<PAGE>
                           ACADIANA BANCSHARES, INC.
                               1996 ANNUAL REPORT

<PAGE>

    Service Philosophy LBA Savings Bank, a wholly owned subsidiary of Acadiana
Bancshares, Inc., is Lafayette's largest locally owned and operated community
bank, committed exclusively to serving the banking needs of the people of
Acadiana.

LBA's success is dependent upon:

    - Understanding and satisfying customer needs;

    - Meeting customers' perceptions of value;

    - Striving to place customers' interests first;

    - Tailoring products and services to meet the individual needs of each
      customer;

    - Serving customers personally with enthusiasm, energy and creativity, and
      especially with courtesy and good manners; and

    - Always respecting customers' confidentiality.

    All decisions concerning customer banking relationships are made in
Lafayette, both at the bank and holding company level. This helps us to provide
prompt and efficient response to customer requests.

    The mission of LBA Savings Bank is to provide the people of Acadiana the
most friendly and efficient service in all banking areas. The bank's goals
include being a market leader in providing full-service banking, and to
consistently exceed our customers' expectations.

                                     2

<PAGE>

    Dear Fellow Shareholders:

    On behalf of the directors, management and staff of our Company, we are
pleased to provide you with our first annual report on Acadiana Bancshares,
Inc.

    The 1996 year was characterized by significant changes to both our
ownership structure and operating strategy. These changes are the catalyst
for our transition from a traditional thrift institution into a full-service
banking institution.

THE CULTURE

    During 1996, we successfully completed the re-engineering of our
operating structure and conducted extensive marketing research to support our
new commercial banking focus. We were successful in attracting experienced
banking personnel to complement our existing officers and employees. The
adoption of a new logo was implemented for use by both the holding company
and the bank in an effort to reposition our image in the marketplace.

THE STOCK OFFERING

    Everyone worked very hard this year to ensure our stock offering and
transition to public ownership was a success. Through the formation of our
holding company, we established an Employee Stock Ownership Plan which aligns
employees' interests with those of each and every shareholder.

    Our primary goal in developing our franchise will be to maintain our
position as the dominant mortgage lender, while focusing on growth in
consumer and commercial market share. We will also consider our opportunities
to further leverage our capital position through acquisitions.

THE PRODUCTS AND SERVICES

    Over the past year, we expanded into commercial lending, home equity
lines of credit and credit card programs designed to complement our existing
product mix. We discontinued our indirect automobile lending operation and
redesigned our direct consumer loan and deposit offerings.

THE SYSTEMS

Our Bank made significant investments in technology as evidenced by the
acquisition of a new mainframe computer, financial information software and
loan documentation systems. Our loan approval process was streamlined to
maximize prompt turnaround with a focus on local decision making.

FINANCIAL RESULTS

    The Company posted improved financial performance over 1995 in both
profitability and asset growth. Despite the payment of $1.3 million in the
saif special assessment, our Company posted $800,000 in net income for the
1996 fiscal year. We are confident the trend of improved financial
performance will continue during the coming year.

THE COMMUNITY

    Our Company continued its strong support of the community we serve
through participation in several worthwhile civic organizations. We are also
currently participating in various housing grant programs designed to assist
our low- to moderate-income neighbors.

    Since the successful completion of our stock conversion during 1996, we
believe that Acadiana Bancshares, Inc. is well positioned to become the best
banking franchise in our region.

    We thank you for your confidence in our company and look forward to
reporting continued success in the future.

SINCERELY,

/s/ JERRY REAUX
-------------------------------------
Jerry Reaux
President and Chief Executive Officer

                                     3
<PAGE>


                            LBA SAVINGS BANK HISTORY

    The year was 1900. A group of businessmen in Lafayette, Louisiana, in the
heart of "Cajun Country" in Southwestern Louisiana, saw the need for a
savings and loan association to serve the increasing financial needs of the
residents of the city and all of Lafayette Parish. Those financial needs
consisted primarily of a ready source of mortgage funding for home
construction and a safe depository for savings.

    On February 12, 1900, Lafayette Building Association -- the first savings
and loan association in Lafayette -- was organized by Judge Julian Mouton,
A.B. Denbo, C.O. Mouton, Charles D. Caffery, B.N. Coronna, B.J. Pellerin and
J.E. Martin. The association's office was located in the heart of the
Downtown Lafayette business district at 107 West Vermilion Street.

    LBA initially offered two basic types of savings accounts along with home
mortgages. The association published its first financial statement in
December 1900 citing assets of $6,289.

    The original building was completely renovated in 1959 and continued
serving as LBA's main office until it was gutted by fire in late 1992.
Following the fire, the association moved next door to offices at 101 West
Vermilion Street that had been purchased in 1990. The original LBA office
building has since been demolished.

    In 1973, to meet the needs of a rapidly growing Lafayette, LBA added the
first of three branch offices in Lafayette, the Northside Branch at 2601 Moss
Street. The Northside Branch was followed the next year by the Southside
Branch at 3701 Johnston Street, and in 1980 by the Broadmoor Branch at 5301
Johnston Street. In 1992, a loan production office was opened in Eunice,
Louisiana, 50 miles northwest of Lafayette.

    At the Annual Meeting held July 15, 1993, members of Lafayette Building
Association approved the application with the Commissioner of Financial
Institutions of the State of Louisiana for the conversion of Lafayette
Building Association to a state-chartered savings bank. On August 2, 1993,
Lafayette Building Association was authorized by the state Commissioner of
Financial Institutions to begin operation as LBA Savings Bank.

    The next major event in the 97-year history of LBA Savings Bank occurred
on November 15, 1995, when the Board of Directors approved a Plan of
Conversion to convert the bank from a mutual savings bank to a stock savings
bank and the creation of the bank's holding company, Acadiana Bancshares,
Inc.

    LBA's eligible account holders overwhelmingly approved the Plan of
Conversion on June 26, 1996. On July 16, 1996, shares of common stock of
Acadiana Bancshares, Inc., began trading on the American Stock Exchange under
the symbol "ANA."
                                     4
 <PAGE>


                                                                 DIRECTORS OF
                                                                 ACADIANA
                                                                 BANCSHARES,
                                                                 INC.


Front, left to right
  Lawrence Gankendorff--Chairman of the Board, LBA Savings Bank
  Jerry Reaux-- President and Chief Executive Officer, LBA Savings Bank
  William H. Mouton--Attorney

Rear, left to right
  Don J. O'Rourke, Sr.- Architect
  James J. Montelaro--Executive Vice President, LBA Savings Bank
  Kaliste J. Saloom, Jr.--Attorney and retired City Judge

Not pictured
  Al W. Beacham, md--Urologist


                                                                 EXECUTIVE
  Lawrence Gankendorff--Chairman of the Board                    OFFICERS
  Jerry Reaux--President and Chief Executive Officer
  James J. Montelaro--Executive Vice President
  Brady Como--Senior Vice President
  Emile Soulier, iii--Vice President and Chief Financial Officer
  Thomas Debaillon--Vice President-Operations and Personnel
  Mary Anne Bertrand--Vice President-Retail

                                     5

<PAGE>

                               ABOUT THE COMPANY

    Acadiana Bancshares, Inc., (the "Company") is a Louisiana-chartered bank
holding company with headquarters at 101 West Vermilion Street, Lafayette,
Louisiana 70501. Its banking subsidiary, LBA Savings Bank, operates four
full-service branches in Lafayette and a loan production office in Eunice,
Louisiana. Addresses of LBA Savings Bank branches are:

        Main Office Branch
        101 West Vermilion Street, Lafayette, Louisiana 70501

        Southside Branch
        3701 Johnston Street, Lafayette, Louisiana 70503

        Broadmoor Branch
        5301 Johnston Street, Lafayette, Louisiana 70503

        Northside Branch
        2601 Moss Street, Lafayette, Louisiana 70501

        Eunice Loan Production Office
        136 South 3rd Street, Eunice, Louisiana 70535

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Annual Meeting of Shareholders of Acadiana Bancshares, Inc., will be
held at 2:00 p.m. (Central Time) Wednesday, April 30, 1997, at a la carte,
301 Heymann Boulevard, Lafayette, Louisiana 70503.

STOCK LISTING

The common stock of Acadiana Bancshares, Inc., is traded on the American
Stock Exchange under the symbol "ANA." Price and other column information are
listed under the "ANA" symbol in The Wall Street Journal and under similar
designations in other daily newspapers. The Company's common stock is held of
record by 593 shareholders (as of March 20, 1997). Below is a table showing
the high and low sales prices of the common stock since the commencement of
trading on July 16, 1996:

<TABLE>
<CAPTION>
QUARTER,ENDED                                          HIGH        LOW
--------------                                      ---------  ----------
<S>                                                  <C>        <C>
  September 30, 1996...........................     $   13 7/8  $  11 11/14
  December 31, 1996............................         15 1/8     13  5/8
</TABLE>

REGISTRAR AND TRANSFER AGENT

Shareholders requesting a change of name, address, or ownership of stock,
or to report a lost stock certificate should contact the transfer agent:

    Registrar and Transfer Company
    10 Commerce Drive
    Cranford, New Jersey 07016
    Toll-free (800) 368-5948

INVESTOR RELATIONS

Shareholders, prospective shareholders, analysts or other interested
parties seeking copies of the Company's annual report, Form 10-K (which the
Company will furnish to shareholders upon request without charge), Form 10-Q,
quarterly earnings reports or other financial information should contact:

    Jerry Reaux, President & CEO, or
    Emile E. Soulier, iii, Vice President & CFO
    Phone: (318) 232-4631
    Fax: (318) 269-6233

                                                   ACADIANA BANCSHARES, INC.
                                                   P.O. Box 3607
                                                   Lafayette, Louisiana 70502

                                     6

<PAGE>

                               SELECTED CONSOLIDATED FINANCIAL INFORMATION
                               (Dollars in Thousands except per Share Data)



    The following selected consolidated financial and other data of the
Company does not purport to be complete and should be read in conjunction
with, and is qualified in its entirety by, the more detailed financial
information, including the Consolidated Financial Statements of the Company
and Notes thereto, contained elsewhere herein.

<TABLE>
<CAPTION>
                                                                  AT DECEMBER 31,
                                                  -------------------------------------------------
                                                   1996       1995       1994       1993       1992
                                                 --------  ---------  ---------  ---------  --------
<S>                                      <C>      <C>        <C>        <C>        <C>
Selected Financial Condition Data:
  Total assets................................   $264,374   $225,574   $223,166   $223,143   $231,122
  Cash and cash equivalents...................     19,784     16,481     10,384     24,097     26,488
  Loans receivable, net.......................    182,724    157,691    151,161    153,284    154,233
  Investment securities.......................     20,539      4,030     19,386     16,910      4,753
  Mortgage-backed securities..................     34,653     39,514     33,349     30,254     34,836
  Deposit accounts............................    193,450    206,343    204,088    215,889    215,435
  Borrowings..................................     22,250        250         --         --         --
  Equity......................................     47,091     17,697     17,845     15,869     13,839


                                                                YEAR ENDED DECEMBER 31,
                                                   -------------------------------------------------
                                                   1996       1995       1994       1993      1992
                                                 --------  ---------  ---------  ---------  -------
Selected Operating Data:
  Interest Income............................   $  18,703  $  16,975  $  16,922  $  17,885  $  19,887
  Interest expense...........................      10,762     10,134      9,378     10,021     11,725
                                                 ---------  ---------  ---------  ---------  --------
  Net interest income........................       7,941      6,841      7,544      7,864      8,162
  Provision for loan losses..................         355      1,274         63        235      1,293
                                                 ---------  ---------  ---------  ---------  -------
  Net interest income after
   provision for loan losses.................       7,586      5,567      7,481      7,629      6,869
  Non-interest income........................         954        802        943      1,039      1,348
  Non-interest expense.......................     (7,301)    (7,812)(1) (5,274)    (5,510)    (5,723)
                                                 ---------  ---------  ---------  ---------  --------
 Income (loss) before taxes
  and extraordinary item......................      1,239     (1,443)     3,150      3,158      2,494
 Income tax expense (benefit).................        439       (477)     1,057      1,074        591
 Extraordinary item(2)........................         --         --         --        (54)       526
                                                 --------  ---------  ---------   ---------  --------
 Net income (loss)............................  $     800  $    (966) $   2,093  $   2,030      2,429
                                                 --------  ---------  ---------   ---------  --------
                                                 --------  ---------  ---------   ---------  --------
 Net income per share.........................  $    0.07        N/A        N/A        N/A        N/A
 Dividends declared per share.................  $    0.18        N/A        N/A        N/A        N/A


                                                           AT OR FOR THE YEAR ENDED DECEMBER 31,
                                                       ---------------------------------------------
                                                   1996       1995       1994       1993       1992
                                                 --------   ---------  ---------  ---------  --------
<S>                                               <C>        <C>        <C>        <C>        <C>
Other Data:
  Profitability:
    Return on average assets...................      0.32%     (0.43)%     0.91%      0.87%      1.04%
    Return on average equity...................      2.55      (5.23)     12.19      13.36      18.75
    Interest rate spread for period(3).........      2.68       2.80       3.15       3.35       3.53
    Net interest margin(4).....................      3.34       3.16       3.41       3.55       3.66
    Efficiency ratio(5)........................     82.08      88.45      62.14      61.88      60.18
    Other expenses to average assets...........      2.95       3.49       2.30       2.37       2.44
  Capital ratios:
    Average equity to average assets...........     12.71       8.25       7.48       6.54       5.53
    Total capital to risk-weighted assets......     36.69      16.20      16.29      13.90      11.37

  Asset Quality:
    Non-performing assets to total assets(6)...      0.36       0.70       1.35       2.35       2.45
    Allowance for loan losses to total loans...      1.35       1.41       0.69       0.64       0.61
    Allowance for loan losses to
     non-performing loans and
     troubled debt restructuring...............    183.96     143.94      71.51      26.76      31.05
</TABLE>

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

(1) Includes $1.1 million of write-downs and expenses of real estate owned and
    $1.1 million of expenses of a previously contemplated merger/conversion.

(2) An extraordinary gain was recorded in 1992 and an extraordinary (loss) in
    1993, both relating to the receipt of insurance proceeds from the loss, by
    fire, of the Bank's former main office.

(3) The interest rate spread represents the difference between the average
    yield on interest-earning assets and the average rate paid on
    interest-bearing liabilities.

(4) The net interest margin represents net interest income divided by average
    interest-earning assets.

(5) The efficiency ratio is non-interest expense (excluding, with respect to
    1995, the write-off of expenses incurred in the previously contemplated
    merger/conversion transaction) divided by the sum of net interest income
    plus non-interest income.

(6) Non-performing assets include non-accrual loans, accruing loans delinquent
    90 days or more and real estate owned.

                                     7

<PAGE>

        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS



    The following discussion and analysis is intended to assist readers in
understanding the financial condition and results of operations of Acadiana
Bancshares, Inc. (the "Company") and its subsidiary for the years ended December
31, 1994 through 1996. This review should be read in conjunction with the
audited consolidated financial statements, accompanying footnotes and
supplemental financial data included herein.

FINANCIAL CONDITION

ASSETS

    General--Total assets of the Company increased by $38.8 million, or
17.2%, from $225.6 million at December 31, 1995, to $264.4 million at
December 31, 1996. The increase was primarily due to a $25.0 million increase
in net loans and a $16.5 million increase in investments securities available
for sale. Such increases were funded primarily by the $29.2 million of net
proceeds received in the Company's July 1996 offering of common stock and a
$22.0 million increase in advances from the Federal Home Loan Bank of Dallas
(the "FHLB").

