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, 2000 OR [  ]
  TRANSITION REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THESECURITIES 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
  Employerof incorporation or
  organization)
  Identification
  Number)200 West Congress Street
  Lafayette, Louisiana
  70501(Address of principal executive
  offices)
  (Zip Code)
  Registrants
telephone number, including area code: 
(337) 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 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. 
[   ] As of March 10, 2001, the aggregate market value of
the 978,524 shares of Common Stock of the Registrant issued and outstanding on
such date, which excludes 407,297 shares held by all directors and executive
officers of the Registrant as a group, was approximately $18.4 million.  This figure was based on the closing sale
price of $18.85 per share of the Registrants Common Stock on March 10, 2001. Number of shares of Common Stock outstanding as of
December 31, 2000: 1,402,321 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, 2000 are incorporated into Part II, Items
  5 through 8 of this Form 10-K.(2)
  Portions of the definitive proxy statement for
  the 2000 Annual Meeting of Stockholders to be filed within 120 days of
  Registrants fiscal year end are incorporated into Part III, Items 10 through
  13 of this Form 10-K.  PART I.

In addition to historical information, this Annual
Report on Form 10-K 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 assets of the Company are the capital stock of the Bank and
its investment in Acadiana Holdings, L.L.C. (Holdings).  Holdings was formed in May 2000 for the
purpose of acquiring a new facility for the Companys headquarters and the
Banks main office.  The facility was
purchased in May 2000.  On March 3,
2001, and after completing certain renovations and improvements, the Bank,
Holdings, and the Company moved to its new headquarters and main office
location at 200 West Congress Street, Lafayette, Louisiana.  The Companys common stock trades on the
AMEX under the symbol ANA.  At
December 31, 2000, the Company had total assets of $324.5 million, total
deposits of $224.5 million, and stockholders equity of $28.8 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 was located at 101 West Vermilion Street, Lafayette,
Louisiana, 70501, until March 3, 2001 when it moved to 200 West Congress
Street, Lafayette, Louisiana, 70501; 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 commercial, retail, and other
loans.  At December 31, 2000, the Companys
net loan portfolio totaled $264.8 million, or 81.6% of the Companys total
assets.  In addition to its lending
activities, the Company also invests in investment securities.  The Companys investment securities
portfolio amounted to $35.9 million, or 11.1%, of the Companys total assets at
December 31, 2000.  At December 31,
2000, the Company had total deposits of $224.5 million, of which $59.3 million,
or 26.4% 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 $165.2 million, or 73.6%, consisted of certificates of deposit,
including $47.0 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s borrowings include both
short-term (amounts maturing in one year or less from date of inception) and
long-term debt (amounts maturing more than one year from date of
inception).  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, 2000, borrowings, consisting primarily of
advances from the FHLB, totaled $69.6 million, all of which was long-term.  Borrowings funded 21.5% of total assets at
December 31, 2000.

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,
2000, stockholders equity totaled $28.8 million, or 8.9% 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,
2000, the Company and the Bank significantly exceeded all applicable regulatory
capital ratio requirements.

Lending Activities



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


At December 31,2000
  1999
  1998
  1997
  1996Percent
  
  Percent
  
  Percent
  
  Percent
  
  PercentBalance
  of Total
  Balance
  of Total
  Balance
  of Total
  Balance
  of Total
  Balance
  of Total(Dollars in
  Thousands)Type of loan:Mortgage Loans:Single-family residential
  $188,133
  71.04%
  $179,109
  73.10%
  $169,362
  75.02%
  $169,694
  79.72%
  $142,774
  78.15%Construction
  3,912
  1.48%
  12,612
  5.15%
  12,588
  5.58%
  10,286
  4.83%
  10,581
  5.79%Multi-family residential
  346
  0.13%
  425
  0.17%
  481
  0.21%
  546
  0.26%
  862
  0.47%Commercial real estate
  28,851
  10.90%
  18,798
  7.67%
  16,887
  7.48%
  13,900
  6.53%
  14,744
  8.07%Equity lines of credit
  4,227
  1.60%
  3,406
  1.39%
  2,040
  0.90%
  587
  0.28%
  132
  0.07%Total mortgage loans
  225,469
  85.15%
  214,350
  87.48%
  201,358
  89.19%
  195,013
  91.62%
  169,093
  92.55%Commercial business loans
  19,702
  7.44%
  18,144
  7.41%
  13,861
  6.14%
  9,821
  4.61%
  5,535
  3.03%Consumer loans
  24,398
  9.21%
  21,803
  8.90%
  19,348
  8.57%
  15,768
  7.41%
  16,727
  9.15%Total loans
  269,569
  101.80%
  254,297
  103.79%
  234,567
  103.90%
  220,602
  103.64%
  191,355
  104.73%Less:Allowance for loan losses
  (2,714)
  -1.01%
  (2,747)
  -1.12%
  (2,726)
  -1.21%
  (2,760)
  -1.30%
  (2,592)
  -1.42%Unearned discounts
  1
  0.00%
  13
  0.01%
  57
  0.03%
  162
  0.08%
  331
  0.18%Net deferred loan fees
  (198)
  -0.07%
  (235)
  -0.10%
  (357)
  -0.16%
  (535)
  -0.25%
  (471)
  -0.26%Unadvanced loan funds
  (1,853)
  -0.72%
  (6,332)
  -2.58%
  (5,789)
  -2.56%
  (4,629)
  -2.17%
  (5,899)
  -3.23%Total loans, net
  $264,805
  100.00%
  $244,996
  100.00%
  $225,752
  100.00%
  $212,840
  100.00%
  $182,724
  100.00%



