SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-K

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

                   For the fiscal year ended December 31, 1999

                                       OR

|X|    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                     EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
                     For the transition period from ______to_____________

                           Commission File no: 1-14364

                            Acadiana Bancshares, Inc.
                    -----------------------------------------
             (Exact name of registrant as specified in its charter)

                  Louisiana                          72-1317124
           --------------------------------     -------------------------
           (State or other jurisdiction             (IRS Employer
           of incorporation or organization)      Identification Number)

           101 West Vermilion Street

           Lafayette, Louisiana                               70501
           --------------------------                      ------------
           (Address of principal executive offices)         (Zip Code)

       Registrant's telephone number, including area code: (318) 232-4631

           Securities registered pursuant to Section 12(b) of the Act:

                     Common Stock (par value $.01 per share)
                     ---------------------------------------
                                (Title of Class)

   Securities registered pursuant to Section 12(g) of the Act: Not Applicable

Indicate by check mark whether Registrant: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

Yes   X  No ____
    -----

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

|X|

As of March 22, 2000,  the  aggregate  market value of the  1,081,185  shares of
Common  Stock of the  Registrant  issued and  outstanding  on such  date,  which
excludes  353,338  shares held by all directors  and  executive  officers of the
Registrant as a group, was approximately $16.2 million. This figure was based on
the  closing  sale price of $15 per share of the  Registrant's  Common  Stock on
March 22, 2000.

Number of shares of Common Stock outstanding as of December 31, 1999: 1,494,523

                       DOCUMENTS INCORPORATED BY REFERENCE

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

(1)  Portions  of the Annual  Report to  Stockholders  for the fiscal year ended
     December 31, 1999 are incorporated  into Part II, Items 5 through 8 of this
     Form 10-K.

(2)  Portions of the definitive  proxy  statement for the 1999 Annual Meeting of
     Stockholders  to be filed within 120 days of  Registrant's  fiscal year end
     are incorporated into Part III, Items 9 through 13 of this Form 10-K.

PART I.

         In addition to historical  information,  this Annual Report on Form 10K
includes certain "forward-looking  statements," as defined in the Securities Act
of 1933 and the  Securities  Exchange Act of 1934,  based on current  management
expectations.  The Company's  actual results could differ  materially from those
management  expectations.  Such  forward-looking  statements  include statements
regarding the Company's  intentions,  beliefs or current expectations as well as
the assumptions on which such statements are based.  Stockholders  and potential
stockholders  are cautioned  that any such  forward-looking  statements  are not
guarantees of future performance and involve risks and  uncertainties,  and that
actual  results  may  differ   materially   from  those   contemplated  by  such
forward-looking statements. Factors that could cause future results to vary from
current  management  expectations  include,  but are  not  limited  to,  general
economic  conditions,  legislative and regulatory  changes,  monetary and fiscal
policies  of  the  federal  government,  changes  in  tax  policies,  rates  and
regulations  of federal,  state and local tax  authorities,  changes in interest
rates,  deposit flows, the cost of funds,  demand for loan products,  demand for
financial  services,  competition,  changes in the quality or composition of the
Company's  loan and  investment  portfolios,  changes in accounting  principles,
policies  or  guidelines  and  other  economic,  competitive,  governmental  and
technological  factors affecting the Company's  operations,  markets,  products,
services and fees. The company  undertakes no obligation to update or revise any
forward-looking  statements to reflect  changed  assumptions,  the occurrence of
unanticipated events or changes to future operating results over time.

Item 1.  Business.

General

         Acadiana Bancshares,  Inc., (the "Company") is a Louisiana  corporation
organized  in February  1996 by LBA Savings  Bank (the  "Bank",  or the "Savings
Bank") for the purpose of acquiring  all of the capital  stock of the Bank to be
issued by the Bank in the  conversion  (the  "Conversion")  of the Bank to stock
form,  which was completed on July 15, 1996. The only  significant  asset of the
Company is the capital stock of the Bank.  The Company's  common stock trades on
the AMEX under the symbol  "ANA".  At December 31,  1999,  the Company had total
assets of  $305.7million,  total deposits of $213.2 million,  and  stockholders'
equity of $27.8 million.

         The Company,  as a bank holding  company,  is subject to regulation and
supervision by the Board of Governors of the Federal  Reserve  System  ("Federal
Reserve Board" or ("FRB").  The Bank is subject to examination and comprehensive
regulation  by the Office of  Financial  Institutions  of the State of Louisiana
("OFI"),  which is the Bank's chartering  authority and primary  regulator.  The
Bank is also subject to regulation by the Federal Deposit Insurance  Corporation
("FDIC"),  as the administrator of the SAIF, and to certain reserve requirements
established  by the FRB.  The Bank is a member  of the  Federal  Home  Loan Bank
("FHLB") of Dallas,  which is one of twelve  regional banks  comprising the FHLB
System.  The Bank is a Savings  Association  Insurance  Fund ("SAIF")  -insured,
Louisiana chartered, stock savings bank conducting business from its main office
and three branch  offices  located in  Lafayette,  Louisiana,  one branch office
located  in New  Iberia,  Louisiana  and one loan  production  office in Eunice,
Louisiana.  The  Company's  executive  office is located  at 101 West  Vermilion
Street, Lafayette, Louisiana, 70501, and its telephone number is (337) 232-4631.

         Through its continuing  operation of the Bank, the Company's  principal
business has been, and continues to be,  attracting  deposits from its customers
and investing  such funds in residential  real estate loans and other loans.  At
December 31, 1999, the Company's net loan portfolio  totaled $245.0 million,  or
80.1% of the  Company's  assets.  In  addition to its  lending  activities,  the
Company  also  invests  in  investment  securities.   The  Company's  investment
securities portfolio amounted to $38.0 million, or 12.4%, of the Company's total
assets at  December  31,  1999.  At  December  31,  1999,  the Company had total
deposits of $213.2 million,  of which $61.6 million,  or 28.9% consisted of core
deposits  which  include  savings  deposits,  money  market  deposits  ("MMDA"),
negotiable order of withdrawal  ("NOW") and  non-interest-bearing  accounts.  At
that same date $151.6 million,  or 71.1%,  consisted of certificates of deposit,
including $43.5 million of deposit accounts equal to or exceeding $100,000.  The
Company does not accept broker deposits.  Traditionally, the Company's principal
source of funds has come from deposits raised in the local market; however, FHLB
borrowings provide the Company with an alternative source of funds. The Company,
like many other financial institutions, has experienced increasing difficulty in
attracting net new deposits in amounts  necessary to fully fund new loan demand.
The FHLB has provided an important  funding source that, when used together with
deposits, is expected to be an adequate source of funds to meet anticipated loan
demand.  At December 31, 1999,  borrowings from the FHLB totaled $6.0 million of
short-term advances and $57.9 million of long-term advances. Total advances were
20.9% of total assets at December 31, 1999.

                                       2
<PAGE>

         Stockholders'  equity  provides  a  permanent  source of funding to the
Company,  allows for future  growth,  and provides the Company with a cushion to
withstand unforeseen,  adverse developments. At December 31, 1999, stockholders'
equity  totaled  $27.8  million,  or 9.1% of total assets at such date.  Federal
regulations impose minimum  regulatory capital  requirements on all institutions
with  deposits  insured by the FDIC.  At December 31, 1999,  the Company and the
Bank   significantly   exceeded  all   applicable   regulatory   capital   ratio
requirements.

                                       3
<PAGE>


Lending Activities

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


<TABLE>
<CAPTION>
                                                               At December 31,
                                     ----------------------------------------------------------------------------
                                         1999                      1998                     1997
                                     ------------------------- ------------------------ ------------------------
                                                     Percent                  Percent                  Percent
                                        Balance     of Total     Balance     of Total     Balance     of Total
                                     -------------- ---------- ------------- ---------- ------------- ----------
                                                                                        (Dollars in Thousands)
Type of loan:
     Mortgage Loans:
<S>                                      <C>           <C>        <C>           <C>        <C>           <C>
       Single-family residential         $ 179,109     73.10%     $ 169,362     75.02%     $ 169,694     79.72%
       Construction                         12,612      5.15%        12,588      5.58%        10,286      4.83%
       Multi-family residential                425      0.17%           481      0.21%           546      0.26%
       Commercial real estate               18,798      7.67%        16,887      7.48%        13,900      6.53%
       Equity lines of credit                3,406      1.39%         2,040      0.90%           587      0.28%
                                     -------------- ---------- ------------- ---------- ------------- ----------
Total mortgage loans                       214,350     87.48%       201,358     89.19%       195,013     91.62%
     Commercial business loans              18,144      7.41%        13,861      6.14%         9,821      4.61%
     Consumer loans                         21,803      8.90%        19,348      8.57%        15,768      7.41%
                                     -------------- ---------- ------------- ---------- ------------- ----------
Total loans                                254,297    103.79%       234,567    103.90%       220,602    103.64%
Less:
     Allowance for loan losses              (2,747)    -1.12%        (2,726)    -1.21%        (2,760)    -1.30%
     Unearned discounts                         13      0.01%            57      0.03%           162      0.08%
     Net deferred loan fees                   (235)    -0.10%          (357)    -0.16%          (535)    -0.25%
     Unadvanced loan funds                  (6,332)    -2.58%        (5,789)    -2.56%        (4,629)    -2.17%
                                     -------------- ---------- ------------- ---------- ------------- ----------
Total loans, net                         $ 244,996    100.00%     $ 225,752    100.00%     $ 212,840    100.00%
                                     ============== ========== ============= ========== ============= ==========

<CAPTION>

                                                     At December 31,
                                     -------------------------------------------------
                                         1996                    1995
                                     ------------------------ ------------------------
                                                    Percent                  Percent
                                       Balance     of Total     Balance     of Total
                                     ------------- ---------- ------------  ----------

