  the
proceeds  from repayments and prepayments on existing loans and mortgage-backed
securities   and   the   maturity  of  mortgage-backed  securities.   Investing
activities used net cash in  1998  primarily  because  the  amount of mortgage-
backed  securities and investments purchased exceeded the amount  matured.   In
1997, investing  activities  provided  net  cash as the amount of maturities of
mortgage-backed  securities  and investments  exceeded the amount of purchases.
The primary financing activity consists of the  purchases  of treasury stock of
$1.2  million  in  1998  and  of  deposit  increases  of 4.0 million  in  1998.
Financing activities used net cash in 1997 due to the repayment  of  $1,500,000
of FHLB advances.  Total cash and cash equivalents amounted to $4.9 million  at
December  31,  1998.   See  the  Consolidated  Statements  of Cash Flows in the
Consolidated Financial Statements.

      At  December 31, 1998, Algiers had outstanding commitments  to  originate
$57,000  of   one-to   four-family  residential  loans  (including  undisbursed
construction loans).  At  the  same  date,  the total amount of certificates of
deposit which were scheduled to mature in the  following  12  months  was $18.1
million.   Algiers  believes that it has adequate resources to fund all of  its
commitments and that  it  can  adjust  the  rate  on certificates of deposit to
retain deposits to the extent desired.  If Algiers  requires  funds  beyond its
internal  funding  capabilities, advances from the FHLB of Dallas are available
as an additional source of funds.

      Algiers is required  to  maintain  regulatory  capital sufficient to meet
tangible,  core  and  risk-based  capital  ratios  of  1.5%,   3.0%   and  8.0%
respectively.   At  December  31,  1998,  Algiers  exceeded each of its capital
requirements,  with  tangible, core and risk-based capital  ratios  of  15.58%,
15.58% and 53.28%, respectively.  See Note N of Notes to Consolidated Financial
Statements.

IMPACT OF INFLATION AND CHANGING PRICES

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

THE YEAR 2000

      The  Company utilizes and is dependent upon data processing  systems  and
software to  conduct  its  business.   The approach of the Year 2000 presents a
problem  in that many computer programs have  been  written  using  two  digits
rather than four digits to define the appropriate year.  Computer programs that
have time-sensitive  software  may recognize a date using "00" as the year 1900
rather than the Year 2000.  For  example, computer systems may compute payment,
interest, delinquency or other figures  important  to  the  operations  of  the
Company  based on the wrong date.  This could result in internal system failure
or miscalculations,  and  also creates risks for the Company from third parties
with whom the Company deals on financial transactions.

      Risks to the Company  if  its  computer system is not Year 2000 compliant
include the inability to process customer  deposits  or  checks  drawn  on  the
Association, inaccurate interest accruals, and maturity dates of loans and time
deposits,  and  the inability to update accounts for daily transactions.  Other
risks  to  the Company  exist  if  certain  of  its  vendors',  suppliers'  and
customers' computer  systems  are not Year 2000 compliant.  These risks include
the interruption of business in  the  event  of power outages, the inability of
loan  customers  to  comply  with  repayment  terms  if  their  businesses  are
interrupted, the inability to make payment for checks drawn on the Association,
receive payment for checks deposited by the Association's  customers, or invest
excess funds if the FHLB or correspondent banks are not Year 2000 compliant.

      The Company has structured its Year 2000 compliance plans  in  accordance
with  the  OTS and FDIC guidelines.  As part of its Year 2000 compliance  plan,
the  Company   has  identified  mission  critical  systems  and  is  developing
contingency plans relating to a "worst case scenario" relative to the Year 2000
issue.  The Company's  most  important  mission critical system is the software
and hardware responsible for maintaining  and  processing  the  general ledger,
deposits and loan accounts.  This system and other internal systems used by the
Company   have  been tested as part of the Company's Year 2000 compliance  plan
and have been certified Year 2000 compliant.  The Company's Year 2000 plan also
addresses contingencies  related  to  increased  liquidity and currency demands
which may arise in the latter part of 1999.

      The  Company  has  communicated  with its key vendors  and  suppliers  to
determine their Year 2000 compliance and  to  determine the potential impact of
such  third parties' failure to remediate their  own  Year  2000  issues.   The
Company  has  been assured that such third parties either are already Year 2000
compliant or are  in  the  process  of  modifying, upgrading or replacing their
computer applications to ensure Year 2000 compliance.

      In light of its compliance efforts, the Company does not believe that the
Year 2000 issue is likely to have a material  adverse  effect  on the Company's
liquidity, capital resources or results of operations.  However,  there  can be
no assurance that all of the Company's systems will be Year 2000 compliant,  or
that  the failure of any such system will not have a material adverse effect on
the Company's business, financial condition or operating results.  In addition,
to the  extent  that  the  Year 2000 issue has a material adverse effect on the
business, financial condition  or  operating results of third parties with whom
the Company has material relationship,  such  as  other financial institutions,
the  Year  2000  issue could have a material adverse effect  on  the  Company's
business, financial condition and operating results.


ITEM 7.  FINANCIAL STATEMENTS.


The Board of Directors
Algiers Bancorp, Inc. & Subsidiaries


                         INDEPENDENT AUDITOR'S REPORT

  We  have  audited  the  accompanying  consolidated  statements  of  financial
condition  of  ALGIERS BANCORP, INC. AND SUBSIDIARIES, as of December 31,  1998
and 1997, and the  related consolidated statements of operations, comprehensive
income, changes in stockholders'  equity,  and cash flows for each of the three
years in the period ended December 31, 1998.   These  financial  statements are
the  responsibility  of  the  Company's management.  Our responsibility  is  to
express an opinion on these financial statements based on our audits.

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

  In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of  ALGIERS BANCORP,
INC.  AND  SUBSIDIARIES  as of December 31, 1998 and 1997, and the  results  of
their operations and their cash flows for each of the three years in the period
ended  December 31, 1998, in  conformity  with  generally  accepted  accounting
principles.



                                          /s/ LaPorte, Sehrt, Romig & Hand
                                          A Professional Accounting Corporation

March 26, 1999
Metairie, Louisiana


                ALGIERS BANCORP, INC. & SUBSIDIARIES
        CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                      (DOLLARS IN THOUSANDS)

<TABLE>
                              ASSETS
<CAPTION>                     
                                                              December 31,
                                                       -----------------------
                                                             1998       1997
                                                        ---------     --------
<S>                                                    <C>            <C>
Cash and Amounts Due from Depository Institutions      $    3,659     $    482
Interest-Bearing Deposits in Other Banks                    1,222        2,073
Investments Available-for-Sale, at Fair Value               5,304        4,087
Loans Receivable - Net                                      9,297        9,198
Mortgage-Backed Securities - Available-for-Sale,
    at Fair Value                                          27,392        6,615
Mortgage-Backed Securities - Held-to-Maturity
    (Fair Value of $21,580 at December 31, 1997)             -          21,830
Stock in Federal Home Loan Bank                               512          483
Accrued Interest Receivable                                   369          269
Real Estate Owned - Net                                        62          -
Office Property and Equipment, (Net of Depreciation
    and Amortization)                                         662          253
Prepaid Expenses                                               87           19
Income Tax Receivable                                          28          -
Other Assets                                                   32            3
                                                        ---------     --------
      Total Assets                                      $  48,626    $  45,312
                                                        =========    =========
</TABLE>

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


<TABLE>
                LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>

                                                                   December 31,
                                                             ---------------------
                                                                1998        1997
                                                             --------     --------
<S>                                                          <C>           <C>
LIABILITIES                                                  
  Deposits                                                   $ 39,495      $ 35,534
  Advance Payments from Borrowers for
       Insurance and Taxes                                        114           112
  Accrued Interest Payable on Depositors' Accounts                 23             1
  Dividends Payable                                                32            31
  Deferred Tax Liability                                          212            28
  Income Taxes Payable                                            -              17
  Other Liabilities                                                84            47

                                                               39,960        35,770
  Minority Interest in Subsidiary                                  87           -
                                                               ------        ------
      Total Liabilities                                        40,047        35,770
                                                               ------        ------
STOCKHOLDERS' EQUITY
  Preferred Stock - Par Value $.01
      5,000,000 Shares Authorized; 0 Shares                              
      Issued and Outstanding                                      -              -
  Common Stock - Par Value $.01
      648,025 Shares Issued - 519,248 Outstanding at
      December 31, 1998 and 614,124 Outstanding at
      December 31, 1997                                             6             6
  Additional Paid-in Capital                                    6,137         6,122
  Unearned ESOP Shares                                           (376)         (433)
  Unearned MRP Shares                                             (48)          -
  Retained Earnings                                             4,344         4,305
  Treasury Stock - 128,777 Shares in 1998 and
      33,901 Shares in 1997, at Cost                           (1,675)         (472)
  Accumulated Other Comprehensive Income                          191            14
                                                             --------      --------
      Total Stockholders' Equity                                8,579         9,542
                                                             --------      --------
      Total Liabilities and Stockholders' Equity             $ 48,626      $ 45,312
                                                             ========      ========
</TABLE>

   The accompanying notes are an integral part of these financial statements




                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                   For the Years Ended
                                                       December 31,
                                               -------------------------
                                                1998      1997     1996
                                               ------    ------   ------
<S>                                            <C>       <C>      <C>
INTEREST INCOME                                
  Loans                                        $   916   $   837  $   776
  Mortgage-Backed Securities                     1,747     1,993    2,008
  Investment Securities                            364       219      166
  Other Interest-Earning Assets                    137       106      109
                                               -------   -------  -------

      Total Interest Income                      3,164     3,155    3,059
                                               -------   -------  -------

INTEREST EXPENSE
  Deposits                                       1,812     1,722    1,818
  FHLB Advances                                    -          29       18
                                               -------   -------  -------

      Total Interest Expense                     1,812     1,751    1,836
                                               -------   -------  -------

NET INTEREST INCOME                              1,352     1,404    1,223

(PROVISION) CREDIT FOR LOAN LOSSES                 (24)       45        4
                                               -------   -------  -------


NET INTEREST INCOME AFTER
  (PROVISION) CREDIT FOR LOAN LOSSES             1,328     1,449    1,227
                                               -------   -------  -------

NON-INTEREST INCOME
  Service Charges and Fees                          54        52       68
  Recapture of Allowance on GIC Bonds                5       116       67
  Gain on Sale of REO                               34       -        -
  Gain on Sale of Investments                       17        11       29
  Other Income                                      14        44       31
                                               -------   -------  -------