The Companys primary
source of income is from loans. Loans receivable, net, grew $19.8 million, or
8.1%, during the year ended December 31, 2000. 
Changes in types of loans during 2000 are as follows: single-family
residential loans increased $9.0 million or 5.0%; construction loans decreased
$8.7 million, or 69.0%; multi-family residential loans decreased $79,000, or
18.6%; commercial real estate loans grew $10.1 million, or 53.5%; equity lines
of credit grew $821,000, or 24.1%; commercial business loans grew $1.6 million,
or 8.6%; and consumer loans grew $2.6 million, or 11.9%.

Contractual Maturities.The following
table sets forth the time to contractual maturity of the Companys loan
portfolio at December 31, 2000.

Less than 
  One Year
  One Year
   Through Five 
  Years
  Over Five
  Years
  Total(Dollars in Thousands)Single-family residential
  $5,967
  $27,584
  $154,582
  $188,133Construction
  3,912
  -
  -
  3,912Multi-family residential
  224
  31
  91
  346Commercial real estate
  3,777
  8,549
  16,525
  28,851Equity lines of credit
  4,227
  -
  -
  4,227Commercial business loans
  9,015
  6,437
  4,250
  19,702Consumer loans
  5,791
  10,741
  7,866
  24,398Total
  $32,913
  $53,342
  $183,314
  $269,569

Contractual maturities of the
Companys loan portfolio do not reflect the expected timing of loan
repayments.  The average life of the companys
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 (contractual) 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, 2000 of all loans contractually maturing after
December 31, 2001 by fixed and adjustable interest rates.

Fixed 
  Rates
  Adjustable
  Rates(In
  thousands)Single-family residential
  $102,054
  $80,112Construction
  -
  -Multi-family residential
  -
  122Commercial real estate
  14,927
  10,147Equity lines of credit
  -
  -Commercial business loans
  5,776
  4,911Consumer loans
  16,941
  1,666$139,698
  $96,958

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.

Years Ended
  December 31,2000
  1999
  1998(Dollars in
  Thousands)Loans receivable, net beginning of period
  $244,996
  $225,752
  $212,840Loan originations:Single-family residential
  27,624
  37,154
  41,007Construction
  8,227
  14,704
  15,306Multi-family residential
  -
  -
  -Commercial real estate
  -
  5,803
  -Commercial business loans
  24,706
  22,395
  31,624Consumer loans
  16,037
  16,642
  16,664Total loan
  originations
  76,594
  96,698
  104,601Loan reductions:Loan sales
  (4,415)
  (8,565)
  (19,479)Loan participation
  -
  (2,471)Principal repayments
  (56,783)
  (73,417)
  (65,964)Other changes, net(1)
  4,413
  6,999
  (6,246)Total loan
  reductions
  (56,785)
  (77,454)
  (91,689)Loans receivable, net, end of period
  $264,805
  $244,996
  $225,752


(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 real
estate mortgage loans, construction loans and commercial real estate,
commercial business loans and consumer loans must be reviewed and approved by
appropriate Loan Officers, the Directors Loan Committee of the Companys Board
of Directors, and the full Board of Directors, depending on the amount of the
request.  The Directors Loan Committee
is comprised of five directors, one of which is the President and Chief
Executive Officer, and two outside directors, one of which is designated as the
chairman.

Unsecured loans in amounts up to
$50,000 and secured loans in amounts up to $100,000 may be approved by
designated senior loan officers of the Company.  The Companys Singly-Family Residential Lending Manager has the
authority to approve conforming residential loans up to $275,000.  The Companys Commercial Lending Manager has
authority to approve secured commercial real estate and secured commercial
business loans in amounts up to $150,000. 
The Companys Retail Lending Manager has authority to approve secured
consumer loans in amounts up to $100,000. 
The Companys Executive Vice President and Chief Operating Officer has
authority to approve secured loans up to $250,000.  The Companys President and Chief Executive Officer has authority
to approve secured loans in amounts up to $500,000.  Credit relationships over $500,000 to $1,000,000 require the
approval of the Directors Loan Committee. Loans in excess of $1,000,000 must
be reviewed and approved by the full Board of Directors of the Company.All credit relationships with aggregate debt in excess of $1,000,000
require the approval of the Companys Board of Directors.

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. 
An independent appraiser approved by the Companys Board of Directors
generally performs property appraisals. 
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.

Single-Family Residential Loans.As of December 31, 2000, $188.1
million, or 71.0%, of the Companys total loan portfolio consisted of
single-family residential mortgage 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).  The Companys maximum
loan-to-value (LTV) ratio is 80%, and is based on the lesser of sales price
or appraised value for conventional residential mortgage loans held in the
portfolio and also for those loans originated for sale in the secondary
market.  Generally on loans with a LTV
ratio over 80%, private mortgage insurance (PMI) is required on the amount of
the loan in excess of 80% of value. 
However, the Directors Loan Committee may approve loans with LTV ratios
of up to 89.5% without PMI.