Type of loan:
     Mortgage Loans:
<S>                                     <C>           <C>       <C>            <C>
       Single-family residential        $ 142,774     78.15%    $ 127,565      80.90%
       Construction                        10,581      5.79%        7,597       4.82%
       Multi-family residential               862      0.47%        1,202       0.76%
       Commercial real estate              14,744      8.07%       13,168       8.35%
       Equity lines of credit                 132      0.07%            -       0.00%
                                     ------------- ---------- ------------  ----------
Total mortgage loans                      169,093     92.55%      149,532      94.83%
     Commercial business loans              5,535      3.03%        1,358       0.86%
     Consumer loans                        16,727      9.15%       13,704       8.69%
                                     ------------- ---------- ------------  ----------
Total loans                               191,355    104.73%      164,594     104.38%
Less:
     Allowance for loan losses             (2,592)    -1.42%       (2,329)     -1.48%
     Unearned discounts                       331      0.18%          206       0.13%
     Net deferred loan fees                  (471)    -0.26%         (488)     -0.31%
     Unadvanced loan funds                 (5,899)    -3.23%       (4,292)     -2.72%
                                     ------------- ---------- ------------  ----------
Total loans, net                        $ 182,724    100.00%    $ 157,691     100.00%
                                     ============= ========== ============  ==========
</TABLE>

                                       4
<PAGE>

         The  Company's  primary  source of income is from  loans.  Total  loans
receivable grew $19.7 million, or 8.4%, during the year ended December 31, 1999.
Changes in types of loans during 1999 are as follows:  single-family residential
loans increased $9.7 million or 5.8%;  construction loans grew $24,000, or 0.2%;
multi-family  residential  loans decreased  $56,000,  or 11.6%;  commercial real
estate  loans grew $1.9  million,  or 11.3%;  equity  lines of credit  grew $1.4
million,  or 67.0%;  commercial  business loans grew $4.3 million, or 30.9%; and
consumer loans grew $2.5 million, or 12.7%.

         Contractual  Maturities.  The  following  table  sets forth the time to
contractual maturity of the Company's loan portfolio at December 31, 1999.

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

<S>                                      <C>              <C>              <C>              <C>
Single-family residential                $ 6,494          $ 34,599         $ 138,016        $ 179,109
Construction                                 982               171            11,459           12,612
Multi-family residential                     278                57                90              425
Commercial real estate                     2,661             6,856             9,281           18,798
Equity lines of credit                     3,406                 -                 -            3,406
Commercial business loans                  8,748             4,736             4,660           18,144
Consumer loans                             5,808            10,456             5,539           21,803
                                  ---------------   ---------------  ----------------  ---------------
Total                                   $ 28,377          $ 56,875         $ 169,045        $ 254,297
                                  ===============   ===============  ================  ===============
</TABLE>


         Contractual  maturities of the company's  loan portfolio do not reflect
the  expected  timing  of loan  repayments.  The  average  life of its  loans is
substantially less than contractual terms because of loan prepayments and due on
sale clauses.  Prepayments  occur when loan  repayments are made before they are
contractually  due.  Prepayment amounts are expected to be higher when competing
loan rates are lower than actual loan rates.  Prepayment amounts are expected to
be lower  when  competing  loan rates are  higher  than  actual  loan  rates.  A
due-on-sale  clause  requires  a loan  to be  paid  in  full  upon  sale  of the
underlying collateral.

         The  following  table sets forth the dollar amount at December 31, 1999
of all  loans  contractually  maturing  after  December  31,  2000 by fixed  and
adjustable interest rates.

                                               Fixed          Adjustable
                                               Rates            Rates

                                          ---------------  ----------------
                                                   (In thousands)

Single-family residential                       $ 93,960          $ 78,655
Construction                                      11,630                 -
Multi-family residential                               -               147
Commercial real estate                             7,891             8,246
Equity lines of credit                                 -                 -
Commercial business loans                          5,174             4,222
Consumer loans                                    15,995                 -
                                          ---------------  ----------------
                                               $ 134,650          $ 91,270
                                          ===============  ================


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

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                       Years Ended December 31,
                                          ----------------------------------------------------
                                               1999              1998              1997
                                          ----------------  ----------------  ----------------
                                                            (Dollars in Thousands)
<S>                                             <C>               <C>               <C>
Loans receivable, net beginning of period       $ 225,752         $ 212,840         $ 182,724
Loan originations:
     Single-family residential                     37,154            41,007            36,800
     Construction                                  14,704            15,306            18,982
     Multi-family residential                           -                 -                 -
     Commercial real estate                         5,803                 -             3,824
     Commercial business loans                     22,395            31,624            13,260
     Consumer loans                                16,642            16,664            10,762
                                          ----------------  ----------------  ----------------
         Total loan originations                   96,698           104,601            83,628
                                          ----------------  ----------------  ----------------
Loan reductions:
     Loan sales                                    (8,565)          (19,479)             (878)
     Loan participation                            (2,471)
     Principal repayments                         (73,417)          (65,964)          (53,168)
     Other changes, net (1)                         6,999            (6,246)              534
                                          ----------------  ----------------  ----------------
         Total loan reductions                    (77,454)          (91,689)          (53,512)
                                          ----------------  ----------------  ----------------
Loans receivable, net end of period             $ 244,996         $ 225,752         $ 212,840
                                          ================  ================  ================
</TABLE>

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

(1) Includes changes in net deferred loan fees,  allowance for loan losses,  and
unadvanced loan funds.

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

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

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

                                       6
<PAGE>

         Single-Family  Residential  Loans.  Substantially  all of the Company's
single-family   residential   mortgage  loans  consist  of  conventional  loans.
Conventional  loans are loans that are neither  insured by the  Federal  Housing
Administration  ("FHA") nor partially  guaranteed by the  Department of Veterans
Affairs  ("VA").  The vast majority of the Company's  single-family  residential
mortgage loans are secured by properties located in Lafayette, Louisiana and the
Louisiana  parishes   immediately   contiguous  to  Lafayette  Parish,  and  are
originated under terms and documentation  which permit their sale to the Federal
Home Loan  Mortgage  Corporation  ("FHLMC"),  or the Federal  National  Mortgage
Association  ("FNMA"). As of December 31, 1999, $179.1 million, or 73.1%, of the
Company's total loan portfolio consisted of single-family  residential  mortgage
loans.

         The  Company's  residential  mortgage  loans either have fixed rates of
interest or  interest  rates which  adjust  periodically  during the term of the
loan. Fixed-rate loans generally have maturities ranging from 15 to 30 years and
are fully  amortizing  with monthly loan payments  sufficient to repay the total
amount of the loan with  interest  by the end of the loan  term.  The  Company's
fixed-rate  loans  generally  are  originated  under  terms,   conditions,   and
documentation  which  permit  them  to  be  sold  to  U.S.  Government-sponsored
agencies,  such as the FNMA and the FHLMC,  and other investors in the secondary
market for  single-family  residential  mortgages.  At December 31, 1999,  $98.3
million,  or 54.8%, of the Company's  single-family  residential  mortgage loans
were fixed-rate loans. At December 31, 1999, the weighted average remaining term
to maturity of the  Company's  fixed-rate,  single-family  residential  mortgage
loans was approximately 19 years. Substantially all of the Company's fixed-rate,
single family  residential  mortgage loans contain  due-on-sale  clauses,  which
permit the Company to declare the unpaid  balance to be due and payable upon the
sale or transfer of any interest in the property  securing the loan. The Company
enforces such due-on-sale clauses.

         The  adjustable-rate  loans  currently  offered  by  the  Company  have
interest rates which adjust on an annual basis from the closing date of the loan
or an annual basis commencing after an initial  fixed-rate period of one, three,
five,  seven or ten years in  accordance  with a  designated  index (the primary
index utilized by the Company is the United States Treasury  securities adjusted
to a constant  maturity of one year),  plus a stipulated  margin.  The Company's
adjustable-rate,  single-family  residential  real estate loans generally have a
cap of 2% on any  increase or decrease in the  interest  rate at any  adjustment
date, and include a specified cap on the maximum  interest rate over the life of
the loan,  which cap generally is 4% to 6% above the initial rate. The Company's
adjustable-rate  loans  require  that any payment  adjustment  resulting  from a
change in the interest rate of an  adjustable-rate  loan be sufficient to result
in full  amortization  of the loan by the end of the loan term and, thus, do not
permit any of the increased  payment to be added to the principal  amount of the
loan, or so-called negative amortization. From time-to-time, based on prevailing
market  conditions,  the Company may offer  adjustable-rate  loans with "teaser"
rates,  i.e.,  initial rates below the fully indexed rate. At December 31, 1999,
the   weighted   average   remaining   term  to   maturity   of  the   Company's
adjustable-rate,  single-family residential mortgage loans were approximately 25
years.  At  December  31,  1999,  $81.0  million  or  45.2%,  of  the  Company's
single-family residential mortgage loans were adjustable-rate loans.

                                       7
<PAGE>

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

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

         Commercial  Real Estate Loans and  Multi-Family  Residential  Loans. At
December 31, 1999, the Company had $18.8 million in outstanding loans secured by
commercial real estate.  Such commercial real estate loans, which comprised 7.7%
of the  Company's  total loan  portfolio  at  December  31,  1999,  are  secured
primarily by office and other  commercial  buildings,  retail and  manufacturing
properties  and church  properties.  None of the Company's  commercial and other
real estate loans were non-performing loans at such date.

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

         At  December  31,  1999,  the  Company  had  $425,000  of  multi-family
residential   real  estate  loans.  The  Company  has  not  originated  any  new
multi-family  residential  loans  during  the  past  three  years,  and does not
anticipate becoming an active originator of multi-family residential loans.