    Cash and Cash Equivalents--Cash and cash equivalents, which consist of
interest-bearing and noninterest-bearing deposits and cash on hand, increased
by $3.3 million or 20.0% at December 31, 1996 compared to $16.5 million at
December 31, 1995. The increase in cash and cash equivalents was primarily
due to repayments of mortgage-backed securities. At December 31, 1996 cash
and cash equivalents amounted to 7.5% of total assets.

    Investment Securities--Investment securities increased by $16.5 million,
or 409.7%, to $20.5 million at December 31, 1996 compared to $4.0 million at
December 31, 1995. The increased level of investment securities was primarily
funded by the net proceeds of the mutual to stock conversion of the Company's
wholly owned subsidiary, LBA Savings Bank (the "Bank"), and the concurrent
initial public offering of the Company's common stock completed during July
1996.

    At December 31, 1996, all $20.5 million of the Company's investment
securities were classified as available for sale and had a pre-tax effected
net unrealized gain of $145,000 at such date. In addition, at such date,
substantially all of the Company's investment securities consisted of U.S.
Government and Federal agency obligations. At December 31, 1996, $9.5
million, or 46.3%, of the Company's investment securities held for sale were
either scheduled to mature or were callable within one year. Note 3 to the
Consolidated Financial Statements provides further information on the
Company's investment securities.

    Mortgage-Backed Securities--Mortgage-backed securities decreased $4.9
million, or 12.3%, to $34.7 million at December 31, 1996 compared to $39.5
million at December 31, 1995. The decrease in mortgage-backed securities of
$4.9 million was the result of $4.4 million of principal repayments and a
$462,000 decrease in the carrying value of the mortgage-backed securities
available for sale portfolio. At December 31, 1996, the Company's adjustable
rate mortgage-backed securities amounted to $13.1 million and were classified
as held to maturity. At that same date, the Company's fixed rate
mortgage-backed securities amounted to $21.6 million and were classified as
available for sale. At December 31, 1996 and 1995, substantially all of the
Company's mortgage-backed securities consisted of securities issued or
guaranteed by Federal agencies and government sponsored enterprises.

    Loans Receivable, Net--Loans receivable, net, increased by $25.0 million,
or 15.9%, to $182.7 million at December 31, 1996 compared to $157.7 million
at December 31, 1995. Total mortgage loans increased $17.7 million, or 11.9%,
during 1996, primarily as the result of a $15.3 million increase in
single-family residential mortgage loans, net of undisbursed funds. In
addition, commercial business loans increased $6.0 million, or 442.2%, during
1996 and consumer loans increased $3.0 million, or 22.1%, during 1996. The
increase in mortgage loans was funded primarily by borrowings from the FHLB,
while the increases in commercial and consumer loans were primarily funded by
a portion of the net proceeds of the Company's July 1996 offering of common
stock.

                                     8

<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY

    General--The Company's primary funding sources include deposits,
borrowings from the FHLB and stockholders' equity. The discussion which
follows focuses on the major changes in this mix during 1996.

    Deposits--The Company's deposits decreased by $12.9 million, or 6.2%,
from $206.3 million at December 31, 1995, to $193.5 million at December 31,
1996. The decrease was the result of $19.6 million in net cash withdrawals,
$6.4 million of which were withdrawn to purchase stock in the Bank's mutual
to stock conversion, which was partially offset by $6.7 million in interest
credited during the year. Additionally, the Bank chose not to renew certain
higher yielding certificates of deposit that matured during 1996. Additional
information regarding deposits is provided in Note 9 to the Consolidated
Financial Statements.

    Borrowings--The Company's borrowings are composed of advances from the
FHLB which increased by $22.0 million, from $250,000 at December 31, 1995 to
$22.3 million at December 31, 1996. FHLB borrowings provide the Company with
an alternative source of funds compared to raising deposits in the local
market which from time to time may be a cheaper source of funds because of
interest rates in general and because of competitive pressures on interest
rates of deposits in local markets. The Company has significantly increased
the amount of outstanding FHLB advances to fund origination of mortgage
loans. The $22.0 million of new advances are non-amortizing, variable rate
advances tied to the London International Bank Offering Rate ("libor"), and
are due within two years from the date of origination. For additional
information see Note 10 to the Consolidated Financial Statements.

    Stockholders' Equity--Stockholders' equity provides a source of permanent
funding, allows for future growth and provides the Company with a cushion to
withstand unforeseen, adverse developments. At December 31, 1996
stockholders' equity totaled $47.1 million, an increase of $29.4 million from
the previous year-end level, primarily as a result of the infusion of $29.2
million of net proceeds from the conversion of the Bank from mutual to stock
ownership and its reorganization into the holding company form of ownership.
The increase in stockholders' equity during 1996 was also due to net income
of $800,000 and $148,000 in common stock released by the Company's Employee
Stock Ownership Plan (the "esop") trust. These increases were partially
offset by a decrease in the net unrealized gain on securities of $318,000 and
dividends declared on the Company's common stock of $452,000.

    Federal regulations impose minimum regulatory capital requirements on all
institutions with deposits insured by the Federal Deposit Insurance
Corporation (the "fdic"). At December 31, 1996, the Bank significantly
exceeded all regulatory capital ratio requirements with a tier 1 leverage
capital ratio of 13.4%, a tier 1 risk-based capital ratio of 25.9%, and a
total risk-based capital ratio of 27.2%. These compared to regulatory
requirements of 4.0%, 4.0%, and 8.0%, respectively. The Company is required
to comply with similar regulatory capital requirements and at December 31,
1996, it also significantly exceeded all applicable regulatory capital
requirements with a tier 1 leverage capital ratio of 17.7% a tier 1
risk-based capital ratio of 35.4%, and a total risk-based capital ratio of
36.7%.

RESULTS OF OPERATIONS

    General--The Company reported net income of $800,000 and $2.1 million for
the years ended December 31, 1996 and 1994, respectively, and a net loss of
$966,000 for the year ended December 31, 1995. The $1.8 million increase in
net income in 1996 compared to the prior year net loss was due primarily to
an increase in net interest income of $1.1 million, a $152,000 increase in
noninterest income, a $919,000 decrease in provision for loan losses, and a
$511,000 decrease in noninterest expense, which was partially offset by a
$916,000 increase in income tax expense.

    The Company reported a net loss of $966,000 during the year ended
December 31, 1995 and net income of $2.1 million during the year ended
December 31, 1994. The primary reasons for the net loss reported in 1995 were
a $1.3 million provision for loan losses, compared to $63,000 in 1994, $1.1
million in write-downs and expenses related to real estate owned, and the
recognition of $1.1 million of expenses related to the merger/conversion
transaction previously contemplated by the Bank but which was abandoned
during 1995.

    Net Interest Income--Net interest income is determined by interest rate
spread (i.e., the difference between the yields earned on its
interest-earning assets and the rates paid on its interest-bearing
liabilities) and the

                                       9
<PAGE>

relative amounts of interest-earning assets and interest-bearing liabilities.
The Company's average interest rate spread was 2.68%, 2.80%, and 3.15%,
during the years ended December 31, 1996, 1995, and 1994, respectively.

    Net interest income increased $1.1 million, or 16.1%, in 1996 to $7.9
million compared to $6.8 million in 1995. The reason for the increase was a
$1.7 million increase in interest income, which was partially offset by a
$628,000 increase in interest expense. Net interest income decreased
$703,000, or 9.3%, in 1995 compared to 1994. Such decrease was due to a
$756,000 increase in interest expense which more than offset a $53,000
increase in interest income.

    Interest Income--Interest income totaled $18.7 million for the year ended
December 31, 1996, an increase of $1.7 million over the total of $17.0
million for the year ended December 31, 1995. This improvement was mainly due
to an increase in the Company's average interest-earning assets by $21.9
million, or 10.1%, to $238.1 million for the year ended December 31, 1996 as
the Company began to leverage the capital raised as a result of the Bank's
mutual-to-stock conversion and the Company's initial public common stock
offering which was completed in July 1996. The increase in interest earning
assets produced additional interest income of $1.7 million. Interest earned
on loans increased $1.4 million, or 10.8%, in 1996. The increase was due to a
$17.4 million, or 11.3%, increase in the average balance of loans which was
partially offset by a 4 basis point (with 100 basis points being equal to 1%)
decrease in the yield earned. Interest earned on mortgage-backed securities
increased $73,000, or 2.9%, during 1996. This increase was due to a $2.2
million, or 6.3%, increase in the average balance of mortgage-backed
securities partially offset by a 23 basis point decrease in the yield earned
on mortgage-backed securities. Interest earned on investment securities
increased $305,000, or 34.7%, during 1996. The increase was due to a $2.5
million, or 17.3%, increase in the average balance of investment securities
combined with a 90 basis point increase in the yield earned. Interest income
on other earning assets, primarily interest-bearing deposits, decreased
$35,000 in 1996.

    Interest income was stable for the years ended December 31, 1995, and
1994, amounting to $17.0 million and $16.9 million, respectively. The
$53,000, or .3%, increase in interest income in 1995 compared to 1994 was due
primarily to a $200,000, or 8.6%, increase in interest earned on
mortgage-backed securities as a result of a $2.6 million, or 8.2%, increase
in the average balance of mortgage-backed securities, accompanied by a 2
basis point increase in the yield earned on mortgage-backed securities, which
was partially offset by a $105,000 decrease in interest earned on
investments, a $23,000 decrease in interest earned on interest bearing
deposits, and a $19,000 decrease in interest earned on loans. The $105,000
decrease in interest earned on investments was the result of a $4.8 million
decrease in the average balance of investment securities, which was partially
offset by a 96 basis point increase in the yield earned in investment
securities.

    Interest Expense--Interest expense increased $628,000, or 6.2%, in 1996
compared to 1995. The reason for such increase was a $72,000 increase in
interest expense on deposits and a $556,000 increase in interest expense on
borrowings. The increase in interest expense on deposits was due to an 11
basis point increase in the average cost of deposits, partially offset by a
$2.9 million, or 1.4%, decrease in the average balance of deposits.
Traditionally, deposits have included a relatively high amount of
certificates of deposit, including "jumbo" certificates with balances in
excess of $100,000. Such certificates generally are higher costing and more
interest rate sensitive than "core" deposits. During 1996, the average
balance of certificates of deposit amounted to 78.0% of the average balance
of all deposits, compared to 77.4% during 1995. The average rate paid on
certificates of deposit was 5.97% during 1996, representing an 11 basis point
increase over the average rate in 1995, compared to average rates of 1.82%
and 2.52%, respectively, on demand deposits and regular savings accounts in
1996. The increase in interest expense on borrowings was due to a $10.1
million increase in the average balance of borrowings.

    Total interest expense amounted to $10.1 million and $9.4 million for the
years ended December 31, 1995 and 1994, respectively. The $756,000, or 8.1%,
increase in interest expense in 1995 compared to 1994 was due to a 55 basis
point increase in average rates on deposits, which was partially offset by a
$7.9 million, or 3.8%, decrease in the average balances of deposits.

                                       10
<PAGE>

    Average Balances, Net Interest Income, and Yields Earned and Rates Paid.
The following table sets forth, for the periods indicated, information
regarding (i) the dollar amount of interest income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total
dollar amount of interest expense on interest-bearing liabilities and the
resultant rate; (iii) net interest income; (iv) interest rate spread; and (v)
net interest margin. Non-accrual loans have been included in the appropriate
average balance loan category, but interest on non-accrual loans has been
included for purposes of determining interest income only to the extent that
cash payments are actually received.

<TABLE>
<CAPTION>
                                                                                          YEAR ENDED DECEMBER 31,
                                                  ----------------------------------------------------------------------------
                                                            1996                      1995                     1994
                                       YIELD/     ------------------------- ------------------------ -------------------------
                                      COST AT                       AVERAGE                 AVERAGE                    AVERAGE
                                    DECEMBER 31,  AVERAGE           YIELD/ AVERAGE           YIELD/  AVERAGE            YIELD/
                                        1996      BALANCE  INTEREST  COST  BALANCE INTEREST   COST   BALANCE  INTEREST   COST
                                        ----      -------  --------  ----  ------- --------   ----   -------  --------   ----
<S>                                     <C>       <C>      <C>       <C>    <C>    <C>       <C>      <C>     <C>       <C>
Interest-earning assets:
  Loans receivable:
   Real estate mortgage loans.........  7.86%  $  150,541  $12,438  8.26% $140,597  $11,652   8.29%  $133,262 $11,334    8.51%
   Commercial business loans..........  9.45%       3,818      349  9.14%    1,467      128   8.73%     1,434     135    9.41%
   Consumer and other loans...........  9.19%      16,780    1,431  8.53%   11,674    1,053   9.02%    14,855   1,383    9.31%
                                                  -------   ------  -----  -------  -------   -----  -------- -------
    Total loans.......................  8.04%     171,139   14,218  8.31%  153,738   12,833   8.35%   149,551  12,852    8.59%
  Mortgage-backed securities..........  7.30%      36,869    2,609  7.08%   34,681    2,536   7.31%    32,055   2,336    7.29%
  Investment securities(1)............  6.99%      17,032    1,185  6.96%   14,525      880   6.06%    19,299     985    5.10%
  Other earning assets................  5.21%      13,067      691  5.29%   13,242      726   5.48%    20,590     740    3.64%
                                                  -------   ------  -----  -------  -------   -----  -------- -------    -----
    Total interest-earning assets.....  7.77%     238,107   18,703  7.85%  216,186   16,975   7.85%   221,495  16,922    7.64%
                                                            ------                  -------                   -------
  Noninterest-earning assets..........              9,238                    7,782                      7,978
                                                  -------                 --------                     ------
    Total Assets......................           $247,345                 $223,968                   $229,473
                                                  -------                 --------                    -------
                                                  -------                 --------                    -------
Interest-bearing liabilities:
  Deposits:
    Demand deposits...................  1.92%     $15,953      291   1.82% $15,909      283   1.78%   $18,458     342    1.85%
  Passbook savings deposits...........  2.57%      27,506      692   2.52%  29,442      737   2.50%    37,081     928    2.50%
  Certificates of deposit.............  5.95%     154,187    9,201   5.97% 155,173    9,092   5.86%   152,872   8,086    5.29%
                                                  -------   ------  -----  -------  -------   -----  -------- -------
    Total deposits....................  5.14%     197,646   10,184   5.15% 200,524   10,112   5.04%   208,411   9,356    4.49%
  Advance from FHLB...................  5.50%      10,338      578   5.59%     250       22   8.80%       250      22    8.80%
                                                  -------   ------  -----  -------  -------           -------- -------
    Total interest-bearing
     liabilities......................  5.18%    207,984    10,762   5.17% 200,774   10,134   5.05%   208,661   9,378    4.49%
                                                            ------                   ------                     -----
Noninterest-bearing
   demand deposits....................             3,342                     2,642                              1,923
Other noninterest-bearing
  liabilities.........................             4,592                     2,080                              1,723
                                                  -------                  -------                              -----
    Total liabilities.................           215,918                   205,496                            212,307
Equity................................            31,427                    18,472                             17,166
                                                 -------                  --------                            -------
    Total liabilities and equity......          $247,345                  $223,968                           $229,473
                                                 -------                  --------                            -------
                                                 -------                  --------                            -------
Net interest-earning assets...........           $30,123                   $15,412                            $12,834
                                                 -------                  --------                            -------
                                                 -------                  --------                            -------
Net interest income/interest
  rate spread.........................  2.59%              $7,941  2.68%            $6,841   2.80%              7,544    3.15%
                                                           ------  -----           -------   -----            -------    -----
                                                           ------  -----           -------   -----            -------    -----
Net interest margin...................                             3.34%                     3.16%                       3.41%
                                                                   -----                     -----                       -----
                                                                   -----                     -----                       -----
Ratio of average interest-
  earning assets to average
interest-bearing liabilities..........                     114.48%                  107.68%                   106.15%
                                                           -------                  -------                   -------
                                                           -------                  -------                   -------
</TABLE>

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

(1) Includes FHLB stock


                      11

<PAGE>


  MANAGEMENT'S        Rate/Volume Analysis. The following table set forth the
    DISCUSSION     effects of changing rates and volumes on net interest
  AND ANALYSIS     income of the Company. Information is provided with respect
  OF FINANCIAL     to (i) effects on interest income attributable to changes
     CONDITION     in volume (changes in volume multiplied by prior rate);
AND RESULTS OF     (ii) effects on interest income attributable to changes in
    OPERATIONS     rate (changes in rate multiplied by prior volume); and (iii)
   (Dollars in     changes in rate/volume (change in rate multiplied by change
    Thousands)     in volume).