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 contractual
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 with
documentation that 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, 2000, $106.5 million, or 56.6%, of the Companys
single-family residential mortgage loans were fixed-rate loans.  At December 31, 2000, the weighted average
remaining term to maturity of the Companys fixed-rate, single-family
residential mortgage loans was approximately 20 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 loan terms
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, 2000, the
weighted average remaining term to maturity of the Companys adjustable-rate,
single-family residential mortgage loans was approximately 25 years.  At December 31, 2000, $81.6 million or
43.4%, of the Companys single-family residential mortgage loans were
adjustable-rate loans.

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

Construction Loans.  Single-family construction loans are
included in the Companys residential loan portfolio.  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 that is insufficient to assure full repayment of the
loan.  Loans on lots may run the risk of
adverse zoning changes, environmental or other restrictions on future use.  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.

Substantially all of the Companys
construction loans have consisted of loans to construct single-family
residences.  As of December 31, 2000,
the Companys construction loans amounted to $3.9 million, or 1.5% of the
Companys loan portfolio.  As of
December 31, 2000, none of the Companys construction loans was considered
non-performing.

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 of80% of the sales price, or appraised value of the property, whichever is
less.  Higher ratios require PMI.  The Company originated $7.6 million of
single-family construction loans to individuals during the year ended December
31, 2000.

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, 2000, the
Company originated $587,000 such loans to builders.

Commercial Real Estate Loans and Multi-Family
Residential Loans. 
Commercial real estate loans and multi-family residential loans are
included in the Companys commercial loan portfolio.  The Company evaluates various aspects of commercial real estate
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, both 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 to substantiate values for every
commercial real estate and multi-family loan transaction.  The Company commissions state-licensed or
certified appraisers (generally Master Appraisal Institute (MAI) certified)
for such appraisal data.  Prior to the
approval of a loan, the Company reviews all appraisal reports.  On occasion, the Company also retains a
second independent appraiser to review an appraisal report.  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.

Commercial
real estate and multi-family residential lending entail 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.

At December 31, 2000, the Company had $28.9 million
in outstanding loans secured by commercial real estate.  Securing such commercial real estate loans
are office and other commercial buildings, retail and manufacturing properties
and church properties.  Commercial real
estate loans comprised 10.9% of the Companys total loan portfolio at December
31, 2000.  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 either have fixed rates of interest or
interest rates that adjust periodically during the term of the loan.  Such loans generally havematurities ranging from 5 to 10 years; such loans generally have monthly
loan payments based on 10-year amortization, together with a final maturity
balloon payment, sufficient to repay the total amount of the loan with interest
by the end of the loan term.  At
December 31, 2000, $15.8 million, or 54.7%, of the Companys commercial real
state loans were fixed-rate loans.  The
weighted average remaining term to maturity of the Companys fixed-rate
commercial real estate loans was 5 years. 
The Companys adjustable-rate 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. 
At December 31, 2000, $13.1 million, or 45.3%, of the Companys
commercial real estate loans were adjustable-rate loans.  The weighted average remaining term to
maturity of the Companys adjustable-rate commercial real estate loans was 8
years.

At
December 31, 2000, the Company had $346,000 of multi-family residential real
estate loans.  None of the Companys
multi-family residential real estate loans were non-performing at December 31,
2000.  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.

Commercial Business Loans.  Commercial business loans are included in
the Companys commercial loan portfolio. 
Commercial business 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 a businesss products and services. 
The Company attempts to minimize its risk exposure by limiting such
lending to proven businesses, only considering businesses with existing
operating performance which can be analyzed, requiring conservative debt
coverage ratios, and periodically monitoring the operation and physical
condition of the collateral.   The
Company concentrates its commercial business lending activities among small- to
mid-size businesses in Lafayette, Louisiana and contiguous parishes, in a
manner consistent with its current underwriting standards.  Originations of commercial business loans by
the Company amounted to $24.7 million during the year ended December 31, 2000,
compared to $22.4 million, and $31.6 million in the years ended December 31,
1999 and 1998, respectively.  Prior to
1996, the Company had not been an active originator of commercial business
loans.  At December 31, 2000, the Companys
commercial business loans amounted to $19.7 million, or 7.4% of the Companys
total loan portfolio.  Non-performing
commercial business loans amounted to $148,000 at December 31, 2000.

The Companys commercial business loans either have
fixed rates of interest or interest rates that adjust periodically during the
term of the loan.  Such loans generally
have maturities ranging up to 5 years; such loans generally have monthly loan
payments sufficient to repay the total amount of the loan with interest by the
end of the loan term.  At December 31,
2000, $7.6 million, or 38.3%, of the Companys commercial business loans were
fixed-rate loans.  The weighted average
remaining term to maturity of the Companys fixed-rate commercial business
loans was 2 years.  At December 31,
2000, $12.1 million, or 61.7%, of the Companys commercial business loans were
adjustable-rate loans.  The weighted
average remaining term to maturity of the Companys adjustable-rate commercial
business loans was 3 years. The Companys adjustable-rate commercial business
loans are generally 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.