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

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

                                       8
<PAGE>

         Construction  Loans.  Substantially  all of the Company's  construction
loans have  consisted  of loans to  construct  single-family  residences.  As of
December 31, 1999, the Company's  construction  loans amounted to $12.6 million,
or 5.2% of the Company's total loan portfolio.

         The  Company  makes  construction  loans  both  to  individuals  and to
builders.   Construction  loans  made  to  individuals  for  one-to  four-family
residences  normally  are  construction/permanent  loans  which  provide for the
payment of interest only during the  construction  period,  after which the loan
converts to a permanent loan at fixed or adjustable  interest rates with monthly
amortization  of principal and interest.  Construction  loans to individuals for
single-family  residential  properties generally have a maximum LTV ratio of 80%
of the sales price or appraised value of the property, whichever is less. Higher
ratios  require  PMI.  The Company  originated  $13.4  million of  single-family
construction loans to individuals during the year ended December 31, 1999.

         The   Company's   policies   permit  loans  to  builders   constructing
single-family  residential  properties on a  speculative  basis;  however,  such
policies  generally  limit a builder to two such loans.  Other builder loans are
made to finance  construction  of residences,  which have been pre-sold prior to
loan closing.  Loans made to builders  generally require the payment of interest
during the  construction  period and the payment of the principal in full at the
end of the  construction  period.  Construction  loans  to  builders  made  on a
speculative  basis are generally  limited to 85% of the  appraised  value of the
property.  During the year ended  December  31,  1999,  the  Company  originated
$550,000 in such loans to builders.

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

         Construction  financing  is  generally  considered  to involve a higher
degree of risk of loss than long-term financing on improved, owner-occupied real
estate.  Risk of loss on a  construction  loan is  dependent  largely  upon  the
accuracy  of the initial  estimate  of the  property's  value at  completion  of
construction  or  development  and the estimated  cost  (including  interest) of
construction. During the construction phase, a number of factors could result in
delays and cost overruns. If the estimate of value proves to be inaccurate,  the
Company may be confronted,  at or prior to maturity of the loan, with a project,
when  completed,  having a value which is insufficient to assure full repayment.
Loans on lots may run the risk of adverse zoning changes, environmental or other
restrictions  on future use.  As of December  31,  1999,  none of the  Company's
construction loans was considered non-performing.

         Consumer Loans. The Company offers consumer loans in order to provide a
full range of retail financial services to its customers.  At December 31, 1999,
$21.8  million,  or 8.9% of the Company's  total loan portfolio was comprised of
consumer loans. The Company  originates  substantially  all of such loans in its
primary market area.

         Origination of consumer loans by the Company  amounted to $16.6 million
in  1999  compared  to  $16.7  million  and  $10.8  million  in 1998  and  1997,
respectively. During 1996, the Company discontinued its indirect automobile loan
origination  program,  which it had initiated during 1995.  Indirect  automobile
loans originated  accounted for  approximately  43.6% and 39.3% of the Company's
total consumer loans  originated  during 1996 and 1995,  respectively.  Although
applications  for such loans were taken by  employees  of the dealer,  the loans
were made pursuant to the Company's  underwriting  standards using the Company's
documentation,  and all such indirect loans had to be approved by a loan officer
of the Company before disbursement of loan proceeds.

                                       9
<PAGE>

         Consumer finance loans generally involve more credit risk than mortgage
loans because of the type and nature of the  collateral  and, in certain  cases,
the  absence  of  collateral.  In  addition,  consumer-lending  collections  are
dependent on the borrower's  continuing financial  stability,  and thus are more
likely to be  adversely  affected by job loss,  divorce,  illness  and  personal
bankruptcy.  In many cases, any repossessed  collateral for a defaulted consumer
finance loan will not provide an adequate source of repayment of the outstanding
loan  balance  because of  improper  repair and  maintenance  of the  underlying
security.  The remaining  deficiency often does not warrant further  substantial
collection efforts against the borrower.  As of December 31, 1999,  $49,000,  or
0.2% of the Company's total consumer loans were considered non-performing.

         Commercial   Business  Loans.  At  December  31,  1999,  the  Company's
commercial  business loans  amounted to $18.1 million,  or 7.4% of the Company's
total  loan  portfolio.  Prior  to 1996,  the  Company  had not  been an  active
originator of commercial business loans.

         The Company concentrates its commercial lending activities among small-
to mid-size  businesses in Lafayette,  Louisiana and contiguous  parishes,  in a
manner consistent with its current underwriting  standards.  Commercial business
lending  generally  involves  more credit risk than  traditional,  single-family
residential  mortgage lending.  Origination of commercial  business loans by the
Company amounted to $22.4 million in 1999, compared to $31.6 million,  and $13.3
million in 1998 and 1997, respectively.

         Loans-to-One Borrower  Limitations..  The Louisiana Savings Bank Act of
1990 (the "LSBA")  imposes  limitations on the aggregate  amount of loans that a
Louisiana  chartered savings bank can make to any one borrower.  Under the LSBA,
the permissible amount of loans-to-one  borrower may not exceed 15% of a savings
bank's total net worth. In addition,  a savings bank may make loans in an amount
equal to an additional  10% of a savings  bank's net worth if the loans are 100%
secured by readily  marketable  collateral.  A savings bank's net worth shall be
calculated  based  on  its  last  quarterly  call  report  and  consists  of (i)
outstanding  and  unimpaired  common  stock;  (ii)  outstanding  and  unimpaired
perpetual preferred stock; (iii) unimpaired capital surplus,  undivided profits,
capital reserves,  minus intangible  assets;  (iv) purchased  mortgage servicing
rights;  and (v) mandatory  convertible debt up to 20% of categories (i) through
(iv).  Readily  marketable  collateral  consists  of  financial  instruments  or
bullion,   which  are  salable  under  ordinary  circumstances  with  reasonable
promptness at fair market value or on an auction or a similarly  available daily
bid and ask  price  market.  At  December  31,  1999,  the  Company's  limit  on
loans-to-one borrower under LSBA was approximately $4.1 million. At December 31,
1999, the Company's five largest loans or groups of loans-to-one borrower ranged
from  $1.2  million  to $2.6  million  and all such  loans  were  performing  in
accordance with their terms.

Asset Quality

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

                                       10
<PAGE>

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

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

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

         Under  GAAP,  the  Company is  required  to account  for  certain  loan
modifications or restructurings as "troubled debt  restructurings".  In general,
the  modification  or  restructuring  of a  debt  constitutes  a  troubled  debt
restructuring  if the  Company,  for  economic or legal  reasons  related to the
borrower's financial difficulties,  grants a concession to the borrower that the
Company  would not otherwise  consider  under current  market  conditions.  Debt
restructurings,  however,  and troubled debt  restructurings  do not necessarily
result in non-accrual  loans.  The Company had $453,000 of loans deemed troubled
debt restructurings as of December 31, 1999. The interest income that would have
been  recognized if those loans had been current with their  original  terms was
approximately  $107,000 for the year ended  December 31, 1999.  Interest  income
totaling $58,000 was included in income for the year ended December 31, 1999.

         Delinquent Loans. The following table sets forth information concerning
delinquent  loans at December 31, 1999, in dollar amounts and as a percentage of
each category of the Company's loan portfolio.  The amounts presented  represent
the total outstanding  principal balances of the related loans,  rather than the
actual payment amounts, which are past due.

                                       11
<PAGE>

<TABLE>
<CAPTION>
                                                            At December 31, 1999
                                         -----------------------------------------------------------
                                                 30-59 Days                     60-89 Days
                                         ----------------------------   ----------------------------
                                                         Percent of                    Percent of
                                           Amount       Loan Category     Amount      Loan Category
                                         ------------   -------------   ------------  --------------
                                                           (Dollars in Thousands)
Mortgage loans:
<S>                                            <C>             <C>             <C>            <C>
     Single-family residential                 $ 424           0.24%           $ 96           0.05%
     Construction                                  -               -              -               -
     Multi-family residential                      -               -              -               -
     Commercial real estate                      105            0.56             38            0.20
     Equity lines of credit                      103            3.02              -               -
Commercial business loans                         25            0.14             48            0.26
Consumer loans                                     7            0.03              1               -
                                         ------------   -------------   ------------  --------------
             Total                             $ 664           0.26%          $ 183           0.07%
                                         ============   =============   ============  ==============
</TABLE>

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

                                       12
<PAGE>

<TABLE>
<CAPTION>
                                                                       At December 31,
                                                  ----------------------------------------------------------
                                                    1999        1998        1997        1996        1995
                                                  ----------  ----------  ----------  ----------  ----------
                                                                   (Dollars in Thousands)
Accruing loans 90 days or more past due:
<S>                                                   <C>         <C>        <C>         <C>         <C>
     Single-family residential                          $ -         $ -         $ -         $ -         $ -
     Construction                                         -           -           -           -           -
     Multi-family residential                             -           -           -           -           -
     Commercial real estate                               -           -           -           -           -
     Equity lines of credit                               -           -           -           -           -
     Commercial business loans                            -           -           -           -           -
     Consumer loans                                       -           -           -           -           -
                                                  ----------  ----------  ----------  ----------  ----------
       Total accruing loans                               -           -           -           -           -
                                                  ----------  ----------  ----------  ----------  ----------
Non-accrual loans:
     Single-family residential                           33         140         285         632         527
     Construction                                         -           -           -           -           -
     Multi-family residential                             -           -           -           -           -
     Commercial real estate                               -           -           -         145         197
     Equity lines of credit                              18           -           -           -           -
     Commercial business loans                            -           -           -           -           -
     Consumer loans                                      49          50         129          96          16
                                                  ----------  ----------  ----------  ----------  ----------
       Total non-accrual loans                          100         190         414         873         740
                                                  ----------  ----------  ----------  ----------  ----------
Total non-performing loans                              100         190         414         873         740
                                                  ----------  ----------  ----------  ----------  ----------
Other real estate owned, and repossessed assets           -           7         204          75         845
                                                  ----------  ----------  ----------  ----------  ----------
Total non-performing assets                             100         197         618         948       1,585
                                                  ==========  ==========  ==========  ==========  ==========

Performing troubled debt restructurings               $ 453       $ 490       $ 515       $ 536       $ 878
                                                  ==========  ==========  ==========  ==========  ==========

Total non-performing assets and troubled debt         $ 553       $ 687      $1,133      $1,484      $2,463
                                                  ==========  ==========  ==========  ==========  ==========
    restructurings


Non-performing assets to total loans                  0.04%       0.08%       0.29%       0.52%       0.96%
Non-performing assets to total assets                  0.03        0.07        0.22        0.36        0.70
Non-performing loans to total loans                    0.04        0.08        0.19        0.48        0.45
Non-performing loans to total assets                   0.03        0.07        0.15        0.33        0.33
Total non-performing assets and troubled debt
    restructurings to total assets                     0.18        0.24        0.41        0.56        1.09
</TABLE>

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

         At December 31, 1999, the Company had $1.8 million of assets classified
substandard  and no assets  classified  as doubtful or loss.  At such date,  the
aggregate of the Company's classified assets amounted to 0.6% of total assets.