<TABLE>
<CAPTION>

                                                                     1996 COMPARED TO 1995             1995 COMPARED TO 1994
                                                             ----------------------------------  --------------------------------
                                                           INCREASE (DECREASE) DUE TO          INCREASE (DECREASE) DUE TO
                                                          ----------------------------         --------------------------
                                                                                        TOTAL
                                                                              RATE/   INCREASE                    RATE/   TOTAL
                                                             VOLUME   RATE   VOLUME  (DECREASE)  VOLUME   RATE   VOLUME  INCREASE
                                                             ------   ----   ------  ----------  ------   ----   ------  --------
                   <S>                                       <C>      <C>    <C>     <C>         <C>      <C>    <C>     <C>
                   (Decrease)
                   Interest-earning assets:
                    Loans receivable.......................  $  1,453  $(61) $ (7)   $1,385      $ 360    $(369)  $ (10)  $  (19)
                    Mortgage-backed securities.............       160   (82)   (5)       73        191        8       1      200
                    Investment securities..................       144   138    26       308       (250)     156     (43)    (137)
                    Other earning assets...................        (3)  (35)   --       (38)      (262)     406    (135)       9
                                                             --------  ----   ---    ------      -----    -----   -----   ------
                   Total net change in income on
                     interest-earning assets...............     1,754   (40)   14     1,728         39      201    (187)      53
                                                             --------  ----   ---    ------      -----    -----   -----   ------
                   Interest-bearing liabilities:
                   Deposits:
                   Demand deposits and passbook savings
                     deposits................................    (43)     6    --       (37)      (233)     (21)      4     (250)
                   Certificates of deposit...................    (58)   168    (1)      109        122      871      13    1,006
                                                             -------   ----   ---     ------     -----     ----    ----    -----
                   Total deposits............................   (101)   174    (1)       72       (111)     850      17      756
                   Advance from FHLB.........................    888     (8) (324)      556         --       --      --       --
                                                             -------   ----  ----     -----      -----     ----    ----    -----
                   Total net change in expense on
                     interest-bearing liabilities............    787    166  (325)      628       (111)     850      17      756
                                                             -------   ----  ----     -----      -----     ----    ----    -----
                   Net change in net interest income......... $  967  $(206) $339    $1,100       $150    $(649)  $(204)   $(703)
                                                             -------  -----  ----    ------      -----    -----   -----    -----
                                                             -------  -----  ----    ------      -----    -----   -----    -----

</TABLE>

12


<PAGE>

Provision for Loan Losses--Provision for loan losses are        MANAGEMENT'S
  charged to earnings in order to bring the total allowance     DISCUSSION
  for loan losses to a level considered appropriate by          AND ANALYSIS
  management based on methodology implemented by the            OF FINANCIAL
  Company, which is designed to assess, among other things,     CONDITION
  historical experience, the volume and type of lending         AND RESULTS OF
  conducted by the Company, the amount of the Company's         OPERATIONS
  classified assets, the status of past due principal and
  interest payments, loan-to-value ratios of loans in the
  portfolio, general economic conditions, particularly
  as they relate to the Company's market area, and other
  factors related to the collectibility of the Company's
  loan portfolio. Management of the Company assesses the
  allowance for loan losses on a quarterly basis and makes
  provisions for loan losses as deemed appropriate in order
  to maintain the adequacy of the allowance for loan losses.

    The Company made a provision for loan losses of $355,000 in
1996, compared to $1.3 million and $63,000 in 1995, and 1994,
respectively.

    During 1995 the Company revised its methodology for making
provisions for loan losses and made certain adjustments
thereto. New management instituted new policies regarding loan
origination, supervision and review, and determined to increase
its collection and foreclosure efforts with respect to
delinquent loans. The Company also determined that it would no
longer continue its prior practice of making relatively high
loan-to-value loans to finance sales of its foreclosed property.

    During 1996, the Company continued making provisions for
loan losses in a manner consistent with its revised methodology
of 1995. The Company increased its provision for loan losses
from $45,000 per quarter during the first three quarters of
1996, to $220,000 for the fourth quarter of 1996, primarily due
to management's continuing assessment of the asset quality in
the Bank's portfolio of indirect automobile loans. The Bank
recently abandoned its program of originating indirect
automobile loans through a network of local dealers which it
had begun in August of 1995. Indirect dealer loans outstanding
amounted to $7.4 million at December 31, 1996. During the third
and fourth quarters of 1996, the Bank charged-off $46,000 and
$122,000, respectively, of indirect auto loans. At December 31,
1996, $45,000 remained 90 days or more past due. At December
31, 1996, the Bank's allowance for loan losses amounted to $2.6
million, or 1.35% of total loans, and 183.96% of non-performing
loans and troubled debt restructurings.

    Non-performing loans (non-accrual loans and accruing loans
90 days or more overdue) were $873,000 and $740,000 at December
31, 1996 and December 31, 1995, respectfully. The Company's
real estate owned, which consists of real estate acquired
through foreclosure or by deed-in-lieu of foreclosure, amounted
to $75,000 and $845,000 at December 31, 1996 and December 31,
1995, respectively. As a percentage of total assets, the
Company's total non-performing assets amounted to .36% and
 .70%, at December 31, 1996 and 1995, respectively.

    Although management of the Company believes that the
allowance for loan losses was adequate at December 31, 1996,
based on facts and circumstances available to it, there can be
no assurances that additions to such allowance will not be
necessary in future periods, which would adversely affect the
Company's results of operations. In addition, various
regulatory agencies, as an integral part of their examination
process, periodically review the Company's provision for loan
losses and the carrying value of its other non-performing
assets based on their judgments about information available to
them at the time of their examination. No assurance can be
given whether any of such agencies might require the Bank to
make additional provisions for loan losses in the future.

    Non-interest Income--For 1996, the Company reported
      non-interest income of $954,000 compared to $802,000 of
      non-interest income for 1995. The primary reason for the
      $152,000, or 19.0%, increase in non-interest income for
      1996 was an increase of $103,000 in other miscellaneous
      income and the absence of losses on sales of investment
      securities during 1996 compared to a $64,000 loss in 1995.

      Total non-interest income amounted to $802,000 and
      $943,000 for the years ended December 31, 1995 and 1994,
      respectively. The primary reason for the $141,000, or
      15.0%, decrease in non-interest income in 1995 compared to
      1994 was a $64,000 loss on the sale of investment
      securities, and a $57,000 decrease in deposit fees and
      service charges reflecting a decrease in deposit accounts.

    Non-Interest Expense--Non-interest expense includes
     salaries and employee benefits, occupancy, depreciation,
     Savings Association Insurance Fund ("SAIF") deposit
     insurance premiums, advertising, merger/conversion                      13

<PAGE>


  MANAGEMENT'S     expenses-withdrawn transaction, and other items.
    DISCUSSION     Non-interest expense amounted to $7.3 million for the year
  AND ANALYSIS     ended December 31, 1996, a decrease of $511,000, or 6.5%,
  OF FINANCIAL     over the total of $7.8 million for the year ended December
     CONDITION     31, 1995. The primary reason for the $511,000 was a decrease
AND RESULTS OF     of $1.0 million in net costs of real estate owned, and the
    OPERATIONS     recognition in 1995 of cost incurred in connection with a
                   merger/conversion transaction which the Bank had previously
                   contemplated, and which was partially offset by a one-time
                   special assessment to recapitalize the SAIF deposit
                   insurance fund of $1.3 million (pre-tax) incurred at the
                   end of the third quarter of 1996.

                   Salaries and employee benefits, the largest component of
                   non-interest expenses, decreased by $12,000, or .5%, in
                   1996 compared to 1995. In connection with the conversion
                   from mutual to stock form, the Company established the ESOP
                   for the benefit of the employees of the Company and the
                   Bank, as further described in Note 13 to the Consolidated
                   Financial Statements. Compensation expenses related to the
                   ESOP amounted to $148,000 for the year ended December 31,
                   1996, which expenses began in July 1996. The Company also
                   maintains a 401(k) Profit Sharing Plan which provided for
                   up to 3% matching of employee contributions and additional
                   discretionary contributions, annually, as further described
                   in Note 13 to the Consolidated Financial Statements. During
                   1996, the Company amended the plan by discontinuing matching
                   employee contributions after December 31, 1996. On January
                   21, 1997, at a special meeting the stockholders of the
                   Company approved adoption of the Stock Option Plan and
                   Recognition and Retention Plan ("rrp") and Trust Agreement
                   for the benefit of directors, officers and key employees,
                   as more fully described in Note 21 to the Consolidated
                   Financial Statements. The Company expects the annual
                   expenses related to the rrp for the shares granted to be
                   approximately $227,000.

                   The $1.0 million decrease in net cost of real estate owned
                   in 1996 compared to 1995 was due primarily to the charges
                   to income taken in 1995, as the result of new appraisals
                   and management's reassessment of the carrying value of
                   several parcels of real estate owned.

                   The Bank's deposits are insured by the FDIC through the
                   SAIF, and as such, the Bank incurred a one-time special
                   assessment of $1.3 million on September 30, 1996 in
                   connection with an immediate recapitalization of the
                   SAIF. As a result of such recapitalization, the Bank's
                   regular and recurring SAIF premiums are expected to
                   decrease from 23 basis points per $100 of insured
                   deposits at and prior to September 30, 1996, to 6.5 basis
                   points in 1997, 1998, and 1999. The Bank incurred no
                   deposit insurance premium expense for the period
                   beginning October 1, 1996 and ending December 31, 1996,
                   which is unusual and is not expected to reoccur.

                   Beginning in 1997, the Company will incur a state tax
                   which is based on the stockholders' equity of the Bank.
                   The Company expects this tax to amount to $304,000 in
                   1997.

         Income Taxes-For the years ended December 31, 1996 and 1994, the
                   Company incurred income tax expense of $439,000 and $1.1
                   million, respectively. For the year ended December 31,
                   1995, the Company reported an income tax benefit of
                   $477,000. The Company's effective tax rate amounted to
                   35.4%, (33.1)%, and 33.6% during 1996, 1995, and 1994,
                   respectively. The difference between the effective rate and
                   the statutory tax rate primarily related to variances in
                   the items that are either non-taxable or non-deductible. In
                   1996 the difference also included state income tax on the
                   Company's income, exclusive of the income derived from
                   the Bank. For more information on income taxes, see Note
                   11 to the Consolidated Financial Statements.








ASSET AND LIABILITY MANAGEMENT

                   The ability to maximize net interest income is largely
                   dependent upon the achievement of a positive interest
                   rate spread that can be sustained during fluctuations in
                   prevailing interest rates. Interest rate sensitivity is a
                   measure of the difference between amounts of
                   interest-earning assets and interest-bearing liabilities
                   which either reprice or mature within a given period of
                   time. The difference, or the interest rate repricing
                   "gap", provides an indication of the extent to which an
                   institution's interest rate spread will be affected by
                   changes in interest rates. A gap is considered positive
                   when the amount of interest-rate sensitive assets exceeds
                   the amount of interest-rate sensitive liabilities, and is
                   considered negative when the amount of interest-rate
                   sensitive liabilities exceeds the amount of interest-rate
                   sensitive assets, in a given time period. Generally,
                   during a period of rising interest rates, a negative gap
                   within shorter maturities would adversely affect net
                   interest income, while a positive gap within shorter
                   maturities would result in an increase in net interest
                   income, and during a period of falling interest rates, a
                   negative gap within shorter maturities would result in an
                   increase in net interest income while a positive gap
                   within shorter maturities would have the opposite effect.
                   As of December

14


<PAGE>


31, 1996, the amount of the Company's                           MANAGEMENT'S
interest-sensitive assets which were estimated to mature        DISCUSSION
or reprice within one year exceeded the Company's               AND ANALYSIS
interest-sensitive liabilities with the same                    OF FINANCIAL
characteristics by $7.6 million or 2.9% of the Company's        CONDITION
total assets.                                                   AND RESULTS OF
                                                                OPERATIONS
The Company's actions with respect to interest rate risk
and its asset/liability gap management are taken under
guidance of the Finance Committee of the Board of
Directors of the Company, which is composed of Messrs.
O'Rourke, Beacham, and Montelaro, and the Asset/Liability
Management Committee ("ALCO"), which is comprised of ten
officers of the Bank. This joint committee meets
quarterly to, among other things, set interest rate risk
targets and review the Company's current composition of
assets and liabilities in light of the prevailing
interest rate environment. The committee assesses its
interest rate risk strategy quarterly, which is then
reviewed by the full Board of Directors.

As a part of the Company's asset/liability management
strategies, the Company intends to increase its emphasis
on originating commercial business loans, which generally
have variable or adjustable rates of interest, and to
increase its emphasis on originating consumer loans,
which have relatively short terms to maturity. The
Company also intends to increase the amount of
non-interest bearing demand deposits, which are
considered "core deposits" and which is expected to
lessen the effects of changes in interest rates on the
Company's net interest margin. Additionally, the Company
maintains substantially all of its fixed-rate investment
securities, and its fixed-rate mortgage-backed securities
in its held for sale portfolios, which at December 31,
1996 amounted to $20.5 million and $21.6 million,
respectively, as further described in Notes 3 and 4 to
the Consolidated Financial Statements, and which are
carried at fair value and could be liquidated in response
to rapid changes in interest rates, if deemed
appropriate. As more fully described in Note 5 to the
Consolidated Financial Statements, the Company's loan
portfolio includes approximately $86.6 million of
long-term adjustable-rate mortgage loans, $80.7 million
of long-term fixed-rate loans, $16.7 million of shorter
term consumer loans, and $7.4 million of commercial
loans. The Company's mortgage-backed securities held to
maturity portfolio of $13.1 million is substantially
comprised of adjustable-rate securities. The Company's
asset/liability strategy with respect to these portfolios
includes an attempt to balance the effects of rising and
falling interest rates on the projected interest income
from these assets.