Consumer Loans and Equity Lines of Credit.Consumer loans and equity lines
of credit are included in the Companys consumer loan portfolio. The Company
offers consumerloans and home equity lines of credit in order to
provide a full range of retail financial services to its customers.  Consumer loans generally involve more credit
risk than single-family residential 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.

The Company originates substantially
all consumer loans and home equity lines of credit in its primary market
area.  Origination of consumer loans and
home equity lines of credit by the Company amounted to $16.0 million during the
year ended December 31, 2000 compared to $16.6 million and $16.7 million during
the years ended December 31, 1999 and 1998, respectively.  At December 31, 2000, $24.4 million, or 9.2%
of the Companys loan portfolio was comprised of consumer loans, and
additionally, $4.2 million, or 1.6%, of the Companys loan portfolio was
comprised of home equity lines of credit. 
The rates on the Companys home equity lines of credit loans are
generally indexed to the New York Prime Rate, as quoted in The Wall Street
Journal, plus a margin.  As of
December 31, 2000, $22,000 of the Companys total consumer loans and none of
its home equity line of credit loans were considered non-performing.

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, 2000, the Companys limit on
loans-to-one borrower under LSBA was approximately $4.2 million.  At December 31, 2000, the Companys five
largest loans or groups of loans-to-one borrower ranged from $2.0 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.

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 toresolve 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 and are recorded at the lower of
fair value minus estimated costs to sell the property, or 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.

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 $404,000 of loans deemed troubled
debt restructurings as of December 31, 2000. 
The interest income that would have been recognized if those loans had
been current with their original terms was approximately $102,000 for the year
ended December 31, 2000.  Interest
income for such loans totaling $53,000 was included in income for the year
ended December 31, 2000.

Delinquent Loans.The following table sets forth information concerning
delinquent loans at December 31, 2000, 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.

At December
  31, 200030-59 Days
  60-89 DaysPercent of
  
  Percent ofAmount
  Loan Category
  Amount
  Loan Category(Dollars in
  Thousands)Mortgage loans:Single-family residential
  $268
  0.14%
  $44
  0.02%Construction
  -
  -
  -
  -Multi-family residential
  -
  -
  -
  -Commercial real estate
  -
  -
  -
  -Equity lines of credit
  -
  -
  -
  -Commercial business loans
  249
  1.26
  -
  -Consumer loans
  50
  0.20
  12
  0.05Total
  $567
  0.21%
  $56
  0.02%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.

At December
  31,2000
  1999
  1998
  1997
  1996(Dollars in
  Thousands)Accruing loans 90 days or more past due: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
  41
  33
  140
  285
  632Construction
  -
  -
  -
  -
  -Multi-family residential
  -
  -
  -
  -
  -Commercial real estate
  -
  -
  -
  -
  145Equity lines of credit
  -
  18
  -
  -
  -Commercial business loans
  148
  -
  -
  -
  -Consumer loans
  22
  49
  50
  129
  96Total
  non-accrual loans
  211
  100
  190
  414
  873Total non-performing loans
  211
  100
  190
  414
  873Other real estate owned, and repossessed assets
  11
  -
  7
  204
  75Total non-performing assets
  $222
  $100
  $197
  $618
  $948Performing troubled debt restructurings
  $404
  $453
  $490
  $515
  $536Total non-performing assets 
    and troubled debt restructurings
  $626
  $553
  $687
  $1,133
  $1,484Non-performing assets to total loans
  0.08%
  0.04%
  0.08%
  0.29%
  0.52%Non-performing assets to total assets
  0.07
  0.03
  0.07
  0.22
  0.36Non-performing loans to total loans
  0.08
  0.04
  0.08
  0.19
  0.48Non-performing loans to total assets
  0.07
  0.03
  0.07
  0.15
  0.33Total non-performing assets and troubled debt
  restructurings to total assets
  0.19
  0.18
  0.24
  0.41
  0.56Other
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, 2000, the Company had $1.3 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 0.4% of total assets.

Potential Problem Loans.  As of December 31, 2000, the Company had not
identified any additional potential problem loans that are not already
described above in sections titled delinquent loans, non-performing assets and
troubled debt restructurings, and other classified assets.

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, 2000, the Companys allowance for loan losses amounted
to 441.30% and 1.01% of the Companys total 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.