                                       13
<PAGE>

         Potential  Problem  Loans.  The  Company  has  identified  a  group  of
residential  mortgage loans which were originated  during several years prior to
1996 under its  discontinued  program of making loans to facilitate  the sale of
real estate owned,  and which,  at December 31, 1999,  totaled $2.2 million,  or
0.9%,  of the  Company's  gross loan  portfolio.  Loans in this  portfolio  were
originated at 90% to 100% of collateral value,  without credit enhancements such
as  private  mortgage  insurance.   Although  the  portfolio  is  not  currently
demonstrating credit problems evidenced by delinquent loan payments, the Company
recognizes  that these loans are secured  primarily by residential  real estate,
which  generally  became  severely  depressed  during the most  recent  economic
downturn.  In that regard,  the Company has concerns that the collateral  values
would again become severely  adversely  affected in the next economic  downturn.
Accordingly,  the Company  believes the relative credit risk with regard to this
group of loans to be higher than that of its other  residential  mortgage loans,
taken as a whole.

         Also,  during  1995,  the Company  commenced  a program of  originating
automobile loans  indirectly  through a network of approximately 12 new and used
automobile  dealers  located in Lafayette,  Louisiana,  and in nearby  parishes.
Although the Company  determined to  discontinue  this program (see  "Business -
Consumer Loans") in 1996, the outstanding portfolio totaled $994,000 at December
31,  1999,  or  0.4% of the  Company's  net  loans.  This  group  of  loans  has
demonstrated  much higher  delinquency  ratios than that of the Company's  other
secured  consumer  loans.  Several of the loans in this  portfolio  demonstrated
serious  credit  problems  such as  first  payment  default.  In  addition,  the
Company's  experience  indicates that the collateral values securing those loans
which became delinquent are generally  insufficient to cover the amounts due the
Company.  Accordingly,  the Company  believes this  indirect loan  portfolio has
higher relative  credit risks than that of its other consumer loans,  taken as a
whole.

         Allowance  for  Loan  Losses.  The  Company's  policy  is to  establish
reserves  for  estimated  losses on loans  when it  determines  that  losses are
expected  to be incurred on such  loans.  The  allowance  for losses on loans is
maintained at a level believed adequate by management to absorb potential losses
in the portfolio. Management's determination of the adequacy of the allowance is
based on an evaluation of the portfolio, past loss experience,  current economic
conditions, volume, growth, and composition of the portfolio, and other relevant
factors.  Provisions for loan losses, which are charged against income, increase
the allowance.  As shown in the table below, at December 31, 1999, the Company's
allowance  for loan  losses  amounted  to  496.75%  and  1.08% of the  Company's
non-performing  loans  and  troubled  debt  restructurings,   and  gross  loans,
respectively.

         Effective  December 21, 1993, the FDIC, in conjunction  with the Office
of the Comptroller of the Currency, the Office of Thrift Supervision ("OTS") and
the  Federal   Reserve  Board,   issued  the  Policy   Statement   regarding  an
institution's  allowance for loan and lease losses.  [The  Company's  policy for
establishing  its  estimated   allowance  for  loan  and  lease  losses  is  not
inconsistent with the Policy  Statement.] The Policy  Statement,  which reflects
the  position  of the  issuing  regulatory  agencies  and does  not  necessarily
constitute GAAP, includes guidance (i) on the responsibilities of management for
the  assessment  and  establishment  of an adequate  allowance  and (ii) for the
agencies'  examiners to use in evaluating the adequacy of such allowance and the
policies  utilized to determine such allowance.  The Policy  Statement also sets
forth quantitative  measures for the allowance with respect to assets classified
substandard  and  doubtful  and with  respect  to the  remaining  portion  of an
institution's loan portfolio. Specifically, the Policy Statement also sets forth
quantitative measures which examiners may use to determine the reasonableness of
an allowance;  (i) 50% of the portfolio that is classified doubtful; (ii) 15% of
the portfolio that is classified substandard;  and (iii) for the portions of the
portfolio that have not been  classified  (including  loans  designated  special
mention), estimated credit losses over the upcoming 12 months based on facts and
circumstances  available on the evaluation date. While the Policy Statement sets
forth this quantitative  measure,  such guidance is not intended as a "floor" or
"ceiling."

                                       14
<PAGE>

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

<TABLE>
<CAPTION>
                                                                 Years Ended December 31,
                                          -----------------------------------------------------------------------
                                             1999           1998          1997           1996           1995
                                          ------------ --------------  ------------   ------------  -------------
                                                                  (Dollars in Thousands)
<S>                                           <C>            <C>           <C>            <C>            <C>
Balance, beginning of period                  $ 2,726        $ 2,760       $ 2,592        $ 2,329        $ 1,087
Provision for loan losses                           -             90           180            355          1,274
Charge-offs:
     Single-family residential                     (4)           (40)          (14)             -            (70)
     Construction                                   -              -             -              -              -
     Multi-family residential                       -              -             -              -             (7)
     Commercial real estate                         -              -             -            (67)             -
     Equity lines of credit                         -              -             -              -              -
     Commercial business loans                    (25)          (169)            -              -              -
     Consumer loans                              (156)          (104)         (221)          (210)           (50)
                                          ------------  -------------  ------------   ------------  -------------
       Total charge-offs                         (185)          (313)         (235)          (277)          (127)
                                          ------------  -------------  ------------   ------------  -------------
Recoveries:
     Single-family residential                     40             36            76             87             10
     Construction                                   -              -             -              -              -
     Multi-family residential                       -              -             -              -              -
     Commercial real estate                         -              -            56             10              -
     Equity lines of credit                         -              -             -              -              -
     Commercial business loans                     47             22             -              -              -
     Consumer loans                               119            131            91             88             85
                                          ------------  -------------  ------------   ------------  -------------
       Total recoveries                           206            189           223            185             95
                                          ------------  -------------  ------------   ------------  -------------
Net (charge-offs) / recoveries                     21           (124)          (12)           (92)           (32)
                                          ------------  -------------  ------------   ------------  -------------
Balance, end of period                          2,747          2,726         2,760          2,592          2,329
                                          ============  =============  ============   ============  =============
Allowance for loan losses to
     total non-performing loans
     and troubled debt restructurings
     at end of period                         496.75%        396.80%       297.09%        183.96%        143.94%
                                          ============  =============  ============   ============  =============
Allowance for loan losses to
     total loans at end of period               1.08%          1.16%         1.25%          1.35%          1.41%
                                          ============  =============  ============   ============  =============
Net (charge-offs) / recoveries to
     average loans outstanding                  0.01%         -0.06%        -0.01%         -0.05%         -0.02%
                                          ============  =============  ============   ============  =============
</TABLE>

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

                                       15
<PAGE>


<TABLE>
<CAPTION>
                                                                  At December 31,
                                       ---------------------------------------------------------------------
                                                    Percent                Percent                Percent
                                                   of Loans               of Loans               of Loans
                                          1999     to Gross      1998     to Gross      1997     to Gross
                                         Amount      Loans      Amount      Loans      Amount      Loans
                                       ---------------------- ----------- ---------- ----------- ----------
                                                              (Dollars in Thousands)
Mortgage loans:
<S>                                         <C>       <C>        <C>        <C>         <C>        <C>
       Single-family residential            $ 992     70.43%     $ 1,591     72.20%     $ 1,739     76.92%
       Construction                            74      4.96%          80      5.37%          64      4.66%
       Multi-family residential                 3      0.17%           3      0.20%           5      0.25%
       Commercial real estate                 505      7.39%         397      7.20%         350      6.30%
       Equity lines of credit                  81      1.34%          31      0.87%           9      0.27%
                                       ----------- ---------- ----------- ---------- ----------- ----------
Total mortgage loans                        1,655     84.29%       2,102     85.84%       2,167     88.40%
                                       ----------- ---------- ----------- ---------- ----------- ----------
       Commercial business loans              737      7.14%         346      5.91%         274      4.45%
       Consumer loans                         355      8.57%         278      8.25%         319      7.15%
                                       ----------- ---------- ----------- ---------- ----------- ----------
Total non-mortgage loans                    1,092     15.71%         624     14.16%         593     11.60%
                                       ----------- ---------- ----------- ---------- ----------- ----------
Total allowance for loans                 $ 2,747    100.00%     $ 2,726    100.00%     $ 2,760    100.00%
                                       =========== ========== =========== ========== =========== ==========
<CAPTION>