                                                                          15

<PAGE>


  MANAGEMENT'S     The following table summarizes the anticipated maturities
    DISCUSSION     or repricing of the Company's interest-sensitive assets
  AND ANALYSIS     and interest-sensitive liabilities as of December 31,
  OF FINANCIAL     1996 based on the information and assumption set forth in
     CONDITION     the notes below.
AND RESULTS OF
    OPERATIONS
   (Dollars in
    Thousands)


<TABLE>
<CAPTION>
                                                                   MORE THAN
                                          THREE TO    MORE THAN   THREE YEARS
                            WITHIN THREE   TWELVE    ONE YEAR TO    TO FIVE     OVER FIVE
                               MONTHS      MONTHS    THREE YEARS     YEARS        YEARS       TOTAL
                            ------------  ---------  -----------  -----------  -----------  ----------
<S>                         <C>           <C>        <C>          <C>          <C>          <C>         <C>        <C>
Interest-sensitive
  assets1:
Loans receivable2.........   $   24,279   $  45,849   $  43,109    $  27,837    $  41,650   $  182,724
Investment securities3....       23,828       6,000      10,889           --          150       40,867
Mortgage-backed
  securities4.............       12,033       3,698       9,252        3,442        6,228       34,653
                            ------------  ---------  -----------  -----------  -----------  ----------
Total.....................       60,140      55,547      63,250       31,279       48,028      258,244
                            ------------  ---------  -----------  -----------  -----------  ----------
Interest-sensitive
  liabilities:
Deposits:
NOW accounts5.............           --          --          --           --       11,528       11,528
Passbook savings
  accounts5...............           --          --          --           --       25,071       25,071
Money market deposit
  account5................        5,101          --          --           --           --        5,101
Certificates of deposit...       22,748      58,197      48,101        3,208       14,542      146,796
Advances from FHLB........       22,000          --          --           --          250       22,250
                            ------------  ---------  -----------  -----------  -----------  ----------

Total.....................       49,849      58,197      48,101        3,208       51,391      210,746
                                                                                                                           -
                            ------------  ---------  -----------  -----------  -----------  ----------
Excess (deficiency) of
  interest-sensitive
  assets over interest-
  sensitive liabilities...   $   10,291   $  (2,650)   $ 15,149    $  28,071   $   (3,363)    $ 47,498
                            ------------  ---------  -----------  -----------  -----------  ----------
                            ------------  ---------  -----------  -----------  -----------  ----------
Cumulative excess
  (deficiency) of
  interest-sensitive
  assets over interest-
  sensitive liabilities...   $   10,291   $   7,641    $ 22,790    $  50,861   $   47,498
                            ------------  ---------  -----------  -----------  -----------
                            ------------  ---------  -----------  -----------  -----------
Cumulative excess
  (deficiency) of
  interest-sensitive
  assets over interest-
  sensitive liabilities as
  a percent of total
  assets..................         3.89%       2.89%       8.62%       19.24%       17.97%
                            ------------  ---------  -----------  -----------  -----------
                            ------------  ---------  -----------  -----------  -----------

</TABLE>

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

(1) Adjustable-rate assets are included in the period in which interest rates
    are next scheduled to adjust rather than in the period in which they are
    due, and fixed-rate assets are included in the periods in which they are
    scheduled to be repaid, based on scheduled amortization, in each case as
    adjusted to take into account estimated prepayments. The Company has
    estimated the prepayments based upon its experience in the interest rate
    environment prevailing during 1996.

(2) Balances have been reduced for non-performing loans, which amounted to
    $873,000 at December 31, 1996.

(3) Includes interest-bearing deposits and fhlb stock.

(4) Reflects estimated prepayments in the current interest rate environment.

(5) Although the Company's NOW accounts and passbook savings accounts are
    subject to immediate withdrawal, management considers substantially all of
    such accounts to be core deposits having significantly longer effective
    maturities. The Company generally has retained a relatively consistent
    amount of such deposits under widely varying interest rate environments. If
    all of the Company's NOW accounts and passbook savings accounts had been
    assumed to be subject to repricing within one year, interest-bearing
    liabilities which were estimated to mature or reprice within one year would
    have exceeded interest-sensitive assets with comparable characteristics by
    $29.0 million or 11.0% of total assets.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES                                 MANAGEMENT'S
                                                                DISCUSSION
The Company's primary liquidity, represented by cash and        AND ANALYSIS
cash equivalents, is a product of its operating,                OF FINANCIAL
investing and financing activities. Excess liquidity            CONDITION
includes the Company's portfolios of investment                 AND RESULTS OF
securities held for sale and mortgage-backed securities         OPERATIONS
held for sale. The Company's primary sources of funds are
deposits, borrowings, proceeds from sale of stock, and
amortization, prepayments and maturities from its loan
portfolio and its held to maturity investment securities
and mortgage-backed securities portfolios, and other
funds provided from operations. While scheduled payments
from the amortization of loans and mortgage-backed
securities and maturing investment securities are
relatively predictable sources of funds, deposit flows,
loan prepayments, and mortgage-backed securities
prepayments are greatly influenced by general interest
rates, economic conditions and competition. The Company
has the ability to borrow up to approximately $126.0
million from the FHLB through its subsidiary Bank.

Liquidity management is both a daily and long-term
function of business management. The Company uses its primary
liquidity to meet its ongoing commitments, to pay maturing
certificates of deposit and deposit withdrawals, and to fund
loan commitments. The Company's excess liquidity and
borrowing capacity provide added readiness to meet ongoing
commitments and growth. At December 31, 1996, the total
approved commitments to extend credit amounted to $10.1
million. Certificates of deposit scheduled to mature in one
year or less at that same date totaled $80.3 million.
Management believes that a significant portion of maturing
deposits will stay with the Company. The Company anticipates
it will continue to have sufficient funds together with
available borrowings to meet its current commitments.

IMPACT OF INFLATION AND CHANGING PRICES

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

EFFECT ON NEW ACCOUNTING PRONOUNCEMENTS

In October 1995, the Federal Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standard
("SFAS") 123, Accounting for Stock-Based Compensation. The
statement establishes a fair value based method of accounting
for stock-based compensation plans. It encourages entities to
adopt that method in place of the provisions of Accounting
Principles Board ("APB") Opinion 25, Accounting for Stock
Issued to Employees, for all arrangements under which
employees receive shares of stock or other equity instruments
of the employer if the employer incurs liabilities to
employees in amounts based on the price of its stock. The
Company will continue using the accounting methods prescribed
by APB Opinion 25 and will disclose in the footnotes
information on a fair value basis for its stock-based
compensation plans.

    In June 1996, the FASB issued SFAS 125, Accounting for
Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. The statement establishes
accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of
liabilities based on the consistent application of the
financial-components approach. This approach requires the
recognition of financial assets and servicing assets that are
controlled by the reporting entity, and the de-recognition of
financial assets and liabilities when control is
extinguished. Liabilities and derivatives incurred or
obtained by transfers in conjunction with the transfer of
financial assets are required to be measured at fair value,
if practicable.

    Servicing assets and other retained interests in
transferred assets are required to be measured by allocating
the previous carrying amount between the assets sold, if any,
and the interest that is retained, if any, based on the
relative fair value of the assets at the date of transfer.
SFAS 127, Deferral of the Effective Date of Certain
Provisions of SFAS 125, was issued in December 1995 and
deferred application of many of the provisions of SFAS 125
until after December 31, 1997.

                                                                          17

<PAGE>


INDEPENDENT  CHARLES E. CASTAING                      MEMBERS
  AUDITORS'  ROGER E. HUSSEY                     AMERICAN INSTITUTE OF
     REPORT  SAMUEL R. LOLAN                 CERTIFIED PUBLIC ACCOUNTANTS
             CAROLINE C. BOUDREAUX                     SOCIETY OF
             PATRICK J. DAUTERIVE        LOUISIANA CERTIFIED PUBLIC ACCOUNTANTS
             LORI D. PERCLE
             DEBBIE B. TAYLOR
             KATHERINE H. ARMENTOR
             ---------------------
             ROBIN G. FREYOU
             DAWN K. GONSOULIN



                           CASTAING, HUSSEY & LOLAN, LLP
                            CERTIFIED PUBLIC ACCOUNTANTS
                          525 WEEKS STREET--P.O. BOX 14240
                             NEW IBERIA, LA. 70562-4240
                             --------------------------
                                 PH: (318) 364-7221
                                FAX: (318) 364-7235


             To the Board of Directors
             Acadiana Bancshares, Inc. and Subsidiary
             Lafayette, Louisiana

             We have audited the accompanying consolidated statements of
             financial condition of Acadiana Bancshares, Inc. and Subsidiary
             as of December 31, 1996 and 1995, and the related consolidated
             statements of operations, stockholders' equity, and cash flows for
             each of the three years in the period ended December 31, 1996.
             These consolidated financial statements are the responsibility of
             the Company's management. Our responsibility is to express an
             opinion on these consolidated financial statements based on our
             audits.

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

             In our opinion, the consolidated financial statements referred to
             above present fairly, in all material respects, the financial
             position of Acadiana Bancshares, Inc. and Subsidiary as of
             December 31, 1996 and 1995, and the results of their operations
             and their cash flows for each of the three years in the period
             ended December 31, 1996, in conformity with generally accepted
             accounting principles.

             /s/ CASTAING, HUSSEY & LOLAN, LLP
             ---------------------------------
             New Iberia, Louisiana
             January 31, 1997


18

<PAGE>

<TABLE>
<CAPTION>
                   ASSETS                                                 1996        1995
ACADIANA           --------------------------------------------------- ----------  ----------
BANCSHARES,        <S>                                                 <C>         <C>
INC. AND           Cash and Cash Equivalents:
SUBSIDIARY         Cash and Amounts Due from Banks.................... $    1,234  $      802
                   Interest Bearing Deposits-Federal Home Loan Bank...     18,550      15,679
Consolidated                                                           ----------  ----------
Statements of      Total..............................................     19,784      16,481
Operations         Investment Securities:
Years Ended        Available for Sale, at fair value..................     20,539       4,030
December 31,       Mortgage-Backed Securities:
1995 and 1996      Held to Maturity (fair value of $12,938
                     and $13,539, respectively).......................     13,087      13,492
(In Thousands,     Available for Sale, at fair value..................     21,566      26,022
except per share   Loans Receivable, Net..............................    182,724     157,691
data)              Real Estate Owned, Net.............................         75         845
                   Premises and Equipment, Net........................      1,827       1,799
The accompanying   Federal Home Loan Bank Stock, at Cost..............      1,778       1,677
Notes to           Accrued Interest Receivable........................      1,551       1,187
Consolidated       Other Assets.......................................      1,443       2,350
Financial                                                              ----------  ----------
Statements are an  Total Assets....................................... $  264,374  $  225,574
integral part of                                                       ----------  ----------
these Financial                                                        ----------  ----------
Statements.        Liabilities and Stockholders' Equity
                   Liabilities:
                   Deposits........................................... $  193,450  $  206,343
                   Advances from Federal Home Loan Bank...............     22,250         250
                   Accrued Interest Payable on Deposits...............         46          31
                   Advance Payments by Borrowers for Taxes and
                     Insurance........................................        441         485
                   Accrued and Other Liabilities......................      1,096         768
                                                                       ----------  ----------
                   Total Liabilities..................................    217,283     207,877
                                                                       ----------  ----------
                   Commitments and Contingencies
                   Stockholders' Equity:
                   Preferred Stock of $.01 Par Value; 5,000,000
                     shares authorized, -0-shares issued
                     or outstanding...................................         --          --
                   Common Stock of $.01 Par Value; 20,000,000
                     shares authorized,  2,731,250 shares issued
                     and outstanding..................................         27          --
                   Additional Paid-in Capital.........................     31,827          --
                   Retained Earnings (Substantially Restricted).......     17,344      16,996
                   Unearned Common Stock Held by ESOP.................     (2,490)         --
                   Unrealized Gain on Securities Available for
                     Sale, Net of Deferred Taxes.. ...................        383         701
                                                                       ----------  ----------
                   Total Stockholders' Equity.........................     47,091      17,697
                                                                       ----------  ----------
                   Total Liabilities and Stockholders' Equity......... $  264,374  $  225,574
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>

                                                                          19

<PAGE>

<TABLE>
          ACADIANA
       BANCSHARES,
          INC. AND
        SUBSIDIARY

      Consolidated
     Statements of
        Operations
       Years Ended
December 31, 1996,
     1995 and 1994

    (In Thousands,
  except per share
             data)

  The accompanying
          Notes to
      Consolidated
         Financial
 Statements are an
  integral part of
   these Financial
       Statements.

                                                                   1996       1995       1994
                                                                 ---------  ---------  ---------
                  <S>                                            <C>         <C>        <C>
                  Interest Income:
                  Loans........................................ $  14,218  $  12,833  $  12,852
                  Mortgage-Backed Securities...................     2,609      2,536      2,336
                  Investment Securities........................     1,185        880        985
                  Interest Bearing Deposits....................       691        726        749

                                                                ---------  ---------  ---------
                  Total Interest Income........................    18,703     16,975     16,922

                                                                ---------  ---------  ---------
                  Interest Expense:
                  Deposits.....................................    10,184     10,112      9,356
                  Advances from Federal Home Loan Bank.........       578         22         22

                                                                ---------  ---------  ---------
                  Total Interest Expense.......................    10,762     10,134      9,378

                                                                ---------  ---------  ---------
                  Net Interest Income..........................     7,941      6,841      7,544
                  Provision for Loan Losses....................       355      1,274         63
                                                                ---------  ---------  ---------

                  Net Interest Income After Provision for
                    Loan Losses................................     7,586      5,567      7,481
                                                                ---------  ---------  ---------

                  Non-Interest Income:
                  Loan Fees and Service Charges................        157        119        136
                  Servicing Fees on Loans Sold.................         60         68         86
                  Deposit Fees and Service Charges.............        569        583        640
                  Investment Securities Losses, Net............         --        (64)        --
                  Gain (Loss) on Sale of Fixed Rate Loans......        (20)        11          3
                  Other........................................        188         85         78

                                                                 ---------  ---------  ---------
                  Total Non-Interest Income....................        954        802        943

                                                                 ---------  ---------  ---------
                  Non-Interest Expenses:
                  Salaries and Employee Benefits...............      2,654      2,666      2,517
                  Occupancy....................................        285        222        193
                  Depreciation.................................        320        259        349
                  Net Costs of Real Estate Owned...............        129      1,144        182
                  SAIF Deposit Insurance Premium...............        354        469        523
                  SAIF Special Assessment......................      1,338         --         --
                  Merger/Conversion Expenses--Withdrawn
                    Transaction................................         --      1,052         --
                  Advertising..................................        307        237        168
                  Consulting...................................        193        306         72
                  Other........................................      1,721      1,457      1,270

                                                                 ---------  ---------  ---------
                  Total Non-Interest Expenses..................      7,301      7,812      5,274

                                                                 ---------  ---------  ---------
                  Income (Loss) Before Income Taxes............      1,239     (1,443)     3,150
                  Income Tax Expense (Benefit).................        439       (477)     1,057

                                                                 ---------  ---------  ---------
                  Net Income (Loss)............................  $     800  $    (966) $   2,093

                                                                 ---------  ---------  ---------
                                                                 ---------  ---------  ---------
                  Net Income Per Common Share*.................  $     .07      N/A    N/A

                                                                 ---------  ---------  ---------
                                                                 ---------  ---------  ---------
</TABLE>
------------------------

*   Includes 3rd and 4th quarters only, for 1996.