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



Years Ended
  December 31,2000
  1999
  1998
  1997
  1996(Dollars in
  Thousands)Balance, beginning of period
  $2,747
  $2,726
  $2,760
  $2,592
  $2,329Provision for loan losses
  (83)
  -
  90
  180
  355Charge-offs:Single-family residential
  -
  (4)
  (40)
  (14)
  -Construction
  -
  -
  -
  -
  -Multi-family residential
  -
  -
  -
  -
  -Commercial real estate
  -
  -
  -
  -
  (67)Equity lines of credit
  (8)
  -
  -
  -
  -Commercial business loans
  -
  (25)
  (169)
  -
  -Consumer loans
  (162)
  (156)
  (104)
  (221)
  (210)Total charge-offs
  (170)
  (185)
  (313)
  (235)
  (277)Recoveries:Single-family residential
  55
  40
  36
  76
  87Construction
  -
  -
  -
  -
  -Multi-family residential
  -
  -
  -
  -
  -Commercial real estate
  -
  -
  -
  56
  10Equity lines of credit
  -
  -
  -
  -
  -Commercial business loans
  37
  47
  22
  -
  -Consumer loans
  128
  119
  131
  91
  88Total recoveries
  220
  206
  189
  223
  185Net (charge-offs) / recoveries
  50
  21
  (124)
  (12)
  (92)Balance, end of period
  $2,714
  $2,747
  $2,726
  $2,760
  $2,592Allowance for loan losses to total non-performing
  loans and troubled debt restructurings at end of period
  441.30%
  496.75%
  396.80%
  297.09%
  183.96%Allowance for loan losses to total loans at end
  of period
  1.01%
  1.08%
  1.16%
  1.25%
  1.35%Net (charge-offs) / recoveries to Average loans
  outstanding
  0.02%
  0.01%
  -0.06%
  -0.01%
  -0.05%

The following table
presents an allocation of the allowance for loan losses to categories of loans
indicated, and the percentage that each category of loans bears to the total
loans.  Management uses this allocation
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.



At December
  31,2000
  1999
  1998
  1997
  1996Percent
  
  Percent
  
  Percent
  
  Percent
  
  Percentof Loans
  
  of Loans
  
  of Loans
  
  of Loans
  
  of Loansto Gross
  
  to Gross
  
  to Gross
  
  to Gross
  
  to GrossAmount
  Loans
  Amount
  Loans
  Amount
  Loans
  Amount
  Loans
  Amount
  Loans(Dollars in
  Thousands)Mortgage loans:Single-family residential
  $1,119
  69.79%
  $992
  70.43%
  $1,591
  72.20%
  $1,739
  76.92%
  $1,565
  74.61%Construction
  31
  1.45%
  74
  4.96%
  80
  5.37%
  64
  4.66%
  58
  5.53%Multi-family residential
  3
  0.13%
  3
  0.17%
  3
  0.20%
  5
  0.25%
  7
  0.45%Commercial real estate
  409
  10.70%
  505
  7.39%
  397
  7.20%
  350
  6.30%
  460
  7.71%Equity
  lines of credit
  87
  1.57%
  81
  1.34%
  31
  0.87%
  9
  0.27%
  2
  0.07%Total mortgage loans
  1,649
  83.64%
  1,655
  84.29%
  2,102
  85.84%
  2,167
  88.40%
  2,092
  88.37%Commercial business loans
  791
  7.31%
  737
  7.14%
  346
  5.91%
  274
  4.45%
  163
  2.89%Consumer loans
  274
  9.05%
  355
  8.57%
  278
  8.25%
  319
  7.15%
  337
  8.74%Total non-mortgage loans
  1,065
  16.36%
  1,092
  15.71%
  624
  14.16%
  593
  11.60%
  500
  11.63%Total allowance for loans
  $2,714
  100.00%
  $2,747
  100.00%
  $2,726
  100.00%
  $2,760
  100.00%
  $2,592
  100.00%

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



Investment Securities

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 invests 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 commercial paper and
mortgage-backed securities.  
Additionally, the Company holds certain equity securities in its trading
and available for sale portfolios. 
Finally, as a condition to its membership in the FHLB, the Company
invests in FHLB stock.  All of the
Companys investments are in domestic securities.  The Companys objective is to use such investments to reduce
interest rate risk, provide liquidity and enhance yields on assets. The average
yield on investment securities, including FHLB stock, was 7.12%, 6.51%, and
6.67% for the years ended December 31, 2000, 1999, and 1998, respectively.

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 that 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.  Privately issued mortgage-backed securities
are not guaranteed by government agencies but normally carry other credit
enhancement; Standard and Poors or Fitch generally rates privately issued
mortgage-backed securities.

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.

Typically,
pooling a group of similar mortgages creates mortgage-backed securities.  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.

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.

Trading Securities.As of
December 31, 2000, the Companys trading securities amounted to $162,000.  Trading securities are carried at fair
value, using quoted market prices. 
Changes in fair value are recorded in earnings.  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 $24.2 million, $26.1 million, and $26.4 million, respectively, at
December 31, 2000, 1999 and 1998.



December 31,
  2000Amortized
  Cost
  Gross 
  Unrealized 
  Gains
  Gross
  Unrealized
  Losses
  Fair
  Value(In
  Thousands)Securities Available for Sale:U.S. Treasuries
  $495
  $9
  $-
  $504U.S. Government Agencies:Bonds
  10,000
  26
  (22)
  10,004Mortgage-backed securities
  8,815
  124
  (47)
  8,892Other mortgage-backed securities
  4,994
  -
  (219)
  4,775Total debt securities
  $24,304
  $159
  $(288)
  $24,175Equity securities
  5
  50
  -
  55Total Securities Available for
  Sale
  $24,309
  $209
  $(288)
  $24,230December 31,
  1999Amortized
  Cost
  Gross 
  Unrealized 
  Gains
  Gross
  Unrealized
  Losses
  Fair
  Value(In
  Thousands)Securities Available for Sale:U.S. Treasuries
  $493
  $-
  $(5)
  $488U.S. Government Agencies:Bonds
  10,000
  -
  (233)
  9,767Mortgage-backed securities
  11,120
  99
  (389)
  10,830Other mortgage-backed securities
  4,994
  -
  (44)
  4,950Total debt securities
  $26,607
  $99
  $(671)
  $26,035Equity securities
  5
  20
  -
  25Total Securities Available for
  Sale
  $26,612
  $119
  $(671)
  $26,060