      Total Non-Interest Income                    124       223      195
                                               -------   -------  -------
</TABLE>


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



             ALGIERS BANCORP, INC. & SUBSIDIARIES
      CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
                 (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                            For the Years Ended
                                                December 31,
                                         ---------------------------
                                         1998      1997        1996
                                       -------    --------    ------
<S>                                    <C>        <C>         <C>
NON-INTEREST EXPENSES
  Compensation and Benefits               560         765        456
  Occupancy and Equipment                 183         173        118
  Computer                                 60          34         49
  SAIF Assessment                         -           -          241
  Deposit Insurance Premium                24          18         90
  Professional Services                   104         138         33
  FHLB Service Charges                     15          25         39
  Provision for Possible Real Estate
      Write-Downs                         -            45          4
  Loss of Sale of Real Estate Owned       -           -            5
  Real Estate Owned Expense - Net           7           2          3
  Other                                   282         213        161
                                       ------     -------    -------

                                        1,235       1,413      1,199
                                       ------     -------    -------
INCOME BEFORE INCOME TAXES
   AND MINORITY INTEREST                  217         259        223

INCOME TAX EXPENSE                        103          48         66
                                       ------     -------    -------

NET INCOME BEFORE MINORITY
  INTEREST IN SUBSIDIARY                  114         211        157

MINORITY INTEREST IN SUBSIDIARY            47         -          -
                                       ------    --------   --------

NET INCOME                             $  161    $    211   $    157
                                       ======    ========   ========

EARNINGS PER SHARE                     $ 0.29    $   0.37   $   0.26
                                       ======    ========   ========
</TABLE>

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



                  ALGIERS BANCORP, INC. & SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                       (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   For The Years Ended
                                                       December 31,
                                                ------------------------
                                                1998      1997      1996
                                               ------    ------    ------
<S>                                            <C>       <C>       <C>
NET INCOME                                     $  161    $  211    $  157

OTHER COMPREHENSIVE INCOME,
  NET OF TAX:
    Unrealized Holding Gains (Losses) Arising
      During the Period                           237         4      (51)

    Reclassification Adjustment for (Gains)
      Losses Included in Net Income               (60)       34       65
                                               ------    ------    -----
        Total Other Comprehensive Income          177        38       14
                                               ------    ------    -----
COMPREHENSIVE INCOME                           $  338    $  249    $ 171
                                               ======    ======    =====
</TABLE>

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



                                 ALGIERS BANCORP, INC. & SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                      (DOLLARS IN THOUSANDS)


                                                                    
<TABLE>
<CAPTION>                                                                                       Accumulated
                                                  Additional  Unearned   Unearned                  Other                Total
                                         Common    Paid-in      ESOP       MRP      Retained   Comprehnsive  Treasury  Retained
                                          Stock    Capital     Shares     Shares    Earnings      Income      Stock    Earnings
                                         ------  ---------    --------   --------   ---------  -----------   --------  --------

<S>                                      <C>     <C>          <C>         <C>       <C>        <C>           <C>       <C>
BALANCE - DECEMBER 31, 1995              $   -   $    -       $    -      $   -     $ 4,082    $   (38)      $   -     $ 4,044

Net Income                                   -        -            -          -         157        -             -         157
Dividends Declared                           -        -            -          -         (32)       -             -         (32)
Common Stock Issuance - 648,025 Shares
  at $.01 Per Share Issued at
  $10 Per Share                               6    6,474           -          -        -           -             -       6,480
Costs of Conversion from a Mutual
  Association to a Stock Association         -      (370)          -          -        -           -             -        (370)
Shares Allocated to the ESOP Plan            -        -           (518)       -        -           -             -        (518)
ESOP  Shares  Released  for  Allocation      -         4            26        -        -           -                        30
Other Comprehensive Income Net
   of Applicable Deferred Income Taxes       -        -            -          -        -            14           -          14
                                         ------  --------     --------    -------   -------  ---------       -------   -------

BALANCE - DECEMBER 31, 1996                   6    6,108          (492)       -       4,207        (24)          -       9,805

Net Income                                   -        -            -          -         211        -             -         211
Dividends Declared                           -        -            -          -        (113)       -             -        (113)
ESOP  Shares  Released  for  Allocation      -        14            59        -         -          -             -          73
Purchase of Treasury Stock                   -        -            -          -         -          -            (472)     (472)
Other Comprehensive Income Net
   of  Applicable Deferred Income Taxes      -        -            -          -         -           38           -          38
                                         ------  --------     --------    -------   -------  ---------       -------   -------

BALANCE - DECEMBER 31, 1997                   6    6,122          (433)       -       4,305         14          (472)    9,542

Net Income                                   -        -            -          -         161        -             -         161
Dividends Declared                           -        -            -          -        (122)       -             -        (122)
Common Stock Acquired by MRP Trust           -        -            -          (60)      -          -             -         (60)
Common Stock Released by MRP Trust           -        -            -           12       -          -             -          12
ESOP  Shares  Released  for  Allocation      -        15            57        -         -          -             -          72
Purchase of Treasury Stock                   -        -            -          -         -          -          (1,203)   (1,203)
Other Comprehensive Income Net
   of Applicable Deferred Income Taxes       -        -            -          -         -          177           -         177
                                         ------  --------     --------    -------   -------  ---------       -------   -------
BALANCE - DECEMBER 31, 1998              $    6  $  6,137     $   (376)   $   (48)  $ 4,344  $     191       $(1,675)  $ 8,579
                                         ======  ========     ========    =======   =======  =========       =======   =======

</TABLE>

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


                       ALGIERS BANCORP, INC. & SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    For the Years Ended
                                                                         December 31,
                                                                  -----------------------
                                                                   1998     1997      1996
                                                                  ------   ------    ------
<S>                                                               <C>      <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income                                                      $  161   $  211    $  157
  Adjustments to Reconcile Net Income to Net
    Cash Provided by Operating Activities:
     Depreciation and Amortization                                    48       24        22
     Provision (Credit) for Loan Losses                               24      (45)       (4)
     Provision for Losses on Real Estate Owned                       -         45         4
     Premium Amortization Net of Discount Accretion                  (74)      62       127
     (Gain) Loss on Sale of Real Estate Owned                        (34)     -           5
     Gain on Sale of Mortgage-Backed Securities                      (17)     (11)      (29)
     ESOP and MRP Expense                                             84       70        30
     Increase in Accrued Interest Receivable                        (100)      (4)      (36)
     Increase in Prepaid Expenses                                    (68)      (1)      (13)
     (Increase) Decrease in Prepaid Income Taxes                     (28)      75       117
     (Increase) Decrease in Other Assets                             (29)       2        (4)
     Increase (Decrease) in Accrued Interest Payable                  22      -          (2)
     Increase (Decrease) in Income Tax Payable                       (17)      17        -
     Increase (Decrease) in Other Liabilities                         38       18       (17)
     Increase in Minority Interest                                    87      -           -
     Increase in Deferred Income Taxes                                93       51        29
                                                                  ------   ------    ------

       Net Cash Provided by Operating Activities                     190      514       386
                                                                  ------   ------    ------


CASH FLOWS FROM INVESTING ACTIVITIES
  Maturities of Investment Securities - Held-to-Maturity             -        825       400
  Purchases of Investment Securities - Available-for-Sale         (5,083)  (3,094)   (3,022)
  Maturities of Investment Securities - Available-for-Sale         3,885    1,539     1,247
  Purchases of Mortgage-Backed Securities - Held-to-Maturity      (1,406)    (185)   (5,786)
  Maturities of Mortgage-Backed Securities - Held-to-Maturity      3,399    2,119     2,373
  Purchases of Mortgage-Backed Securities - Available-for-Sale    (4,132)    (784)   (3,424)
  Maturities of Mortgage-Backed Securities - Available-for-Sale    2,378    1,600     1,358
  Proceeds From Sale of Mortgage-Backed Securities - AFS           1,153    1,661       668
  Net (Increase) Decrease in Loans                                  (228)      22       474
  Non-Cash Dividend - FHLB                                           (29)     (27)      (26)
  Purchase of Office Properties and Equipment                       (457)     (46)      (26)
  Proceeds from Sales of Real Estate Owned                            77      -          39
                                                                  ------   ------    ------

       Net Cash Provided by (Used in) Investing Activities          (443)   3,630    (5,725)
                                                                  ------   ------    ------

</TABLE>

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



                     ALGIERS BANCORP, INC. & SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                          (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                    For the Years Ended
                                                                        December 31,
                                                               ------------------------------
                                                                1998          1997      1996
                                                               ------        ------    ------
<S>                                                            <C>           <C>       <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Net Increase (Decrease) in Deposits                           3,961       (1,101)    (1,568)
  Net Increase (Decrease) in Advances from Borrowers
      for Taxes and Insurance                                       2         (125)        85
  Proceeds from Federal Home Loan Bank Advance                    -          3,900      3,000
  Repayment of Federal Home Loan Bank Advance                     -         (5,400)    (1,500)
  Sale of Common Stock                                            -            -            6
  Contribution of Additonal Paid-in Capital                       -            -        6,104
  Dividends Paid                                                 (121)        (113)       -
  Purchase of Treasury Stock                                   (1,203)        (472)       -
  Purchases of ESOP Shares                                        -            -         (518)
  Purchases of MRP Shares                                         (60)         -          -
                                                               -------      -------     ------

      Net Cash Provided by (Used in) Financing Activities       2,579       (3,311)     5,609
                                                               -------      -------     ------

NET INCREASE IN CASH AND CASH EQUIVALENTS                       2,326          833        270
                                                               -------      -------     ------

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                   2,555        1,722      1,452

CASH AND CASH EQUIVALENTS - END OF YEAR                        $4,881       $2,555     $1,722
                                                               ======       ======     ======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION
   Cash Paid During the Year for:
     Interest                                              $    1,790     $   1,751  $    1,819
     Income Taxes                                          $      139     $      31  $       30

SUPPLEMENTAL DISCLOSURE OF NON-CASH
  TRANSACTIONS
    Dividends Declared                                     $       32     $      31  $       32
    Real Estate Owned Acquired Through Foreclosure         $      105     $     -    $      -
    Transfer of Mortgage-Backed Securities from Held-
     to-Maturity to Available-for-Sale                     $   19,837     $     -    $      -

</TABLE>

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



                          ALGIERS BANCORP, INC. & SUBSIDIARIES
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     NATURE OF OPERATIONS
                  Algiers    Bancorp,  Inc.  was    organized  as  a  Louisiana
     corporation on February 5, 1996 for the purpose  of engaging in any lawful
     act or activity for which a corporation may be formed  under the Louisiana
     Business  Corporation Law, as amended.  Other than steps  related  to  the
     reorganization  described  below, the Corporation was essentially inactive
     until July 8, 1996, when it  acquired  Algiers  Homestead Association in a
     business  reorganization  of entities under common  control  in  a  manner
     similar  to  a  pooling of interest.   Algiers  Homestead  Association  is
     engaged in the savings and loan industry.  The acquired association became
     a wholly-owned subsidiary of the Corporation through the issuance of 1,000
     shares of common  stock  to the Corporation in exchange for 50% of the net
     proceeds received by the Corporation in the reorganization.