                                                     At December 31,
                                       ---------------------------------------------
                                                    Percent                Percent
                                                   of Loans               of Loans
                                          1996     to Gross      1995     to Gross
                                         Amount      Loans      Amount      Loans
                                       ----------- ---------- ----------- ----------
                                                   (Dollars in Thousands)
Mortgage loans:
<S>                                       <C>        <C>         <C>        <C>
       Single-family residential          $ 1,565     74.61%     $ 1,773     77.50%
       Construction                            58      5.53%          22      4.62%
       Multi-family residential                 7      0.45%          80      0.73%
       Commercial real estate                 460      7.71%         331      8.00%
       Equity lines of credit                   2      0.07%           -      0.00%
                                       ----------- ---------- ----------- ----------
Total mortgage loans                        2,092     88.37%       2,206     90.85%
                                       ----------- ---------- ----------- ----------
       Commercial business loans              163      2.89%          26      0.82%
       Consumer loans                         337      8.74%          97      8.33%
                                       ----------- ---------- ----------- ----------
Total non-mortgage loans                      500     11.63%         123      9.15%
                                       ----------- ---------- ----------- ----------
Total allowance for loans                 $ 2,592    100.00%     $ 2,329    100.00%
                                       =========== ========== =========== ==========
</TABLE>


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

                                       16
<PAGE>


Investment Activities

         General.  Interest and  dividend  income from  investments  in debt and
equity securities  generally provides the second largest source of income to the
Company after interest on loans. The Company's Board of Directors has authorized
investments in U.S. Government and agency obligations,  obligations of the FHLB,
and debt of U.S.  government  agencies such as the Government  National Mortgage
Association ("GNMA" or "Ginnie Mae"), and government-sponsored  enterprises such
as the Federal Home Loan Mortgage  Corporation  ("FHLMC" or "Freddie Mac"),  and
the Federal National Mortgage  Association ("FNMA" or "Fannie Mae") representing
mortgage-backed  securities.  The Company also  invests in certain  highly rated
privately issued  mortgage-backed  securities.  Additionally,  the Company holds
certain equity securities in its trading and available for sale portfolios.  The
Company's  objective is to use such  investments  to reduce  interest rate risk,
provide liquidity and enhance yields on assets.

         Mortgage-backed   securities   provide   a  means   of   investing   in
housing-related   mortgage   instruments   without  the  costs  associated  with
originating  mortgage loans for portfolio retention and with limited credit risk
of  default   which  arises  in  holding  a  portfolio  of  loans  to  maturity.
Mortgage-backed  securities  (which  also are  known as  mortgage  participation
certificates or pass-through certificates) represent a participation interest in
a pool of  single-family  or  multi-family  mortgages.  The  servicers,  through
intermediaries  (generally  U.S.  Government  agencies and  government-sponsored
enterprises)  pool and  repackage  the  participation  interests  in the form of
securities,  to investors such as the Company. Such U.S. Government agencies and
government-sponsored  enterprises,  which guarantee the payment of principal and
interest to investors, primarily include FHLMC, FNMA and GNMA.

         The FHLMC is a public corporation  chartered by the U.S. Government and
owned by the 12 FHLB's and federally  insured  savings  institutions.  The FHLMC
issues  participation  certificates backed principally by conventional  mortgage
loans.  The FHLMC  guarantees  the timely  payment of interest  and the ultimate
return  of  principal  on  participation  certificates.  The  FNMA is a  private
corporation  chartered  by the U.S.  Congress  with a  mandate  to  establish  a
secondary  market for mortgage loans.  The FNMA guarantees the timely payment of
principal and interest on FNMA  securities.  FHLMC and FNMA  securities  are not
backed by the full faith and credit of the United States,  but because the FHLMC
and  FNMA  are  U.S.  Government-sponsored  enterprises,  these  securities  are
considered  to be among the highest  quality  investments  with  minimal  credit
risks.  The GNMA is a government  agency  within the  Department  of Housing and
Urban Development, which is intended to help finance government-assisted housing
programs. GNMA securities are backed by FHA-insured and VA-guaranteed loans, and
the timely  payment of principal and interest on GNMA  securities are guaranteed
by the GNMA and  backed  by the full  faith and  credit of the U.S.  Government.
Because the FHLMC, the FNMA and the GNMA were established to provide support for
low- and  middle-income  housing,  there are limits to the maximum size of loans
that qualify for these programs, which limit is currently $240,000.

         Typically mortgage-backed  securities are created by pooling a group of
similar  mortgages.  Most  mortgage-backed  securities  are issued with a stated
minimum  principal  amount,  and a stated interest rate and represent a pro rata
share in the principal and interest cash flows to be received as the  underlying
mortgages  are repaid by the  mortgagors.  The interest and  principal  payments
representing cash flows from the underlying pool of mortgages, (i.e., fixed rate
or adjustable  rate) are passed on to the certificate  holder,  as is prepayment
risk. The life of a mortgage-backed  pass-through security thus approximates the
life of the  underlying  mortgages.  The  Company's  mortgage-backed  securities
portfolio  includes  investments in  mortgage-backed  securities backed by fixed
rate  mortgages  and  adjustable  rate  mortgages  ("ARMs"),  collateralized  by
single-family real estate mortgages.

                                       17
<PAGE>

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

         Mortgage-backed  securities  (including CMOs) generally yield less than
the loans that underlie such securities  because of their payment  guarantees or
credit enhancements, which offer nominal credit risk. Mortgage-backed securities
issued or guaranteed by the FNMA or the FHLMC (except  interest-only  securities
or the  residual  interests  in CMOs) are  weighted  at no more  than  20.0% for
risk-based  capital  purposes,  compared  to a weight  of 50.0%  to  100.0%  for
residential loans. The actual maturity of a mortgage-backed security may be less
than  its  stated  maturity  due to  prepayments  of the  underlying  mortgages.
Prepayments  that  are  faster  than  anticipated  may  shorten  the life of the
security and adversely affect its yield to maturity. The yield is based upon the
interest income and the  amortization of any premium or discount  related to the
mortgage-backed  security.  In accordance with GAAP,  premiums and discounts are
amortized  over the estimated  lives of the loans,  which  decrease and increase
interest income, respectively.  The prepayment assumptions used to determine the
amortization  period for premiums and  discounts  can  significantly  affect the
yield of the  mortgage-backed  security,  and  these  assumptions  are  reviewed
periodically to reflect actual prepayments.  Although  prepayments of underlying
mortgages  depend on many factors,  including the type of mortgages,  the coupon
rate, the age of mortgages,  the  geographical  location of the underlying  real
estate  collateralizing  the  mortgages  and general  levels of market  interest
rates, the difference between the interest rates on the underlying mortgages and
the  prevailing  mortgage  interest  rates  generally  is the  most  significant
determinant of the rate of prepayments.

         During periods of rising  mortgage  interest rates, if the coupon rates
of the underlying  mortgages are less than the prevailing  market interest rates
offered  for  mortgage  loans,  refinancings  generally  decrease  and  slow the
prepayment  of the  underlying  mortgages  and the  related  securities.  During
periods  of  falling  mortgage  interest  rates,  if  the  coupon  rates  of the
underlying  mortgages are more than the  prevailing  interest  rates offered for
mortgage loans, refinancings generally increase and accelerate the prepayment of
the underlying  mortgages and the related securities.  Under such circumstances,
the Company may be subject to  reinvestment  risk because to the extent that the
Company's   mortgage-related   securities   amortize   or  prepay   faster  than
anticipated,  the  Company  may not be able to  reinvest  the  proceeds  of such
repayments and prepayments at a comparable rate.

                                       18
<PAGE>

         Trading  Securities.  As of December 31, 1999,  the  Company's  trading
securities  amounted to  $285,000.  The Company has no intention to increase its
trading securities portfolio significantly.

         Securities  Available for Sale. The Company's  securities available for
sale amounted to $26.1 million, and $26.4 million, respectively, at December 31,
1999 and 1998. The following table sets forth certain information  regarding the
Company's  securities  available for sale at the dates indicated.  The Company's
mortgage-backed   securities   include  interests  in  collateralized   mortgage
obligations ("CMOs").

<TABLE>
<CAPTION>
                                                         At December 31,
                          ------------------------------------------------------------------------------
                                    1999                       1998                       1997
                          -------------------------  ------------------------   ------------------------
                           Carrying      Market       Carrying      Market       Carrying      Market
                            Value         Value        Value        Value         Value        Value
                          -----------  ------------  -----------  -----------   -----------  -----------
                                                     (Dollars in Thousands)
Debt securities:
<S>                          <C>                        <C>            <C>      <C>            <C>
       Commercial Paper      $      -      S     -      $ 5,992        5,992    $        -     $      -
       U.S. Government and
          Federal Agencies     10,255       10,255        8,973        8,973        11,021       11,021
       Mortgage-backed         15,780       15,780       11,409       11,409        17,846       17,846
                         -----------  ------------  -----------  -----------   -----------  -----------
        Total debt securities  26,035       26,035       26,374       26,374        28,867       28,867
Marketable equity securities      25            25           30           30            23           23
                          -----------  ------------  -----------  -----------   -----------  -----------
        Total                $26,060       $26,060      $26,404      $26,404       $28,890      $28,890
                          ===========  ============  ===========  ===========   ===========  ===========
</TABLE>

         At December 31, 1999,  the Company's  investments  in U.S.  Treasuries,
agency  obligations,  mortgage-backed  securities,  and CMOs were  1.9%,  37.5%,
40.8%,  and 19.8%,  respectively,  of the total  securities  available for sale.
Securities  classified  as  available  for  sale  are  carried  at  fair  value.
Unrealized  gains  and  losses  on such  securities  are  recognized  as  direct
increases or decreases in equity,  net of applicable  income taxes.  At December
31, 1999,  the Company had net  unrealized  losses of $364,000,  net of deferred
taxes, with respect to its securities available-for-sale.