December 31,
  1998Amortized
  Cost
  Gross 
  Unrealized 
  Gains
  Gross
  Unrealized
  Losses
  Fair
  Value(In
  Thousands)Securities Available for Sale:U.S. Treasuries
  $500
  $11
  $-
  $511U.S. Government Agencies:Bonds
  8,449
  14
  (1)
  8,462Mortgage-backed securities
  11,067
  345
  (3)
  11,409Commercial Paper
  5,992
  
  
  5,992Total debt securities
  $26,008
  $370
  $(4)
  $26,374Equity securities
  5
  25
  -
  30Total Securities Available for
  Sale
  $26,013
  $395
  $(4)
  $26,404

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, 2000, the Company had net
unrealized losses of $51,000, net of deferred taxes, with respect to its
securities available-for-sale.

During the years ended December 31,
2000, 1999, and 1998, proceeds from calls and maturities of securities
available for sale were approximately $0, $19.9 million, and $39.9 million,
respectively, resulting in no realized gain or loss.  Below is a table of the Companys available for sale debt
securities showing the weighted average yield for various ranges of maturities
at December 31, 2000:



Due in One
  Year 
  or Less
  Due After
  One 
  Year Through 
  Five YearsAmount
  Weighted 
  Average 
  Yield
  Amount
  Weighted
  Average
  Yield(In
  Thousands)Debt Securities Available for Sale:U.S. Treasuries
  $-
  
  $504
  6.01%U.S. Government Agencies:Bonds
  -
  
  10,004
  6.54%Mortgage-backed securities
  1,011
  6.01%
  3,734
  8.54%Other mortgage-backed securities
  -
  
  -Total
  1,011
  6.01%
  14,242
  7.03%

Due After
  Five Years Through Ten Years
  Due After Ten
  YearsAmount
  Weighted
  Average Yield
  Amount
  Weighted
  Average Yield(In
  Thousands)Debt Securities Available for Sale:U.S. Treasuries
  $-
  
  $-U.S. Government Agencies:Bonds
  -
  
  -Mortgage-backed securities
  4,147
  6.55%Other mortgage-backed securities
  -
  
  4,775
  6.55%Total
  4,147
  6.55%
  4,775
  6.55%

U.S. Government Agency Bonds are
distributed without regard to certain call features.  All of the Companys $10.0 million of Bonds are callable at
par.  Mortgage-backed securities are
distributed based upon expected repayment schedules at currently projected
speeds.  Accordingly, actual maturities
may differ from contractual and projected maturities.

Securities Held to
Maturity. The
Companys securities held to maturity amounted to $11.7 million, $11.9 million,
and $12.4 million, respectively, at December 31, 2000, 1999 and 1998. The following
table sets forth certain information regarding the Companys securities held to
maturity at the dates indicated.



December 31,
  2000Amortized
  Cost
  Gross
  Unrealized
  Gains
  Gross
  Unrealized
  Losses
  Fair 
  Value(In
  Thousands)Securities Held to Maturity:U.S. Government Agencies:Mortgage-backed securities
  $11,682
  $191
  $(59)
  $11,814Total Securities Held to
  Maturity
  $11,682
  $191
  $(59)
  $11,814

December 31,
  1999Amortized
  Cost
  Gross
  Unrealized
  Gains
  Gross
  Unrealized
  Losses
  Fair 
  Value(In
  Thousands)Securities Held to Maturity:U.S. Government Agencies:Mortgage-backed securities
  $11,921
  $55
  $(18)
  $11,958Total Securities Held to
  Maturity
  $11,921
  $55
  $(18)
  $11,958

December 31,
  1998Amortized
  Cost
  Gross
  Unrealized
  Gains
  Gross
  Unrealized
  Losses
  Fair 
  Value(In
  Thousands)Securities Held to Maturity:U.S. Government Agencies:Mortgage-backed securities
  $12,360
  $350
  $(16)
  $12,694Total Securities Held to
  Maturity
  $12,360
  $350
  $(16)
  $12,694

Securities classified as held to
maturity are carried at amortized cost, or original cost adjusted for the
amortization of premiums and the accretion of discounts using a method that
approximates the interest method. 
Unrealized gains and losses on such securities are not recognized on the
books of the Company, and are not included in income or equity.    Below is a table of the Companys held to
maturity debt securities showing the weighted average yield for various ranges
of maturities at December 31, 2000:



Due in One Year
  or Less
  Due After One 
  Year Through 
  Five YearsAmount
  Weighted 
  Average 
  Yield
  Amount
  Weighted 
  Average 
  Yield(In Thousands)Debt Securities Held to Maturity:U.S. Government Agencies:Mortgage-backed securities
  $5,657
  7.11%
  1,025
  6.87%Total
  $5,657
  7.11%
  $ 1,025
  6.87%

Due After Five
  Years Through 
  Ten Years
  Due After 
  Ten YearsAmount
  Weighted
  Average
  Yield
  Amount
  Weighted
  Average 
  Yield(In Thousands)Debt Securities Held to Maturity:U.S. Government Agencies:Mortgage-backed securities
  $-
  
  $ 5,000
  7.06%Total
  $-
  0.00%
  $ 5,000
  7.06%

Mortgage-backed
securities are distributed based upon expected repayment schedules at currently
projected speeds.  Actual maturities may
differ from projections.