           On December 23, 1996,  Algiers  Bancorp, Inc. entered into a limited
     liability  company partnership when it acquired  a  majority  interest  in
     Jefferson Community  Lending,  LLC.   Jefferson  Community Lending, LLC is
     engaged in the business of consumer lending.  During 1998, the Corporation
     initiated  a  restructuring  plan  to  reduce  costs and  increase  future
     operating  efficiency  by  consolidating  the  operations   of   Jefferson
     Community  Lending,  LLC.   Accordingly, net assets of Jefferson Community
     Lending, LLC have been reduced to $-0- at December 31, 1998.

           During 1998, the Algiers  Bancorp,  Inc. formed Algiers.Com, Inc., a
     subsidiary  that  owns  a 51% interest in Planet  Mortgage,  LLC.   Planet
     Mortgage, LLC is engaged in the solicitation of mortgage loans through its
     internet site.

     PRINCIPLES OF CONSOLIDATION
           The accompanying  consolidated  financial statements include
     the  accounts  of the Company and its wholly-owned  subsidiaries,  Algiers
     Homestead  Association   and  Algiers.Com,  Inc.  and  its  majority-owned
     subsidiary,  Jefferson  Community   Lending,   LLC.    In   consolidation,
     significant  inter-company accounts, transactions, and profits  have  been
     eliminated.

     INVESTMENT SECURITIES
           Investment  securities that management has the ability and intent to
     hold to maturity are  classified  as held-to-maturity and carried at cost,
     adjusted for amortization of premium  and accretion of discounts using the
     interest method.  Marketable securities  classified  as available-for-sale
     are carried at fair value in 1998 and 1997.  Unrealized  gains  and losses
     on  securities  available-for-sale  are recognized as direct increases  or
     decreases in comprehensive income.  Cost  of securities sold is recognized
     using the specific identification method.

     RECLASSIFICATIONS
           Certain reclassifications of previously  reported  amounts have been
     made  to  conform with 1998 presentation.  Such reclassifications  had  no
     effect on net income.



                ALGIERS BANCORP, INC. & SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     MORTGAGE-BACKED SECURITIES
           Mortgage-backed  securities  represent  participating  interests  in
     pools  of  first  mortgage loans originated and serviced by issuers of the
     securities.  During  1998, the Association transferred securities from the
     held-to-maturity category  to the available-for-sale category.  Unrealized
     gains and losses on mortgage-backed  securities  are  recognized as direct
     increases  or decreases in comprehensive income.  The cost  of  securities
     sold is recognized using the specific identification method.  Premiums and
     discounts are  being  amortized over the life of the securities as a yield
     adjustment.

     LOANS
           Loans are stated  at  unpaid  principal balances, less the allowance
     for  loan  losses,  net  deferred loan fees,  and  unearned  interest  and
     discounts.

           Loan origination fees,  as well as certain direct origination costs,
     are deferred and amortized as a  yield  adjustment  over  the lives of the
     related  loans  using  the  interest  method.   Commitment fees and  costs
     relating to commitments, the likelihood of exercise  of  which  is remote,
     are  recognized  over  the commitment period on a straight-line basis,  if
     material.   If  the  commitment   is  subsequently  exercised  during  the
     commitment period, the remaining unamortized commitment fee at the time of
     exercise is recognized over the life  of  the  loan  as  an  adjustment of
     yield.

           Loans  are  placed  on  non-accrual  when  principal or interest  is
     delinquent for 90 days or more.  Any unpaid interest previously accrued on
     those  loans  is  reversed  from  income,  and  thereafter,   interest  is
     recognized only to the extent of payments received.

           A  loan  is  considered  impaired  when,  based  on  current
     information  and events, it is probable that a creditor will be unable  to
     collect all amounts  due  according  to  the contractual terms of the loan
     agreement.  Interest payments on impaired  loans  are typically applied to
     principal unless collectibility of the principal amount  is fully assured,
     in which case interest is recognized on the cash basis.  Interest  may  be
     recognized on the accrual basis for certain troubled debt restructurings.

           The  allowance  for  loan  losses  is  maintained at a level
     which,  in management's judgment, is adequate to absorb  potential  losses
     inherent  in  the loan portfolio.  The amount of the allowance is based on
     management's evaluation  of  the  collectibility  of  the  loan portfolio,
     including  the nature of the portfolio, credit concentrations,  trends  in
     historical  loss   experience,   specific  impaired  loans,  and  economic
     conditions.

     FORECLOSED REAL ESTATE
           Foreclosed real estate  includes  formally  foreclosed property.  At
     the time of foreclosure, foreclosed real  estate  is recorded at the lower
     of the Association's cost or the asset's fair value,  less estimated costs
     to  sell,  which  becomes  the property's new basis.  Any write-downs  are
     charged to the allowance for  losses  on  foreclosed  real  estate.  Costs
     incurred  in  maintaining  foreclosed  real estate are included in  income
     (loss) on foreclosed real estate.



                ALGIERS BANCORP, INC. & SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A
     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     OFFICE PROPERTY AND EQUIPMENT
           Land is carried at cost; office property  and  equipment are carried
     at cost less accumulated depreciation.  Depreciation is computed using the
     straight-line method.

           Property  and equipment acquired are depreciated  using  accelerated
     methods.  The depreciation  under these methods does not differ materially
     from  that calculated in accordance  with  generally  accepted  accounting
     principles.

           When these assets are retired or otherwise disposed of, the cost and
     related  accumulated  depreciation  or  amortization  is  removed from the
     accounts,  and any resulting gain or loss is reflected in income  for  the
     period.

     INCOME TAXES
           Income  taxes  are  provided for the tax effects of the transactions
     reported in the financial statements  and  consist  of taxes currently due
     plus deferred taxes related to differences between the basis of assets and
     liabilities  for  financial and income tax reporting.   The  deferred  tax
     assets and liabilities  represent  the  future  tax return consequences of
     those  differences, which will either be taxable or  deductible  when  the
     assets and  liabilities are recovered or settled.  Deferred tax assets are
     reduced by a valuation allowance when, in the opinion of management, it is
     more likely than  not  that some portion or all of the deferred tax assets
     will not be realized.  Deferred  tax  assets  and liabilities are adjusted
     for the effect of changes in tax laws and rates on the date of enactment.

           Algiers Homestead Association is exempt from Louisiana income tax.

     CASH EQUIVALENTS
           Cash equivalents consist of certificates of deposit purchased with a
     maturity  of  three  months or less, and daily demand  investment  deposit
     accounts.

           Cash and cash equivalents at December 31, 1998 and 1997 included the
     following (in thousands):

<TABLE>
<CAPTION>
                                          1998         1997
                                       --------      -------
  <S>                                  <C>           <C>
  Cash                                 $  3,659      $   482
  Interest-Bearing Deposits
       in Other Institutions              1,222        2,073
                                       --------      -------
                                       $  4,881      $ 2,555
                                       ========      =======
</TABLE>

  NON-DIRECT RESPONSE ADVERTISING
           The Corporation expenses advertising costs as incurred.  Advertising
     for 1998, 1997 and 1996 was $1,000, $2,000 and $6,000, respectively.




              ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE A
  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     USE OF ESTIMATES
           The  preparation  of  financial  statements   in   conformity   with
     generally  accepted  accounting principles  requires  management  to  make
     estimates and assumptions  that  affect the reported amounts of assets and
     liabilities  at  the date of the financial  statements  and  the  reported
     amounts of revenues  and  expenses  during  the  reporting period.  Actual
     results could differ from these estimates.

           Material    estimates    that    are  particularly  susceptible   to
     significant change relate to the determination of the allowance for losses
     on  loans  and  valuation  of  real  estate acquired  in  connection  with
     foreclosures  or  in  satisfaction  of  loans.   In  connection  with  the
     determination of the allowances for losses  on  loans  and foreclosed real
     estate, management obtains independent appraisals for all properties.

           While management uses available information to recognize  losses  on
     loans  and  foreclosed  real  estate,  future  reductions  in the carrying
     amounts of loans and foreclosed assets may be necessary based  on  changes
     in  local  economic  conditions.  In addition, regulatory agencies, as  an
     integral  part  of their  examination  process,  periodically  review  the
     allowances for losses  on loans and foreclosed real estate.  Such agencies
     may require the Corporation to recognize additions to the allowances based
     on their judgments about  information  available  to  them  at the time of
     their  examination.   Because of these factors, it is reasonably  possible
     that the estimated losses  on  loans and foreclosed real estate may change
     materially in the near term, however  the  amount  of  the  change that is
     reasonably possible cannot be estimated.

     ACCOUNTING STANDARDS NOT YET ADOPTED
           Statement  of   Financial   Accounting   Standards  No.   133  (SFAS
     133), "Accounting for Derivative  Instruments  and  Hedging Activities" is
     effective for the quarter ended September 30, 1999.   This  statement will
     require all derivatives to be recognized at fair value as either assets or
     liabilities in the consolidated balance sheets.  Changes in the fair value
     of derivatives not designated as hedging instruments are to be  recognized
     currently  in  earnings.   Gains  or  losses on derivatives designated  as
     hedging instruments are either to be recognized  currently  in earnings or
     are  to  be  recognized  as  a  component  of  other comprehensive income,
     depending  on  the  intended  use  of the derivatives  and  the  resulting
     designation.   The  Company  currently   has  no  derivatives;  therefore,
     adoption of this pronouncement is not expected  to  have  an effect on the
     financial position and results of operations of the Company.