20


<PAGE>

<TABLE>

                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY

                 CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                        (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                                                           NET
                                                                                                       UNREALIZED
                                                                                                       GAIN (LOSS)
                                                                                                           ON
                                                                            RETAINED      UNEARNED     SECURITIES,
                                          COMMON STOCK        ADDITIONAL     EARNINGS       COMMON          NET
                                      ---------------------    PAID-IN    (SUBSTANTIALLY STOCK HELD    OF DEFERRED
                                        SHARES      AMOUNT     CAPITAL     RESTRICTED)     BY ESOP        TAXES        TOTAL
                                      ----------   ---------  -----------  -------------  -----------  -------------  ---------
<S>                                   <C>         <C>         <C>          <C>            <C>          <C>            <C>

Balance, January 1, 1994.............                 $--       $    --       $15,869      $    --         $  --       $15,869
Net Income...........................                                           2,093                                    2,093
Change in Unrealized Gain (Loss)
  on Securities Available for
  Sale, Net of Deferred Taxes........                                                                      (117)          (117)
                                                      ---       -------       -------      -------         -----       -------
Balance, December 31, 1994...........                  --            --        17,962           --         (117)        17,845
Net Loss.............................                                            (966)                                    (966)
Change in Unrealized Gain (Loss)
  on Securities Available for
  Sale, Net of Deferred Taxes........                                                                        818           818
                                                      ---       -------       -------      -------         -----       -------
Balance, December 31, 1995...........                  --            --        16,996           --           701        17,697
Net Income...........................                                             800                                      800
Common Stock Issued in Conversion....    2,731,250     27        31,811                      (2,622)                    29,216
Common Stock Released by ESOP Trust..                                16                         132                        148
Cash Dividends Declared..............                                            (452)                                    (452)
Change in Unrealized Gain (Loss)
  on Securities Available for
  Sale, Net of Deferred  Taxes.......                                                                       (318)         (318)
                                        ---------     ---       -------       -------      -------         -----       -------
Balance, December 31, 1996...........   2,731,250     $27       $31,827       $17,344      $(2,490)        $ 383       $47,091
                                        ---------     ---       -------       -------      -------         -----       -------
                                        ---------     ---       -------       -------      -------         -----       -------

</TABLE>

    The accompanying Notes to Consolidated Financial Statements are an integral
part of these Financial Statements.

                                21


<PAGE>

                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
                                 (IN THOUSANDS)



<TABLE>
<CAPTION>
                                                     1996           1995            1994
                                                  ----------  -----------------  ----------
<S>                                                <C>         <C>                <C>
Cash Flows from Operating Activities:
Net Income (Loss)...............................    $    800       $  (966)        $  2,093
                                                    --------       -------         --------
Adjustments to Reconcile Net Income (Loss) to
  Net Cash Provided by Operating Activities:
Depreciation....................................         320           259              349
Provision for Deferred Income Taxes.............         (43)         (344)             (54)
Provision for Losses on Loans...................         355         1,274               63
Provision for Losses on Real Estate Owned and
  Other Property Acquired.......................         256         1,169               94
Other Gains and Losses, Net.....................        (121)         (139)             (92)
Loss (Gain) on Sale of Loans Held for Sale......          52           (11)              (3)
Proceeds from Sale of Loans Held for Sale.......       6,353         1,553              554
Originations of Loans Held for Sale.............      (6,405)       (1,542)            (551)
Abandonment of Construction Work in Progress....          --           202               --
Accretion of Discounts, Net of Premium
  Amortization On Securities....................         (46)          (57)            (150)
Amortization of Deferred Revenues and Unearned
  Income on Loans...............................        (161)         (146)            (193)
FHLB Stock Dividend Received....................        (101)         (104)             (72)
ESOP Contribution...............................         148            --               --
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest
  Receivable....................................        (364)           58               52
Decrease (Increase) in Other Assets.............       1,139          (723)            (514)
Increase (Decrease) in Accounts Payable and
  Accrued Expenses..............................         133           (36)            (368)
                                                    --------       -------         --------
Total Adjustments...............................       1,515         1,413             (885)
                                                    --------       -------         --------
Net Cash Provided by Operating Activities.......    $  2,315       $   447         $  1,208
                                                    --------       -------         --------
Cash Flows from Investing Activities:
Proceeds from Sale of Securities Available for
  Sale..........................................    $     --       $ 2,719         $     --
Proceeds from Maturities of Securities Available
  for Sale......................................       3,000         2,500           16,250
Proceeds from Maturities of Securities Held to
  Maturity......................................          --        10,500               --
Purchases of Securities Held to Maturity........          --            --          (18,217)
Purchases of Securities Available for Sale......     (19,500)           --             (500)
Net Advances on Loans...........................     (25,416)       (7,404)           1,453
Proceeds from Sale of Premises and Equipment....          11             6                2
Purchase of Premises and Equipment..............        (416)         (337)            (183)
Proceeds from Sale of Real Estate Owned
  and Other Property Acquired...................         874           908            1,241

Capital Costs Incurred on Real Estate Owned and
  Other Property Acquired.......................         (35)         (131)             (71)
Proceeds from Sale of Mortgage-Backed
  Securities....................................          --           467               --
Principal Collections on Mortgage-Backed
  Securities Available for Sale.................       4,020            --               --
Principal Collections on Mortgage-Backed
  Securities Held to Maturity...................         397         3,955            5,341
Purchase of Mortgage-Backed Securities Held to
  Maturity......................................          --        (9,718)          (8,471)
Purchase of FHLB Stock..........................          --            --              (53)

Net Cash Provided By (Used In) Investing
  Activities....................................    $(37,065)      $ 3,465         $ (3,208)
                                                    --------       -------         --------

Cash Flows From Financing Activities:
Net Change in Demand, now and Savings
  Deposits......................................    $ (1,260)      $(5,784)         $(6,808)
Net Change in Time Deposits.....................     (11,633)        8,039           (4,993)
Net Change in Mortgage Escrow Funds.............         (44)          (70)              88
Proceeds from FHLB Advances.....................      22,000            --               --
Proceeds from Issuance of Common Stock..........      30,153            --               --
Dividends Paid to Shareholders..................        (226)           --               --
Stock Conversion Costs Incurred.................        (937)           --               --
                                                    --------       -------         --------

Net Cash Provided By (Used In) Financing
  Activities....................................    $ 38,053       $ 2,185         $(11,713)
                                                    --------       -------         --------
Net Increase (Decrease) in Cash and Cash
  Equivalents...................................    $  3,303       $ 6,097         $(13,713)
Cash and Cash Equivalents at Beginning of
  Year..........................................      16,481        10,384           24,097
                                                    --------       -------         --------

Cash and Cash Equivalents at End of Year........    $ 19,784       $16,481         $ 10,384
                                                    --------       -------         --------
                                                    --------       -------         --------

Supplemental Schedule of Noncash Activities:
Acquisition of Real Estate in Settlement of
  Loans.........................................    $    189       $   252         $    955
Unrealized Appreciation (Loss) on Securities....    $   (481)      $ 1,239         $   (177)
Loans Made to Facilitate Sales of Real Estate
  Owned.........................................    $     --       $   317         $    764
Supplemental Disclosures:
Cash Paid For:
Interest on Deposits and Borrowings.............    $ 10,747       $10,136         $  9,371
Income Taxes....................................    $    526       $   915         $    951
</TABLE>

    The accompanying Notes to Consolidated Financial Statements are an integral
part of these Financial Statements.


                              22


<PAGE>
                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF OPERATIONS

    Acadiana Bancshares, Inc. (the "Company") is a Louisiana Corporation
organized in February 1996 for the purpose of becoming the bank holding
company for lba Savings Bank (the "Bank"). The Board of Directors of the Bank
adopted the Plan of Conversion pursuant to which the Bank converted from a
Louisiana chartered savings bank to a Louisiana chartered stock savings bank.
The Company completed its subscription and community offering in July 1996,
and with a portion of the net proceeds, acquired the capital stock of the
Bank. The Company provides a variety of financial services primarily to
individuals, but also to commercial business customers through its four full
service branches in Lafayette, Louisiana and its loan production office in
Eunice, Louisiana. The Bank's primary deposit products are interest bearing
checking accounts and certificates of deposit. Its primary lending products
are single family residential loans, commercial real estate loans and
commercial loans.

BASIS OF CONSOLIDATION

    The consolidated financial statements include the accounts of Acadiana
Bancshares, Inc. and its wholly owned subsidiary, lba Savings Bank. All
material intercompany balances and transactions have been eliminated in
consolidation. The 1995 and 1994 financial statements contained herein are
those of LBA Savings Bank (and Subsidiary) as the predecessor entity.

USE OF ESTIMATES

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

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

    A majority of the Company's loan portfolio consists of single family
residential loans in the Lafayette area. The regional economy has
demonstrated heavy dependence on the oil and gas industry, which was in
severe economic decline in the 1980's. Real estate prices in this market were
substantially depressed. Accordingly, the ultimate collectibility of a
substantial portion of the Company's loan portfolio and the recovery of a
substantial portion of the carrying amount of foreclosed real estate are
susceptible to changes in local market conditions.

    While management uses available information to recognize losses on loans
and foreclosed real estate, future additions to the allowances may be
necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowances for losses on loans and
foreclosed real estate. Such agencies may require the Company to recognize
additions to the allowances based on their judgments about information
available to them at the time of their examination. Because of these factors,
it is reasonably possible that the allowances for losses on loans and
foreclosed real estate may change materially in the near term.

CASH AND CASH EQUIVALENTS

    The Company considers all cash and amounts due from depository
institutions and interest bearing demand deposits in other banks to be cash
equivalents for purposes of the statements of cash flows.

INVESTMENT SECURITIES

    Investment securities that are held for short-term resale are classified
as trading securities and carried at fair value. Debt securities that
management has the ability and intent to hold to maturity are classified as
held to maturity and carried at cost, adjusted for amortization of premiums
and accretion of discounts using methods approximating the interest method.
Other investment securities are classified as available for sale and are
carried at fair value. Realized and unrealized gains and losses on trading
securities are included in net income. Unrealized gains and losses on
securities available for sale are recognized as direct increases or decreases
in

                                                                Continued    23
<PAGE>

                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: CONTINUED

equity, net of applicable income taxes. No investments have been classified
as trading securities. The cost of securities sold is recognized using the
specific identification method.

MORTGAGE-BACKED SECURITIES

    Mortgage-Backed securities, or MBSS, owned by the Company represent
participating interests in pools of underlying long-term first mortgage loans
issued by one of three agencies: GNMA, FNMA, and FHLMC. Collateralized
mortgage obligations, or CMOS, owned by the Company represent participating
interests in a multiclass security that is secured by one or more pools of
mortgage pass-through pools. Management classifies certain of both types of
MBSS as available for sale securities, which are carried at fair value. These
securities may be sold in the future; however, it is not anticipated they
will be sold in the near future. Management also classifies certain of both
types of MBSS as held to maturity, which are carried at cost, adjusted for
amortization of premiums and accretion of discounts using methods
approximating the interest method. The Company has both the intent and
ability to hold such securities to maturity. Unrealized gains and losses on
securities available for sale are recognized as direct increases or decreases
in equity, net of applicable income taxes. The cost of mortgage-backed
securities sold is recognized using the specific identification method.

REDESIGNATIONS REGARDING INVESTMENT SECURITIES AND MORTGAGE-BACKED
SECURITIES

     On November 15, 1995, the Financial Accounting Standards Board issued a
"Special Report", A Guide to Implementation of Statement 115 on Accounting
for Certain Investments in Debt and Equity Securities. In connection with the
"Special Report", accounting principles allowed the Company a one-time
opportunity to reassess the appropriateness of the designations of all its
securities held upon the initial application of the "Special Report". In
December 1995, the Company elected to redesignate certain of its investment
securities and its mortgage-backed securities; such redesignations were
accounted for at fair value in accordance with SFAS 115.

LOANS HELD FOR SALE

    Mortgage loans originated and held for sale in the secondary market are
carried at the lower of cost or market value determined on an aggregate
basis. Net unrealized losses are recognized in a valuation allowance through
charges to income. Gains and losses on the sale of loans held for sale are
determined using the specific identification method. At December 31, 1996 and
1995, the bank had no loans held for sale.

LOANS RECEIVABLE

    Loans are stated at unpaid principal balances, less the allowance for
loan losses, net deferred loan fees and unearned discounts. Loan origination
fees and certain direct loan origination costs, including dealer
participation fees paid on indirect financing, are deferred and amortized as
an adjustment to the related loan's yield using the interest method. Interest
on loans is recognized using the simple interest method.

    A loan (including a loan defined as impaired under SFAS 114) is
classified as nonaccrual when the loan becomes 90 days or more past due. Any
unpaid interest previously accrued on those loans is reversed from income.
Interest income generally is not recognized on specific impaired loans unless
the likelihood of further loss is remote. Interest payments received on such
loans are applied as a reduction of the loan principal balance. Interest
income on other nonaccrual loans is recognized only to the extent of cash
payments received.

    The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb credit losses inherent in the
loan portfolio. The amount of the allowance is based on management's
evaluation of various factors, including the collectibility of the loan
portfolio, the nature of the portfolio, credit concentrations, trends in
historical loss experience, specific impaired loans, and economic conditions.
Allowances for impaired loans are generally determined based on collateral
values or the present value of estimated cash flows. The allowance is
increased by a provision for loan losses, which is charged to expense, and
reduced by charge-offs, net of recoveries.

    In May 1993, the FASB issued SFAS 114, Accounting by Creditors for
Impairment of a Loan, which requires that impaired loans that are within the
scope of this statement be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or at the
loan's market price or the fair value of the collateral if the loan is
collateral dependent. The Company uses the loan-by-loan measurement method
for all loans; however, residential mortgage loans and consumer installment
loans are considered to be groups of


                                                                Continued   24
<PAGE>


                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: CONTINUED

smaller balance homogenous loans and are collectively evaluated for
impairment and are not subject to SFAS 114 measurement criteria. A loan is
considered impaired when it is probable that all contractual amounts due will
not be collected in accordance with the terms of the loan. A loan is not
deemed to be impaired if a delay in receipt of payment is expected to be less
than 60 days or if, during a longer period of delay, the Company expects to
collect all amounts due, including interest accrued at the contractual rate
during the period of the delay. Factors considered by management include the
property location, economic conditions and any unique circumstances affecting
the loan. Due to the composition of the Company's loan portfolio, the fair
value of collateral is utilized to measure virtually all of the Company's
impaired loans. If the fair value of an impaired loan is less than the
related recorded amount, a valuation allowance is established or the
writedown is charged against the allowance for loan losses if the impairment
is considered to be permanent.

    The standard is to be adopted prospectively with the effect of initially
applying the standard to be reflected as an adjustment to the Company's
provision for loan losses in the year of adoption. The Company adopted the
standard effective January 1, 1995.

PREMISES AND EQUIPMENT

     Depreciation and amortization are provided over the estimated useful
lives of the respective assets, 15 to 40 years for buildings and 3 to 12
years for furniture, fixtures and equipment. All premises and equipment are
recorded at cost and are depreciated on either the straight line method or
declining balance method.

REAL ESTATE AND OTHER PROPERTY ACQUIRED IN SETTLEMENT OF LOANS

    Real estate and other property acquired in settlement of loans are
recorded at the balance of the loan or at estimated fair value minus
estimated costs to sell, whichever is less, at the date acquired, plus
capital improvements made thereafter to facilitate sale. Writedowns based on
fair value at the date of acquisition are charged to the allowance for loan
losses. After foreclosure, valuations are periodically performed by
management and the real estate is carried at the lower of cost or fair value
minus estimated costs to sell. Costs of holding real estate acquired in
settlement of loans and subsequent writedowns to reflect fair value are shown
as charges against income currently. Gains on sales of such real estate are
taken into income based on the buyer's initial and continuing investment in
the property. Other property acquired in settlement of loans consists
primarily of automobiles.

LOAN SERVICING

    The Company adopted SFAS 122, Accounting for Mortgage Servicing Rights,
prospectively as of January 1, 1996. Issued in May 1995, SFAS 122 amends
certain provisions of SFAS 65 to eliminate the accounting distinction between
rights to service mortgage loans for others that are acquired through loan
origination activities and rights acquired through purchase transactions. The
statement requires a mortgage banking enterprise, which sells or securitizes
loans and retains the related mortgage servicing rights, to allocate the
total cost of the mortgage servicing rights and the loans (without the
mortgage servicing rights) based on their relative fair values.