Federal Home Loan Bank
Stock.  In addition, as a member of the FHLB of
Dallas, the Bank is required to maintain a minimum investment in stock of the
FHLB of Dallas calculated as a percentage of outstanding home mortgage related
assets.  Additional investment is
required that is calculated as a percentage of total FHLB advances.  As of December 31, 2000, the Banks
investment in stock of the FHLB of Dallas amounted to $4.1 million.  Both cash and stock dividends may be
received on FHLB stock.  During the year
ended December 31, 2000, the Bank received $311,000 in dividends on its FHLB stock.  No ready market exists for such stock, which
is carried at par value.

Sources of Funds

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

Deposits. 
The Companys current deposit products include savings accounts, money
market accounts, checking accounts, 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 regional ATM networks known as CIRRUS®and PULSE®.

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.

All of the Companys deposits are held
in domestic bank offices. 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.



At or for the
  year ended December 31,2000
  1999
  1998(In
  Thousands)Total deposits, beginning of period
  $213,212
  $201,654
  $195,043Net increase (decrease) before interest credited
  3,468
  4,771
  209Interest credited
  7,851
  6,787
  6,402Total deposits, end of period
  $224,531
  $213,212
  $201,654

The average rate paid
on interest bearing demand deposits was 3.95%, 3.44%, and 3.17% for the years
ended December 31, 2000, 1999, and 1998, respectively.  The average rate paid on savings deposits
was 2.00%, 1.74%, and 2.10% for the years ended December 31, 2000, 1999, and
1998, respectively. The average rate paid certificate of deposit accounts was
5.82%, 5.49%, and 5.70% for the years ended December 31, 2000, 1999, and 1998,
respectively.

As of December 31, 2000, the aggregate
amount of time certificates of deposit in amounts greater than or equal to
$100,000 was approximately $47.0 million. 
The following table presents the maturity of these time certificates of
deposit at such dates.



Three
  Months
  and Less
  Over
  Three
  Months
  Through
  Six Months
  Over
  Six 
  Months
  Through
  One Year
  Over
  One 
  Year
  Through
  Two Years
  Over
  Two
  Years
  Through
  Three Years
  Over
  Three
  Years
  Through
  Five Years
  Over
  Five
  Years
  Total(In
  Thousands)$7,184
  $13,747
  $18,041
  $5,205
  $2,326
  $464
  $-
  $46,967

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,
and investment securities (including 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 appropriate interest rates and ranges of
maturities.

Short-term borrowings.  Short-term borrowings consist of sales of
securities under repurchase agreements and from time to time, advances from the
FHLB Dallas.  At December 31, 2000,
securities sold under agreements to repurchase were $128,000, and the weighted
average interest rate thereon was 4.57%. 
These short-term borrowings represent transactions with customers, which
activity the Company began in December 2000. 
There were no other short-term borrowings at December 31, 2000.  Other short-term borrowings from time to
time during the periods described below, were obtained from the FHLB Dallas to
meet the cash flow needs of the Company.

Average
short-term borrowings for the year ended December 31, 2000 were $4.4 million,
with the highest level during the year at $15.0 million; the average rate for
the year was 6.23%.  Average short-term
borrowings for the year ended December 31, 1999 were $8.5 million, with the
highest level during the year at $22.0 million; the average rate for the year
was 5.30%.  Average short-term
borrowings for the year ended December 31, 1998 were $389,000, with the highest
level during the year at $7.5 million; the average rate for the year was 4.96%.

Subsidiaries

The
Bank is a wholly owned subsidiary of the Company. The Bank currently has no
subsidiaries.  Holdings is also a wholly
owned subsidiary of the Company. 
Holdings 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.  The Companys share of
Cadences net loss for the year ended December 31, 2000 was $19,000.  The Company is a guarantor in the amount of
$500,000 for a $1.0 million bank line of credit to Cadence dated in August
2000.

Legal Proceedings

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

Competition

The
Company faces strong competition 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 upon the convenient locations of its branch
office network and 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 Company 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 84 full-time employees and 10 part-time employees as of December 31,
2000.  The Company had 2 full-time
employees who were not officers or employees of the Bank.  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.

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.

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 that 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.

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, 2000, the Bank paid $44,000 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, 2000, the
Bank met each of its capital requirements.

In
August 1995, the FDIC and other federal banking agencies published a final rule
modifying their existing risk-based capital standards to provide for
consideration of interest rate risk when assessing capital adequacy of a
bank.  Under the final rule, the FDIC
must explicitly include a banks exposure to declines in the economic value of
its capital due to changes in interest rates as a factor in evaluating a
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.