           Statement  of   Financial   Accounting   Standards   No.  134  (SFAS
     134),  "Accounting  for  Mortgage-Backed  Securities  Retained  after  the
     Securitization of Mortgage  Loans  Held-for-Sale  by  a  Mortgage  Banking
     Enterprise"  is  effective  for  the  first fiscal quarter beginning after
     December 15, 1998.  This statement establishes  standards for the way that
     mortgage banking enterprises classify mortgage-backed  securities or other
     retained interests based on its ability and intent to sell  or  hold those
     investments,  after  the  securitization  of mortgage loans held-for-sale.
     Adoption of this pronouncement is not expected  to  have  an effect on the
     financial position and results of operations of the Company.



                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE B
  POOLING OF INTEREST
           Details  of  the  unaudited results of operations of the  previously
     separate entities for the  periods  prior  to  the combination (January 1,
     1996 - July 7, 1996) follows (in thousands):

<TABLE>
<CAPTION>

                            Algiers        Algiers Homestead
                          Bancorp, Inc.       Association
                          -------------    -----------------
<S>                       <C>              <C>
Operating Income          $    -           $     1,519
                          ========         ===========
Net Income                $    -           $       173
                          ========         ===========

</TABLE>

           As  discussed in Note A, Algiers Bancorp, Inc.  had  essentially  no
     activity prior  to  July 8, 1996, the acquisition date.  The proforma data
     reflects certain estimated  values  and  assumptions.  Proforma results of
     operations  are  not  necessarily indicative  of  the  actual  results  of
     operations, which would  have  occurred  had  the  pooling occurred at the
     beginning of the fiscal years, or of the results, which  may  occur in the
     future.

NOTE C
  INVESTMENT SECURITIES AVAILABLE-FOR-SALE
           Investment   securities   available-for-sale  at  December  31, 1998
     consist of the following (in thousands):

<TABLE>
<CAPTION>
                                              Gross         Gross
                                Amortized   Unrealized   Unrealized    Fair
                                  Cost        Gains        Losses      Value
                                ---------   ----------   ----------   ------
  <S>                           <C>         <C>          <C>          <C>
  FNMA Medium Term
     Callable Note              $   706     $   28       $  -         $   734
  FHLMC Callable Note             1,443         11          -           1,454
  FHLB Callable Notes             2,750        -            1           2,749
  Other Securities                  393        -           26             367
                                -------     ------       ----         -------
                                $ 5,292     $   39       $ 27         $ 5,304
                                =======     ======       ====         =======
</TABLE>

           Investment  securities   available-for-sale   at  December  31, 1997
     consist of the following (in thousands):


<TABLE>
<CAPTION>
                                              Gross        Gross
                                Amortized   Unrealized   Unrealized    Fair
                                  Cost        Gains        Losses      Value
                                ---------   ----------   ----------   ------
  <S>                           <C>         <C>          <C>          <C>
  FNMA Medium Term
       Callable Note            $    216    $  -          $  16        $  200
  FHLMC Callable Note              1,095        6             1         1,100
  FHLB Callable Notes              2,782        5           -           2,787
                                --------    -----         -----       -------
                                $  4,093    $  11         $  17       $ 4,087
                                ========    =====         =====       =======
</TABLE>



                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE C
     INVESTMENT SECURITIES AVAILABLE-FOR-SALE (Continued)

           The  following   is   a   summary  of   contractual   maturities  of
     investment securities available-for-sale  as  of  December  31,  1998  (in
     thousands):

<TABLE>
<CAPTION>
                                                       Amortized     Fair
                                                         Cost        Value
                                                       ---------    -------
  <S>                                                  <C>         <C>
  Due in One Year or Less                              $     142   $    117
  Due from One to Five Years                                 -          -
  Due from Five to Ten Years                               3,694      3,703
  Due After Ten Years                                      1,456      1,484
                                                       ---------    -------
                                                       $   5,292    $ 5,304
                                                       =========    =======
</TABLE>

           Investment  in  stock  of  the  Federal  Home  Loan  Bank is carried 
     at cost, which approximates market.  The carrying value of this investment
     at  December  31,  1998  and 1997 was $512,200 and $483,000, respectively,
     with no provision for unrealized losses necessary.


NOTE D
  GUARANTEED INSURANCE CONTRACT (GIC) BONDS
           During  1987  and 1989,  the  Association   invested   in  Louisiana
     Agricultural Finance Authority  Bonds  and Southeast Texas Housing Finance
     Authority  Bonds which were backed by insurance  contracts  guaranteed  by
     Executive  Life   Insurance   Company.   A  conservator  was  subsequently
     appointed for Executive Life Insurance Company thus impacting the ultimate
     collectibility  of  the  entire  bond   proceeds.    Prior  to  1996,  the
     conservator was unable to determine the ultimate amount of principal which
     would  be  recovered;  therefore,  the Association set up  reserves  which
     amounted to $339,375 at December 31,  1993  based  on its best estimate of
     what  would  be recovered.  As of December 31, 1996, the  conservator  had
     estimated that  the ultimate collectibility of the bonds would approximate
     88% of their original  carrying  value.   As  such,  the  Association  has
     applied  all  proceeds  received during 1997 against the carrying value of
     the  bonds.  The Association  has  reserved  100%  against  the  remaining
     principal  value of the bonds given the questionability of the proceeds to
     be collected.



              ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE D
  GUARANTEED INSURANCE CONTRACT (GIC) BONDS (CONTINUED)
           The  activity  in   the  carrying  value  and  the  reserve  account
     is summarized as follows for the  years  ended  December 31, 1998 and 1997
     (in thousands):

<TABLE>
<CAPTION>
                                                     Carrying   Reserve
                                                       Value    Balance
                                                     --------   -------
  <S>                                                <C>        <C>
  Balance at December 31, 1996                       $     62   $   (62)
    Principal Repayment                                   (62)      -
    Recovery of Previous Charge - Offs                    -         (54)
    Recapture of Provision for Investment Losses          -         116
                                                     --------   -------

  Balance at December 31, 1997                            -         -
    Recovery of Previous Charge - Offs                    -          (5)
    Recapture of Provision for Investment Losses          -           5
                                                     --------   -------

    Balance at December 31, 1998                     $    -     $   -
                                                     ========   =======

</TABLE>


NOTE E
  LOANS RECEIVABLE
        Loans receivable consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                       1998       1997
                                                     --------   ---------
  <S>                                                <C>        <C>
  Loans Secured by First Mortgages on Real Estate:
    1-4 Family Residential                           $  7,816   $ 8,018
    Commercial                                            686       738
    Construction Loans - 1- 4 Family                      -          43
    Partially-Guaranteed by VA
          or Insured by FHA Loans - 1-4 Family             27        41
                                                     --------   -------
                                                        8,529     8,840
                                                     --------   -------
  Consumer Loans:
    Second Mortgage Loans - 1- 4 Family                   360       189
    Consumer Loans                                        400       325
    Share Loans                                           566       758
                                                     --------   -------
                                                        1,326     1,272
                                                     --------   -------
  Less:
    Allowance for Losses                                  506       485
    Unearned Interest on Mortgage Loans                   -          73
    Undisbursed Portion of Construction Loans             -         301
    Net Deferred Loan Origination Fees                     52        55
                                                     --------   -------
                                                          558       914
                                                     --------   -------
                                                     $  9,297   $ 9,198
                                                     ========   =======

</TABLE>



                ALGIERS BANCORP, INC. & SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E
  LOANS RECEIVABLE (CONTINUED)
           An    approximate   schedule   of  loan   maturities   or  repricing
     opportunities at December 31, 1998 is as follows (in thousands):

<TABLE>
<CAPTION>
                                         Variable      Fixed
        Maturities                         Rate        Rate      Total
     ---------------                     --------     ------     -----
     <S>                                 <C>          <C>        <C>
     Three Months or Less                $  1,374     $   415    $  1,789
     Three Months - One Year                2,209         179       2,388
     One Year - Five Years                     91          23         114
     Over Five Years                        3,415       2,149       5,564
                                         --------     -------    --------
                                         $  7,089     $ 2,766    $  9,855
                                         ========     =======    ========

</TABLE>

           Activity  in  the allowance for loan losses is summarized as follows
     for the years ended December 31, 1998 and 1997 (in thousands):


<TABLE>
<CAPTION>
                                       1998     1997     1996
                                      ------   ------   ------
  <S>                                 <C>      <C>      <C>
  Balance at Beginning of Year        $  482   $  527   $  531
  Charge-Offs                             -        -        -
  Recoveries                              -        -        -
  Provision (Credit)
         for Loan Losses                  24      (45)      (4)
                                      ------   ------   ------

  Balance at End of Year              $  506   $  482   $  527
                                      ======   ======   ======
</TABLE>

           At  December  31,  1998 and 1997, the Association had loans totaling
     approximately $505,800 and $10,000, respectively, for which impairment had
     been recognized.  The allowance  for  loan  losses  related to these loans
     totaled $261,000 and $10,000 at December 31, 1998 and  1997, respectively.
     There  was no interest income recognized on these loans during  the  years
     ended December 31, 1998, 1997 and 1996.

           At  December  31,  1998 and 1997, the Association had non-performing
     loans of approximately $737,000  and $10,000, respectively.  The amount of
     interest foregone for the years ended December 31, 1998, 1997 and 1996 was
     approximately $62,000, $1,000 and $1,000, respectively.

           The Association does not service any loans for others.



             ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE E
  LOANS RECEIVABLE (CONTINUED)

           In  the  normal  course  of  business,  the  Association  originates
     installment  loans to members of the  Board  of  Directors  and  officers.
     Loans to such borrowers are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                              1998     1997
                                            ------   ------
  <S>                                       <C>      <C>
  Balance at Beginning of Year              $   84   $   17
    Additions                                   28       88
    Payments and Renewals                      (86)     (21)
                                            ------   ------
  Balance at End of Year                    $   26   $   84
                                            ======   ======

</TABLE>

NOTE F
  MORTGAGE-BACKED SECURITIES
           Fixed and  variable  rate  mortgage-backed securities available-for-
     sale at December 31, 1998 are summarized as follows (in thousands):

<TABLE>
<CAPTION>

                                                DECEMBER 31, 1998
                                  ------------------------------------------------
                                                  Gross       Gross
                                   Amortized    Unrealized  Unrealized      Fair
                                     Cost         Gains       Losses       Value
                                  ---------     ----------  ---------    ---------
  <S>                             <C>           <C>         <C>          <C>
  GNMA Certificates               $   6,885     $      90   $   -        $   6,975
  FNMA Certificates                  16,320           156       -           16,476
  FHLMC Certificates                  3,911            30       -            3,941
                                  ---------     ---------   ---------    ---------
                                  $  27,116     $     276   $   -        $  27,392
                                  =========     =========   =========    =========

</TABLE>

           Fixed  and variable rate mortgage-backed  securities  available-for-
     sale at December 31, 1997 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                   DECEMBER 31, 1997
                                  -----------------------------------------------
                                                  Gross       Gross
                                   Amortized   Unrealized  Unrealized    Fair
                                     Cost        Gains       Losses     Value
                                  ---------     ---------  ---------    ---------
  <S>                             <C>           <C>        <C>          <C>
  GNMA Certificates               $     502     $       9  $       1    $     510
  FNMA Certificates                   4,902            96         35        4,963
  FHLMC Certificates                  1,132            18          8        1,142
                                  ---------     ---------   --------    ---------
                                  $   6,536     $     123   $     44    $   6,615
                                  =========     =========   ========    =========

</TABLE>



                ALGIERS BANCORP, INC. & SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE F
  MORTGAGE-BACKED SECURITIES (CONTINUED)

           Fixed and  variable rate mortgage-backed securities held-to-maturity
     at December 31, 1997 are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                  DECEMBER 31, 1997
                                  -----------------------------------------------
                                                  Gross       Gross
                                   Amortized   Unrealized  Unrealized    Fair
                                     Cost        Gains       Losses     Value
                                  ---------     ---------  ---------    ---------
  <S>                             <C>           <C>        <C>          <C>
  GNMA Certificates               $   2,801     $      34  $       2    $   2,833
  FNMA Certificates                  15,256            21        226       15,051
  FHLMC Certificates                  3,773             2         79        3,696
                                  ---------     ---------  ---------    ---------
                                  $  21,830     $      57  $     307    $  21,580
                                  =========     =========  =========    =========
</TABLE>

           The amortized  cost  and fair value of mortgage-backed securities at
     December 31, 1998,  by   contractual   maturity,   are   shown   below (in
     thousands).  Expected maturities will differ from  contractual  maturities
     because  borrowers  may  have  the  right  to  call  or prepay obligations
     without call or prepayment penalties.


<TABLE>
<CAPTION>
                                                 Amortized       Fair
                                                   Cost         Value
                                                 ---------     -------
  <S>                                            <C>           <C>
  Mortgage-Backed Securities Maturing:
     Less than One Year                          $      53     $     53
     Due After One Year Thru Five Years              1,599        1,609
     Due After Five Years Thru Ten Years                95          102
     Due After Ten Years                            25,369       25,628
                                                 ---------     --------
                                                 $  27,116     $ 27,392
                                                 =========     ========
</TABLE>

           During  1998,  1997 and 1996, the Association  sold  mortgage-backed
     securities   for  approximately   $1,153,000,   1,661,000   and   668,000,
     respectively.   These sales resulted in realized gains of $17,000, $11,000
     and $29,000 during 1998, 1997 and 1996, respectively.



                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE G
   INTEREST RECEIVABLE
           Interest receivable  at  December 31, 1998 and 1997 is summarized as
     follows (in thousands):

<TABLE>
<CAPTION>
                                                       1998       1997
                                                      ------      ------
  <S>                                                 <C>         <C>
  Mortgage Loans                                      $   75      $   29
  Share Loans                                              7           3
  Investment Securities                                  121          52
  Mortgage-Backed Securities                             166         185
                                                      ------      ------
                                                      $  369      $  269
                                                      ======      ======
</TABLE>

NOTE H
  REAL ESTATE OWNED
           A summary of real estate owned  at  December 31, 1998 and 1997 is as
     follows (in thousands):

<TABLE>
<CAPTION>
                                           1998     1997
                                          ------   ------
  <S>                                     <C>      <C>
  Real Estate Acquired in Settlement      $   97   $  90
  Less:  Allowances for Losses                35      90
                                          ------   -----
                                          $   62   $ -
                                          ======   =====
</TABLE>

           Activity in the allowance for  losses  for other real estate  owned
     for years ended December 31, 1998, 1997 and 1996  is  as follows (in
     thousands):


<TABLE>
<CAPTION>
                                           1998      1997     1996
                                          ------    ------   ------
        <S>                               <C>       <C>      <C>
        Balance at Beginning of Year      $  90     $  45    $  47
        Provision for REO Losses            -          45        4
        Sale of REO                         (55)      -         (6)
                                          -----     -----    -----
        Balance at End of Year            $  35     $  90    $  45
                                          =====     =====    =====

</TABLE>



             ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE I
  OFFICE PROPERTY AND EQUIPMENT
          Office property and equipment consist of the following at  December
     31, 1998 and 1997 (in thousands):

<TABLE>
<CAPTION>
                                                          1998         1997
                                                         ------       ------
     <S>                                                 <C>          <C>
     Land                                                $   30       $   30
     Building                                               188          185
     Furniture, Fixtures and Equipment                      654          205
     Leasehold Improvements                                  48           45
                                                         ------       ------
                                                            920          465
     Less:  Accumulated Depreciation and Amortization       258          212
                                                         ------        -----
                                                         $  662        $ 253
                                                         ======        =====
</TABLE>


           Depreciation expense for the years ended December 31, 1998, 1997 and
     1996  was   approximately   $48,000,  $24,000  and  $22,000, respectively.


NOTE J
  FEDERAL INCOME TAXES
           The provision for income taxes for 1998,  1997  and 1996 consists of
     the following (in thousands):

<TABLE>
<CAPTION>
                                                 1998     1997    1996
                                                ------   ------  ------
        <S>                                     <C>      <C>     <C>
        Current Federal Tax Expense             $  10    $ 77    $ 48
        Deferred Federal Tax Expense (Benefit)     93     (29)     18
                                                -----    ----    ----
        Balance at End of Year                  $ 103    $ 48    $ 66
                                                =====    ====    ====
</TABLE>
           The provision for federal income taxes differs from that computed by
     applying  Federal  statutory  rates  to income before Federal  income  tax
     expense, as indicated in the following analysis (in thousands):

<TABLE>
<CAPTION>
                                                 1998     1997    1996
                                                ------   ------  ------
  <S>                                           <C>      <C>     <C>
  Expected Tax Provision at 34% Rate            $   74   $   88  $   76
  Effect of Net Loan, REO and
      Investment Losses Charged
      Directly to Tax Bad Debt Reserves            -        (40)     26
  (Decrease) in Deferred Tax Asset
      Valuation Allowance                          -        -       (36)
  Employee Stock Ownership Plan                      5      -       -
  Other                                             24      -       -
                                                ------   ------   -----
  Balance at End of Year                        $  103   $   48   $  66
                                                ======   ======   =====

</TABLE>



             ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE J
  FEDERAL INCOME TAXES (CONTINUED)

           Deferred  tax  liabilities  have  been   provided   for  taxable  or
     deductible temporary differences related to unrealized gains on available-
     for-sale  securities,  deferred  loan  costs,  depreciation  and  non-cash
     Federal Home Loan Bank dividends.  Deferred tax assets have been  provided
     for  taxable  or  deductible temporary differences related to the reserves
     for uncollected interest  and  late charges, deferred loan fees, allowance
     for loan losses, the allowance for  losses  on  foreclosed real estate and
     the allowance for losses on real estate held-for-investment.

           The  net  deferred  tax assets or liabilities  in  the  accompanying
     statements of financial condition  include  the  following  components (in
     thousands):

<TABLE>
<CAPTION>
                                                         1998         1997
                                                        ------       ------
  <S>                                                   <C>          <C>
  Deferred Tax Assets
    Allowance for Loan Losses                           $  170       $  164
    Allowance for REO Losses                                12           31
    Employee Stock Option Plan                               2            7
    Management Retention Plan                                2          -
    Charitable Contribution Carryforward                     4          -
    Deferred Loan Fees                                      18           19
    Other                                                    1            2
                                                         -----       ------
        Total Deferred Tax Assets                          209          223
                                                         -----       ------
  Deferred Tax Liabilities
    Property and Equipment and Depreciation                 95           13
    Market Value Adjustment for
        Available-for-Sale Securities                       98            7
    Section 481 Adjustment                                   5            5
    FHLB Stock                                              41           32
                                                         -----       ------
        Total Deferred Tax Liabilities                     239           57
                                                         -----       ------

  Net Deferred Tax Assets (Liabilities)                    (30)         166
  Deferred Tax Valuation Reserve                           182          194
                                                         -----       ------

        Total Net Deferred Tax Liability                $ (212)      $  (28)
                                                        ======       ======
</TABLE>

           Included  in  retained  earnings  at December 31, 1998 and  1997  is
     approximately  $1,309,000  in  bad debt reserves  for  which  no  deferred
     Federal income tax liability has  been  recorded.  These amounts represent
     allocations  of  income  to bad debt deductions  for  tax  purposes  only.
     Reduction of these reserves for purposes other than tax bad-debt losses or
     adjustments arising from carryback  of  net  operating losses would create
     income  for  tax  purposes, which would be subject  to  the  then  current
     corporate income tax  rate.   The  unrecorded  deferred liability on these
     amounts was approximately $445,000 for December 31, 1998 and 1997.



                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE K
  DEPOSITS
           Deposits consist of the following at December  31, 1998 and 1997 (in
     thousands):


<TABLE>
<CAPTION>
                                  Weighted                                   Years Ended
                               Average Rate at                               December 31,
                             ---------------------     -----------------------------------------------------
                                 December 31,                     1998                        1997
                             ---------------------     --------------------------    -----------------------
                               1998         1997         Amount         Percent        Amount      Percent
                             --------     --------     ----------     -----------    ----------  -----------
<S>                          <C>          <C>          <C>            <C>            <C>         <C>
Balance by Interest Rate:
   Regular Savings Accounts    2.63 %       2.69 %     $   5,128       12.98 %       $  5,483     15.43 %
   NOW Accounts                2.15 %       2.4  %         2,750        6.96            1,098      3.09
   Money Fund Accounts         2.54 %       2.58 %           802        2.03            1,915      5.39
   Certificate of Deposit      5.51 %       5.59 %        30,815       78.03           27,038     76.09
                                                       ---------      ------         --------    ------
                                                       $  39,495      100.00 %       $ 35,534    100.00 %
                                                       =========      ======         ========    ======

Certificate Accounts Maturing
   Under 12 months                                     $  18,057        58.60 %      $ 14,172     52.42 %
   12 months to 24 months                                  6,835        22.18           5,353     19.80
   24 months to 36 months                                  1,844         5.98           4,977     18.41
   Due after 36 months                                     4,079        13.24           2,536      9.37
                                                       ---------      -------        --------    ------
                                                        $ 30,815       100.00 %      $ 27,038    100.00 %
                                                       =========      =======        ========    ======
</TABLE>

           The  aggregate  amount of short-term jumbo  certificates  of deposit
     with a minimum denomination of $100,000  was  approximately $2,563,000 and
     $1,746,000 at December 31, 1998 and 1997, respectively.