    When participating interests in loans sold have an average contractual
interest rate, adjusted for normal servicing fees, that differs from the
agreed yield to the purchaser, gains or losses are recognized equal to the
present value of such differential over the estimated remaining life of such
loans. The resulting "excess servicing receivable" or "deferred servicing
revenue" is amortized over the estimated life using a method approximating
the interest method.

    The cost of mortgage servicing rights is amortized in proportion to, and
over the period of, estimated net servicing revenues. Impairment of mortgage
servicing rights is assessed based on the fair value of those rights. Fair
values are estimated using discounted cash flows based on a current market
interest rate.

    The effect of adopting SFAS 122 did not have a material impact on the
Company's financial condition or the results of operations.

ADVERTISING COSTS

    The Company incurred no direct-response advertising costs and expenses all
advertising costs as incurred.


                                                               Continued    25
<PAGE>



                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: CONTINUED

LONG-LIVED ASSETS

    The Company adopted SFAS 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of, in 1996. This statement
requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present. Impairment would be
considered when the undiscounted cash flows estimated to be generated by
those assets are less then the assets' carrying amount. Implementation of
this statement had no material effect on the consolidated financial
statements.

EMPLOYEE BENEFITS

    SFAS 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, which is effective for fiscal years beginning after December 15,
1992, requires recognition of estimated future postretirement costs over
employees' periods of service. SFAS 112, Employers' Accounting for
Postemployment Benefits, which is effective for fiscal years beginning after
December 15, 1993, requires recognition of estimated future postemployment
costs over employees' periods of service. The Company offers no
postretirement health or medical benefits or postemployment benefits to any
of its employees or former employees.

INCOME TAXES

    The Company and its subsidiary file a consolidated federal income tax
return on a calendar year basis. Deferred income taxes are recognized for the
tax consequences of temporary differences by applying enacted statutory tax
rates applicable to future years to differences between the financial
statements carrying amounts and the tax bases of existing assets and
liabilities in accordance with SFAS 109, Accounting for Income Taxes. The
measurement of deferred tax assets is reduced, if necessary, by the amount of
any tax benefits that, based on available evidence, are not expected to be
realized.

EARNINGS PER SHARE

    Net income per share of common stock is computed by dividing net income
by the weighted average number of shares of common stock outstanding during
each year. The weighted average number of common shares outstanding excludes
the weighted average unreleased shares owned by the ESOP of 213,026. Earnings
per share for periods preceding the third quarter of 1996 are not applicable,
as the Bank's conversion from mutual-to-stock form and reorganization into a
holding company format was not completed until July 15, 1996.

FAIR VALUES OF FINANCIAL INSTRUMENTS

    SFAS 107, Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments, whether or
not recognized in the statement of financial condition. In cases where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and,
in many cases, could not be realized in immediate settlement of the
instruments from its disclosure requirements. Accordingly, the aggregate fair
value amounts presented do not represent the underlying value of the Company.

    The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:

    Cash and cash equivalents: The carrying amounts reported in the
    statements of financial condition for cash and cash equivalents
    approximate those assets' fair values.

    Investment securities (including equity securities and mortgage-backed
    securities): Fair values for investment securities are based on quoted
    market prices, where available. If quoted market prices are not
    available, fair values are based on quoted market prices of comparable
    instruments.

    Loans: For variable rate loans that reprice frequently and with no
    significant change in credit risk, fair values are based on carrying
    amounts. The fair values for other loans (for example, fixed rate
    commercial real estate and mortgage loans) are estimated using discounted
    cash flow analysis, based on interest rates currently being offered for
    loans with similar terms to borrowers of similar credit quality. Loan
    fair value estimates


26        Continued

<PAGE>


                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: CONTINUED

    include judgments regarding future expected loss experience and risk
    characteristics. The carrying amount of accrued interest receivable
    approximates its fair value.

    Deposits: The fair value disclosed for demand deposits (for example,
    interest bearing checking accounts and passbook accounts) are, by
    definition, equal to the amount payable on demand at the reporting date
    (that is, their carrying amounts). The fair values for certificates of
    deposit are estimated using a discounted cash flow calculation that
    applies interest rates currently being offered on certificates to a
    schedule of aggregated contractual maturities on such time deposits. The
    carrying amount of accrued interest payable approximates fair value.

    Off-Balance Sheet Items: The Company has outstanding commitments to
    extend credit and stand-by letters of credit. These off-balance sheet
    financial instruments are generally exerciseable at the market rate
    prevailing at the date the underlying transaction will be completed and,
    therefore, have no current value.

EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS

    In October 1995, FASB issued SFAS 123, Accounting for Stock-Based
Compensation. The Company adopted SFAS 123 effective January 1, 1996. The
statement establishes a fair value based method of accounting for stock-based
compensation plans. It encourages entities to adopt that method in place of
the provisions of Accounting Principles Board ("apb") Opinion 25, Accounting
for Stock Issued to Employees, for all arrangements under which employees
receive shares of stock or other equity instruments of the employer if the
employer incurs liabilities to employees in amounts based on the price of its
stock. The Company will continue using the accounting methods prescribed by
apb Opinion 25 and will disclose in the footnotes information on a fair value
basis for its stock-based compensation plans.

    In June 1996, the FASB issued SFAS 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities. The
statement establishes accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities based on the
consistent application of the financial-components approach. This approach
requires the recognition of financial assets and servicing assets that are
controlled by the reporting entity, and the derecognition of financial assets
and liabilities when control is extinguished. Liabilities and derivatives
incurred or obtained by transfers in conjunction with the transfer of
financial assets are required to be measured at fair value, if practicable.

    Servicing assets and other retained interests in transferred assets are
required to be measured by allocating the previous carrying amount between
the assets sold, if any and the interest that is retained, if any, based on
the relative fair value of the assets at the date of transfer. SFAS 125 is
effective for transfers and servicing of financial assets and extinguishments
of liabilities occurring after December 31, 1996. SFAS 127, Deferral of the
Effective Date of Certain Provisions of FASB Statement No. 125, was issued in
December 1996 and deferred application of many of the provisions of SFAS 125
until after December 31, 1997.

    Management believes adoption of SFAS 125 will not have a material effect
on financial position and the results of operations.

RECLASSIFICATIONS

    Certain reclassifications have been made to the 1995 and 1994
consolidated financial statements in order to conform to the classifications
adopted for reporting in 1996.

NOTE 2--CASH AND AMOUNTS DUE FROM BANKS:

    The Company is required by the Federal Reserve Bank to maintain a reserve
of vault cash or cash on deposit based on a percentage of deposits. The
amount of the reserves at December 31, 1996 and 1995 was approximately
$281,000 and $223,000, respectively.


                                                               Continued    27
<PAGE>
                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3--INVESTMENT SECURITIES:

    Securities available for sale consist of the following (in thousands):

<TABLE>
<CAPTION>
                                              DECEMBER 31, 1996                                 DECEMBER 31, 1995
                               ------------------------------------------------  ------------------------------------------------
                                               GROSS        GROSS                                GROSS        GROSS
                                AMORTIZED   UNREALIZED   UNREALIZED     FAIR      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                  COST         GAINS       LOSSES       VALUE       COST         GAINS       LOSSES       VALUE
                               -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
<S>                            <C>          <C>          <C>          <C>        <C>          <C>          <C>          <C>
U.S. Government
  and Federal Agencies.......    $20,389       $149         $(14)      20,524       $3,861        $157        $  --       $4,018
Marketable Equity Security...          5         10           --           15            5           7           --           12
                                 -------       ----         ----      -------       ------        ----        -----       ------
Total........................    $20,394       $159         $(14)     $20,539       $3,866        $164        $  --       $4,030
                                 -------       ----         ----      -------       ------        ----        -----       ------
                                 -------       ----         ----      -------       ------        ----        -----       ------

</TABLE>

    The following is a summary of maturities of securities available for sale
as of December 31, 1996 (in thousands):


                                                   SECURITIES AVAILABLE
                                                         FOR SALE
                                                  ----------------------
                                                   AMORTIZED     FAIR
                                                     COST        VALUE
                                                  -----------  ---------
Amounts maturing in:
One year or less...............................     $ 1,000     $ 1,001
After one year through five years..............      17,389      17,532
After five years through ten years.............       2,000       1,991
After ten years................................          --          --
                                                 -----------  ---------
                                                     20,389      20,524
Marketable Equity Security.....................           5          15
                                                 -----------  ---------
Total..........................................     $20,394     $20,539
                                                -----------   ---------
                                                -----------   ---------

    Securities are classified according to their contractual maturity without
consideration of call options. Accordingly, actual maturities may differ from
contractual maturities.

    During 1996, no securities available for sale were sold. During 1995, the
Company sold securities available for sale for total proceeds of
approximately $2,719,000, resulting in realized losses of approximately
$31,000. There were no sales of securities in 1994.

    As described above in Note 1, in 1995 the Company was permitted to make
transfers from the held to maturity to available for sale classifications. In
December 1995, investment securities with an amortized cost of approximately
$3,859,000 and market value of approximately $4,004,000 were transferred from
held to maturity to available for sale.

    Investment securities with a carrying amount and fair value of
approximately $519,000 at December 31, 1996 were pledged to secure deposits
as required or permitted by law.


28

<PAGE>
                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4--MORTGAGE-BACKED SECURITIES:

    Mortgage-backed securities available for sale consist of the following
(in thousands):

<TABLE>
<CAPTION>
                          DECEMBER 31, 1996                                 DECEMBER 31, 1995
           ------------------------------------------------  ------------------------------------------------
<S>        <C>          <C>          <C>          <C>        <C>          <C>          <C>          <C>
                           GROSS        GROSS                                GROSS        GROSS
            AMORTIZED   UNREALIZED   UNREALIZED     FAIR      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
              COST         GAINS       LOSSES       VALUE       COST         GAINS       LOSSES       VALUE
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
GNMA.....   $   1,760    $      16    $     --   $   1,776    $  1,924    $      57   $       --   $   1,981
FNMA.....      11,976          483         (10)     12,449      14,418          767           --      15,185
FHLMC....       6,893           45         (85)      6,853       8,281          111          (31)      8,361
FNMA
  CMO....        502          --           (14)        488         502           --           (7)        495
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
            $  21,131    $     544   $    (109)   $  21,566  $  25,125   $        935  $     (38)  $  26,022
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
</TABLE>

    Mortgage-backed securities held to maturity consist of the following (in
thousands):

<TABLE>
                          DECEMBER 31, 1996                                 DECEMBER 31, 1995
           ------------------------------------------------  ------------------------------------------------
<S>        <C>          <C>          <C>          <C>        <C>          <C>          <C>          <C>
                           GROSS        GROSS                                GROSS        GROSS
            AMORTIZED   UNREALIZED   UNREALIZED     FAIR      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
              COST         GAINS       LOSSES       VALUE       COST         GAINS       LOSSES       VALUE
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
GNMA.....   $   1,320    $      21    $      --   $  1,341    $   1,585    $       --      $   (9)  $  1,576
FNMA.....         232           --           (3)       229          259            1           --        260
FHLMC....         822           --          (30)       792          936           --          (27)       909
FNMA
  CMO....       4,733           --          (21)     4,712        4,733           58           --      4,791
FHLMC
  CMO....       5,980          --          (116)     5,864        5,979           79          (55)     6,003
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
            $  13,087    $       21    $   (170)  $ 12,938    $  13,492       $  138   $      (91)  $ 13,539
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------
           -----------  -----------  -----------  ---------  -----------  -----------  -----------  ---------

</TABLE>

    The following is a summary of maturities of mortgage-backed securities
available for sale and held to maturity as of December 31, 1996 (in
thousands):

                                  AVAILABLE FOR SALE       HELD TO MATURITY
                                ----------------------  ----------------------
                                 AMORTIZED     FAIR      AMORTIZED     FAIR
                                   COST        VALUE       COST        VALUE
                                -----------  ---------  -----------  ---------
Amounts maturing in:
One year or less..............   $   3,441   $   3,511   $     304   $     301
After one year through
   five years.................      14,460      14,758         874         864
After five years through
   ten years..................       2,873       2,932         600         593
After ten years...............         357         365      11,309      11,180
                                -----------  ---------  -----------  ---------
Total.........................   $  21,131   $  21,566   $  13,087   $  12,938
                                -----------  ---------  -----------  ---------
                                -----------  ---------  -----------  ---------

    Maturities are based on the average life at the currently projected
prepayment speed.

    During 1996, no mortgage-backed securities available for sale were sold.
During 1995, the Company sold one available for sale mortgage-backed security
for total proceeds of approximately $468,000 resulting in a realized loss of
approximately $33,000. There were no sales of mortgage-backed securities
available for sale in 1994. There were no sales of held to maturity
mortgage-backed securities in 1996, 1995 or 1994.

    As described above in Note 1, in 1995 the Company was permitted to make
transfers from the held to maturity to available for sale classifications. In
December 1995, mortgage-backed securities with an amortized cost of
approximately $25,921,000 and market value of approximately $26,737,000 were
transferred from held to maturity to available for sale.


                                                               Continued    29
<PAGE>

                    ACADIANA BANCSHARES, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 5--LOANS RECEIVABLE:

    Loans Receivable at December 31, 1996 and 1995 are summarized as follows
(in thousands):
                                                       1996        1995
                                                    ----------  ----------
Mortgage Loans:
Single Family Residential.........................  $  142,965  $  127,656
Single Family Construction........................      10,565       7,304
Multi-family Residential..........................         862       1,202
Commercial Real Estate............................      12,873      13,370
                                                    ----------  ----------
Total Mortgage Loans..............................     167,265     149,532
Commercial Business Loans.........................       7,363       1,358
Consumer Loans:
Savings...........................................       2,709       2,632
Indirect Automobile Dealer........................       7,424       5,472
Other.............................................       6,594       5,600
                                                    ----------  ----------
Total Loans.......................................     191,355     164,594
Less:
Allowance for Loan Losses.........................      (2,592)     (2,329)
Unearned Discounts and Prepaid Dealer Reserve.....         331         206
Net Deferred Loan Origination Fees................        (471)       (488)
Loans in Process and Undisbursed Funds............     (5,899)    (4,292)
                                                    ----------  ----------
Net Loans.........................................  $  182,724  $  157,691
                                                    ----------  ----------
                                                    ----------  ----------

    At December 31, 1996 and 1995, the Company's loan portfolio included
$86,565,000 and $69,991,000 in adjustable rate mortgages, respectively.

    The following is an analysis of the allowance for possible loan losses
for the years ended December 31 (in thousands):

                                         1996       1995       1994
                                       ---------  ---------  ---------
Balance, Beginning...................  $2,329     $1,087     $1,015
Provision Charged to Income..........     355      1,274        63
Loans Charged Off....................    (277)      (127)     (183)
Loans Recovered......................     185         95       192

                                       ---------  ---------  ---------
Balance, Ending......................  $   2,592  $   2,329  $   1,087
                                       ---------  ---------  ---------
                                       ---------  ---------  ---------

    The total recorded investment in impaired loans as of December 31, 1996
and 1995 was $197,000 which consisted of one loan. The total allowance for
impaired loans attributable to this loan was $65,000 as of December 31, 1996
and 1995. The average recorded investment in the impaired loan during 1996
and 1995 was $197,000. No interest income was recognized in 1996 on the
impaired loan. No interest income was recognized in 1995 on the impaired loan
during the period it was considered impaired.