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, the Bank and Holdings 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 Company and its subsidiaries file a consolidated federal
income tax return.  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
Company, the Bank, and Holdings maintain their 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.

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.

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.  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. 
The Louisiana Shares Tax and franchise tax are included is included in
non-interest expense.

Item 2.  Properties.

Offices and Properties

At
December 31, 2000, 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, 2000.

Owned or
  Leased
  Net Book
  Value of
  Premises and
  Equipment at
  December 31, 2000
  Deposits at
  December 31, 
  2000(In
  Thousands)Main Offices200  West Congress 
         Lafayette, Louisiana  70501
  Owned
  $3,200
  $-101 West Vermilion Street 
         Lafayette, Louisiana  70501
  Leased
  $524
  84,645Branch Offices:Northside
  Office 
         2601 Moss Street 
         Lafayette, Louisiana  70501
  Owned
  457
  43,184Southside Office 
         3701 Johnston Street 
         Lafayette, Louisiana  70503
  Owned
  151
  46,781Broadmoor Office 
         5301 Johnston Street 
         Lafayette, Louisiana  70503
  Owned
  207
  38,533New Iberia Office 
         230 West Main Street 
         New Iberia, Louisiana  70560
  Owned
  472
  11,388Loan Production Offices:Eunice
  Loan Production Office 
         136 South Third Street 
         Eunice, Louisiana  70535
  Leased
  8
  -$5,019
  $224,531

In December of
2000, the Company sold its former headquarters and Banks main office building
located at 101 West Vermilion Street, Lafayette, Louisiana, and leased back
those facilities through March 31, 2001. 
On March 3, 2001, the Company moved its headquarters and the Banks main
office from 101 West Vermilion Street, Lafayette, Louisiana to 200 West
Congress Street, Lafayette, Louisiana. 
Holdings conducts its business from the Company headquarters.

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 50 of the Registrants 2000 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 2000 Annual Report.

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

The
Information required herein is incorporated by reference from pages 7 through
19 of the Registrants 2000 Annual Report.

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

The
information required herein is incorporated by reference from pages 15 through
18 of the registrants 2000 Annual Report.

Item 8.  Financial Statements and
Supplementary Data.

The
information required herein is incorporated by reference from pages 21 through
47 of the Registrants 2000 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 pages 2 through
3, 5 and 10 of the Registrants definitive proxy statement for the 2000 Annual
Meeting of Stockholders (Proxy Statement).

Item 11.  Executive Compensation.

The
information required herein is incorporated by reference from pages 8 through
12 of the Registrants Proxy Statement.

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

The
information required herein is incorporated by reference from pages 6 through 7
of the Registrants Proxy Statement.

Item 13.  Certain Relationships
and Related Transactions.

The
information required herein is incorporated by reference from page 10 of 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, 2000 and 1999Consolidated
Statements of Income for the Fiscal Periods Ended December 31,
           2000, 1999 and 1998 
Consolidated Statements of Changes in Stockholders Equity for the Fiscal
Periods 
          ended December 31, 2000, 1999
and 1998 
Consolidated Statements of Cash Flows for the Fiscal Periods Ended December 31,
           2000, 1999 and 1998 
Notes to consolidated Financial Statements(2)      All schedules for which provision 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 Plan10.2**
  1996 Recognition and Retention Plan and Trust
  Agreement for Employees and Non-Employee Directors10.3***
  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 Agreements13.0
  2000 Annual Report to Stockholders22.0
  Subsidiaries of the Registrant  Reference is
  made to Item 2.  Business for the
  required information23.1
  Consent of Castaing, Hussey & Lolan LLC


(*)
  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.(****)
  Incorporated herein by reference to the Annual
  Report on Form 10-K filed by the Registrant with the SEC on March 29, 2000.

(b)
  Reports
  on Form 8-Knot
  applicable.




SIGNATURESPursuant 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 28, 2001
  
  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.

Name
  Title
  Date/s/ Gerald G. Reaux, Jr.Gerald G Reaux, Jr.
  President, Chief Executive
  Officer and Director
  March 28, 2001/s/ Lawrence E. GankendorffLawrence E. Gankendorff
  Chairman of the Board
  March 28, 2001/s/ Albert W. BeachamAlbert W. Beacham, M.D.
  Director
  March 28, 2001/s/ James J. MontelaroJames J. Montelaro
  Executive Vice President and Director
  March 28, 2001/s/ John H. DeJeanJohn H. DeJean
  Director
  March 28, 2001/s/ Thomas S. OrtegoThomas S. Ortego
  Director
  March 28, 2001/s/ William H. MoutonWilliam H. Mouton
  Director
  March 28, 2001/s/ Donald J. ORourke, Sr.Donald J. ORourke, Sr.
  Director
  March 28, 2001/s/ Kaliste J. Saloom, Jr.Kaliste J. Saloom, Jr.
  Director
  March 28, 2001/s/ Emile E. Soulier, III.Emile E. Soulier, III
  Vice President and Chief Financial Officer 
  (principal financial and accounting officer)
  March 28, 2001