        Interest expense consisted of the following (in thousands):

<TABLE>
<CAPTION>
                                           Years Ended
                                           December 31,
                                  --------------------------------
                                    1998         1997        1996
                                  --------     --------    --------
  <S>                             <C>          <C>         <C>
  Certificates                    $ 1,616      $ 1,506     $  1,569
  Passbook Savings                    141          149          175
  Money Fund Accounts                  25           31           33
  NOW Accounts                         30           36           41
                                  -------      -------      -------
                                  $ 1,812      $ 1,722      $ 1,818
                                  =======      =======      =======

</TABLE>



                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE K
  DEPOSITS (Continued)

           In the normal course of business, the  Association  accepts deposits
     from  members  of  the  Board  of Directors and officers.  As of  December
     31, 1998 and  1997, these  deposits  totaled  approximately  $444,000  and
     $567,000, respectively.


NOTE L
  ADVANCES FROM FEDERAL HOME LOAN BANK
           Pursuant to collateral agreements with the Federal Home Loan
     Bank  (FHLB), advances are secured by a blanket  floating  lien  on  first
     mortgage  loans and $106,000 of mortgage-backed securities which have been
     pledged to the short-term FHLB advance.  Total interest expense recognized
     in 1998, 1997 and 1996, respectively, was $-0-, $29,000 and $18,000.

           There  were  no  advances   from   the   FHLB   outstanding   as  of
     December 31, 1998.


NOTE M
     FEDERAL  DEPOSIT  INSURANCE  CORPORATION  IMPROVEMENT  ACT  OF  1991
     (FDICIA) AND FINANCIAL INSTITUTIONS  REFORM, RECOVERY AND EN-FORCEMENT ACT
     OF 1989 (FIRREA)
           FDICIA  was  signed  into  law on December  19,  1991.   Regulations
     implementing the prompt corrective  action  provisions  of  FDICIA  became
     effective  on  December  19,  1992.   In addition to the prompt corrective
     action requirements, FDICIA includes significant  changes to the legal and
     regulatory  environment  for  insured  depository institutions,  including
     reductions in insurance coverage for certain  kinds of deposits, increased
     supervision  by  the  federal  regulatory  agencies,  increased  reporting
     requirements  for  insured  institutions, and new  regulations  concerning
     internal controls, accounting and operations.

             FIRREA was signed into  law  on  August  9, 1989.  Regulations for
     savings institutions' minimum capital requirements  went  into  effect  on
     December  7,  1989.   In  addition  to  its  capital  requirements, FIRREA
     includes  provisions for changes in the federal regulatory  structure  for
     institutions,  including a new deposit insurance system, increased deposit
     insurance premiums,  and  restricted investment activities with respect to
     noninvestments grade corporate debt and certain other investments.  FIRREA
     also increases the required  ratio  of  housing-related assets in order to
     qualify as a savings institution.

           The regulations require institutions  to  have  a minimum regulatory
     tangible  capital  equal  to  at  least 1.5% of adjusted total  assets,  a
     minimum 4% core/leverage capital ratio,  a  minimum  4%  tier 1 risk-based
     ratio,  and a minimum 8% total risk-based capital ratio to  be  considered
     "adequately  capitalized."   An  institution  is  deemed to be "critically
     undercapitalized" if it has a tangible equity ratio  of  2%  or less.  The
     ability  to  include qualifying supervisory goodwill for purposes  of  the
     core/leverage  requirements  was  phased  out  by January 1, 1995, and the
     ability   to   include   investments   in  impermissible   activities   in
     core/leverage capital and tangible capital was phased out by July 1, 1994.



                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                         NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE M
           FEDERAL  DEPOSIT  INSURANCE  CORPORATION  IMPROVEMENT  ACT  OF  1991
     (FDICIA) AND FINANCIAL  INSTITUTIONS REFORM, RECOVERY AND EN-FORCEMENT ACT
     OF 1989 (FIRREA) (CONTINUED)

           The following table  sets  out  the Association's various regulatory
     capital categories at December 31, 1998 and 1997.

                                        
<TABLE>
<CAPTION>
                                       1998                        1997
                               ----------------------       ----------------------
                               DOLLARS     PERCENTAGE       DOLLARS     PERCENTAGE
                               -------     ----------       -------     ----------
                             (thousands)                  (thousands)
<S>                          <C>               <C>        <C>              <C>
Tangible Capital             $   7,716         15.58%     $   7,184        16.51 %
Tangible Equity              $   7,416         15.58%     $   7,184        16.51 %
Core/Leverage Capital        $   7,416         15.58%     $   7,184        16.51 %
Tier 1 Risk-Based Capital    $   7,416         52.22%     $   7,184        64.02 %
Total Risk-Based Capital     $   7,567         53.28%     $   7,326        65.29 %

</TABLE>

NOTE N
  REGULATORY CAPITAL
           The following is a reconciliation  of  generally accepted accounting
     principles  (GAAP) net income and capital to regulatory  capital  for  the
     Association.   The  following  reconciliation  also  compares  the capital
     requirements  as  computed  to  the  minimum capital requirements for  the
     Association (in thousands).

<TABLE>
<CAPTION>
                                  Net Income              Capital
                                  Year Ended               as of
                               December 31, 1998      December 31, 1998
                               -----------------      -----------------
  <S>                           <C>                      <C>
  Per GAAP                      $   209                  $   7,623
                                =======                  =========

  Total Assets                                           $  47,919
                                                         =========

  Capital Ratio                                              15.91%
</TABLE>



              ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE N
  REGULATORY CAPITAL (CONTINUED)

<TABLE>
<CAPTION>
                                                    Core/      Tier 1        Total
                          Tangible     Tangible   Leverage    Risk-Based   Risk-Based
                          Capital       Equity     Equity      Capital       Capital
                          --------     --------   ---------   ----------   ----------
  <S>                     <C>          <C>        <C>          <C>          <C>
  Per GAAP                $  7,623     $  7,623   $   7,623    $  7,623     $   7,623
  Assets Required
   to be Added
    Unrealized Loss
      on Securities
      Available-
      for-Sale                (207)        (207)       (207)       (207)         (207)
    General Valuation
      Allowance                -            -           -           -             151
                          --------      --------    --------     --------      --------

  Regulatory Capital
   Measure                $  7,416      $  7,416    $  7,416     $  7,416      $  7,567
                          ========      ========    ========     ========      ========

  Adjusted Total Assets   $ 47,606      $ 47,606    $ 47,606
                          ========      ========    ========

  Risk-Weighted Assets                                           $ 14,201      $ 14,201
                                                                 ========      ========
  Capital Ratio              15.58%       15.58%      15.58%       52.22%        53.28%

  Required Ratio              1.50%        2.00%       3.00%        4.00%         8.00%

  Required Capital       $     714                  $  1,428                    $ 1,136
                         =========                  ========                    =======

  Excess Capital         $   6,702                  $  5,988                    $ 6,431
                         =========                  ========                    =======
</TABLE>


NOTE O
  RELATED PARTY TRANSACTIONS
           The Association leases its  main office  from  one  of  its officers
     under  an  operating  lease  expiring  April 1, 2006.  The  annual  rental
     payment  through  April 1, 2001 is  $45,000.   The  annual  rental payment
     for the next five years  will  be  adjusted  by  changes  in  the Consumer
     Price Index but in no case will be less than $45,000 per year.



                   ALGIERS BANCORP, INC. & SUBSIDIARIES
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE P
  EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
           During   1996,   Algiers   Bancorp,  Inc.  sponsored   an   employee
     stock  ownership  plan  that  covers  all employees of  Algiers  Homestead
     Association who have completed one year  of  service and have attained the
     age of 21.  The Association may contribute to  the  Plan  such  amount  as
     shall  be  determined  by  the Association.  All dividends received by the
     ESOP are either used to pay  debt  service  or credited to the participant
     accounts  at the discretion of the administrator.   The  ESOP  shares  are
     pledged as  collateral  for  its  debt.  As the debt is repaid, shares are
     released from collateral and allocated  to  active employees, based on the
     proportion  of  debt  service paid in the year.   The  shares  pledged  as
     collateral are reported  as  unearned  ESOP  shares  in  the statements of
     financial condition.  As shares are released from collateral,  the Company
     reports  compensation  expense  equal  to the current market price of  the
     shares,  and  the  shares  become  outstanding   for  earnings  per  share
     computations.   Dividends  on  allocated ESOP shares  are  recorded  as  a
     reduction of retained earnings.   Dividends on unallocated ESOP shares are
     recorded as a reduction of debt and  accrued  interest.  ESOP compensation
     expense was approximately $72,000, $76,000 and $28,000 for the years ended
     December 31, 1998, 1997 and 1996, respectively.   The  ESOP  shares  as of
     December 31, 1998 were as follows:

<TABLE>
  <S>                                                    <C>
  Allocated Shares                                           8,546
  Shares Released for Allocation                             5,723
  Unreleased Shares                                         37,573
                                                         ---------
  Total ESOP Shares                                         51,842
                                                         =========
  Fair Value of Unreleased Shares at December 31, 1998   $ 418,000
                                                         =========
</TABLE>

           In  conjunction   with   the  establishment  of  the  ESOP, $518,420
     was borrowed from Algiers  Bancorp,  Inc.  to purchase the shares of stock
     for the ESOP.  The corresponding note is to  be  paid  back  in  40  equal
     quarterly  payments  of  $19,202 on the last business day of each calendar
     quarter beginning September  30,  1996  at  the  rate  of 8.25%.  The note
     payable  and  corresponding  note  receivable  have  been  eliminated  for
     consolidation purposes.


NOTE Q
  RECOGNITION AND RETENTION PLAN

           On  July  18,  1997,  the Association established a Recognition  and
     Retention Plan as an incentive  to  retain  personnel  of  experience  and
     ability  in  key  positions.   The  Association approved a total of 25,921
     shares of stock to be acquired for the  Plan,  of  which  4,205  have been
     allocated for distribution to key employees and directors.  As shares  are
     acquired  for  the plan, the purchase price of these shares is recorded as
     unearned compensation,  a  contra  equity  account.   As  the  shares  are
     distributed, the contra equity account is reduced.