    At December 31, 1996 and 1995, the Company had loans totaling $536,000 (5
loans) and $747,000 (6 loans), respectively, whose terms had been modified as
a troubled debt restructuring. The interest income that would have been
recognized if those loans had been current with their original terms was
$131,000, $147,000 and $154,000 for the years ended December 31, 1996, 1995
and 1994, respectively. Interest income totaling $78,000, $89,000 and $96,000
was included in income for the years ended December 31, 1996, 1995 and 1994,
respectively. The Company is not committed to lend additional funds to
debtors whose loans have been restructured.


30
<PAGE>
NOTE 6--LOAN SERVICING:

    Mortgage loans serviced for others are not included in the accompanying
consolidated statements of financial condition. The unpaid principal balances of
mortgage loans serviced for others was $24,453,000 and $24,033,000 at December
31, 1996 and 1995, respectively.

    Custodial escrow balances maintained in connection with the foregoing
loan servicing were approximately $378,000 and $295,000 at December 31, 1996
and 1995, respectively.

    Mortgage loan servicing rights of $35,000 were capitalized in 1996.
Amortization of mortgage servicing rights was $3,000 in 1996, and the balance
of mortgage servicing rights at December 31, 1996 was $32,000.

NOTE 7- PREMISES AND EQUIPMENT:

    Premises and equipment at December 31 is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                               1996       1995
                                                                             ---------  ---------
<S>                                                                          <C>        <C>
Land.......................................................................  $     738  $     738
Office Buildings...........................................................      1,237      1,510
Furniture, Fixtures and Equipment..........................................      2,381      2,267
Transportation Equipment...................................................         95         81
                                                                             ---------  ---------
                                                                                 4,451      4,596
Accumulated Depreciation...................................................     (2,624)    (2,797)
                                                                             ---------  ---------
Premises and Equipment, Net................................................  $   1,827  $   1,799
                                                                             ---------  ---------
                                                                             ---------  ---------
</TABLE>

NOTE 8--REAL ESTATE OWNED:

    Real estate owned at December 31 is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                               1996       1995
                                                                             ---------  ---------
<S>                                                                          <C>        <C>
 Real Estate and Other Property Acquired.....................................$      75  $     855

 Allowance for Losses........................................................       --        (10)
                                                                             ----------  ---------

 Real Estate Owned, Net......................................................$      75  $     845
                                                                             ----------  ---------
                                                                             ----------  ---------
</TABLE>

    The changes in real estate and other property acquired for the years ended
December 31 is as follows (in thousands):

<TABLE>
<CAPTION>

                                                                               1996       1995
                                                                             ---------  ---------
<S>                                                                          <C>        <C>
Balance, Beginning...........................................................$     855  $   2,753
 Real Estate and Other Property acquired in settlement of loans..............      281        252
 Capitalized Costs............................................................      34        131
 Dispositions.................................................................    (737)      (818)
 Losses and Writedowns Charged to Allowance...................................    (358)    (1,463)
                                                                              ---------  ---------

Balance, Ending..............................................................$      75  $     855
                                                                              ---------  ---------
                                                                              ---------  ---------
</TABLE>
                                            Continued 31


<PAGE>

NOTE 8: Continued


The changes in the allowance for losses on real estate and other property
acquired in settlement of loans for the years ended December 31 is as follows
(in thousands):

<TABLE>
<CAPTION>

                                                   1996       1995       1994
                                                 ---------  ---------  ---------
<S>                                              <C>        <C>        <C>

Balance, Beginning............................      $ 10      $   304     $ 314
 Provision Charged to Income..................                  1,169        94
 Losses and Writedowns Charged to Allowance...       (10)      (1,463)     (104)
                                                 ---------  ---------  ---------

Balance, Ending................................     $ --      $    10     $ 304
                                                 ---------  ---------  ---------
                                                 ---------  ---------  ---------
</TABLE>

During 1996, the Company switched from the allowance method to the direct
charge-off method for Real Estate Owned and Other Repossessed Assets.

NOTE 9--DEPOSITS:

Deposit account balances at December 31 are summarized as follows (dollars in
thousands):

<TABLE>
<CAPTION>
                                                     WEIGHTED               1996                     1995
                                                  AVERAGE RATE AT   ---------------------  -------------------------
                                                 DECEMBER 31,,1996    AMOUNT        %          AMOUNT          %
                                                 -----------------  ----------  ---------  --------------  ---------
<S>                                              <C>                <C>         <C>        <C>             <C>
NOW Accounts...................................               1.8%   $ 11,528        6.0%   $    10,689        5.2%
 Money Market Accounts..........................              2.3%      5,101        2.6%         6,228        3.0%
 Non-interest Bearing Checking Accounts.........               --%      4,954        2.6%         3,024        1.5%
  Total Demand Deposits..........................                      21,583       11.2%        19,941        9.7%
                                                                    ----------  ---------  --------------  ---------
Passbook Savings Deposits......................               2.5%     25,071       12.9%        27,973       13.5%
                                                                    ----------  ---------  --------------  ---------
                                                                    ----------  ---------  --------------  ---------
Certificate of Deposit Accounts:
Less than 4.00%................................                           100         .1%           323         .2%
4.0% to 4.99%                                                          17,031        8.8%        14,845        7.2%
5.0% to 6.99%                                                         105,385       54.5%       105,766       51.2%
7.0% to 8.99%                                                          23,434       12.1%        36,600       17.8%
9.0% and over                                                             846         .4%           895         .4%
                                                                    ----------  ---------  --------------  ---------
Total Certificates of Deposit..................               5.8%    146,796       75.9%       158,429       76.8%
                                                                    ----------  ---------  --------------  ---------
Total Deposits.................................               4.9%  $ 193,450      100.0% $     206,343      100.0%
                                                                    ----------  ---------  --------------  ---------
                                                                    ----------  ---------  --------------  ---------
</TABLE>
At December 31, 1996, scheduled maturities of certificates of deposit
accounts were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                       AMOUNT
                                                                     ----------
<S>                                                                  <C>
One year or less........................................             $   80,284
Over one year through two years......................................    33,378
Over two years through three years...................................    15,233
Over three years through five years.................................      3,135
Over five years through ten years...................................     14,766
                                                                     ----------
Total Certificates of Deposit......................................  $  146,796
                                                                     ----------
                                                                     ----------
</TABLE>

Certificates of deposit with a balance of $100,000 and over were $36,037,000
and $39,604,000 at December 31, 1996 and 1995, respectively.


32 Continued

<PAGE>
NOTE 9:  Continued

Interest expense on deposits for the following years ended December 31 is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                             1996       1995       1994
                                                                           ---------  ---------  ---------
<S>                                                                        <C>        <C>        <C>
NOW Accounts.............................................................  $     160  $     144  $     153
Money Market.............................................................        131        139        189
Passbook Savings.........................................................        692        737        928
Certificates of Deposits.................................................      9,201      9,092      8,086
                                                                           ---------  ---------  ---------
Total Interest Expense on Deposits.......................................  $  10,184  $  10,112  $   9,356
                                                                           ---------  ---------  ---------
                                                                           ---------  ---------  ---------
</TABLE>

Income from early withdrawal penalties on certificate accounts was $63,000,
$53,000 and $45,000 for the years ended December 31, 1996, 1995 and 1994,
respectively.

NOTE 10--FEDERAL HOME LOAN BANK ADVANCES:

Federal Home Loan Bank advances totaled $22,250,000 and $250,000 as of
December 31, 1996 and 1995, respectively, which are secured by mortgage loans
under an existing blanket collateral agreement and by Federal Home Loan Bank
stock. No payments are scheduled prior to maturity. The Company has the
ability to borrow total advances up to $125,955,000 from the Federal Home
Loan Bank which would also be secured by the existing blanket collateral
agreement and by Federal Home Loan Bank stock. Advances at December 31, 1996
and 1995 are as follows (in thousands):

<TABLE>
<CAPTION>
INTEREST RATE                                  1996          1995
-------------------------------------------  -----------------------
<S>                                          <C>           <C>
5.350% to 5.566%, at floating libor          $  22,000     $   --
8.700%                                             250        250
                                             -----------  ----------
Total Advances.............................  $  22,250     $  250
                                             -----------  ----------
                                             -----------  ----------
</TABLE>

Advances at December 31, 1996 have maturities in future years as follows (in
thousands):

<TABLE>
<CAPTION>
                         YEAR ENDING DECEMBER 31              AMOUNT
                         -----------------------             -------
                         <S>                                  <C>
                                  1998.................      $22,000
                                  2005..................         250
                                                             -------
                                                             $22,250
                                                             -------
                                                             -------
</TABLE>

NOTE 11--INCOME TAXES:

The provision for Income Tax Expense (Benefit) is as follows for the years
ended December 31 (in thousands):
<TABLE>
<CAPTION>
                                           1996       1995       1994
                                         --------   ---------  ---------
<S>                                      <C>        <C>        <C>
Current:
  Federal..........................      $  468       $(134)     $1,111
  State..............................        14          --          --

Deferred:
  Federal...........................        (43)       (343)       (54)
                                         --------   ---------  ---------
Total Income Tax Expense (Benefit).....    $439       $(477)     $1,057
                                         --------   ---------  ---------
                                         --------   ---------  ---------
</TABLE>

There was an income tax refund receivable of $16,000 at December 31, 1996 and
$1,090,000 at December 31, 1995.

Continued 33

<PAGE>

NOTE 11: CONTINUED

The total provision for federal income taxes differs from that computed by
applying statutory corporate tax rates, as follows for the years ended
December 31:

<TABLE>
<CAPTION>
                                                                                               1996       1995       1994
                                                                                             ---------  ---------  ---------
<S>                                                                                          <C>        <C>        <C>
Statutory Federal Income Tax Rate..........................................................    34.0%     (34.0)%      34.0%
Increase (Decrease) in Taxes Resulting From:
State Income Tax on Non-Bank Entities......................................................     1.1         --          --
Other Items................................................................................      .3         .9         (.4)
Effective Tax Rate.........................................................................    35.4%     (33.1)%      33.6%
                                                                                              ---------  ---------  ---------
                                                                                              ---------  ---------  ---------
</TABLE>

The tax effects of principal temporary differences at December 31 is as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                      1996       1995
                                                                                    ---------  ---------
<S>                                                                                 <C>        <C>
Deferred Tax Assets:
  Deferred loan fees................................................................ $    90    $    166
  Book provision for losses on loans and real estate owned..........................     878         797
  Real estate owned basis differences...............................................      74          --
  Deferred gains on loans...........................................................      49          73
  Depreciable property basis differences............................................      25          --
  Other.............................................................................      21           5
                                                                                    ---------  ---------
     Subtotal.......................................................................   1,137       1,041
                                                                                    ---------  ---------
Deferred Tax Liabilities:
  Discount Accretion on Investment..................................................      19          --
  FHLB stock........................................................................     249         215
  Unrealized gains on Securities Available for Sale.................................     193         361
                                                                                    ---------  ---------
     Subtotal.......................................................................     461         576
                                                                                    ---------  ---------
  Net Deferred Tax Asset............................................................  $  676    $    465
                                                                                    ---------  ---------
                                                                                    ---------  ---------
</TABLE>

The likelihood of realization of the entire amount of the deferred tax asset
is considered to be more likely than not; therefore, no valuation allowance
has been provided for 1996 and 1995. The net deferred tax asset is included
in Other Assets on the statement of financial condition.

Included in retained earnings at December 31, 1996 and 1995, is approximately
$7,073,000 and $7,064,000, respectively, in bad debt reserves for which no
deferred federal income tax liability has been recorded. These amounts
represent allocations of income to bad debt deductions for tax purposes only
for tax years prior to 1987. Reduction of these reserves for purposes other
than tax bad debt losses or adjustments arising from carryback of net
operating losses would create income for tax purposes, which would be subject
to the then current corporate income tax rate.

NOTE 12--REGULATORY MATTERS:

The Company is subject to various regulatory capital requirements
administered by the federal banking agencies. Financial institutions are
segmented into one of five classifications ranging from "well capitalized" to
"critically undercapitalized." Should a financial institution's ratios
decline below the predetermined minimum ratios, the institution would be
subject to increasingly restrictive regulatory action.

34 Continued

<PAGE>

Note 12: CONTINUED

The regulations require institutions to have a minimum regulatory tangible
capital equal to 1.5 percent of adjusted total assets, a minimum 4.0 percent
core/leverage capital ratio, a minimum 4.0 percent tier one risk-based ratio,
and a minimum 8.0 percent total risk-based capital ratio to be considered
"adequately capitalized." An institution is deemed to be "critically
undercapitalized" if it has a tangible equity ratio of two percent or less.
At December 31, 1996, the Bank was classified as "well capitalized".

As of December 31, the Company met all regulatory capital requirements as
follows (dollars in thousands):

<TABLE>
<CAPTION>

                                                    December 31, 1996
                                                 -----------------------
                                            Required              Actual
                                        Amount   Percent      Amount   Percent
                                       --------  -------     --------  -------
<S>                                    <C>       <C>         <C>       <C>
Tier 1 leverage capital:
  Acadiana Bancshares, Inc.            $ 10,545   4.00%     $ 46,676   17.71%
  LBA Savings Bank                       10,007   4.00%       33,451   13.37%

Tier 1 risk-based capital:
  Acadiana Bancshares, Inc.               5,270   4.00%       46,676   35.43%
  LBA Savings Bank                        5,161   4.00%       33,451   25.93%

Total risk-based capital:
  Acadiana Bancshares, Inc.              10,539   8.00%       48,334   36.69%
  LBA Savings Bank                       10,322   8.00%       35,076   27.19%


</TABLE>


<TABLE>
<CAPTION>

                                                    December 31, 1995
                                                 -----------------------
                                            Required              Actual
                                        Amount   Percent      Amount   Percent
                                       --------  -------     --------  -------
<S>                                    <C>       <C>         <C>       <C>
Tier 1 leverage capital:
  LBA Savings Bank                     $  8,986   4.00%     $ 16,996    7.57%

Tier 1 risk-based capital:
  LBA Savings Bank                        4,550   4.00%       16,996   14.94%

Total risk-based capital:
  LBA Savings Bank                        9,099   8.00%       18,429   16.20%

</TABLE>

LBA Savings Bank is restricted under applicable laws in the payment of
dividends to an amount equal to current year earnings plus undistributed
earnings for the immediately preceding year, unless prior permission is
received from the Commissioner of Financial Institutions. Undistributed
earnings of the Bank for 1996 that are available for dividend distribution to
the Company in 1997 are $547,000.

NOTE 13--EMPLOYEE BENEFITS:

401(k) and Money Purchase Pension Plans

The Company maintains a 401(k) Profit Sharing Plan to provide retirement
benefits for substantially all employees. Eligible employees may defer up to
ten percent of compensation and the Company contributes a matching
contribution of 100 percent of employee deferrals up to three percent of
compensation. The board of directors determines the amount of an additional
discretionary contribution, if any, annually. All employees are eligible
after completing one year of service and attaining age 21. The Company
terminated the Money Purchase Pension Plan, which required a two percent
contribution, effective January 1, 1996.

Employer contributions made to the plans were $52,000, $146,000 and $189,000
for the years ended December 31, 1996, 1995 and 1994, respectively.

Continued 35

<PAGE>
NOTE 13: CONTINUED

EMPLOYEE STOCK OWNERSHIP PLAN

In connection with the conversion from mutual to stock form, the Company
established an Employee Stock Ownership Plan ("ESOP") for the benefit of
employees of the Company and the Bank. The ESOP purchased 218,500 shares, or
8 percent of the total stock sold in the subscription, for $2,622,000,
financed by a loan from the Company. The leveraged ESOP is accounted for in
accordance with AICPA SOP 93-6, Employers' Accounting for Employee Stock
Ownership Plans.