         At December 31, 1999, the weighted average contractual  maturity of the
Company's  mortgage-backed  securities available for sale was approximately 16.7
years,  and the weighted  average  contractual  maturity of the  Company's  CMOs
available for sale was approximately  28.9 years. The following table sets forth
certain  other  information  regarding  the  maturities  of the  Company's  debt
securities  available  for  sale.  Maturity   distributions  of  mortgage-backed
securities are based on the estimated average life at the projected speed.

<TABLE>
<CAPTION>
                                                                   Contractually Maturing
                                     -----------------------------------------------------------------------------------
                                                Weighted              Weighted              Weighted            Weighted
                                      Under 1    Average     1-5       Average    6-10      Average  Over 10    Average
                                       Year      Yield      Years      Yield      Years      Yield    Years      Yield
                                     ---------- --------- ----------- --------- ----------  -------- ---------  --------
                                                                   (Dollars in Thousands)
Debt securities:
        U.S. Government and
<S>                                       <C>      <C>       <C>         <C>      <C>          <C>      <C>        <C>
           Federal Agencies               $  -     0.00%     $10,255     6.36%    $      -     0.00%       $ -     0.00%
        Mortgage-backed securities          97     8.51%       6,368     7.93%       2,114     6.53%     7,201     6.56%
                                     ---------- --------- ----------- --------- ----------  -------- ---------  --------
              Total                       $ 97     8.51%     $16,623     6.96%    $  2,114     6.53%    $7,201     6.56%
                                     ========== ========= =========== ========= ==========  ======== =========  ========
</TABLE>

                                       19
<PAGE>

         Securities Held to Maturity.  The Company's securities held to maturity
amounted to $11.9 million, and $12.4 million, respectively, at December 31, 1999
and 1998.  The  following  table sets forth  certain  information  regarding the
Company's  securities  held to maturity at the dates  indicated.  The  Company's
mortgage-backed   securities   include  interests  in  collateralized   mortgage
obligations ("CMOs").

<TABLE>
<CAPTION>
                                                          December 31,
                          ------------------------------------------------------------------------------
                                   1999                       1998                       1997
                          -------------------------  ------------------------   ------------------------
                           Carrying      Market       Carrying      Market       Carrying      Market
                            Value         Value        Value        Value         Value        Value
                          -----------  ------------  -----------  -----------   -----------  -----------
                                                     (Dollars in Thousands)
Debt securities:
<S>                        <C>          <C>           <C>          <C>           <C>          <C>
       Mortgage-backed     $  11,921    $  11,958     $  12,360    $  12,694     $  12,806    $  12,736
                          ===========  ============  ===========  ===========   ===========  ===========
</TABLE>

All such  mortgage-backed  securities  held to  maturity  are  carried  at cost,
adjusted for the amortization of premiums and the accretion of discounts using a
method which approximates a level yield.

         At December 31, 1999,  the  Company's  investments  in  mortgage-backed
securities, and CMOs were 89.4% and 10.6%, respectively, of the total securities
held to  maturity.  At December  31,  1999,  the  weighted  average  contractual
maturity  of the  Company's  mortgage-backed  securities  held to  maturity  was
approximately 24.1 years, and the weighted average  contractual  maturity of the
Company's  CMOs held to maturity was  approximately  23.3 years.  The  following
table sets forth  certain  other  information  regarding  the  maturities of the
Company's debt securities held to maturity.  Maturity distributions are based on
the average life at the projected speed.

<TABLE>
<CAPTION>
                                                          Contractually Maturing
                            -----------------------------------------------------------------------------------
                                       Weighted              Weighted              Weighted            Weighted
                             Under 1    Average     1-5       Average    6-10      Average  Over 10    Average
                              Year      Yield      Years      Yield      Years      Yield    Years      Yield
                            ---------- --------- ----------- --------- ----------  -------- ---------  --------
                                                          (Dollars in Thousands)
Debt securities:
<S>                            <C>        <C>       <C>         <C>     <C>          <C>     <C>         <C>
        Mortgage-backed        $5,657     7.11%     $ 1,264     5.62%   $     -      0.00%   $5,000      7.06%
                            ---------- --------- ----------- --------- ----------  -------- ---------  --------
              Total            $5,657     7.11%     $ 1,264     5.62%   $     -      0.00%   $5,000      7.06%
                            ========== ========= =========== ========= ==========  ======== =========  ========
</TABLE>


         Federal Home Loan Bank Stock.  In addition,  as a member of the FHLB of
Dallas,  the Bank is required to maintain an  investment in stock of the FHLB of
Dallas  equal to the  greater  of 1% of the  Bank's  outstanding  home  mortgage
related assets or 5% of its outstanding  advances from the FHLB of Dallas. As of
December 31, 1999, the Bank's investment in stock of the FHLB of Dallas amounted
to $3.7  million.  During the year ended  December 31, 1999,  the Bank  received
$167,000 in dividends on its FHLB stock.  No ready market exists for such stock,
which is carried at par value.

Sources of Funds

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

                                       20
<PAGE>

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

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

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

<TABLE>
<CAPTION>
                                                               December 31,
                                    -------------------------------------------------------------------
                                      1999                   1998                   1997
                                    ---------------------  ---------------------  ---------------------
                                               Percent of             Percent of              Percent of
                                                 Total                  Total                  Total
                                     Amount    Deposits     Amount    Deposits     Amount     Deposits
                                    ---------- ----------  ---------- ----------  ----------  ---------
                                                           (Dollars in Thousands)
<S>                                  <C>           <C>       <C>          <C>       <C>          <C>
Demand accounts                      $ 18,354      8.61%     $ 9,023      4.47%     $ 8,177      4.19%
Money market accounts                  18,491      8.67%      19,364      9.60%       9,436      4.83%
Noninterest-bearing demand accounts    10,382      4.87%      12,518      6.21%      10,562      5.42%
                                    ---------- ----------  ---------- ----------  ----------  ---------
    Total demand deposits              47,227     22.15%      40,905     20.28%      28,175     14.44%
                                    ---------- ----------  ---------- ----------  ----------  ---------
Savings deposits                       14,364      6.74%      19,706      9.77%      23,343     11.97%
                                    ---------- ----------  ---------- ----------  ----------  ---------
Certificate of Deposit accounts:
    Six months and less                35,581     16.69%      41,357     20.51%      35,802     18.36%
    Over six months through one year   28,851     13.53%      36,453     18.08%      30,131     15.45%
    Over one year through two years    67,029     31.44%      32,239     15.99%      25,255     12.95%
    Over two years through three years 12,601      5.91%      14,199      7.04%      15,772      8.09%
    Over three years through five years 7,330      3.44%      15,823      7.85%      12,400      6.36%
    Over five years                       229      0.10%         972      0.48%      24,165     12.38%
                                    ---------- ----------  ---------- ----------  ----------  ---------
    Total certificates                151,621     71.11%     141,043     69.95%     143,525     73.59%
                                    ---------- ----------  ---------- ----------  ----------  ---------
Total Deposits                      $ 213,212    100.00%   $ 201,654    100.00%   $ 195,043    100.00%
                                    ========== ==========  ========== ==========  ==========  =========
</TABLE>

         The  following  table sets forth  certain  information  relating to the
Company's deposits.

         The following table sets forth by various interest-rate  categories the
certificates of deposit with the Company at the dates indicated. The Company had
no "brokered" deposits during any of the periods reported below.

                                       21
<PAGE>

                                              December 31,
                           ----------------------------------------------------
                                1999              1998              1997
                           ---------------   ----------------  ----------------
                                         (Dollars in Thousands)

0.00% to 2.99%                       $ 83              $ 122             $ 226
3.00% to 3.99%                      1,854                347                 -
4.00% to 4.99%                     42,260             38,636            13,474
5.00% to 5.99%                     64,549             57,020            79,702
5.00% to 6.99%                     33,738             32,493            34,172
7.00% to 8.99%                      9,137             11,533            15,056
9.00% and over                          -                892               895
                           ---------------   ----------------  ----------------
                                $ 151,621          $ 141,043         $ 143,525
                           ===============   ================  ================


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

<TABLE>
<CAPTION>
                                                     At or for the year ended December 31,
                                                ------------------------------------------------
                                                    1999             1998             1997
                                                --------------   --------------  ---------------
                                                                (In Thousands)

<S>                                                 <C>              <C>              <C>
Total deposits, beginning of period                 $ 201,654        $ 195,043        $ 194,192
Net increase (decrease) before interest credited        4,771              209           (5,264)
Interest credited                                       6,787            6,402            6,115
                                                --------------   --------------  ---------------
Total deposits, end of period                       $ 213,212        $ 201,654        $ 195,043
                                                ==============   ==============  ===============
</TABLE>


         As of December 31, 1999, the aggregate  amount of time  certificates of
deposit in amounts  greater  than or equal to $100,000 was  approximately  $43.5
million. The following table presents the maturity of these time certificates of
deposit at such dates.