               ALGIERS BANCORP, INC. & SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE Q
  RECOGNITION AND RETENTION PLAN (CONTINUED)

           Plan  share  awards are earned by recipients at a rate of 20% of the
     aggregate number of  shares  covered  by the plan over five years.  If the
     employment  of  an  employee  or service as  a  non-employee  director  is
     terminated prior to the fifth anniversary  of  the  date  of grant of plan
     share award for any reason, the recipient shall forfeit the  right  to any
     shares  subject  to  the award which have not been earned.  The total cost
     associated with the plan  is  based on the market price of the stock as of
     the  date on which the plan shares  were  granted.   Compensation  expense
     pertaining  to the Recognition and Retention plan was $19,974 and $-0- for
     the years ended December 31, 1998 and 1997, respectively.

        A summary of the changes in restricted stock follows:

<TABLE>
<CAPTION>
                                                Unawarded        Awarded
                                                 Shares           Shares
                                                ---------        -------
  <S>                                           <C>              <C>
  Balance January 1, 1998                       $    -           $    -
  Purchased by Plan                               25,921              -
  Granted                                         (4,205)           4,205
  Earned and Issued                                  -               (841)
                                                --------         --------
  Balance December 31, 1998                     $ 21,716         $  3,364
                                                ========         ========
</TABLE>

NOTE R
  STOCK OPTION PLAN
           In 1997, the Association adopted a stock option plan for  the benfit
     of directors,  officers,  and  other  key employees.  The number of shares
     of  common  stock reserved  for issuance  under  the stock option plan was
     equal to 64,802 shares, or ten percent, of the total  number  of shares of
     common shares sold in the Association's initial  public  offering  of  its
     common  stock.   The  option  exercise  price cannot be less than the fair
     value of the underlying common stock as of  the  date  of the option grant
     and the maximum option term cannot exceed ten years.

           The   stock   option   plan   also  permits  the granting  of  Stock 
     Appreciation Rights ("SAR's").   SAR's  entitle  the holder to receive, in
     the form of cash or stock, the increase in the fair value of Company stock
     from the date of grant to the date of exercise.  No SAR's have been issued
     under the plan.

           The following table summarizes the activity related to stock
     options:

<TABLE>
<CAPTION>
                            Exercise    Available     Options
                             price      for Grant   outstanding
                            --------    ---------   -----------
  <S>                       <C>         <C>         <C>
  At Inception              $ -            64,802         -
  Granted                                  -              -
  Canceled                                 -              -
  Exercised                                -              -
                                        ---------   -----------
  At December 31, 1998                     64,802         -
                                        =========   ===========

</TABLE>



               ALGIERS BANCORP, INC. & SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE S
  FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
           In the normal course of business, various commitments and contingent
     liabilities  are  outstanding, such as commitments to  extend  credit  and
     stand-by letters of  credit  which  are not reflected on the Association's
     financial statements.  Management does not anticipate any material loss as
     a  result of these transactions.  Commitments  to  extend  credit  totaled
     approximately  $57,000  and  $62,000 on one to four family mortgage loans,
     and stand-by letters of credit  totaled  $ -0- and $40,000 at December 31,
     1998 and 1997, respectivley.

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

           The  Association's  exposure  to  credit   loss   in  the  event  of
     nonperformance  by  the  other  party  to these financial instruments  for
     commitments to extend credit and stand-by letters of credit is represented
     by the contractual notional amount of those  instruments.  The Association
     uses the same credit policies making commitments as it does for on-balance
     sheet instruments.

           Commitments to extend credit are agreements to lend to a customer as
     long  as  there  is  no  violation  of any condition  established  in  the
     contract.  Commitments generally have  fixed  expiration  dates  or  other
     termination  clauses  and may require payment of a fee.  Since many of the
     commitments are expected  to  expire  without  being drawn upon, the total
     commitment amount does not necessarily represent future cash requirements.
     The Association evaluates each customer's creditworthiness  on  a case-by-
     case  basis.   The  amount  and  type  of  collateral  obtained, if deemed
     necessary by the Association upon extension of credit, varies and is based
     on management's credit evaluation of the counterparty.

           Stand-by letters of credit are conditional commitments issued by the
     Association to guarantee the performance of a customer to  a  third party.
     Stand-by letters of credit generally have fixed expiration dates  or other
     termination  clauses  and  may  require payment of a fee.  The credit risk
     involved in issuing letters of credit  is essentially non-existent, as the
     letters of credit are secured by pledged  certificates  of  deposit of the
     Association.


NOTE T
  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
           On  January  1, 1995, the  Company  adopted  SFAS  107, "Disclosures
     about   Fair  Value  of   Financial  Instruments,"  which   requires   the
     disclosure  of   fair    value   information  about financial instruments,
     whether or not recognized in the statement  of  financial  condition,  for
     which it is practicable to estimate the value.  Quoted market prices, when
     available,  are  used as the measure of fair value.  In cases where quoted
     market prices are  not  available,  fair values are based on present value
     estimates or other valuation techniques.   These  derived  fair values are
     significantly  affected  by  assumptions used, principally the  timing  of
     future  cash  flows  and  the  discount  rates.  Because  assumptions  are



             ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE T
  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

     inherently  subjective  in  nature,  the  estimated  fair values cannot be
     substantiated  by  comparison  to  independent  market quotes and, in many
     cases, the  estimated  fair  values  would  not necessarily be realized in
     an  immediate  sale  or settlement  of  the  instrument.   The  disclosure
     requirements of SFAS 107  exclude  certain  financial  instruments and all
     nonfinancial instruments.  Accordingly, the aggregate fair  value  amounts
     presented do not represent management's estimation of the underlying value
     of the Company.

           The  following  methods  and  assumptions  were used to estimate the 
     fair  value  of  each  class  of  financial  instruments  for which  it is
     practicable to estimate the value:

           The    carrying   amount  of   cash   and   short-term   investments
     approximate the fair value.  For investment securities,  the fair value is
     based on quoted market prices.

           For  mortgage  loan  receivables,  the  fair  values  are  based  on
     discounted  cash  flows  using  current rates at which similar loans  with
     similar maturities would be made to borrowers with similar credit risk.

           The  fair  value  of  deposits is equal to the amount payable at the
     financial statement date.

           For  certificates  of  deposit,  fair  value  is  estimated based on
     current rates for deposits of similar remaining maturities.

           The  fair  value  of loan commitments  is  estimated using fees that
     would be charged to enter similar agreements, taking into  account (1) the
     remaining  terms  of  the  agreement, (2)  the  creditworthiness  of   the
     borrowers, and (3) for fixed  rate  commitments,  the  difference  between
     current interest rates and committed rates.

           Estimated  fair  values  of the financial instruments are as follows
     follows (in thousands):

<TABLE>
<CAPTION>
                                                DECEMBER 31, 1998
                                            ---------------------------
                                              Carrying        Fair
                                               Amount        Value
                                            ------------   ------------
  <S>                                       <C>            <C>
  FINANCIAL ASSETS
    Cash and Short-Term Investment          $      4,881   $    4,881
    Investment Securities                          5,304        5,304
    Loans and Mortgage Backed Securities          36,689       36,490
  FINANCIAL LIABILITIES
    Deposits                                $     39,495   $   39,072
</TABLE>



             ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE T
  DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

<TABLE>
<CAPTION>
                                                 DECEMBER 31, 1997
                                            ---------------------------
                                              Carrying        Fair
                                               Amount        Value
                                            ------------   ------------
  <S>                                       <C>            <C>
  FINANCIAL ASSETS
    Cash and Short-Term Investment          $   2,555       $  2,555
    Investment Securities                       4,093          4,087
    Loans and Mortgage Backed Securities       37,643         34,868
  FINANCIAL LIABILITIES
    Deposits                                $  35,534       $ 35,661
</TABLE>


NOTE U
  COMPREHENSIVE INCOME
           Comprehensive income  was  comprised  of  changes  in  the Company's
     unrealized  holding  gains  or  losses  on  securities  available-for-sale
     during  1998,  1997,  and   1996.   The  following  represents   the   tax
     effects associated with the components of comprehensive income.

<TABLE>
<CAPTION>
                                                       Years Ended
                                                       December 31,
                                             ------------------------------
                                               1998        1997      1996
                                             --------    --------  --------
    <S>                                      <C>         <C>       <C>
    Gross Unrealized Holding Gains (Losses)
       Arising During the Period             $    359    $      6  $    (77)
    Tax (Expense) Benefit                        (122)         (2)       26
                                             --------    --------  --------
                                                  237           4       (51)
                                             --------    --------  --------
    Reclassification Adjustment for Gains
        (Losses) Included in Net Income           (91)         52        98
    Tax (Expense) Benefit                          31         (18)      (33)
                                             --------    --------  --------
                                                  (60)         34        65
                                             --------    --------  --------
    Net Unrealized Holding Gains
        Arising During the Period            $    177    $     38  $     14
                                             ========    ========  ========
</TABLE>



                 ALGIERS BANCORP, INC. & SUBSIDIARIES
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE V
  CONVERSION FROM A MUTUAL TO A STOCK ASSOCIATION
           On July 8, 1996,  Algiers  Homestead  Association  converted  from
     a   Louisiana-chartered   mutual   savings  and  loan  association to  a
     Louisiana-chartered stock savings and loan association known as "Algiers
     Homestead Association" (the Association).   The  Association  issued and
     sold 1000 shares of stock at $.01 per share to Algiers Bancorp,  Inc. to
     become  the wholly-owned subsidiary of Algiers Bancorp.  The Association
     received  net  proceeds from the sale of this stock of  $3,055,245.  The
     costs associated  with  the stock conversion was approximately $370,000.
     The amount of retained earnings  initially  reserved  for a "liquidation
     account"  is approximately $4,117,000 which is  the amount  of  retained
     earnings at  March  31,  1996.   This is the retained earnings as of the
     latest date  shown in the prospectus as per  the plan of conversion.


NOTE W
  CONCENTRATION OF CREDIT RISK
           All  of  the  Association's  loans   and   commitments   have   been
     granted to customers in the greater New Orleans area.

           The   Association  also  had  deposits  in  other  well  capitalized
     financial institutions which exceed the federally insured limits.


NOTE X
     DIVIDEND DECLARED
           On  December  31,  1998,  the  board   of   directors   of   Algiers
     Bancorp,  Inc.  declared  a  $.05  per share dividend to  stockholders  of
     record  at  December 31, 1998  to  be  payable  on  January 15, 1999.  The
     total dividend payable recorded is $32,000.