The ESOP was effective upon completion of the conversion. Full-time employees
of the Company and the Bank who have been credited with at least 1,000 hours
of service during a 12 month period and who have attained age 21 are eligible
to participate in the ESOP. It is anticipated that contributions will be made
to the plan in amounts necessary to amortize the debt to the Company over a
period of 10 years.

Shares purchased by the ESOP with the proceeds of the loan will be held in a
suspense account and released on a pro-rata basis as debt service payments
are made. Shares released will be allocated among participants on the basis
of compensation. Participants will vest in their right to receive their
account balances within the ESOP at the rate of 20 percent per year starting
after one year of service. In the case of a "change of control," as defined
in the plan, participants will become immediately and fully vested in their
account balances.

Under SOP 93-6, unearned ESOP shares are not considered outstanding and are
shown as a reduction of stockholders' equity. Dividends on unallocated ESOP
shares are considered to be compensation expense. The Company will recognize
compensation cost equal to the fair value of the ESOP shares during the
periods in which they become committed to be released. To the extent that the
fair value of the Company's ESOP shares differ from the cost of such shares,
this differential will be credited to equity. The Company will receive a tax
deduction equal to the cost of the shares released. The loan receivable from
the ESOP to the Company is not shown as an asset and the debt of the ESOP is
not shown as a Company liability. Dividends on allocated shares will be used
to pay the ESOP debt.

Compensation cost for the year ended December 31, 1996 was $148,000 based on
the release of 10,946 shares. At December 31, 1996, there were 10,946
allocated shares and 207,554 shares were held in suspense by the ESOP. The
fair value of the unearned ESOP shares at December 31, 1996, using the quoted
market closing price per share was approximately $3,087,000.

NOTE 14--RELATED PARTY TRANSACTIONS:

In the ordinary course of business, the Company makes loans to its employees,
officers and directors. Such loans to employees, officers and directors are
made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons.

The Company has an employment agreement with an executive officer under which
the Company agreed to pay compensation of $130,000 annually through October
31, 1999. The Company has also entered into severance agreements with six
officers. The total commitments under the severance agreements at December
31, 1996 were $728,000.

NOTE 15--COMMITMENTS AND CONTINGENT LIABILITIES:

The Company is subject to claims and lawsuits which arise primarily in the
ordinary course of business. Based on information presently available and
advice received from legal counsel representing the Company in connection
with such claims and lawsuits, it is the opinion of management that the
disposition or ultimate determination of such claims and lawsuits will not
have a material adverse effect on the consolidated financial condition or
results of operations of the Company.

NOTE 16--FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK:

The Company is a party to financial instruments with off-balance-sheet risk
in the normal course of business to meet the financing needs of its
customers. These financial instruments include commitments

36 Continued

<PAGE>

NOTE 16: CONTINUED

to extend credit and standby letters of credit. Those instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of the
amount recognized in the statement of financial condition. The contract or
notional amounts of those instruments reflect the extent of the Company's
involvement in particular classes of financial instruments.

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

<TABLE>
<CAPTION>
     AS OF DECEMBER 31, 1996, FINANCIAL INSTRUMENTS FOR WHICH THE        CONTRACT OR NOTIONAL
        CONTRACT AMOUNTS WERE AS FOLLOWS REPRESENT CREDIT RISK:          AMOUNT (IN THOUSANDS)
-----------------------------------------------------------------------  ---------------------
<S>                                                                      <C>
Undisbursed Loans in Process...........................................        $   5,899
Commitments to Extend Credit...........................................        $  10,105
Standby Letters of Credit..............................................        $     598
</TABLE>

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

Standby letters of credit are conditional commitments issued by the Company
to guarantee the performance of a customer to a third party. Those guarantees
are primarily issued to support public and private borrowing arrangements,
including commercial paper, bonding financing, and similar transactions. The
credit risk involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers.

NOTE 17--CONCENTRATION OF CREDIT:

All of the Company's loans, commitments, and letters of credit have been
granted to customers in the Company's market area. The concentration of
credit by type of loan is set forth in Note 5. The distribution of
commitments to extend credit approximates the distribution of loans
outstanding. Letters of credit were granted primarily to borrowers who
develop real estate properties.

NOTE 18--ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS:

The estimated fair value of the Company's financial instruments as of
December 31 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                1996                    1995
                                                                       ----------------------  ----------------------
<S>                                                                    <C>          <C>        <C>          <C>
                                                                        ESTIMATED   RECORDED    ESTIMATED   RECORDED
                                                                          FAIR        BOOK        FAIR        BOOK
                                                                          VALUE      BALANCE      VALUE      BALANCE
                                                                       -----------  ---------  -----------  ---------
ASSETS
Cash.................................................................   $  19,784   $  19,784   $  16,481   $  16,481
Investment Securities................................................      20,539      20,539       4,030       4,030
Mortgage-Backed Securities...........................................      34,504      34,653      39,561      39,514
Loans Receivable.....................................................     184,289     182,724     163,636     157,691
LIABILITIES
Deposits:
Regular Savings, NOW Accounts, and Money Market Deposits.............   $  46,654   $  46,654   $  47,913   $  47,913
Certificates of Deposit..............................................     149,155     146,796     160,842     158,430
Advances from Federal Home Loan Bank.................................      22,250      22,250         292         250
</TABLE>
                                                                           37

<PAGE>
NOTE 19--CONVERSION FROM MUTUAL TO STOCK ASSOCIATION:

In 1996, the Bank converted from a Louisiana chartered mutual savings bank to
a Louisiana chartered stock savings bank, pursuant to its Plan of Conversion.
The Company issued 2,731,250 shares of common stock at $12.00 per share. The
Company's ESOP purchased 218,500 shares, financed by a loan from the Company.
The net proceeds received from the conversion was $30,153,000. Total
conversion costs approximated $937,000.

In accordance with regulations, at the time that the Bank converted from a
mutual savings bank to a stock savings bank, the Bank established a
liquidation account in the amount of $17,697,000. The liquidation account
will be maintained for the benefit of eligible account holders and
supplemental eligible account holders who continue to maintain their accounts
at the Bank after the Conversion. The liquidation account will be reduced
annually to the extent that eligible account holders and supplemental
eligible account holders have reduced their qualifying deposits. Subsequent
increases in deposits will not restore an eligible account holder's or
supplemental eligible account holder's interest in the liquidation account.
In the event of a complete liquidation of the Bank, each account holder and
supplemental eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the
current adjusted qualifying balances for accounts then held. The Bank may not
pay a dividend on its capital stock if the dividend would bring regulatory
capital below the balance of the liquidation account.

The Bank is restricted from declaring or paying cash dividends or
repurchasing any of its shares of common stock if the effect thereof would
cause equity to be reduced below applicable regulatory capital maintenance
requirements or if such declaration and payment would otherwise violate
regulatory requirements. The Bank continues to be a member of the Federal
Home Loan Bank System and all insured savings deposits continue to be insured
by the fdic up to the maximum provided by law.

NOTE 20--LAFAYETTE LAND AND MANAGEMENT:

Lafayette Land and Management (LLM), a wholly owned subsidiary of the Bank,
was liquidated into the Bank in December 1995. At the time of liquidation its
principal assets consisted of cash ($93,000) and one tract of real estate
($859,000) that had previously been acquired by the Bank through foreclosure.
The liquidation was a tax-free reorganization for tax purposes.

For the year ended December 31, 1995, total revenues of LLM were $100,000 and
its expenses were $48,000. For the year ended December 31, 1994, total
revenues of LLM were $28,000 and its expenses were $41,000. These amounts are
included in the consolidated statements of operations.

NOTE 21--SUBSEQUENT EVENTS:

On January 21, 1997, at a special meeting the stockholders of the Company
approved adoption of the Stock Option Plan and Recognition and Retention Plan
and Trust Agreement for the benefit of directors, officers and key employees.

The stock option plan authorizes grants totaling 273,125 shares, or 10
percent of the total number of common shares sold in the Company's initial
public offering of its common stock upon the mutual-to-stock conversion of
lba Savings Bank. The option exercise price cannot be less than the fair
value of the underlying common stock as of the date of the option grant and
the maximum term cannot exceed ten years. On January 22, 1997, the Board of
Directors granted a total of 211,701 options to directors and officers at an
exercise price of $15.50 per share.

The Recognition and Retention Plan (RRP) is a restricted stock plan. The plan
authorizes the granting of up to 109,250 shares, or 4 percent of the total
number of common shares sold in the Company's initial public offering. The
Company intends to repurchase shares in the open market to fund the plan and
Trust. On January 22, 1997, the Board of Directors granted 73,202 shares of
restricted stock with a vesting period of 5 years.

38
<PAGE>

NOTE 22--CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS:

Condensed financial statements of Acadiana Bancshares, Inc. (parent company)
are shown below. The parent company has no significant operating activities.

CONDENSED BALANCE SHEET
(In thousands)

<TABLE>
<CAPTION>
                                                                        DECEMBER 31,
                                                                            1996
                                                                        ------------
<S>                                                                     <C>
ASSETS
Cash in Bank..........................................................   $   11,561
Securities Available for Sale.........................................        2,014
Investment in Subsidiary..............................................       33,856
Other Assets..........................................................           60
                                                                        ------------
Total Assets..........................................................   $   47,491
                                                                        ------------
                                                                        ------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities...........................................................   $      400
                                                                        ------------
Stockholders' Equity..................................................       47,091
                                                                        ------------
Total Liabilities and Stockholders' Equity............................   $   47,491
                                                                        ------------
                                                                        ------------
</TABLE>
CONDENSED STATEMENT OF INCOME
(In thousands)

<TABLE>
<CAPTION>
                                                                       PERIOD FROM
                                                                    JULY 15, 1996 TO
                                                                    DECEMBER 31,,1996
                                                                    -----------------
<S>                                                                 <C>
Operating Income:
Dividends from Subsidiary Bank....................................      $      50
Interest Income...................................................            335
                                                                        -------------
Total Operating Income............................................            385
Operating Expenses................................................             14
                                                                        -------------
Income Before Income Tax Expense and Decrease in Equity in
  Undistributed Earnings of Subsidiary............................            371
Income Tax Expense................................................            119
Income Before Decrease in Equity in Undistributed Earnings of           -------------
  Subsidiary......................................................            252
Decrease in Equity in Undistributed Earnings of Subsidiary........            (83)
                                                                        -------------
Net Income........................................................      $     169
                                                                        -------------
                                                                        -------------
</TABLE>
                                     39

<PAGE>
NOTE 22:CONTINUED

CONDENSED STATEMENT OF CASH FLOWS
(In thousands)

<TABLE>
<CAPTION>
                                                                                PERIOD FROM
                                                                             JULY 15, 1996 TO
                                                                             DECEMBER 31, 1996
                                                                             -----------------
<S>                                                                          <C>
Cash Flows from Operating Activities:
Net Income.................................................................      $     169
Adjustments to Reconcile Net Income to Net Cash Provided by Operating
  Activities:
Decrease in Equity in Net Income of Subsidiary.............................             83
Increase in Other Assets...................................................            (60)
Increase in Other Liabilities..............................................            124
                                                                                ------------
Net Cash Provided by Operating Activities..................................            316
                                                                                ------------
Cash Flows from Investing Activities:
Purchase of Securities Available for Sale..................................         (2,000)
Purchase of Capital Stock of Subsidiary....................................        (15,919)
                                                                                ------------
Net Cash Used In Investing Activities......................................        (17,919)
Cash Flows from Financing Activities:
Dividends Paid to Shareholders.............................................           (226)
Capital Contributed to Subsidiary..........................................            (20)
Payments Received From esop................................................            194
Net Proceeds From Issuance of Common Stock.................................         30,153
Stock Conversion Costs Incurred............................................           (937)
                                                                                ------------
Net Cash Provided by Financing Activities..................................         29,164
                                                                                ------------
Net Increase in Cash and Cash Equivalents..................................         11,561
Cash and Cash Equivalents, Beginning of Period.............................             --
                                                                                ------------
Cash and Cash Equivalents, End of Period...................................      $  11,561
                                                                                ------------
                                                                                ------------
</TABLE>
Other Disclosures:

At December 31, 1996, the Company owed the Bank $119,000 for estimated tax
payments made on behalf of the Company.

40

<PAGE>

NOTE 23--QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 1996
                                                               --------------------------------------------------
<S>                                                            <C>          <C>          <C>          <C>
                                                                  FIRST       SECOND        THIRD       FOURTH
                                                                 QUARTER      QUARTER      QUARTER      QUARTER
                                                               -----------  -----------  -----------  -----------
Total Interest Income........................................   $   4,310    $   4,458    $   4,958    $   4,977
Total Interest Expense.......................................       2,652        2,699        2,739        2,672
                                                              -----------  -----------  -----------  -----------
Net Interest Income..........................................       1,658        1,759        2,219        2,305
Provision for Loan Losses....................................          45           45           45          220
                                                              -----------  -----------  -----------  -----------
Net Interest Income After Provision for Loan Losses..........       1,613        1,714        2,174        2,085
Noninterest Income...........................................         254          247          165          288
Noninterest Expense..........................................       1,452        1,414        2,864        1,571
                                                              -----------  -----------  -----------  -----------
Income (Loss) Before Income Taxes............................         415          547         (525)         802
Income Tax Expense (Benefit).................................         132          200         (173)         280
                                                              -----------  -----------  -----------  -----------
Net Income (Loss)............................................   $     283    $     347    $    (352)   $     522
                                                              -----------  -----------  -----------  -----------
                                                              -----------  -----------  -----------  -----------
Net Income (Loss) per Common Share...........................         N/A          N/A    $    (.14)   $     .21
                                                              -----------  -----------  -----------  -----------
                                                              -----------  -----------  -----------  -----------

</TABLE>

<TABLE>
<CAPTION>
                                                                          YEAR ENDED DECEMBER 31, 1996
                                                               --------------------------------------------------
<S>                                                            <C>          <C>          <C>          <C>
                                                                  FIRST       SECOND        THIRD       FOURTH
                                                                 QUARTER      QUARTER      QUARTER      QUARTER
                                                               -----------  -----------  -----------  -----------
Total Interest Income........................................   $   4,209    $   4,246    $   4,263    $   4,257
Total Interest Expense.......................................       2,343        2,509        2,613        2,669
                                                              -----------  -----------  -----------  -----------
Net Interest Income..........................................       1,866        1,737        1,650        1,588
Provision for Loan Losses....................................          --           --           --        1,274
                                                              -----------  -----------  -----------  -----------
Net Interest Income After Provision for Loan Losses..........       1,866        1,737        1,650          314
Noninterest Income...........................................         217          222          203          160
Noninterest Expense..........................................       1,273        1,245        1,472        3,822
                                                              -----------  -----------  -----------  -----------
Income (Loss) Before Income Taxes............................         810          714          381       (3,348)
Income Tax Expense (Benefit).................................         273          245          130       (1,125)
                                                              -----------  -----------  -----------  -----------
Net Income (Loss)............................................   $     537    $     469    $     251   $   (2,223)
                                                              -----------  -----------  -----------  -----------
                                                              -----------  -----------  -----------  -----------
Net Income (Loss) per Common Share...........................         N/A          N/A    $     N/A   $      N/A
                                                              -----------  -----------  -----------  -----------
                                                              -----------  -----------  -----------  -----------

</TABLE>

41