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

<S>               <C>             <C>          <C>             <C>            <C>          <C>     <C>
    $ 3,731       $ 4,101         $ 9,863      $ 21,577        $ 2,712        $ 1,489      $ -     $ 43,473
============  ============  ==============  ============  =============   ============  =======   ==========
</TABLE>


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

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

                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                                  December 31,
                                      ---------------------------------------------------------------------
                                               1999                   1998                    1997
                                      ----------------------  ---------------------  ----------------------
                                                   Percent                 Percent                Percent
                                        Amount       Rate      Amount       Rate       Amount       Rate
                                      -----------  ---------  ----------   --------  -----------  ---------
                                                               (Dollars in Thousands)
<S>                                     <C>           <C>      <C>           <C>       <C>           <C>
FHLB Advances                           $ 63,850      5.51%    $ 47,228      5.17%     $ 36,628      5.82%
                                      ===========  =========  ==========   ========  ===========  =========

Maximum amount outstanding
     at any month-end during the period $ 63,850               $ 56,728                $ 36,628
                                      ===========             ==========             ===========

Average balance outstanding
     during the period                  $ 51,430               $ 46,277                $ 29,648
                                      ===========             ==========             ===========


Weighted average interest rates on
     average balance during the period                5.26%                  5.47%                   5.67%
                                                   =========               ========               =========
</TABLE>


         Advances  at  December  31,  1999 have  maturities  in future  years as
follows (dollars in thousands):

                        (Dollars in Thousands)
                     Year Ending DecembeAmount
     ----------------------------------------------
                             2000          $ 6,000
                             2001            2,500
                             2003            3,100
                             2005              250
                             2008           17,000
                             2009           35,000
                                     --------------
                                     --------------
                     Total                $ 63,850
                                     ==============


A  significant  portion  of the  advances  contains  a  quarterly  call  feature
beginning  between one and three years  after the date of  issuance;  therefore,
actual repayments could vary from contractual maturities.

Subsidiaries

         The  Bank  is a  wholly  owned  subsidiary  of the  Company.  The  Bank
currently has no subsidiaries.  The Company has no other subsidiaries;  however,
the Company owns a 40 percent interest in Cadence Holdings, LLC ("Cadence"),  an
affiliate in the financial services  industry,  which is accounted for under the
equity  method.  A limited  liability  company  ("LLC") is a legal form of doing
business that combines partnership and corporate attributes. The Company's share
of Cadence's  net loss for the year ended  December 31, 1999 was  $155,000.  The
Company is a guarantor in the amount of $400,000 for a $1.0 million bank line of
credit to Cadence dated in January, 1999.

Legal Proceedings

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

                                       23
<PAGE>

Competition

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

         The Company  experiences  strong  competition  for real  estate  loans,
commercial  business loans and consumer  loans,  principally  from other savings
institutions, commercial banks and mortgage banking companies. The Bank competes
for loans principally  through the interest rates and loan fees it charges,  the
efficiency  and quality of services it  provides  borrowers  and the  convenient
locations of its branch office network.  Competition may increase as a result of
the  continuing  reduction  of  restrictions  on the  interstate  operations  of
financial institutions.

Employees

         The Bank had 80 full-time  employees  and 11 part-time  employees as of
December  31,  1999.  None of these  employees  is  represented  by a collective
bargaining agreement.  The Bank believes that it enjoys excellent relations with
its personnel. The officers of the Company are officers of the Bank.

Regulation

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

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

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

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

                                       24
<PAGE>

         The Federal  Reserve  Board has by regulation  determined  that certain
activities are closely related to banking within the meaning of the BHCA.  These
activities  include operating a mortgage company,  finance company,  credit card
company,  factoring company,  trust company or savings  association;  performing
certain data  processing  operations;  providing  limited  securities  brokerage
services;  acting as an investment or financial advisor;  acting as an insurance
agent for certain types of credit-related  insurance;  leasing personal property
on a full pay-out,  non-operating basis;  providing tax planning and preparation
services; operating a collection agency; and providing certain courier services.
The Federal  Reserve Board also has  determined  that certain other  activities,
including real estate  brokerage and  syndication,  land  development,  property
management,   and   underwriting   of  life  insurance  not  related  to  credit
transactions, are not closely related to banking and a proper incident thereto.

         Limitation on Transactions with Affiliates. Transaction between savings
institutions  and any  affiliate  are  governed by  Sections  23A and 23B of the
Federal  Reserve Act. An affiliate  of a savings  institution  is any company or
entity,  which  controls,  is controlled by or is under common  control with the
savings institution. In a holding company context, the parent holding company of
a  savings  institution  (such as the  Company)  and any  companies,  which  are
controlled  by such  parent  holding  company,  are  affiliates  of the  savings
institution.  Generally,  Sections 23A and 23B (i) limit the extent to which the
savings  institution or its  subsidiaries  may 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  Sections  23A and 23B,  no  savings
institution may (i) loan or otherwise extend credit to an affiliate,  except for
any affiliate  which engages only in activities  which are  permissible for bank
holding companies, or (ii) purchase or invest in any stocks, bonds,  debentures,
notes or similar  obligations of any affiliate,  except for affiliates which are
subsidiaries of the savings institution.

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

                                       25
<PAGE>


         Capital  Requirements.  The Federal  Reserve Board has adopted  capital
adequacy  guidelines  pursuant to which it assesses  the  adequacy of capital in
examining and supervising a bank holding  company and in analyzing  applications
to it under the BHCA.  The Federal  Reserve  Board capital  adequacy  guidelines
generally  require bank holding  companies to maintain total capital equal to 8%
of total risk-adjusted  assets, with at least one-half of that amount consisting
of Tier I or core capital and up to one-half of that amount  consisting  of Tier
II or supplementary capital. Tier I capital for bank holding companies generally
consists of the sum of common stockholders' equity and perpetual preferred stock
(subject in the case of the latter to limitations on the kind and amount of such
stocks which may be included as Tier I capital), less goodwill and, with certain
exceptions,  intangibles.  Tier II capital generally  consists of hybrid capital
instruments;  perpetual preferred stock, which is not eligible to be included as
Tier I capital;  term subordinated debt and  intermediate-term  preferred stock;
and,  subject to  limitations,  general  allowances for loan losses.  Assets are
adjusted  under the  risk-based  guidelines to take into account  different risk
characteristics,  with the  categories  ranging from 0% (requiring no additional
capital)  for  assets  such as cash to 100% for the  bulk of  assets  which  are
typically held by a bank holding company, including multi-family residential and
commercial  real estate loans,  commercial  business  loans and consumer  loans.
Single-family  residential  first mortgage loans which are not past-due (90 days
or more) or  non-performing  and which have been made in accordance with prudent
underwriting  standards are assigned a 50% level in the risk-weighing system, as
are certain  privately-issued  mortgage-backed  securities representing indirect
ownership of such loans.  Off-balance sheet items also are adjusted to take into
account certain risk characteristics.

         In addition to the risk-based capital requirements, the Federal Reserve
Board  requires bank holding  companies to maintain a minimum  leverage  capital
ratio of Tier I capital to total  assets of 3.0%.  Total assets for this purpose
does not include goodwill and any other  intangible  assets and investments that
the Federal Reserve Board determines should be deducted from Tier I capital. The
Federal Reserve Board has announced that the 3.0% Tier I leverage  capital ratio
requirement is the minimum for the top-rated bank holding  companies without any
supervisory,  financial or operational weaknesses or deficiencies or those which
are not  experiencing or  anticipating  significant  growth.  Other bank holding
companies  will be  expected to maintain  Tier I leverage  capital  ratios of at
least 4.0% to 5.0% or more,  depending on their overall  condition.  At December
31, 1998,  the Company  believes it complies  with the  above-described  Federal
Reserve Board regulatory capital requirements.

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

         Financial Modernization.  Under the Gramm-Leach-Bliley Act enacted into
law on November 12, 1999,  no company may acquire  control of a savings and loan
holding  company  after May 4,  1999,  unless the  company  is  engaged  only in
activities  traditionally  permitted  to a  multiple  savings  and loan  holding
company or newly permitted to a financial  holding company under Section 4(k) of
the Bank Holding Company Act.  Existing  savings and loan holding  companies and
those formed  pursuant to an application  filed with the OTS before May 4, 1999,
may engage in any activity  including  non-financial  or  commercial  activities
provided such companies control only one savings and loan association that meets
the Qualified Thrift Lender test. Corporate  reorganizations are permitted,  but
the transfer of  grandfathered  unitary  thrift  holding  company status through
acquisition is not permitted.

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

                                       26
<PAGE>

         The Bank. The Bank is subject to extensive  regulation and  examination
by the OFI and by the FDIC and is subject to certain requirements established by
the Federal Reserve Board. The federal and state laws and regulations  which are
applicable to banks regulate,  among other things,  the scope of their business,
their  investments,   their  reserves  against  deposits,   the  timing  of  the
availability  of deposited  funds and the nature,  amount of and  collateral for
certain loans.  There are periodic  examinations by the OFI and the FDIC to test
the Bank's compliance with various regulatory requirements.  This regulation and
supervision  establishes  a  comprehensive  framework of  activities in which an
institution  can engage and is  intended  primarily  for the  protection  of the
insurance  fund  and  depositors.   The  regulatory  structure  also  gives  the
regulatory authorities extensive discretion in connection with their supervisory
and enforcement  activities and examination  policies,  including  policies with
respect to the  classification  of assets and the establishment of adequate loan
loss reserves for regulatory purposes.  Any change in such regulation whether by
the OFI, the FDIC or the Congress  could have a material  adverse  impact on the
Company, the Bank and their operations.

         FDIC Insurance Premiums. The deposits of the Bank are currently insured
by the SAIF.  During the year ended December 31, 1999, the Bank paid $120,000 in
SAIF deposit insurance premiums.

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

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

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

         The FDIC also  requires  that savings  banks meet a risk-based  capital
standard.  The  risk-based  capital  standard  for a savings  bank  requires the
maintenance   of  total  capital  (which  is  defined  as  Tier  I  capital  and
supplementary  (Tier 2) capital) to risk weighted  assets of 8%. In  determining
the amount of risk-weighted  assets, all assets,  plus certain off balance sheet
assets,  are multiplied by a risk-weight  of 0% to 100%,  based on the risks the
FDIC believes are inherent in the type of asset or item.  The components of Tier
I capital are equivalent to those discussed above under the 3% leverage  capital
standard.  The components of  supplementary  capital include  certain  perpetual
preferred stock, certain mandatory convertible securities,  certain subordinated
debt and intermediate  preferred stock and general allowances for loan and lease
losses.  Allowance for loan and lease losses includable in supplementary capital
is limited to a maximum of 1.25% of risk-weighted assets. Overall, the amount of
capital counted toward supplementary capital cannot exceed 100% of core capital.
At December 31, 1998, the Bank met each of its capital requirements.