NOTE Y
     EARNINGS PER COMMON SHARE
           Earnings  per   share  are  computed  using  the  weighted  average
     number  of  shares outstanding which was 548,891 in 1998  and 574,423  in
     1997.


NOTE Z
     SAIF ASSESSMENT
           The deposits of the Association are currently insured by the SAIF,
     which  is  a  federal  deposit  insurance  fund  that covers SAIF member
     institutions.  On  September  30,  1996,  legislation  was  passed which
     required  all  SAIF  member  institutions  to  pay  a  one  time special
     assessment  to  recapitalize  the SAIF.  The one-time special assessment
     for the Association amounted to  $241,000.   Net of related tax benefits
     the one-time special assessment amounted to $159,000  or $.26 per share.
     The  payment  of  such special assessment had the effect of  immediately
     reducing the Association's  capital  by  such amount.  Nevertheless, the
     assessment did not have a material adverse effect on the Association.



                      ALGIERS BANCORP, INC. & SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE AA
  CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY

                             ALGIERS BANCORP, INC.
                            CONDENSED BALANCE SHEET
                             (DOLLARS IN THOUSANDS)

                                     ASSETS

<TABLE>
<CAPTION>
                                                               December 31,
                                                           -------------------
                                                            1998         1997
                                                           ------      -------
<S>                                                        <C>         <C>
Cash and Cash Equivalents                                  $   780     $   879
Investments Available-for-Sale - at Fair Value                 117           2
Loans Receivable                                               121         116
Mortgage-Backed Securities - Available-for-Sale -
  at Fair Value                                                 64         841
Investment in Subsidiaries                                   7,741       7,341
ESOP Loan Receivable                                           404         455
Other Assets                                                    76          31
Real Estate Owned - Net                                         62         -
                                                           -------     -------
      Total Assets                                         $ 9,365     $ 9,665
                                                           =======     =======
</TABLE>

<TABLE>

                     LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
<S>                                                        <C>         <C>
Due to Subsidiary                                          $   744     $    51
Dividends Payable                                               32          31
Other Liabilities                                               10          40
                                                           -------     -------
      Total Liabilities                                        786         122
                                                           -------     -------
Total Stockholders' Equity                                   8,579       9,543
                                                           -------     -------

      Total Liabilities and Stockholders' Equity           $ 9,365     $ 9,665
                                                           =======     =======
</TABLE>




                          ALGIERS BANCORP, INC. & SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE AA
  CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (CONTINUED)

                          ALGIERS BANCORP, INC.
                        STATEMENTS OF OPERATIONS
                         (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       For the Six
                                                                       Months Ended
                                                    December 31,       December 31,
                                                ------------------     ------------
                                                 1998        1997         1996
                                                ------      ------     ------------
<S>                                             <C>         <C>        <C>
INTEREST INCOME
  Mortgage-Backed Securities                    $  51       $   75     $          4
  ESOP Loan                                        32           41              -
  Investment Securities                           -             57               31
  Loans and Fees                                   25           13               21
                                                -----       ------     ------------

      Total Interest Income                       108          186               56
                                                -----       ------     ------------

NON-INTEREST INCOME
  Income (Loss) in Subsidiary-Algiers Homestead
     Association                                  209          332              (39)
  Loss in Subsidiary-Jefferson Community
    Lending, LLC                                  (29)        (179)              (7)
  Loss in Subsidiary-Algiers.Com, Inc.            (22)         -                -
  Miscellaneous Income                            -             10                3
                                                -----       ------     ------------

      Total Non-Interest Income                   158          163              (43)
                                                -----       ------     ------------

NON-INTEREST EXPENSES
  General and Administrative                      130          122                5
                                                -----       ------     ------------

INCOME BEFORE FEDERAL
  INCOME TAX EXPENSE                              136          227                8

FEDERAL INCOME TAX EXPENSE                        (24)          16               18
                                                -----       ------     ------------

NET INCOME (LOSS)                               $ 160       $  211     $        (10)
                                                =====       ======     ============
</TABLE>



            ALGIERS BANCORP, INC. & SUBSIDIARIES
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE AA
  CONDENSED FINANCIAL INFORMATION - PARENT COMPANY ONLY (CONTINUED)

                   ALGIERS BANCORP, INC.
                 STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                          For the Six
                                                                                          Months Ended
                                                                       December 31,       December 31,
                                                                   ------------------     ------------
                                                                    1998        1997         1996
                                                                   ------      ------     ------------
<S>                                                                <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income (Loss)                                                $   160     $   211             (10)
  Adjustments to Reconcile Net Income (Loss) to Net
    Cash Provided by (Used in) Operating Activities:
      Increase in Due to Subsidiaries                                  693          31               20
      (Increase) Decrease in Other Assets                              (45)         23              (33)
      Decrease (Increase) in Due from Subsidiaries                     -             7               (7)
      Increase (Decrease) in Other Liabilities                         (30)         20               19
                                                                   -------     -------    -------------
       Net Cash Provided by (Used in) Operating Activities             778         292              (11)
                                                                   -------     -------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Increase in Loans Receivable - Net                                   (67)       (116)             -
  Purchases of Investment Securities - Available-for-Sale             (140)         (2)            (474)
  Maturities of Investment Securities - Available-for-Sale             -           476              -
  Purchases of Mortgage-Backed Securities - Available-for-Sale         (64)        -             (1,058)
  Maturities of Mortgage-Backed Securities - Available-for-Sale        821         207               12
  Investments in Subsidiaries                                         (400)     (4,303)          (3,038)
                                                                   -------     -------    -------------
       Net Cash Provided by (Used in) Investing Activities             150      (3,738)          (4,558)
                                                                   -------     -------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Sale of Common Stock                                                 -           -                  6
  Contribution of Additonal Paid-in Capital                            246       3,818            6,108
  Dividends Paid                                                      (121)       (112)             -
  Loan to Subsidiary for ESOP                                          -           -               (518)
  Purchases of Treasury Stock                                       (1,203)       (472)             -
  Repayments of ESOP Loan                                               51          64              -
                                                                   -------     -------    -------------
       Net Cash Provided by (Used in) Financing Activities          (1,027)      3,298            5,596
                                                                   -------     -------    -------------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                          (99)       (148)           1,027

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                          879       1,027              -
                                                                   -------     -------    -------------

CASH AND CASH EQUIVALENTS - END OF YEAR                            $   780     $   879    $       1,027
                                                                   =======     =======    =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION
    Cash Paid During the Year for:
     Interest                                                      $   -       $   -      $         -
     Income Taxes                                                  $   -       $    45    $         -
</TABLE>




                             ALGIERS BANCORP, INC. & SUBSIDIARIES
                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE BB
  SUBSEQUENT EVENT
           In March 1999, the Association  entered  into  a  lease  for  a  new
     branch location.  The lease is for a five-year term, with a monthly rental
     of $3,500.  The lease provides for two five year renewal options.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL  DISCLOSURE.

      None.

PART III.

ITEM  9. DIRECTORS,   EXECUTIVE  OFFICERS,  PROMOTERS  AND  CONTROL  PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.

      The information required  by  this item will be included in the Company's
definitive  proxy statement in connection  with  its  1999  Annual  Meeting  of
Stockholders and is incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION.

      The information  required  by this item will be included in the Company's
definitive  proxy statement in connection  with  its  1999  Annual  Meeting  of
Stockholders and is incorporated herein by reference.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

      The information  required  by this item will be included in the Company's
definitive  proxy statement in connection  with  its  1999  Annual  Meeting  of
Stockholders and is incorporated herein by reference.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

      The information  required  by this item will be included in the Company's
definitive  proxy statement in connection  with  its  1999  Annual  Meeting  of
Stockholders and is incorporated herein by reference.

ITEM 13.  EXHIBITS, LIST AND REPORTS ON FORM 8-K.

      (a) Exhibits.  Reference  is made to the Exhibit Index beginning on  page
          E-1 hereof.

      (b) Reports   on  Form 8-K.  The  Company  did  not  file any reports  on
          Form  8-K  during the  fourth quarter of the year ended  December 31,
          1998.



                                  SIGNATURES

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


                                        ALGIERS BANCORP, INC.


                                        By:  /s/ Hugh E. Humphrey, Jr.
                                             ---------------------------------
                                                  Hugh E. Humphrey, Jr.
                                             Chairman of the Board, President
                                               and Chief Executive Officer

                                        Date:   April 15, 1999


      In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.

<TABLE>
<CAPTION>

NAME                           TITLE                                            DATE
<S>                            <C>                                              <C>
/s/Hugh E. Humphrey, Jr.       Chairman of the Board, President                 April 15, 1999
--------------------------     and Chief Executive Officer
    Hugh E. Humphrey, Jr.      



/s/ Thu Dany                   Director                                         April 15, 1999
-------------------------
          Thu Dang



/s/ John H. Gary, III          Director                                         April 15, 1999
-------------------------
      John H. Gary, III



/s/ Thomas L. Arnold, Sr.      Director                                         April 15, 1999
--------------------------
    Thomas L. Arnold, Sr.



/s/ Hugh E. Humphrey, III      Director                                         April 15, 1999
--------------------------
   Hugh E. Humphrey, III



/s/ Francis M. Minor, Jr.      Chief Financial Officer                          April 15, 1999
--------------------------
    Francis M. Minor, Jr.
</TABLE>

                                 EXHIBIT INDEX


2.1*  Plan of Conversion
3.1*  Articles of Incorporation of Algiers Bancorp, Inc.
3.2*  Bylaws of Algiers Bancorp, Inc.
4.1*  Stock Certificate of Algiers Bancorp, Inc.
10.1* Employment  Agreement  among Algiers  Bancorp,  Inc.,  Algiers  Homestead
      Association and Hugh E. Humphrey, Jr., dated July 8, 1996
10.2**Employment  Agreement among  Algiers  Bancorp,  Inc.,  Algiers  Homestead
      Association and Hugh E. Humphrey, III, dated July 8, 1996
10.3* Lease for main office building
21.1  Subsidiaries of the Registrant - Reference is made to Item 2.  "Business"
      for the required information
27.1  Financial Data Schedule


(*)   Incorporated herein by reference to the Company's Form SB-2 (Registration
      No. 333-2770)  filed  by  the  Company with the SEC on March 26, 1996, as
      subsequently amended.
(**)  Incorporated herein by reference  from  the Company's Form 10-KSB for the
      year ended December 31, 1996.