                                       27
<PAGE>

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

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

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

                                       28
<PAGE>

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

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

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

Federal and State Taxation

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

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

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

                                       29
<PAGE>

         Under the  experience  method,  the deductible  annual  addition to the
institution's  bad debt reserves is the amount necessary to increase the balance
of the reserve at the close of the taxable year to the greater of (a) the amount
which bears the same ratio to loans outstanding at the close of the taxable year
as the total net bad debts  sustained  during  the  current  and five  preceding
taxable years bear to the sum of the loans  outstanding  at the close of the six
years,  or (b) the lower of (i) the balance of the reserve  account at the close
of the Bank's "base year,"  which was its tax year ended  December 31, 1987,  or
(ii) if the amount of loans outstanding at the close of the taxable year is less
than the amount of loans  outstanding  at the close of the base year, the amount
which bears the same ratio to loans outstanding at the close of the taxable year
as the  balance of the reserve at the close of the base year bears to the amount
of loans outstanding at the close of the base year.

         At  December  31,  1999,  the federal  income tax  reserves of the Bank
included $7.1 million for which no federal income tax has been provided. Because
of these federal income tax reserves and the liquidation account established for
the benefit of certain  depositors of the Bank in connection with the conversion
of the Bank to stock form,  the retained  earnings of the Bank is  substantially
restricted.

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

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

         Net Operating Loss Carryovers.  A financial  institution may carry back
net operating  losses ("NOLs") to the preceding two taxable years and forward to
the succeeding 20 taxable years.  This provision  applies to losses  incurred in
taxable years  beginning  after 1997. At December 31, 1999,  the Bank had no NOL
carryforwards for federal income tax purposes.

         Capital Gains and Corporate Dividends-Received Deduction. Corporate net
capital   gains   are   taxed  at  a  maximum   rate  of  34%.   The   corporate
dividends-received  deduction  is 80% in the  case of  dividends  received  from
corporations  with which a corporate  recipient does not file a consolidated tax
return,  and corporations  which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends  received or accrued on
their behalf.  However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.

                                       30
<PAGE>

         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 Bank.

         The Bank's  federal  income tax  returns  for the tax years ended 1996,
1997, 1998 and 1999 are open under the statute of limitations and are subject to
review by the IRS.

         State  Taxation.  The Company is subject to the  Louisiana  Corporation
Income Tax based on its separate  Louisiana taxable income, and it is subject to
franchise  tax. The  Corporation  Income Tax applies at graduated  rates from 4%
upon the first  $25,000  of  Louisiana  taxable  income  to 8% on all  Louisiana
taxable income in excess of $200,000.  For these  purposes,  "Louisiana  taxable
income" means net income which is earned  within or derived from sources  within
the  State  of  Louisiana,  after  adjustments  permitted  under  Louisiana  law
including a federal  income tax  deduction  and an allowance  for net  operating
losses,  if any. In addition,  the Bank 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  are also  subtracted  in  calculating  a  company's
capitalized earnings.

Item 2.  Properties.

Offices and Properties

         At December 31, 1999, the Bank conducted  business from its main office
and four branch offices, three of which are located in Lafayette,  Louisiana and
one located in New Iberia,  Louisiana. The Bank also conducted business from its
one loan production office in Eunice, Louisiana.

         The  following  table sets forth  certain  information  relating to the
Company's offices at December 31, 1999.

                                       31
<PAGE>

<TABLE>
<CAPTION>
                                                          Net Book Value of
                                                           Premises and
                                            Owned or        Equipment at         Deposits at
                                             Leased      December 31, 1999    December 31, 1999
                                           -----------  --------------------  -------------------
                                                    (In Thousands)
Main Office

     101 West Vermilion Street
<S>                        <C>                                      <C>                 <C>
     Lafayette, Louisiana  70501             Owned                  $ 1,414             $ 85,493

Branch Offices:
     Northside Office
     2601 Moss Street
     Lafayette, Louisiana  70501             Owned                      366               38,515

     Southside Office
     3701 Johnston Street
     Lafayette, Louisiana  70503             Owned                      157               43,523

     Broadmoor Office
     5301 Johnston Street
     Lafayette, Louisiana  70503             Owned                      220               33,606

     New Iberia Office
     230 West Main Street
     New Iberia, Louisiana  70560            Owned                      496               12,075

Loan Production Offices:
     Eunice Loan Production Office
     136 South Third Street
     Eunice, Louisiana  70535                Leased                       4                    -
                                                        --------------------  -------------------

                                                                    $ 2,657            $ 213,212
                                                        ====================  ===================
</TABLE>

Item 3.  Legal Proceedings.

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

Item 4.  Submission of Matters to a Vote of Security Holders.

Not Applicable.


PART II.

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

         The  information   required  herein,  to  the  extent  applicable,   is
incorporated by reference from page 43 of the Registrant's 1999 Annual Report to
Stockholders ("Annual Report").

Item 6.  Selected Financial Data.

         The Information  required herein is incorporated by reference from page
6 of the Registrant's 1999 Annual Report.

                                       32
<PAGE>

Item 7.  Management's Discussion and Analysis of Financial Condition and Results
of                                                      Operations.

         The Information required herein is incorporated by reference from pages
7 through 17 of the Registrant's 1999 Annual Report.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk.

         The information required herein is incorporated by reference from pages
14 through 17 of the registrant's 1999 Annual Report.

Item 8.  Financial Statements and Supplementary Data.

         The information required herein is incorporated by reference from pages
18 through 39 of the Registrant's 1999 Annual Report.

Item 9.  Changes in and Disagreements With Accountants on Accounting and
         Financial Disclosures.

         Not Applicable.

PART III.

Item 10.  Directors and Executive Officers of the Registrant.

         The  information  required herein is incorporated by reference from the
Registrant's   definitive  proxy  statement  for  the  1999  Annual  Meeting  of
Stockholders ("Proxy Statement").

Item 11.  Executive Compensation.

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

Item 12.  Security Ownership of Certain Beneficial Owners and Management.

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

Item 13.  Certain Relationships and Related Transactions.

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

PART IV.

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)      Documents Filed as Part of this Report.

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

         Report of Independent Auditors
         Consolidated Balance Sheets as of December 31, 1999 and 1998
         Consolidated Statements of Income for the Fiscal Periods Ended
         December 31, 1999, 1998 and 1997
         Consolidated  Statements  of  Changes in  Shareholders'  Equity for the
         Fiscal  Periods  ended  December 31, 1999,  1998 and 1997
         Consolidated Statements  of Cash Flows for the Fiscal  Periods  Ended
         December  31, 1999, 1998 and 1997
         Notes to consolidated Financial Statements

                                       30
<PAGE>

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

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



                                  EXHIBIT INDEX

3.1*     Articles of Incorporation of Acadiana Bancshares, Inc.
3.2*     Bylaws of Acadiana Bancshares, Inc.
4.0*     Form of Stock Certificate of Acadiana Bancshares, Inc.
10.1**   Stock Option Plan
10.2**   1996 Recognition and Retention Plan and Trust Agreement for Employees
         and Non-Employee Directors
10.3***  Employment Agreement between LBA Savings Bank and Gerald G. Reaux, Jr.
10.4*    Form of Severance Agreement between Acadiana Bancshares, Inc., LBA
         Savings Bank and Lawrence Gankendorff, James J.
         Montelaro, Gregory King, Mary Anne Bertrand, Wayne Bares, Emile E.
         Soulier, III and Thomas F. Debaillon.
10.5     Form of Amendment No. 1 to Severance Agreements
13.0     1999 Annual Report to Stockholders
22.0     Subsidiaries of the Registrant - Reference is made to "Item 2.
         "Business" for the required information
23.1     Consent of Castaing, Hussey, Lolan & Dauterive, LLP

27.0     Financial Data Schedule

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

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

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

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

                                       34
<PAGE>

                                   SIGNATURES

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

                                                 ACADIANA BANCSHARES, INC.

March 29, 2000                             By:   /s/ Gerald G. Reaux, Jr.
                                                 ------------------------
                                           Gerald G. Reaux, Jr.
                                           President and Chief Executive
                                           Officer and Director

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

<TABLE>
<CAPTION>
Name                                     Title                               Date

<S>                                      <C>                            <C>
  /s/ Gerald G. Reaux, Jr.               President, Chief Executive     March 29, 2000
  -----------------------
  Gerald G. Reaux, Jr.                   Officer and Director

  /s/ Lawrence E. Gankendorff            Chairman of the Board          March 29, 2000
  ----------------------------
  Lawrence E. Gankendorff

  /s/ Albert W. Beacham                  Director                       March 29, 2000
  ---------------------
  Albert W. Beacham, M.D.

  /s/ James J. Montelaro                 Executive Vice President       March 29, 2000
  -----------------------                and Director
  James J. Montelaro


  /s/ John H. DeJean                     Director                       March 29, 2000
  ------------------
  John H. DeJean

  /s/ Thomas S. Ortego                   Director                       March 29, 2000
  --------------------
  Thomas S. Ortego

  /s/ William H. Mouton                  Director                       March 29, 2000
  ---------------------
  William H. Mouton

  /s/ Donald J. O'Rourke, Sr.            Director                       March 29, 2000
  ---------------------------
  Donald J. O'Rourke, Sr.

  /s/ Kaliste J. Saloom, Jr.             Director                       March 29, 2000
  --------------------------
  Kaliste J. Saloom, Jr.

  /s/ Emile E. Soulier, III.             Vice President and Chief       March 29, 2000
  -------------------------
  Emile E. Soulier, III                  Financial Officer
                                         (principal financial and
                                         accounting officer)
</TABLE>

                                       35